January 22, 2018.

Momentum Outmuscles the Bears!
In order to really understand the dynamic playing out now in the American stock market, it’s best to rehash what happened this Friday. Friday couldn’t have been a more crystal clear example of the forces at play. I.B.M. (IBM) and American Express (AXP) released disappointing numbers on Thursday evening. On Capitol Hill, the Senate didn’t succeed in reaching a budget deal to keep the federal government running. And in financial markets, the bond yield climbed to levels not seen since 2014, the U.S. dollar likewise falling to its lowest level since 2014. It would seem like a surefire recipe for a market correction. You couldn’t ask for more than that, especially when on a technical basis, markets are stretched. At the same time, a glimpse at the results in Friday’s trading shows that the large indexes succeeded in climbing – and setting additional new highs, the NASDAQ rising 0.55%, the S&P 500 tacking on 0.44%. In summary, the market saw sweeping gains all week long. The S&P 500 climbed 0.9% to 2,810 points. The S&P 500 is now up 5.1% since January 1st.

The counterintuitive response of the market to all of the abovementioned negative developments could perhaps be summed up in one word: momentum! That’s what the upswing is all about! Momentum is a very powerful market force. Momentum can overcome all negative news, laughing in the face of a technical overbought state – and most importantly, rip bears to shreds! Those who defy momentum, pay a very hefty price.

The momentum, though, won’t last forever, though those who think that they have the ability to time it just right, essentially fail to understand something very basic. Momentum has no sense of proportions or underlying rationale. It lacks all affiliation with sensibility. Momentum, simply put, is fed by the reality that it’s been along for too long, that it’s defied the very odds predicting its demise. Momentum tends to strengthen precisely when you’d think that it’s on its way out!

Momentum doesn’t need much in the way of justification. The concern about being left behind is one of its main components and as of now, the optimism about the earnings season, which just began, provides ample cause for unimpeded gains! Arguments about prices being too expensive have no bearing on reality when expectations hinge on and are founded on momentum.

Momentum, amazingly, isn’t cause for celebration among market players. Rather, it creates fear. Fear of not being part of the party. Fear about being the odd man out – and concern about underperforming when up against the large indexes. And likewise, fear about not making enough money! Momentum crushes those who’d have the gall to try to time the market just right – and also those, who’d be brazen enough to fight against it. Momentum makes short shrift of any persuasive argument, as persuasive as it might be.

How can we best cope with the untamed and seemingly unstoppable market momentum?! We relish it. We ride it. We respect it. And we try to jump on the bandwagon as much as possible. The time will come when the market crescendos then dives – and then we’ll see that momentum also works in the opposite direction. Momentum has no loyalty, and it’s simply impossibly to expect it to persist forever. On the flipside, trying to guess when things will reverse course is a worthless and fruitless pursuit. Rather, we need to stick to the momentum in so far as it’s possible.

As of now, there are enough individual stocks with charts with solid technical patterns, i.e. which are not stretched. Their state isn’t similar to the indexes, which don’t seem too attractive right now. There’s no question that the indexes need a breather, but there’s enough rotation taking place to prevent that from happening right now.

All of the technical and fundamental arguments why the market needs to take a turn for the worse are still in effect. And it could be that they’re even stronger now on the heels of a number of disappointing earnings reports. What the market bears are lacking is price movement which backs up their claims. For the time being, what’s dominating the market is momentum, and that’s all that matters!

The earnings season is picking up this week with high profile reports from Netflix (NFLX) on Monday, after closing, and industrial giants like Caterpillar (CAT) and Procter & Gamble (PG), which should create interesting movement with a lot of trading opportunities all week long. Likewise, airline firms will be reporting this week, United Continental (UAL) releasing its numbers on Tuesday, and American Airlines (AAL) reporting on Thursday. Furthermore, there are number of key economic reports that will be released this week, including durable goods orders and the revision of the Q4 GDP growth reading this Friday. In the event growth comes out as forecasted, it would be the third quarter in a row with growth of at least 3%, a solid and consistent pattern not seen since 2005.

Another focal point this coming week will be the 10-year T-bond yield. The yield on the issue climbed to a high of 2.65% last week – for the first time since 2014. Stock market investors will continue to eye bond yields, which are still not high enough – presumably – to create competition vis a vis the stock market and upset its magnificent run. In the event bonds’ yields approach the 3% level, then we’re talking about a level that’s expected to spook investors and put a spoke in the wheels of the stock market rally.

Index Last

Daily change

DJX 26,072 0.21% Up
SPX 2,810 0.44% Up
NASDAQ 7,336 0.55% Up

Have a great trading day!


Economic Calendar


DAY TIME (EST) Event Forecast Impact
Wednesday 9:00 FHFA House Price Index 0.5 % Medium
Wednesday 10:00 Existing Home Sales 5.750 M Medium
Wednesday 10:30 Oil Inventories -6.9 M barrels Low
Thursday 8:30 International Trade in Goods
$-68.9 B Medium
Thursday 8:30 Jobless Claims 240 K Medium
Thursday 10:00 Wholesale Inventories 683 K Medium
Thursday 10:00 New Home Sales 0.5 % Medium
Friday 8:30 Durable Goods Orders 0.8 % Medium
Friday 8:30 GDP 2.9 % High


Earning Calendar


Symbol Company AM/PM Day
WYNN Wynn Resorts, Limited AM Monday
HAL Halliburton Company AM Monday
NFLX Netflix, Inc. PM Monday
ZION Zions Bancorporation PM Monday
EDU New Oriental Education & Technology Group Inc. AM Tuesday
TRV The Travelers Companies, Inc. AM Tuesday
STT State Street Corporation AM Tuesday
KMB Kimberly-Clark Corporation AM Tuesday
VZ Verizon Communications Inc. AM Tuesday
PG The Procter & Gamble Company AM Tuesday
JNJ Johnson & Johnson AM Tuesday
TXN Texas Instruments Incorporated PM Tuesday
COF Capital One Financial Corporation PM Tuesday
UAL United Continental Holdings, Inc. PM Tuesday
GD General Dynamics Corporation AM Wednesday
SWK Stanley Black & Decker, Inc. AM Wednesday
RCL Royal Caribbean Cruises Ltd. AM Wednesday
GE General Electric Company AM Wednesday
CMCSA Comcast Corporation AM Wednesday
ABT Abbott Laboratories AM Wednesday
UTX United Technologies Corporation AM Wednesday
LVS Las Vegas Sands Corp. PM Wednesday
LRCX Lam Research Corporation PM Wednesday
CCI Crown Castle International Corp. (REIT) PM Wednesday
F Ford Motor Company PM Wednesday
WHR Whirlpool Corporation PM Wednesday
XLNX Xilinx, Inc. PM Wednesday
URI United Rentals, Inc. PM Wednesday
MKC McCormick & Company, Incorporated AM Thursday
NOC Northrop Grumman Corporation AM Thursday
RTN Raytheon Company AM Thursday
LUV Southwest Airlines Co. AM Thursday
AAL American Airlines Group Inc. AM Thursday
CELG Celgene Corporation AM Thursday
UNP Union Pacific Corporation AM Thursday
CAT Caterpillar Inc. AM Thursday
MMM 3M Company AM Thursday
BIIB Biogen Inc. AM Thursday
INTC Intel Corporation PM Thursday
SBUX Starbucks Corporation PM Thursday
WDC Western Digital Corporation PM Thursday
KLAC KLA-Tencor Corporation PM Thursday
MXIM Maxim Integrated Products, Inc. PM Thursday
CL Colgate-Palmolive Company AM Friday
ABBV AbbVie Inc. AM Friday
HON Honeywell International Inc. AM Friday


Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
MTCH $33.08   CAR CRUS
IDTI $33.92   AVT CBS
VNTV $78.25   BG SWKS
GPS $35.24   NKE  
CMCSA $42.71   PM  
ZION $53.87      
C $78.44      
LOW $105.60      
ACAD   $26    


New York Strategy Swing

# Date Stock Long\


Statues Data Close Profit\


1 3.11.2017 AKAM Long Close 8.11.2017 +1.37%
2 10.11.2017 JUNO Long Close 14.11.2017 +1.26%
3 16.11.2017 FLR Long Close 25.11.2017 +2.16%
4 6.12.2017 SPLK Long Close 8.12.2017 +1.51%
5 11.12.2017 NKTR Long Close 2.1.2017 +4.57%
6 18.12.2017 SYY Long Close 19.12.2017 +0.14%
7 3.1.2018 VOYA Long Close 8.1.2017 +0.67%
8 4.1.2018 TER Long Close 10.1.2017 +0.45%
9 9.1.2018 SCG Long Close 10.1.2017 -3.35%
10 11.1.2018 CREE Long Close 16.1.2018 +1.84%
11 11.1.2018 CF Long Close 16.1.2018 +1.66%
12 18.1.2018 MARK Long Open   +0.67%


Today’s Picks – Swing “New-York Strategy”

No.1 –   VRX 

Company Name Valeant Pharmaceuticals International,
Entry Point 22
Stop Area 20.95
1st Target 22.60
Swing Target 24.41
Avg. Volume 18.58M
Sector Healthcare | Drug Delivery
Earning Date 27 Feb
Risk Rate Normal
Risk\Reward Ratio 2.30:1


No.2 – KBH

Company Name
KB Home
Entry Point 35.24
Stop Area 34.58
1st Target 35.80
Swing Target 38.80
Avg. Volume 6.27M
Sector Industrial Goods | Residential Construction
Earning Date
Risk Rate Normal
Risk\Reward Ratio 5.39:1