Securities Trading
SHOP has been in the news lately regarding the acquisition of a logistic company.
Prices are as of the close of Friday, May 6, 2022.
As in all previous illustrations, Green lines are periods of LONG, Red lines show periods of SHORT, and Blue lines are periods of NO POSITION.
The weekly is the dominant signal. So in this example, the only possible daily position in the year 2022 is SHORT.
Like many investors, I was impressed by the incredible upside performance of Cathie Wood’s ETF ARKK in 2020.
The holdings include Tesla, Zoom, Roku, Teledoc Health, and Coinbase Global.
With the exception of Telsa, most are down a considerable amount this year.
Despite the large underperformance of ARKK, many investors are staying the course, according to Monday’s (April 25, 2022) Wall Street Journal.
The following Monthly and Daily chart of ARKK portrays the recent price decline.
Price is as of the close today, Tuesday, April 26, 2022.
“Wall Street expects a year-over-year increase in earnings on higher revenues when AbbVie (ABBV) reports results for the quarter ended March 2022. While this widely-known consensus outlook is important in gauging the company’s earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 29. On the other hand, if they miss, the stock may move lower.” Zacks Equity Research, April 22, 2022
The following pictures of ABBV Daily and Weekly show that some expect lower results than projected. Prices are as of the close of Friday, April 22, 2022.
The weekly chart is the dominant position. The green line indicates BUY. The RED line indicates SELL, and the BLUE line indicates CLOSE position.
As in all past posts, When and only when the Weekly indicates BUY, then if the daily is also Green, the position should be long. The BLUE line indicates CLOSE position.
As many of my readers know, I have been following Sherwin Williams for many years. It qualifies in most metrics as a solid company financially and has been an outstanding holding in many portfolios.
The caveat is that if you have the ability to adjust your potfolio when certain stocks are not gaining at price but declining, then SHW has been in and out of your portfolio many times in the past few years.
Using the weekly price action as the guide and the daily price action as your trigger, the following charts are a good example of good timing in SHW.
As usual, green lines represent the time of being long on the weekly, if only the daily agrees.
Long-only from April of 2020 until the end of January 2021. Then long-only from April of 2021 until Mid January 2022. Short only from February 11, 2022.
The daily charts are the actual trade trigger.
This is an example of how swing trading is supposed to work. Prices are as of the close on Friday, March 11, 2022.
Paypal has been one of the more active stocks for the last few weeks.
Obviously, someone or a group of someone had a head start on the decline.
The following graph of the weekly activity should be helpful in coming to that conclusion.
In October of 2021, the decline began.
The daily chart should through further light.
As in all previous charts, the red line signifies SELL, the Green line, BUY, and the Blue line indicates close out the previous position
Recently, earnings and comments from Netflix and Peloton have resulted in severe losses for many investors.
Forwarned is forearmed.
Attached are recent graphs of both as of the close of Friday, January 21, 2022.
An interested viewer of this blog recently inquired whether the Swingtrader indicators would be appropriate for Day Trading.
The following example of today’s December 27, 2021, activity in TSLA should answer the question, YES!
Nvidia turned up as successfully passing the better than average Clean Surplus ROE sometime in 2016 when the share price was under $25. As of the close on Friday, November 12, 2021, it was at 303.50. On May 28, 2021, the weekly signaled a purchase under $160. The daily trade trigger signaled a purchase most recently on October 14, 2021, at a price less than $217. NVDA is one of the many high-quality shares that could be in a Swing Trading portfolio. Buy when both the weekly and daily agree. Stay on the sidelines during periods of disagreement.
Selecting candidates for Swing Trading positions is difficult. I have found that finding moat-type businesses make the best initial candidates. Good financial underpinnings are essential. Joseph Belmonte of Buffett and Beyond has developed a screening tool based on Clean Surplus ROE(Return on Equity). His conclusion is that “portfolios made of stocks with high Clean Surplus ROE’s outperform all other portfolios”. An example is portrayed below. Salesforce (CRM) first qualified with a higher than average Clean Surplus ROE during 2016 when the shares were trading between $70 and $80. 
Closing prices are as of the close on Friday, November 5, 2021. First, find the candidates and then use weekly technicals to find the overall trend. Use the daily as a trend decision trigger. The weekly signaled a buy decision at the end of June 2021. That is, only trade LONG from that date. The daily concurred with a long position on October 13, 2021.
The following is another example of waiting for the long-term signal, in this case weekly. When that signal is LONG, then if and when the shorter-term time frame is also LONG, jump aboard.
The signal in COST from April 9, 2021, has been LONG only. A corresponding LONG signal was signaled on June 23 and the next day COST opened at 393. A close signal was signaled on September 20, and the opening the next day was 456. Approximately a 16% return in about 3 months.
Please refer to my previous post on REGN for more detail.