June 2017 News Letter
Worst Shorts For The Year 2017
As some of the earlier joiners of the Quick Start Stock Investing Program know that ‘Short Selling’ is where we do the opposite of buying and selling. Where you sell at a higher price and buy it back later at lower price.
Some well known investors have burnt their hands by shorting two stocks. Tesla and Amazon. They tried to short Tesla when it is nearing $200 then near at $300. If you take the example of Tesla, notice the levels at $200, $240 and $290 marked in Green Circles. Check Buying Volumes that support these point. You can use the checklist to validate these points. These points are definitely Buy points on Tesla Weekly chart and not sell points. You can see by just using Support and Resistance, Trend zones and Volume you could have identified these high potential buy levels.
Value Add – Lesson
How You Could Have Avoided Shorting This Stock
By Analysing Under 5 min
Step 1: Add 50 Day Simple Moving Average
Step 2: Add 200 Day Simple Moving Average
Step 3: If Price is Above 50 Day Simple Moving Average (green zone) and 200 Day Simple Moving Average (red zone), If 50 Day Simple Moving Average is above the 200 Day Simple Moving Average then DO NOT CONSIDER SHORTING THAT STOCK.
CROWDED CLOUD WARS
Cloud Business: AMAZON, GOOGLE, Microsoft and ORACLE. These 4 comes to the surface eventhough there are lot others. Many missed invsting in Amazon including The Great Warren Buffet. Near $1000 a share Amazon and Google are unreachable to the new investors in the market place. They may present an opportunity in future if they do stock split. Many people are divided in their opinion if you ask them if Amazon is a retail company or technology company. But, what some people don’t know is that Amazon is a big player in providing cloud service. They provide this via Amazon S3 service. While IBM did not gather momentum in the cloud computing and services, its rival ORACLE did well. ORACLE might continu to surprise many. ORACLE was a good buy between 38 and 43 price range in Feb. 2017. It looks reasonable to buy it around $47 when price retraces /comes down to test the support. After several years spending on the side lines ORACLE finally seems to be getting ready to move upwards. A long term play.
SMOOTH SAILING CRUISING STOCKS
Cruise stocks are cruising in 2017. Warm weather and lack of weather related threats and lowered Zika fears seems to help these stocks. Royal Caribbean, Norwegian and Carnival all three of them are doing well this year. All of them had to cut prices agressively in 2014. Life is different know. Apprarently, these companies have 70% returning customers. This is good for business. I hope some of the students benifited from the Carnival Stock as it was one of the ‘Channel strategy’ stocks. Please see the picture below. You had 3 opportunities to buy or add to your positions. Please see below the weekly chart of CCL Carnival showing how nicely the channel trade worked here.
BABA – ALIBABA
Aliba came to the market around $68 if my memory serves me well. BABA presented an excellent buying opportunity in early part of 2017. Please check the additional buying opportunities presented here, Recent opportunity to add at 132.5. Channel strategy worked very well. This could be now shifting a channel and we need to wait and see the new channel form. Jack Ma has lot of unique ideas and agressive plans.
Ahead Of Health Care Bill…
Health Care Sector (XLV) and Bio-Technology sector (IBB) moving ahead of health. Insurers are also on the move. Don’t chase the price wait for the prices to come to you. Please check the charts below. You can see on the weekly IBB chart there was a beautiful channel but to the downside. Wonderful ‘Short’ at $350.
XLV The Health care sector Breaking out to the upside. This chart looks much better than the IBB at this point. Optimal entry will be around $76 if the price touches the support and starts to rebound it could give a better entry.
Expect Hospital stocks like Community health(CYH), HCA Holdings (HCA), Lifepoint Hospitals (LPNT), Universal Health (UHS), Healh insurers Aetna (AET) , Cigna(CI), Humana(HUM), United Health (UNH), Pharma stocks Pfizer(PFE), Merck(MRK), Bristol-myers(BMY) and Astrazeneca (AZN) all could be active and volatile until at least 4th of July.
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