Verified Investing's Blog – August 2016 Archive (40)

It is rare you get such clarity on a stock chart. Usually the trading action gives you general technical analysis pattern setups but nothing crystal clear. That is not the case with General Electric Company (NYSE:GE). The bearish nature of this pattern is overwhelming and investors should be shorting heavily for a move down to $29.25 in the coming weeks.

Notice on the stock chart how the stock dropped sharply in mid-July. Since that drop there has been no recovery at all. No…

The financial stocks are in the perfect storm for further upside, no matter what happens in the stock market. They are already breaking higher today and the Financial Select Sector SPDR Fund (NYSEARCA:XLF) is likely to continue to at least to $25. The reason the financial stocks are in the perfect storm for upside is because the stock market price action is tied to interest rates and financial stocks are tied in the opposite way to interest rates. Let me explain. What drives the stock market…

Reports have surfaced that Carl Icahn was trying to sell his Herbalife Ltd. (NYSE:HLF) shares prior to him deciding to buy more. In fact, Bill Ackman claimed he was contacted by Jefferies about buying some of those shares. Bill Ackman is heavily short Herbalife while Carl Icahn is long. There has been an ongoing fued between the two.

Smart investors need to be wondering if Carl Icahn was shopping his position and unable to sell it for a decent price. Did he then turn around…

QUALCOMM, Inc. (NASDAQ:QCOM) is a stock that has been a momentum play for months. However, after close examination of the stock chart recently, investors can clearly see the momentum stalling. Note in recent weeks how the stock has had trouble making higher highs. The incline has stalled to almost a flat-line. This tells smart investors that it could be ready to turn lower. The trigger for buying put options on Qualcomm will be when it breaks the trend line connecting the lows since July…

After being dead money for months as the stock market hit all-time highs, Chipotle Mexican Grill, Inc. (NYSE:CMG) may be coming to life. The stock is poised for a potential explosive breakout based off the stock chart. Investors looking to buy need to wait until the down-sloping trend line shown on the chart below is breached to the upside. It is not wise to be before then as the stock has not officially broken out and could collapse back down. If a breakout does occur, Chipotle Mexican…

Amazon, Inc. (NASDAQ:AMZN) is currently trading at $58.29, +1.04 (0.14%). The stock has a clearly defined head and shoulder pattern that has formed over the last three weeks on the stock chart. Head and shoulder patterns are bearish indicators but ONLY trigger when the neck-line is broken to the downside. Amazon has not broken the neck-line yet. Watch closely in the coming days for a break and then short it hard to a calculated target of $725.00.…

Dollar General Corp. (NYSE:DG) is dropping sharply today after missing second quarter earnings estimates. Dollar General is currently trading at $80.19, -11.60 (-12.64%). Investors looking for a swing trade buy level, need to focus on the $75.00 price. There is huge support there, including a gap fill level.

By…

Oil is reversing yesteday's bounce. Just 24 hours ago oil bounced higher on a rumor of Iran possibly being willing to cut oil production. This rumor was most likely an attempt by a hedge fund or big institutions to unload oil contracts prior to a bigger collapse. In my humble opinion, the drop today confirms that was exactly what was going on.

As oil hits the lows today, it tagged a support trend line. Take note in the chart below. Should it break this level, there is a sharp…

Mylan NV (NASDAQ:MYL) took another beating today as the heat mounted over their Epipen price gouging. The company recently raised the price by 400% and it has now become a political firestorm. While the stock tanks, smart investors see opportunity. Mylan is not a one drug or Epipen pony. After a certain discount has been priced in, the stock will begin to rally again. The buy level based on technical analysis is $37.75. …

As oil was tumbling for the second day in a row this morning, and losses were likely mounting at some hedge funds and institutions, a rumor hit the market. Iran might be willing to cut production. Yeah, we know this is nonsense. Iran is not going to cut production because they are arch enemies of Saudi Arabia and are funding proxy wars all over the middle east. But the rumor served its purpose. Oil surged higher and is now positive on the day. It is highly likely that there were…

The S&P 500 started with a surge higher, then reversed and closed at the lows of the day. In the initial surge, the S&P made a new all-time high before the reversal took place. If you are a chart technician, the candlestick formation is called a topping tail. In a 'normal' stock market this signals a top and likely reversal. However in this market, no investors will believe it. The current stock market is one of 'buy-the-dip'. Every dip has been bought, every short…

The Olympics have come to a close. Two weeks of trials and tribulations for the best athletes in the world. Overall, Brazil did a solid job of hosting the games but now they are over. The Brazilian ETF iShares MSCI Brazil Index (NYSEARCA:EWZ) is likely to fall hard. After running up on anticipation of the billions likely to be spent, there will be a major sell as buyers cease and sellers take over. The chart confirms this based on a rounded top pattern during the Olympics. A rounded top…

Oil has rallied over the last two weeks substantially. In fact, after falling from $52 to $39.20, it has retraced exactly 50% back to $46.40. This is a key Fibonacci retrace resistance level. In addition, oil has also slammed into the tracking ETF $USO 50 and 200 daily moving averages. This is a multi factor short on oil level. The pull back should begin tomorrow. Get on board and enjoy the ride. I am buying SCO here, a 2x short oil ETF.

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Twilio Inc (NYSE:TWLO) has major institutional distribution selling over the last two trading days. Most investors have no idea how to read this but I am here to explain it. First, notice the massive volume over the last two days. Today alone, Twilio traded over 12 million shares. The last two days have been the biggest volume the stock has seen since it IPO'ed in June 2016. The volume is coming at the all-time highs. This combination tells you there may be institutional distribution. What…

Yesterday, news hit the markets that Warren Buffet had increased his stake in Apple Inc.(NASDAQ:AAPL) substantially. The stock moved higher in early trading but has since reversed and gone negative. The reason? A simple gap fill on the daily chart, plus an extended move. Instiitutional money had long since been aware of the increase in Buffet's position making the only buyers today retail investors. The bag was passed to them in early trading as institutions unloaded. Then, Apple Inc. sank.…

Apple Inc. (NASDAQ:AAPL) has been on a one way train after reporting better-than-expected earnings almost three weeks ago. Since earnings, the iPhone maker is up almost 15%. While investors are cheering there may be a cloud developing over the stock. Based on the extension move, it is reading heavily overbought in the near term. In addition, there is a major gap fill approaching at $110.00. The combination of these two factors (assuming $110.00 is tagged) should yield a pull back in…

Twilio Inc (NYSE:TWLO) IPO'ed in late June. The company is a cloud communication play that enables developers to build, scale and operate within the cloud on a pay-as-you-go service. The company is not profitable, losing north of $38 million last year. Revenues were in the $200 million range.

The company came to market, trading on its first day around $25 per share. After grinding higher over the course of a month to $45, an explosion has taken place. In the last three…

Hain Celestial Group Inc (NASDAQ:HAIN) announced today that it will delay its fourth quarter and full year financial results. In after-hours trading the stock took a major beating, dropping to $41.26. This is an after-hours drop of over 22%. This major collapse in Hain Celestial offers a potential trading opportunity for tomorrow. After analyzing the stock chart there is a key support level at $37.75. Should the stock hit this level tomorrow during market hours, it is a buy. A likely bounce…

J. C. Penney Company Inc (NYSE: JCP) has made a tremendous move over the past 3 trading days surging up from $9.15 to $11.29. The almost 25% move is a result of earnings, but regardless, when you get a 3 bar surge like this, on volume that is significantly higher than normal, a short term top is typically a day or two away. The move simply cannot be sustained and price needs to pull back. AND, with the crazy move up, a larger pull back than normal is expected. The bigger the move up, the…

As the S&P 500 hits all-time highs, Alphabet Inc (NASDAQ:GOOGL) struggles. There are a couple reasons for this. The first is that this is a double top on the stock chart. This same level as the last all-time high on Alphabet going back to February 2nd, 2016. The second is this is the major high after-hours weeks ago when Alphabet reported earnings. The last reason could be much more telling about the future of the stock market. Alphabet is a leading stock, if it stops leading, could it…