MMM – Why We Like 3M Innovation For High Frequency Trading Strategies

June 19th, 2013

 

3M Company
3M Center
St Paul, MN 55144
United States
Phone: 651-733-1110
Fax: 651-733-9973
Website: http://www.3m.com

Details
Index Membership: Dow Jones Composite
Dow Industrials
Sector: Conglomerates
Industry: Conglomerates
Employees: 87,677

3M Company is an innovative and diversified technology company that offers products like: Tapes, post its, adhesives, filtration energy control, acoustic systems products, and components used in vehicles. It also has a healthcare segements that offers surgical supplies; skin health and infection prevention, dental and orthodontic, and food safety products; inhalation and transdermal drug delivery systems; and health information systems.

Its business segments include:

  • Health Care segment
  • Industrial and Transportation segment
  • Consumer and Office segment
  • Safety, Security, and Protection Services segment
  • Display and Graphics segment
  • Electro and Communications

What does this mean?  It means 3M is a pretty diversified company.  Investors have known for a long time about the diversity of this stock and how correlated it is to the market.

Although the market is often driven by individual sectors, 3M has been used as a bell weather stock for many years and is showing signs that it still is.

Right now the 3M chart looks as follows:

3m All Time Day Trading Chart

As you can see, MMM is breaking out to new highs after the correction in 2008.  It appears to be lagging the market, however this says to us that it may just be lagging in a specific industry (like bio tech)  We feel that this is a strong indication that the current new bull market may be sustainable.  Of course, we always prefer charts to test their support at least once for confirmation when exuberance is modest.

An Entry on this time frame would leave an investor with a risk reward of close to $20 downside, so this means the profit target would need to be around $150 for a chart like this on the upside.

Now Let’s Look At The 3 Month:

3m 3Month Chart with Hammer Candle

Notice the Hammer candle and support at $108.  This is a clear indication of a reversal in most day trading charting strategies.  With the rise above $112 it could allow intraday traders to take advantage of a daily up swing, as well as algos to increase the buy side of their HFT trading strategies.  We would like to see it strong above $120, but would consider a long here with a stop below $107.37.  This means for the trade to be 2-1 in risk reward (ignore frequency of profitability) we would need a profit target of at least $123.00.  There is also the short potential of shorting below 108 to get out at 104 with a very tight stop loss if the stock begins to falter.

The set up here is by no means magical, but we have always liked 3M as a way to gauge the overall market.  The best way to use these charts is to see how they fit into your other investment strategies (perhaps just as an indicator) and see if you can find a correlation.

Please remember, we do not offer advice, we just point out where there may be opportunity.

Happy Trading.

 

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Master Card Day Trading Stock Symbol MA Looking Strong

May 21st, 2013

Master Card was a killer day trading stock for intraday swing trading strategies back in its IPO days.  Visa (stock symbol V) and American Express (Stock Symbol: AXP) were both heavily traded as well.   You can bet, even with lowering volume (in shares, not trading value) that there are hft software programs that are taking advantage of this action today.

The question is, how do you play it?

This of course depends on your strategy and risk reward analysis, but lets take a peak into some of the trading opportunities out there now.

MaterCard Quick View:

MasterCard Incorporated  provides transaction processing and other payment-related services in the United States and internationally.

It also, it manages and licenses payment card brands, including MasterCard, Maestro, and Cirrus.

The company was founded in 1966 and is headquartered in Purchase, New York.

Mastercard Incorporated
2000 Purchase Street
Purchase, NY 10577
United States – Map
Phone: 914-249-2000
Fax: 914-249-4262
Website: http://www.mastercard.com

Now let’s look at the charts:

Master Card Day Trading Chart All Time

Since 2007, MasterCard has been a monster gaining almost 1500%.  Like most other stocks, it had problems in the 08 financial crises, but since then it has returned to prove itself to a bull market leader.   We aren’t sure there is a long on this time frame because it hasn’t pulled back.  On the other hand, a long here could still be worth while as the trend line does offer some support and a chance to get out.  Many people will be looking at this stock and jumping in.

The only choice we see is between jumping in now or waiting for a pull back.  Jumping in means you will need to trade/take profits/manage loss as a pull back is pretty much inevitable (of course this charts time frame shows we could get to the 890s before this happens, which is counter to our experience)

Looking at the Daily Chart:

HFT Trading Chart with channels

We see that the stock is in the mid part of the lower channel after recently breaking a compression pattern.  Which could be a compression in its overall trading range.  This makes perfect sense since the stock has doubled in price on this chart.  We view that the red line is the best long and the best short and expect there to be much more volume (including high frequency trading volume).  However, long term we are going to keep an eye on the upper green line, if only as an extreme over bought shorting signal.

 Looking at the 6 Month:

6 month mater card swing trading chart

We see a closer look.  Here we see 500 support vs 600 resistance.  Its close enough to break through 600 and show us its power.  If we wait till then and its strong, the next pull back may only come down to 610-615 or possibly higher.   We don’t expect too many day traders to short 599.99 since a breakthrough on a stock like this can cost them there whole month if played improperly as there is a very high risk of slippage to intraday traders.

Conclusion:

MA looks strong here and we could see getting long with a really tight stop at 582-84 with a stop below 580 and closing 50% of the position at 610ish.  This way the remaining shares could be held with a stop loss below 580 ($30) and a profit target of 548-49 for the next half of the shares and another half at 680-700.    If we got stopped out on this short term, there would be a chance to recover some profit on the short side, but we would probably let it pass as we prefer to short weakness over lack of strength.  Either way, due your due diligence and risk reward analysis and see if their is opportunity to fit MasterCard into your overall trading plane.

 

Buy It First Visa or MasterCard Motley Fool

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Mastercard MA and Google GOOG Poised for International Revenue Growth The Wall Street Transcript

Mastercard MA and Google GOOG Poised for International Revenue Growth. The Wall Street Transcript. Mastercard MA and Google GOOG are growing their international revenues as demand for their services grows along with services demand in international emerging markets at a faster pace than domestic inflationary pressures says Wally Obermeyer.…

MasterCard Inc MA Earnings Q1 Profit Up ValueWalk ValueWalk

Dividend.com blog MasterCard Inc MA Earnings Q1 Profit Up ValueWalk. ValueWalk. Mastercard Inc NYSE MA released its latest quarterly earnings report before opening bell. Net income was reported to be 766 million or 6.23 per diluted share. That’s a 12 percent increase over the same quarter a year ago. The company’s first Mastercard Inc. MA Tops Q1 EPS by 6c Purchase Volume up 10 StreetInsider.com subscription Mastercard Q1 Profit Rises 12 Tops Estimates Revenues Miss MA Dividend.com blog MasterCard Falls On Slower Volume Growth US WeakInvestor’s Business Daily. Motley Fool -CNBC.com Fox Business. all 30 news articles.…

Is TJX Truly a Market Leader? New Day Trading Strategies

May 8th, 2013

So what is TJX?  TJX is T.J.Maxx, Marshalls, Winners, HomeSense and more.  Its position is that of a discount retailer in high middle level quality, and they operate in 4 retail market segments:

  1. Marmaxx
  2. HomeGodds,
  3. TJX Canada
  4. TJX Europe

They sell everything from footwear to furniture.

As of February 27, 2013, it operated 1,036 T.J. Maxx, 904 Marshalls, 415 HomeGoods, and 4 Sierra Trading Post stores in the United States; 222 Winners, 88 HomeSense, and 14 Marshalls stores in Canada; and 343 T.K. Maxx and 24 HomeSense stores in Europe.

The company was founded in 1956 and is headquartered in Framingham, Massachusetts.

So what does the retail sector look like right now?

RTH ETF Chart High Frequency Trading Strategies

Not Bad!

So Lets take a look at TJX.

Here is the 5 Day Chart:

TJX Companies 5 Day Trading Chart

We see that there was a gap from 48.80 to 49.00 that did not retrace leaving no real shorting opportunity until below this point.  That being said, if the stock did go below 48.80 there could be a potential for a short with a stop out just above 49.00 and a trading profit target of 60 cents or so putting the trade in  2 or 3-1 territory.  This opportunity may present itself if RTH breaks its upward trend line.

However, even when we play contrarian we like to go with a trend and the retail sector seems to be gearing up for summer.  We see the possibility of the stock going much higher here, but looking at the 5 day chart, we don’t want to get too greedy.

From the solid green line we see a right down triangle, followed by 3 tests lower and then a breakout to the upside creating an upward right triangle to balance the chart.  The reason we don’t like the short here is because there is just too much garbage in this range that will clog it up.  This leaves a possibility to own shares over multiple time frames.  Here getting long in the low $50.00 range could allow day traders and HFT Software Algos to enter larger amounts of shares in the hopes of selling off shares in lower time frames to cover the costs of the higher ones.  When this happens, traders feel “Risk Free” and are more apt to hold their shares in the face of fear, which in turn creates a much stronger rip (up trend velocity).

Looking at the  1 Month TJX Chart we see:

1 Month TJX Trading Chart Support Resistance Levels

The old: “support becomes resistance” move.  Ignoring that we expect this stock to go through $100 long term (its way to early to even consider using that as a profit target, but we are combining short potential with long here) We see an opportunity to enter here with a 2-1 profit/loss ratio or even as high as a 9-2 in this short time horizon.

There is about $2.20 in short material for day trading strategists if the support breaks, but we would prefer to use that range to get long for free before the next breakout (we think the HFT computers with their intraday trading ideas may see the same thing)

Looking at the TJX 6 Month, we get a little bit of bad news with a little good:

Day Trading Strategy for TJX 6 Month Chart

It looks like TJX doesn’t really care about broken resistance.  It doesn’t turn it into support which means stop losses will be harder to calculate.  We do notice that this new level is protected so there could be a reason for support here still.  Perhaps the company is buying back shares here to keep the stock above $50 in an anticipation for the new bull market?  Or maybe owners of other retail stocks want to keep this one high to help pull up their other positions?

Either way, it still shows a decent up trend and we still like the long above until it gets down to the 46.50 area.

Now lets look at TJX all time:

All Time High TJX Chart for Day Traders

We notice that after the fall in 2008, this stock recovered quickly.  It made new all time highs 3 years before the market did.  Being that retail is considered a lagging indication of the market (we actually disagree with this, but that’s what the textbooks used to say) theoretically, TJX will improve as the economy gets better (which the leading indication of the stock market suggests [although some people don’t feel the market is a leading indicator either])

We like the pattern here, the risk reward, the different time frames, the sector, and the overall market trend.  We don’t like to predict the future, but we feel we could see big things from this stock long term and feel that there is an opportunity to trade out of a loss should the trade go against you.

That being said, anything can happen and we don’t offer advice.  Just opportunity.

Do your Due (diligence) and you may even find you like another retail stock better.

Don’t forget to check out our pages on HFT software

 

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Time Warner to TJX Cos. Lure Scot Funds on US Consumer Demand. Bloomberg. Scottish managers of U. S. stock funds are counting on companies such as Time Warner Inc. TWX Harley-Davidson Inc. HOG and TJX Cos. TJX to tap recovering consumer demand in the world’s largest economy. Producers of consumer essentials have and more.…

Wells Fargo Transferes Coverage on TJX Companies TJX Downgrades to StreetInsider.com subscription

Dividend.com. Wells Fargo Transferes Coverage on TJX Companies TJX Downgrades to StreetInsider.com subscription Wells Fargo transferred coverage and downgraded The TJX Companies NYSE TJX from Outperform to Market Perform with a price target of 49-53. Anlaysts sadi We like the off-price business model and expect TJX along with ROST to continue to take Wells Fargo Transfers Coverage of Ross Market Perform Rating ROST Dividend.com blog all 5 news articles.…

The TJX Companies Inc TJX Is J C Penney Company Inc JCP s Rally Legit Insider Monkey blog

Insider Monkey blog The TJX Companies Inc. TJX Is J. C. Penney Company Inc. JCP s Rally Legit Insider Monkey blog One retailer executing extremely well is The TJX Companies Inc. NYSE TJX The operator of TJ Maxx and Marshall’s stores is already up nearly 15 since the start of 2013. Indeed the company’s performance has been as impressive as its stock price rally. J. C. Penney Company Inc. NYSE JCP Expects Decline In Q1 SalesGalaxy Stocks. Department Stores in Focus J. C. Penney Company Inc. Wal-Mart Stores Inc Techsonian. all 66 news articles.…

TJX Companies PT Raised to 55.00 at Lazard Capital Markets TJX Zolmax

TJX Companies PT Raised to 55.00 at Lazard Capital Markets TJX Zolmax. Shares of TJX Companies NYSE TJX traded up 1.50 during mid-day trading on Friday hitting 50.03. TJX Companies has a 52 week low of 39.46 and a 52 week high of 50.03. The stock’s 50-day moving average is currently 47.56. The company has a TJX Companies Stock Rating Lowered by Wells Fargo TJX Daily Political. all 2 news articles.…

 

TJX Reaches a New 52-Week High April 30 2013 Zacks.com

Shares of the off-price apparel chain The TJX Company reached a new 52-week high of 48.97 on Monday Apr 29.…

 

Berkshire Hathaway Inc. BRK-B Analysis

May 6th, 2013

Do all new highs in the market mean its time to hit the Buffet(t)?

Okay, anyone who invests knows the name Warren Buffet, but knowing someones name and knowing what they do are two different things all together.

Here is a snapshot of Berkshire Hathaway Inc from Yahoo Finance

Berkshire Hathaway Inc.
3555 Farnam Street
Suite 1440
Omaha, NE 68131
United States – Map
Phone: 402-346-1400
Fax: 402-346-3375
Website: http://www.berkshirehathaway.com

288,500 Employees.

BRK is a publicly owned fund known for out performing the market.

Warren Buffett is the CEO who also is known for his fundamental analysis and shrewd buy and hold strategy.  Basically, is one of the strongest bulls in the market.

If you are a trader who relies on fundamental analysis, this is probably not your stock.   You may want to do your own analysis of their holdings and try to pick from within.

If you prefer technical analysis, there may be an opportunity arising as we speak.

Here is a chart of the last 5 days of Berkshire B:

brk-b_5_day_may_03

 

At first glance we notice the chart has more gaps than a shopping mall, and they don’t exactly look like a fun time for bullish intraday trading strategies.  However, that’s only likely if you are human.  It has a penchant for gapping up in the morning and then settling down, but not filling the gap.  This is generally a bullish sign and it is very possible that the HFT Software Programs are gradually accumulating positions without moving the stock.  (there also appears to be black book trading, but we are ignoring this for now)

So far we see bull and bull, but mostly because we remember IBM doing something similar back in 2005 when it became almost impossible for day traders to take advantage of a really strong and bullish stock because of the consistent overnight gap up.

Looking at the 6 Month Chart:

brk b berkshire HFT profit stock chart

 

It shows it has previously gapped up and never looked back on a much larger time frame.  It is a steady climber and it has just broken through resistance.  Another two great bullish signs. (of course there is still always the short strategy after a break and/or retracement back to the red trendline.)

Now lets look at the 1 year chart:

bershire 1 year chart BRK.b

Now we see the gap from a different light.  This exposes the weakness in the overall trendline, but solidifies the bull move.  We see this as a benefit because it allows us to focus on shorter time frame and this is generally a longer time frame stock when traded on an overnight basis.  Here we are looking at the green bar of resistance that the security has moved through, and feel there is an opportunity to accumulate shares fairly safely around that level if the resistance turns into any type of support (we think the HFTs see this too and is part of the reason why the stock will not retrace its gap ups.

Now lets look at the all time high of the chart.

BRK all time high high freqeuency trading chart

Here we something really simple.  The stock is making all time highs, the overall markets are making all time highs, and BRK is run by the biggest bull market supporter around.

Its hard to make a case for a short here, even if it lines up well.  We’re all bulls around here, but make sure you do your own due diligence and choose your side yourself.

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New York Times blog Berkshire Hathaway 35 Of Potential Upside With Just 9 Downside Risk. Seeking Alpha. Having said that you can easily understand how happy I was when I checked out the recently released 10-Q of Warren Buffett’s Berkshire Hathaway BRK. A BRK. B for Q1 of 2013. It seems that Berkshire at its current valuation is a company that offers Warren Buffett’s Berkshire Hathaway Worst Among S P 100 Companies At Huffington Post. Berkshire Hathaway’s 2013 Shareholder MeetingNew York Times blog 2013 Berkshire Hathaway shareholders meetingOmaha World-Herald blog Financial Times Fort Worth Star Telegram. all 898 news articles.…

Buffett admits Berkshire Hathaway will underperform the S P 500 The Times subscription

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Gold Sell Off April 2013 – GLD Leads Precious Metals Panic

April 16th, 2013

Even after two days of brutal bloodletting in the gold market and two days of soul-searching for the explanations I believe the only questions that ultimately matter for the direction of gold are these Has the direction of global.…

Massive Gold Sell Off Like Never Seen Before

 

So is the bull market in Gold over?  One only has to look at the current chart to see that this is either one bad correction or the beginning of the end of the bubble.

As we know, profit is made by staying in the bubble from the smallest point to its greatest expansion.  Back near the end of 2007 with many people getting out of paper assets like T-bills, mortgage backed securities, CDOs, Stocks and so on, money began to filter in to physical commodities like Gold.  With the economy recovering in recent months, many investors are looking to exit their gold and jump back in to the paper markets.  Now although this is enough to reverse a bull market, it does not explain the panic we have just seen below.

gold panic chart april 15 2013

So why the panic in Gold?  according to Business Insider, there are 4 reasons.

1. India — The country hiked its gold import tax rate by 50% to 6% at the start of the year. This has curbed gold demand.

2. Chartists — Technical analysts that have warned that gold prices will continue to fall.

3. Cyprus — “[German chancellor Angela] Merkel is seeking re-election so she has told Cyprus and others that they should sell some of their gold to pay their debts. The Germans are tired of bailing people out and she needs to be tough.”

4. Bitcoin — “The collapse of Bitcoin since most them also own gold.”

Number 2 is the old self fulfilling prophecy thing and not worth mentioning.  Bitcoin is in the news and is buzzy and not worth mentioning in our opinion either.  India?  Maybe a little.  Cyprus…..Well, maybe not just Cyprus, but what if Greece, Italy, etc all have to do this, then there could be a huge sell off and maybe that’s what investors are thinking.

We don’t know if there are High Frequency Gold Trading Strategies that could be partly responsible, but it wouldn’t be our first guess.  Its more likely that the HFT algorithms have just backed off to protect their trading profit.

Either way, we feel that the more new bull market solidifies in the S&P and Dow, the less demand for gold their will be which means it could be a great mid term short play if GLD can pull back to 140 or so.  This would allow a good juggling area even if gold gets a push back to the top of its gap.

We don’t really like the long unless its really short term and not over a weekend (which could be the only good long there will be, unfortunately).  Of course, if the market goes sour and gold makes a new high, we’d probably jump back on the bull.

Bottom line, we feel this is a strong indication of a reversal that has been brewing for some time and there may even be time to hit a few laggards like Silver, or copper.

Looking at silver, we could take a short term long at the 17.50-18.50 point if it gets there fast enough, but we don’t really feel we will get a chance.

silver chart panic april 2013

Without the elasticity of a fast move to support, there is just not enough confidence that the support is valid since the demand for precious metals was not based upon needing the materials as much as it was about needing the safety of owning them.

We would much rather wait for a bungee bounce to get short slv if given the choice.

silver bungee bounce?

If you would like to know more about the gold sell off of April 2013 check out the following resources:

Despite Gold Selloff Options Traders Bank on Rebound

So gold notched its biggest one-day drop in 30 years. What’s next Despite the heavy losses broken technical levels and waves of margin calls the options market for the yellow metal is beaming with optimism.…

RealClearMarkets The Gold Selloff Is Actually a Good Thing

In the last two days gold has plunged so deep that it’s being called the worst drop at least in percentage terms in 30 years. That brings us back to the early Reagan period when falling gold was regarded as a good thing.…

Gold Sell-Off There Is Only One Question That Matters

Even after two days of brutal bloodletting in the gold market and two days of soul-searching for the explanations I believe the only questions that ultimately matter for the direction of gold are these Has the direction of global.…

6 reasons for gold’s massive selloff HSBC MarketWatch blog

ABC News blog 6 reasons for gold’s massive selloff HSBC. MarketWatch blog It hasn’t been a great time for gold over the past few days. Some people are even calling it a slaughter. And with gold futures quotes zigman 647778 GCM3 on Monday experiencing the biggest one-day percentage drop since February 1983 it’s fair to say Gold Sell-Off Biggest In 30 YearsABC News blog Gold Sell-Off Amid Fears Over Chinese GrowthSky News. Gold takes 140 tumble as sell-off continuesColumbus Dispatch. Lansing State Journal Financial Post Winnipeg Free Press. all 544 news articles.…

Goldman sees more downside on gold selloff MarketWatch

Goldman sees more downside on gold selloff. MarketWatch. Goldman said the most recent exchange-traded-fund holdings show acceleration in the liquidation of length which points to a broad-based sell-off extending beyond the futures markets with potential more room to go. As a result Goldman is lowering and more.…

Short Term Profit Plays for HFT Algorithms and Day Trading Strategies

April 3rd, 2013

After not posting the AMGN Livermore trade last week on the blog we are feeling kind of guilty.   The good news is that the highs seem to be holding their own and their should be plenty more opportunities on the shorter time horizon trade set ups.

KMB-Kimberly Clark Corp

We’re looking at the opportunities in KMB here.  We can see a nice trading range between the $98.00 level and $100 ceiling.  This allows for range trading till one side breaks.  Both sides also have the double punch ability to reverse directions which means lots of short term head fakes and volatility until a strong direction is chosen, especially if it moves out of tandem with the market.

kmb_april_2-a

There is another longer term level at just under 96 and with a tough support range below that at 93-low 94s, so the longs at 98s also have a better shot at holding through a false break at 100.  Of course, don’t forget to look at the triangle compression patterns if that’s your thing.

High Frequency Trading Stratgies and profit ideas for KMB

PM-Phillip Morris International

Not quite a Livermore breakthrough but a great opportunity could pull through on either side.  We are obviously bias to a break through on the up side, but the “M” trade here does offer around some great opportunity if it gets off balance enough.  Alternatively if the second part of the M double top is actually a higher high at the 100 level, even better.  There will probably be tons of shares to short and some real good volume for the HFTs and day traders.

Just make sure to watch for the break through if you decide to short, as this one may never come back once it breaks through 100.

Be sure to sign up for regular updates on high frequency trading strategies to help increase your trading profit.  We don’t offer advice, but we do offer you a look at what others may be watching.

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3 Stocks That Could Be On An HFT Software Watch List

March 21st, 2013

With the Dow and S&P 500 hanging around its all time highs (sorry Nasdaq, were still mad about the late 90s) we at HFTprofit.com,  are all anxiously awaiting for the first strong move ahead (actually, we are waiting for the first real test but to each their own).  The problem is, when its not a new high and new bull market, its simply the top of the range and the worst time to buy.  That being said, there are a few stocks that look good for buying or selling we just aren’t sure which and when. As useless as that statement is, sometimes you just have to stare at opportunity until it presents itself.

Here is what we are looking at:

Symbol: ICE

Yes, the intercontinental exchange sure brought excitement to day traders back in the last bull market.  The $40/share stock rallied to near $200 levels before pulling back hard to near its IPO levels.  Yes, the days of NYX and NMX IPOs were not seen again until linkedin hit the market and any reminder of these stocks and their ferocity reminds us all of better trading days.  If the markets are going into bull formation, it only makes sense that the exchanges will make more profit.   Until its certain which way were are going, stocks like ICE and NYX are assured to be on the watch list of traders, computers and algos engaged in high frequency trading.

Symbol: CLW

ClearWater  Paper is also at all time highs and has been know to move up $15 at a time and not give much back.  It has also given back 2/3rds of a $15 gain before continuing the up trend as well, so who knows.

Yes, the market is at new highs, yes CLW is at new highs, but this could simply be due to take over rumors in the industry (of course take overs and mergers are more frequent when the market is making new highs so its not totally coincidental).    We don’t know what to do with this one either, but there may be some light on the tape and level 2 created by the HFT Software Algorithms

Symbol: HON

Why Honeywell?  Well, we like honey.  Okay, that’s not it really, but the real reason is just as nuts.  We like HON because it is at all new highs and it is a stock that is big enough to pull some weight in the market.   We know there are going to be some really greedy traders who think they can get short at 74.99 with a 1 penny stop loss and take a whole bunch of money.  What usually happens to these people is they start of with small shares taking 10 cent to 50 cent moves.  As the stock triangles up to the high, the moves get smaller and the share size gets bigger to make up for lost profit until traders are taking very large size in front of resistance for a penny or two thinking they can get out at the even level if it breaks.  However, knowing this, mean day traders keep replacing the resistance at the even level.  Why?  so when it gets low enough they can double out long and steal all the shares forcing everyone else with a risk of 2-1 to by at a 10 or 20-1 loss.  Of course when the market is at overall highs too, HFTs and institutions decide it would be a great long term play because after the small traders punch out at a 20-1 loss, the mean day trader would have to punch out even higher if they didn’t get double long.

What does this mean?  The bigger fish/shark wins creating a short squeeze that helps all their positions in the market.

Is this what’s going to happen?  Yes. No. Maybe, probably and probably not.

Who knows really  Like we said,  we’re just looking.

 

 

NEWS:

ICE-NYSE Attempt to Ease Merger Zacks.com

Clearwater Paper Corp closes Georgia plant KLEW

Goldman Sachs Resumes Coverage on Honeywell at Buy HON Dividend.com blog

 

 

 

New All Time Highs On The Dow. Time for a Long Neck BUD?

March 11th, 2013

With the Dow closing above its all time highs last month and the S&P not far behind some may feel its time for a celebration.  Although, its a little early to be celebrating, thatt doesn’t mean that aren’t some great potential opportunities in the market.

Take BUD for instance.  Its riding the exuberance of the market, but is still a little gun shy of cracking through into the triple digit category.

As any ardent Livermore fan knows, the triple digit breakthrough can bring a lot of action to a stock.

Here are the most common things to expect when this happens:

1. The stock breaks through and never looks back until it reaches 200.  Those who jump in first get the whole move, those who don’t miss out because there is no pull back that seems logical enough to allow an entry.

2. The stock gets pushed through by traders and high frequency trading algos, only to head fake back causing short term longs to sell rapidly, in turn, allowing longer term bulls to buy up shares below the $100 point and before the “real” move in the stock.

3. The stock faces resistance at $100 and allows a shorting opportunity with low risk and large rewards.

Whichever way you choose to play it, there is an opportunity every time a stock reaches this point for the first time.

We would be looking at the overall market for direction, but also feel that the long side outweighs the short side here.

Looking at the chart below we see a diagonal climb from Sept 2012 with a few modest pull backs:

BUD_March_11th

 

Which is probably a little stronger than the chart of the S&P 500.

 

SP500_March_11th

 

Now, looking at the S&P and its all time highs makes things interesting:

SP500_March_11th_all_time_highs

If this is a range, the short sellers and range players will have a field day.  On the other hand, by picking a stock that is stronger than the overall market, you get an added bonus on the long side because the stock will often break through and run forward ahead of the market anticipating the break.  Usually its only when it becomes apparent that the market isn’t ready to run through deep into new high territory that the stock will turn back for a correction.

We are looking at BUD to be stronger here, but that doesn’t mean there are only plays for the bulls.  You may end up seeing day traders and HFT machines shorting in front of the $100 level over and over and then competing for the pennies, or punching out through arbitrage and pairs correlations.

Whatever you choose, make sure it has a profitable risk reward scenario.

 

Remember.  HFTprofit.com does not offer advice.  We merely point out opportunities.

 

Is the Crash Finally Over? The S&P and Dow May Be Heading for All Time Highs

March 4th, 2013

spy_all_time_high

So it looks like the crash may be coming to an end. The Dow Jones is showing signs it wants to test its all time highs again and this time its backed up by the S&P 500 doing the same.

The Dow had an all time closing high of 14,164.53 while the S&P peaked at 1,565.15, both are less than 5% away from their respective highs, which means a bull market could be coming.

Traditionally, bull markets last for quite sometime and they begin when things start making new highs. People fear missing out on the move and jump in early. Shorter term investors can and do often get head faked out either by a strong retracement at or below the old high or if the new highs were pushed simply as a short squeeze.

Longer term investors do not have a fear of missing the move, but more a fear of choosing the wrong direction, and that is why they often wait until after the first support test and the second retracement before entering in from the sidelines.

This new money into the market often helps stabilize the market which in turn brings investor confidence which in turn brings in more money from the sidelines which in turn brings more investor confidence. This cycle is what perpetuates a bull market and it will continue as long as money keeps entering the market.

Here the first money that enters the bull market becomes the most valuable. As it increases in relative value, it is often invested in businesses that will also make money that can be reinvested. But not all of the new profit is kept by the newly invested businesses. It is often paid out to workers of the businesses as compensation. The workers then receive and are given an opportunity to invest if their remuneration is beyond their expenses, just as a company would.

This cycle then continues to a maximum of when every person is invested. This cannot occur unless everyone has income beyond their means, so it often means that businesses and individuals must obtain credit in order to take part of the expanding bubble. At this point there can be no more growth so the profit then goes to those who can exit the bubble first. This is what triggers the bear market. The bear market will then collapse until investor confidence is restored.

Those who enter first and exit first have the best chance of making money. Those who enter last and exit last have the greatest chance of losing money. Unfortunately the flow of money and credit is attracted to itself, so the more of it you have, the better the opportunity to make money and conversely the less of it you have, the less chance you have at making money.

There’s a saying that the early bird gets the worm and the second mouse gets the cheese. You’ll have to decide for yourself which analogy is better for investing. Just remember, its isn’t the “First” bird that gets the worm, its the “early” birds. Also, the third mouse gets nothing at all except maybe a fresh trap.

That’s all for now. Happy investing.

Check out other possible Day Trading Strategies and Ideas for Trading Proft at HighFrequencyTradingProfit.com

 

Do You Know Your ABCs? HFT Profit Thinks This Company May Be Singing

February 11th, 2013

AmerisourceBergen is one of the largest pharmaceutical services companies serving North America.  They provide drug distribution and services that reduce costs and improve outcomes for the end users.

Boasting over $80 billion in annual revenue, AmerisourceBergen also employs approximately 11,000 people with their HQ in Valley Forge, PA.

They are ranked #27 on the Fortune 500 list.  Which means their may be some fundamentalist action on the stock as well

They recently reaffirms their EPS guidance of 3.06-3.16 per share on a 13% rise in revenue, along with a healthy dividend of .21 cents per share.   How did the street take the news?  Well, lets just say that things are looking up.

Take a look at the 1 Year chart below.

ABC Feb 8th 1 Year

It looks like it began its run in Sept, broke through resistance, tested support and then went on to new all time highs.  Given the recent good news and the stocks insistence on staying above $40, we think this stock has a good chance of continuing its upswing.

Now lets look at the 3 Month chart:

Feb 8th 3 Month-1

You’ll see some nice support at both 44 and 45.  This means that a stop exit of 43.50 will get you almost 2-1 before it breaks 50 the first time, so you could play the 3 month for half your position at 2-1,  and the 1 year for the other half at anything from 3-1 to 20-1.

For those of you who prefer the down side, you could range trade a break through the yellow trend line short, covering half your position at 45 and then 44 while regrouping at the top of the range (depending where it breaks through at of course) but you probably won’t see any real money like you would on the long side unless the break takes you below $37.00 per share (then their could be a $10-$12 break on the short side)

 

 Remember,  trading is just like real life.   There is no faster way to go broke than chasing fast easy money.

Please note:  There is no advice given in this article.  Only analysis.  Please do your own due diligence before entering any trade.   HFT Profit does not own any of the investments listed on this site, nor do they endorse any trading decisions or solicitations.