Stock Newsletter Volume 2 Issue 2 2-5-14

8/13/2019 Stock Newsletter Volume 2 Issue 2 2-5-14

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WRIGHT TIME CAPITAL GROUP

February 5, 2014

Authored by: Liam McMahon

Liam McMahon’s Stock Newsletter

Sponsored by Wright Time Capital Group Volume 2 Issue 2 February 5, 2014



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iam McMahon’s Stock Newsletter

Sponsored by Wright Time Capital Group

Introduction

Welcome to my stock newsletter. For those of you that don’t know me, my name is Liam McMahon and I

am a strategist at GlobalFxClub.com, a subsidiary of Wright Time Capital Group. While my work over at

GlobalFxClub.com is mostly dedicated to forex, I have been trading stocks since 2008 and though I share alot of my stock setups on twitter (@Duke0777), I’ve decided to formalize the process in an effort to

provide more in-depth fundamental and technical analysis. I will be focusing primarily on US equities,

though I will also discuss some foreign indexes, especially the major European markets and the Japanese

Nikkei. The goal of this newsletter is to provide in-depth analysis and point out both longer and shorter

term trading and investing opportunities in the US stock market. I will be rating stocks as “buy”, “hold”, or

“sell” and I will provide possible targets for the setups that I see. I will also be providing time frames to

consider on all the stocks I analyze. The newsletter will focus on the clearest opportunities out there, not

necessarily the most popular stocks. If I don’t see a clean setup on Apple, I won’t be talking about Apple,

regardless of how many people love talking about it. I will be releasing the newsletter twice a week, on the

Sunday before the trading week starts and then on Wednesday morning before the US session begins.

Thanks for joining me on this exciting new venture; I look forward to communicating with you throughout

the coming weeks, months and years. You can contact me on twitter (@Duke0777) or at

[email protected]



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Disclaimer

Liam McMahon and Wright Time Capital Group LLC are not paid to promote these stocks. Investing in the

stock market is a challenging venture and entails a substantial amount of financial risk. Investing in stocks

may cause you to lose some or all of your investment and should only be done with risk capital. Always

trade on your analysis and within your own risk parameters.

Wright Time Capital Group and Liam McMahon are not responsible for any loss you sustain based on any

advice distributed through this newsletter or through any of our various social media outlets, email, and any

other type of communication, electronic or otherwise.

The intent of this newsletter is not to encourage you to take every trade setup suggested – the goal is to

point out opportunities, both long and short, of varying durations. Always trade on your own due diligence

and research.

All analysis and recommendations are solely the opinion of Liam McMahon and Wright Time Capital Group

team, we can be wrong like anyone else. Please understand and accept the risk involved when investing.

These recommendations are intended for educational purposes, to help you understand different types oftechnical and fundamental analysis. Only trade with money you can afford to lose.



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The Indexes

As mentioned on Sunday, the consolidation we saw to end the week was indeed just another small pause

before more selling. Markets accelerated lower on Monday, and even after yesterday’s bounce are down big

over the last 5 days. The Dow has shed over 3% over the last five days, while the NASDAQ and S&P have

lost 1.61% and 2.09% respectively. Futures are trading slightly lower this morning (I’m writing about 45minutes before the open) after a disappointing ADP Payrolls number. Markets still have ISM figures later

this morning to contend with; to me those are the more important figures. There is significant event risk

ahead to finish out the week, highlighted by Friday’s Non-Farm payrolls report, so markets mail coil a bit

here, especially as the S&P is sitting just above a major trend-line. The 1730-1720 area is a good support

range for the S&P 500 futures, while resistance stands at about 1760 and extends up to 1780. I would

expect this range to hold until after the NFP report, but we’ll have to see how aggressive markets are

feeling.

S&P 500 Futures (Four Hour Chart)

NASDAQ futures behaved much like their S&P counterparts, selling off hard to start the week, and then

bouncing slightly (mostly stagnating) on top of a key trend-line going into today. Again, I’m hard pressed to

believe that we’ll see this key trend-line break ahead of NFPs, and even if we do, I’d be a bit nervous about

relying on that break with such a key news event upcoming. As is stands right now, 3436-3425 is the

support range on NASDAQ futures, while resistance stands at about 3500. The best case scenario for bears

is actually probably some consolidation between 3450 and 3475 until NFPs sends futures lower through the

previously mentioned support range. For bulls, a strong move above 3500 ahead of NFPs would help bring

some confidence back into the market, and an upwards spike on NFPs could be used to break the resistance

zone that’s sitting at 3550. We’ll just have to wait and see what happens.



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NASDAQ Futures (Four Hour Chart)

The Dow is the most concerning of the three major indexes right now having broken below its major

supporting trend-line (dating back to November of 2012) and its 200 day EMA on Monday. It also failed to

sustain a move back above the 200 EMA on Tuesday, and is stil l stuck below it here early on Wednesday.

Resistance is 15.5k, and there is precious little in the way of support for the Dow now, certainly nothing

overly substantial until above 14.75k – bulls need to push the index back above 15.5k to avoid a significant

sell-off in the coming day and weeks. For bears, consolidation is fine here, so long as price stays below that

trend-line. Even if futures managed to reclaim their 200 day, bears would still be in good shape, but ideally

price will remain below that moving average.

Dow Futures (Daily)

The Nikkei continues to be a major concern for equity bulls as the break below that major trend-line

mentioned on Sunday has played out well. The Nikkei is now also below its 200 day EMA and is sitting on

top of support at 14k. A plausible (bearish) scenario would be a slowly rounding bounce toward 1500 or so,

creating a right shoulder of an even larger head and shoulders pattern. Alternatively, we may see the index



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just consolidate below its 200 EMA and 15k resistance for further selling pressure steps in. Bulls need to

reclaim 15.1k or so to alleviate the downside pressure.

Nikkei Futures (Daily Chart)

Trade Idea Update

MRK has continued to push higher after hitting our T1 at 53.44, T2 remains 56.00.

MSFT has been struggling a bit lately, but remains above key support at the 36.00 mark – I still like this

stock to hold and head higher. The stock missed our first target by 16 cents the first time around, so I’m not

going to adjust anything, continue to play the setup as is.

XLU longs got off to a good start but have since faded and price is now back within that large triangle that

provided the basis for the breakout trade. I continue to like Utilities to the upside, and XLU is testing

support at the top of the cloud, so the setup remains intact and the plan remains unchanged.

XLE and HAL both still look good – XLE shorts are about 30 cents in the money right now, and that

wedge breakout continues to look like the start of a decent sized correction. Targets are unchanged. HAL is

testing neckline resistance to start the day, and bears have an excellent opportunity for a low risk / highreward short.



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S P 500

I’m only doing one new setup today, thanks to the heavy event risk upcoming and the uncertain position of

most of the major indexes. I think the open setups we have already put us in a good position to profit no

matter how the next few days go, and I’m not eager to add a ton of additional risk. The one new setup I

have today though is kind of a big one. For the first time I’m recommending an index short – in this case

using the SPY ETF to short the S&P 500. While futures haven’t quite manage to break down yet SPY has

moved below its key trend-line and below the cloud with the sell-off on Monday. Resistance is now clearly

defined, and allows for a good risk to reward for shorts.

SPY

CALL: SELL

ENTRY: MARKET (Current Price: 175.02) – 176.40

TARGET 1: 170.00

TARGET 2: 165.00

TIME FRAME: 2-5 WEEKS

INVALIDATION: DAILY CLOSE ABOVE 178.50

Conclusion

The sell-off Monday helped strengthen the bearish case, but with 2/3 major US indexes still holding their

key supporting trend-lines, it’s hard to get 100% bearish yet. The key technical areas and the significant

upcoming data have stayed my hand a bit this week. We have a good mix of longs and shorts, though our

currently open setups are inarguably defensive. With GE hitting both our targets and going into the book,

I’m comfortable adding the SPY short call today, but I don’t have a great desire to pile on additional longs

right now. Ideally next week will bring with it more clarity. Keep an eye on the newswires this week, and

remember to follow me on Twitter and StockTwits (@duke0777) for updates and other thoughts.

Stock Newsletter Volume 2 Issue 2 2-5-14

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Transcript of Stock Newsletter Volume 2 Issue 2 2-5-14