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KB Homes - KBH - Stock with a Ten Year Inverse Head and Shoulders pattern

KB Homes (KBH) stock is exhibiting perhaps the largest inverse head and shoulders pattern that I have ever seen. It practically transcends time and brings together two eras of the stock market - the Great Recession and one of the great bull rallies of all time.

The latest episode of "wild ramps" at market close, saw 10 straight 5 min red bars.

The S&P 500 and the market as a whole was holding steady for the entire trading session until about 40 minutes remained and then that is when we saw another example of how wild ramps into the close can actually be. This time around it was to the downside, which isn't the norm, usually it is to the upside, but nonetheless the bears ruled the close

Today's stock picks

If you haven't done so yet, you need to check out my swing-trading past performance for the Splash Zone for the month of May and every month before then, and sign up for a free trial to the SharePlanner Splash Zone. 

Long Brookdale Senior Living (BKD)

stock picks bkd

Stocks Watch List

Is it time to reverse for the market or will we keep trucking higher? 

I came into today knowing that the bulls had to hold the 20-day moving average. That has been a level of support for them of late, and if they blew through it, that things could certainly get dicey. 

On Monday, it looked like the market was prime for a breakout in trading

Since then it has only resulted in a head fake kind of maneuver. I'm glad to be back after a short summer vacation over the last week. But when it comes to trading, there isn't much time off, so while I was away from the writing aspect of SharePlanner, I was still trading and managing risk on each and every trade

But back to the market - did you notice how we had a nice, well defined breakout, but much of what June has been about is choppiness and going nowhere, so the following two days has been a reversal of sorts putting the market back inside of June's Darvas trading box, and totally head faking the market

Frustrating for traders, but that doesn't mean gains cannot be had on a stock trading basis because there is plenty of that going on. Look for well defined and well developed trading setups. One of the bests this month has been iShares Nasdaq Biotechnology ETF (IBB) which had been basing nicely, going all the way back to the March highs. When it broke the out of the declining resistance, it went through the roof - that is what you have to be looking for in this market - those kinds of opportunities. 

stock market today

I don't think this particular market environment bodes well with a heavily tilted portfolio in one direction or the other, and I think today will be key for the market's direction going forward. The S&P 500's 20-day moving average was tested yesterday and it did hold. Today will be about whether we hold that moving average and bounce higher like we have done of late, or whether we break that and have a legitimate reason for getting short on this market. 

Today will be interesting! 

S&P 500 Technical Analysis

breakout trading head fake

Current Stock Trading Portfolio Balance: 

  • 2 Long Positions

Recent Stock Trade Notables:

  • Intel (INTC) Short at $35.21, covered at $34.46 for a 2.1% profit. 
  • Nvdia (NVDA): Long at $155.57, closed at $157.53 for a 1.3% profit. 
  • IBB: Long at $298.24, closed at $303.74 for a 1.8% profit. 
  • SPXU: Long at $15.68, closed at $15.25 for a 2.7% loss. 
  • Whirlpool (WHR): Long at $190.46, closed at $195.19 for a 2.5% profit. 
  • Ferrari (RACE): Long at $84.60, closed at $89.93 for a 6.3% profit. 
  • Amazon (AMZN): Long at $964.70, closed at $1001.23 for a 3.8% profit. 
  • American Airlines (AAL): Long at $49.18, closed at $50.62 for a 2.9% profit
  • Alibaba Group (BABA): Long at $124.95, closed at $137.51 for a 10.1% profit. 
  • Starbucks (SBUX): Long at $61.78, closed at $63.68 for a 3.1% profit.
  • Western Digital (WDC): Long at $91.24, closed at $89.29 for a 2.1% loss. 
  • Broadcom (AVGO): Long at $236.65, closed at $241.15 for a 2% profit.
  • SPXU: Long at 16.60, closed at $16.98 for a 2.3% profit.
  • JP Morgan Chase (JPM): Long at $87.84, closed at $85.98 for a 2.1% loss.
  • Micron Technology (MU): Long at $29.00, closed at $28.04 for a 3.3% loss.
  • Alibaba Group (BABA): Long at $116.25, closed at $124.09 for a 6.7% profit. 
  • Southwest Airlines (LUV): Long at $58.35, closed at 57.23 for a 1.9% loss.  
  • Broadcom (AVGO): Long at $223.63, closed at $228.65 for a 2.2% profit. 
  • Workday (WDAY): Long at 86.00, closed at 90.32 for a 5% profit. 
  • Univar (UNVR): Long at $30.96, closed at $32.20 for a 4% profit.
  • Alibaba Group (BABA): Long at $111.91, closed at $115.48 for a 3.2% profit. 
  • Redhat (RHT): Long at $85.21, closed at $87.21 foor a 2.4% profit. 
  • Darling Ingredients (DAR): Long at $15.19, closed at $14.90 for a 1.9% loss. 
  • Apple (AAPL): Long at $143.82, closed at $147.11 for a 2.3% profit.
  • Teradyne (TER): Long at $31.16, closed at $33.03 for a 6.0% profit.
  • UPRO: Long at $92.75, closed at $94.78 for a 2.2% profit. 

See my entire swing-trading past performance here

Today's stock picks

If you haven't done so yet, you need to check out my swing-trading past performance for the Splash Zone for the month of May and every month before then, and sign up for a free trial to the SharePlanner Splash Zone. 

Long Applied Materials (AMAT)

stock picks amat

Stocks Watch List

The famous Darvas Box Breakout setup is back at it again. 

But trading Darvas' box breakout doesn't mean you ignore the downside risk either, because if the market breaks down and out of the box, it becomes just as legitimate of a trade setup as the breakout would be. 

Current Megaphone Price Pattern Starting to Favor Bulls

The bears are letting yet another opportunity to correct this market slip through their hands. It is quite astounding really. I mean, you have a solid opportunity with last Friday's sell-off to put the bulls against the ropes, and they do, but along the way, they let them off of those ropes and start dancing around the middle of the ring sparring with each other while throwing a few meaningless jabs. 

Once again, the market saw the bulls rally off the lows and prevent any kind of monumental sell-off with a 14 point rally off of the lows of the day. 

On the technical front, the bulls managed to hold the 20-day moving average perfectly, which hasn't' always been the case of late. 

stock market today

The VIX managed to only close higher by 2.9% to 10.90, while breaching 12 at one point yesterday. 

This doesn't make for an easy market for the bulls or the bears because price keeps meandering in an expanding price pattern with absolutely no direction until there is a definitive break of said price pattern. 

Last Friday, the Nasdaq gave us quite a surprise, we'll get to see today whether we the bears can repeat that remarkable sell-off once again today. 

S&P 500 Technical Analysis

price pattern

Current Stock Trading Portfolio Balance: 

  • 1 Long Position, 2 Short Positions

Recent Stock Trade Notables:

  • Whirlpool (WHR): Long at 190.46, closed at 195.19 for a 2.5% profit. 
  • Ferrari (RACE): Long at $84.60, closed at $89.93 for a 6.3% profit. 
  • Amazon (AMZN): Long at $964.70, closed at $1001.23 for a 3.8% profit. 
  • American Airlines (AAL): Long at $49.18, closed at $50.62 for a 2.9% profit
  • Alibaba Group (BABA): Long at $124.95, closed at $137.51 for a 10.1% profit. 
  • Starbucks (SBUX): Long at $61.78, closed at $63.68 for a 3.1% profit.
  • Western Digital (WDC): Long at $91.24, closed at $89.29 for a 2.1% loss. 
  • Broadcom (AVGO): Long at $236.65, closed at $241.15 for a 2% profit.
  • SPXU: Long at 16.60, closed at $16.98 for a 2.3% profit.
  • JP Morgan Chase (JPM): Long at $87.84, closed at $85.98 for a 2.1% loss.
  • Micron Technology (MU): Long at $29.00, closed at $28.04 for a 3.3% loss.
  • Alibaba Group (BABA): Long at $116.25, closed at $124.09 for a 6.7% profit. 
  • Southwest Airlines (LUV): Long at $58.35, closed at 57.23 for a 1.9% loss.  
  • Broadcom (AVGO): Long at $223.63, closed at $228.65 for a 2.2% profit. 
  • Workday (WDAY): Long at 86.00, closed at 90.32 for a 5% profit. 
  • Univar (UNVR): Long at $30.96, closed at $32.20 for a 4% profit.
  • Alibaba Group (BABA): Long at $111.91, closed at $115.48 for a 3.2% profit. 
  • Redhat (RHT): Long at $85.21, closed at $87.21 foor a 2.4% profit. 
  • Darling Ingredients (DAR): Long at $15.19, closed at $14.90 for a 1.9% loss. 
  • Apple (AAPL): Long at $143.82, closed at $147.11 for a 2.3% profit.
  • Teradyne (TER): Long at $31.16, closed at $33.03 for a 6.0% profit.
  • UPRO: Long at $92.75, closed at $94.78 for a 2.2% profit. 

See my entire swing-trading past performance here

'Hawkish Rate-Hike' Gets the market in a tizzy

But lets not kid ourselves, all this talk about a 'hawkish rate hike', whatever that means, probably gives the bulls another opportunity to by the dip. If the bears can pull it together today, it could be a very nice for their short positions. But it is going to take the bulls passing up on the opportunity to turn on the buy machines and drive prices back to new all-time highs. 

Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.Stocks Watch List

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated. This program, which would gradually reduce the Federal Reserve's securities holdings by decreasing reinvestment of principal payments from those securities, is described in the accompanying addendum to the Committee's Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; and Jerome H. Powell. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.

 

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the part time swing trader by Ryan Mallory