Earnings Growth Slowing As Interest Rates Rise

With Q3 earnings season in the rear-view mirror, we can now say that earnings growth is slowing. Over the last 4 quarters we have growth rates of: 2.1%, 6.5%, 6.5%, and 4.1%.
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How Much Has the Federal Reserve Reduced Its Balance Sheet

The MBS portion of balance sheet normalization appears to be missing from the current balance sheet reduction numbers. Is something wicked in the economy giving the Federal Reserve pause?

The Federal Reserve said at its September 20, 2017 meeting that the QE unwind would begin on October 1, 2017. Traders have been following this story closely because many in the alternative news sphere that sell ads for things like Bitcoin, gold, and doomsday prepper products, have stated that the Federal Reserve can’t reduce its balance sheet and that reduction is just a lie.
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Of Course Democrats Want Huge Tax Increases

Of course Democrats want huge tax increases. Tax increases cause expanding deadweight loss and ultimately contract economic growth. Democrats clearly want to crash the economy while President Trump is in office to make sure that he’s a one-term President only.

President Trump pushed out on Twitter today that congressional Democrats “want MASSIVE tax increases & soft, crime producing borders.” The President said that Republicans, instead, advocate “the biggest tax cut in history & the WALL.”
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Biotechnology Stocks Look Ripe For Pullback Before EOM

Biotechnology stocks look ready to pullback after rallying 11% since August 21, 2017. The key support level to watch on IBB is 329.

Biotechnology Stocks

Biotechnology stocks ETF IBB looks a bit toppy.

Notice how our favorite swing trading indicator the PPO shows falling histogram bars (red arrow). The falling PPO suggests IBB will likely retest its 329 support level within the next week. We might see a chop out to slightly higher move and then a break down through the 329 support level before the end of September.

Don’t buy the biotechnology stocks hype on mainstream financial websites like Seeking Alpha, MarketWatch, and Daily Reckoning.

I would not go long biotech stocks right now and would NOT take Tarun Chandra’s advice on SeekingAlpha here.

Also watch out for MarketWatch who awarded Greg Guenthner their “Call of the Day” because he wrote here:

Bottom line: the late-summer fade is finished. Biotech stocks are ready to finally put the finishing touches on a months-long quest to reassert the sector as a true market leader.

I like trading biotechnology stocks. Biotechs have the best catalysts of any sector and I did a stock trading lesson on finding catalysts here. What I don’t like about biotech stocks is a strategy that involves chasing them higher. Chasing high-beta biotechs is stock trading suicide IMO. Wait for the September (worst month of the year for stocks) dip that usually comes towards the end of the month before taking a long entry in biotech stocks.

Bonds Outperform Stocks…

For the week ending September 8, 2017, bonds outperformed stocks. Whenever bonds outperform stocks it means that money came out of offensive stocks and went into defense bonds. Tracking the bond market is one of our most important tools for swing trading. I did a lesson on how to trade in a sideways choppy market here.

The fact that bonds outperformed the S&P 500 last week supports the thesis that a market pullback is likely coming the week of September 18 – 22.

Why Clovis Oncology Stock Plunge Didn’t Hurt Me, Did It You?

Clovis Oncology stock dropped -7% on Friday but I only took a very small loss in the trade, did you?

You need to understand the Internet and what goes on with stock trades to protect yourself. First, I’ll show you why I was protected from larger traders targeting my position.

Take a look at this chart. Where do you think I set a mental stop?

Clovis Oncology stock

If you guessed here then you got it right:

You have to understand that large players as well as institutional traders monitor social network sites as well as non-protected and open free stock trading blogs like GuerillaStockTrading.com

There is a war going on beneath the surface that you may never see. I win that war more than I lose. What I’ll do is that I’ll often post stocks that have institutional trader accumulation and then I’ll watch larger players target a stock I blog about and then I joyfully watch them get crushed and stopped out for a loss. About 60% of the time that happens. Approximately 40% of the time that doesn’t happen. For the times that doesn’t happen, your stop loss will save you.

I’m under no illusion that all visitors on my website are here to go long my stock picks. I assume as much as 40% of my web visitors will attempt to short my picks. Many webmasters have put their stock picks behind a password protected site for just this reason. I don’t because I enjoy sticking it to short sellers most of the time.

My favorite tactic is to post about a stock I like but hold back a key chart or SEC filing that shows an institutional trader heavily accumulating the stock. I put forth a weaker case for why I think a stock is a good swing long entry. I watch the 1 minute chart for the usual short selling I see right after posting a stock pick. Then BAM! In comes a wave of buying and the short seller covers which pushes my stock up even higher, often on a gap up open and I sell and take the short sellers money.

There’s a constant battle going on of me beating short sellers and short sellers sometimes beating me. It goes on below the surface of every trade I post on GuerillaStockTrading.com It happens on every website that posts about stocks including mainstream financial media websites. You have to know and understand this and protect yourself with a clearly definable stop loss level. I did a lesson on setting a stop loss here. Try not to set a physical stop loss order on a trade (always set a mental stop loss order and then market order it when the level is hit) and never enter a long position the night before so that your order is filled automatically at market open the next day. Always move quickly with guaranteed time execution and a market order so that institutional traders and market makers with special access to unfilled orders can’t game your moves.

If a stock does a gap up open in your favor, sell immediately and book those profits.

These are a few trading pointers that you should already know and be doing. Remember, it’s dog eat dog. You are attempting to take money from someone who has no intention of giving you their money. They are attempting to reach into your trading account and take money from you. Hope for the best but always prepare for the worst.

Following these pointers will help you avoid big losses in trades like CLVS when they go against you.

Am I going to play the bounce in CLVS? No. There’s too many other juicy swing long trade setups elsewhere right now but that doesn’t mean you shouldn’t.

Financials Confirm Swing Move Down In Markets Coming…

The Financial Select Sector Spider (XLF) confirms that a swing move lower on the S&P 500 is likely coming.

XLF has two possible courses it could take as I wrote about last week here. The buy Parabolic SAR signal was not confirmed and XLF took the downward path back to test its 200 day moving average.

Financial stocks (XLF) are downtrending which signals pullback in markets coming.

In otherwords, Financials are not confirming an upward move on the S&P 500. In fact, its signaling just the opposite. The move lower on the S&P 500 may not occur the week of September 11 – 15th but it should come the week of September 18 – 22.

Are you a trader and do you have any thoughts or questions about market direction over the next couple of weeks? Leave your comments or questions below.