Moving Averages and High Low Index Signals

Key moving averages and the high low index of the S&P 500 is signaling patience for those of us who are sitting back in cash.

The S&P 500 High Low Index is in a free fall which suggests that it’s too early to go long a stock for a V bottom bounce:

business sp500 high low index 1100x484 - Moving Averages and High Low Index Signals

The NYSE percent of stocks above the 200 day moving average is also still in a free fall:

business nyse 200 day chart 1100x484 - Moving Averages and High Low Index Signals

The NYSE percent of stocks above the 50 day moving average doesn’t look much better:

business nyse 50 day 1100x484 - Moving Averages and High Low Index Signals

At least the NYSE percent of stock above the 50 day moving average is showing signs of consolidation rather than a free fall.

Ideally you should be in cash right now and looking for a swing long entry. Do not be quick with the buy button. You want further evidence of consolidation or a basing pattern before taking that swing long entry.

Heavy Insider Buying In Gran Tierra Energy

There has been heavy insider buying in Gran Tierra Energy that began on November 9, 2016. On November 29, 2016, Director David Smith bought $90,000 worth of stock. Also on November 29, 2016, Susan Mawdsley bought $60,000 worth of stock. Again on November 29, 2016, Officer (VP, Investor Relations) Rodger Trimble bought $37,500 worth of stock.

Gran Tierra Energy Stock Chart

Comments: Nice swing trading chart. Short-term swing target price is $3.08 or higher. The insider buying came after Gran Tierra submitted winning bids totaling a combined $30.4 million for two blocks which Ecopetrol S.A. (“Ecopetrol”), Colombia’s national oil company, offered as part of the Ronda Campos Ecopetrol 2016 (“Bid Round”) in an electronic live auction held on November 25, 2016. Gran Tierra’s winning bids are for the Santana and Nancy-Burdine-Maxine Blocks, which are located in the Putumayo Basin.

Disclosure: I do not hold any position in this stock.

Insider Buying In Spark Energy

Spark Energy has had heavy insider buying over the last few weeks. The Director Maxwell W Keith III bought $273,564 worth of stock on November 23, 2016. Two days earlier, on November 21, 2016, Vice President and General Counsel Melman Gil bought $14,922 worth of stock.

Spark Energy operates as an independent retail energy services company in the US. It operates through two segments, Retail Natural Gas, and Retail Electricity. The company is involved in the retail distribution of natural gas and electricity to residential, commercial, and industrial customers. As of December 31, 2015, it operated in 66 utility service territories across 16 states and had approximately 328,000 residential customers and 19,000 commercial customers. Description from Finviz.

Spark Energy Stock Chart

Comments: Lots of resistance above the current price. There is 200-day moving average resistance at $26.86 and then 150-day moving average resistance at $28.25. The Twiggs Money Flow is below the 0% line which suggests weakness in the stock.

The stock trades at an excellent forward P/E ratio of 9.7 and has fantastic quarterly revenue growth of 73.2% YoY.

Disclosure: I do not have any position in SPKE.

Heavy Insider Buying on Franklin Financial Network

Franklin Financial Network provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals.

Franklin Financial Stock Chart

Chart Comments: Testing previous resistance at around $38. Inverted hammer with long upper shadow is bearish and may indicate a pullback is coming. Wait for close above $38 before long entry. Twiggs Money Flow is pulling back a little but still above 0% line. Watch where next low on Twiggs Money Flow forms, bullish if following low forms above 0% line. Big insider buying on November 21, 2016, this is the first insider buying since May of 2015. Excellent revenue and earnings growth. Attractive valuation of P/E 16.7 and forward P/E 13.4. Piper Jaffray just began coverage on November 22, 2016, with an Outperform rating.

Disclosure: I do not hold any position in this stock.

Stocks With Bullish Money Flow 11-21-16

The stocks below have formed a bullish divergence between the Twiggs Money Flow and price on November 21, 2016.

Aceto Corp Stock Chart

Comments: Coming up to horizontal resistance (red line). Breakout of horizontal resistance will take the stock to $21.50, a quick cha-ching play.

CVR Partners Stock Chart

Comments: Broke above 50-day moving average but formed doji on 11/21/16, not a convincing break. If we have another up day, and the Twiggs Money Flow goes positive above the 0% line, $6 is next target, then $6.80. Nice to see Insider CEO and President Mark Pytosh buying on November 4, 2016, at $4.20.

iPath Bloomberg Livestock SubTR ETN Stock Chart

Comments: I don’t have a clue why cows are flying over the moon. Maybe it just got too cheap, and some are expecting food inflation down the road. I have no idea but money flow looks awesome.

ZAGG Inc Stock Chart

Comments: Up against the 200-day moving average (red line) at 7.36. If it breaks above 200-day moving average, next resistance is $8.20 area (red horizontal line). Forward P/E is 12.72. Excellent quarterly revenue growth of 86% YoY. Sales in 2015 were $269.3 million. Sales in 2016 are forecast to come in at $365.6 million, awesome!

Disclosure: I do not hold any positions in any of the stocks mentioned above.

Regeneron Pharmaceuticals Short Update

Satoshi writes, “I’m short on REGN because I think it’s oversold. Could you give me any tips of how to confirm this or if it’s also in a downtrend that could go Lower? Earnings are due on the 4th, and I want to get out before they release, but I’m expecting it to pick up in the next few weeks. What are your thoughts?”

Regeneron Pharmaceuticals is on track to hit $4.65 billion in sales this year. The annual revenue growth for the last five years has come in at a hot 55%.

Short interest in REGN is falling. Short interest in REGN was 3,851,900 but now is 3,800,300, a decrease of -1%. Not a huge drop in short interest but something you should know. On the whole, more traders are buying to cover their short positions at this level than are taking new short positions.

The strong metrics tell me that you’re shorting Regeneron not because you fundamentally believe the company is going to go out of business but instead because of temporary fundamental weakness and technical analysis of the chart.

The Symmetrical Triangle break down, and then a break below the 150 day moving average (white line) was the place to enter the short trade. Target level 1 has been hit and short sellers are taking profits as evidenced by the reduction in the short interest. These traders are the ones that got in the short early on the Symmetrical Triangle break down and confirmation break of the 150 day moving average line.

The Twiggs Money Flow suggests that REGN could go lower to Target level 2. Further, if we draw a vertical line (orange vertical line) and measure the distance at the mouth of the triangle, then extend that distance past the Symmetrical Triangle break down, we see a target of 290 on REGN.

Personally, I would take profits ASAP depending how much I was up in the trade, especially with the earnings report coming up. In a sidelines rated market, it’s too dangerous getting greedy. I played the AT&T and Time Warner merger news on Friday, and two IPOs over the last 3 weeks. In all cases, not being greedy and taking a 2% to 5% profit immediately after going long, usually within 15 minutes, saved me from taking huge losses. In my opinion, trying to time tops and bottoms is much too risky. Instead, I like to scalp the trade by getting in and out quickly and walking away with a couple hundred dollars on the trade. I’m a small little fish in a sea of sharks and so I want to just nibble and take a quick bite somewhere between the top and bottom of the swing and then swim away as fast as possible (i.e. Guerilla warfare tactics of hit and run). That $200 dollar win is worth $400 to $600 on my next trade depending on the margin requirements on the stock I’m buying. With compounding wins and margin, that $200 turns into a lot of money in just a few weeks. Getting too greedy on your trades usually results in having a winning streak, then giving all those winnings back on a losing streak.

Disclosure: I do not hold any position in REGN.

3% GDP Growth For Q3 – What a Not Funny Joke

Both the Fed and Wall Street analysts are forecasting a 3% GDP growth rate for Q3. After yesterday’s release of many economic reports, I would put the GDP growth rate for Q3 at 1.5% at most. Let’s look at yesterday’s economic releases on the charts.

The NY Empire manufacturing index came in at -2%. That number is -84.53% lower than a year ago.

All the major components of the Empire manufacturing index are contracting.

The Philly Fed survey beat, coming in at 12.8 which is an increase of 455.6% from a year ago.

However, employment is still contracting.

Industrial production fell by -1.1 percent for the 12th straight month of contraction.

The Daily Shot makes the observation that the improvement early this summer was in part helped by utilities cranking on all cylinders to keep the air conditioners around the country running. As that contribution subsidies, we are back to the downtrend from the Spring.

Here is the manufacturing component of the US industrial production (year-over-year).

US retail sales fell in August and are continuing to slow.

Inventory growth continues to slow just like retail sales.

Most of the charts above, I went back five years on the data. Let’s look at what the S&P 500 has done over the last five years and compare performance.

The S&P 500 is up nearly +90% over the last five years while the U.S. economy fundamentals have deteriorated over that same time frame. Folks, that’s the Federal Reserve’s monetary policy propping up the stock market and creating a huge bubble in securities.

TEGNA Nice Way To Profit From Increased Political Ads

TEGNA Inc operates 46 television stations that produce local programmings, such as news, sports, and entertainment. The company also operates Cars.com, CareerBuilder, among other digital properties.

TEGNA is the largest independent owner of NBC and CBS affiliates. Profit more than doubled in the most recent quarter because of political advertising. The Wall Street Journal writes

Chief Executive Gracia Martore said the company expects political revenue to ramp up steadily in the third and fourth quarters as a longer-than-usual primary process led to delayed ad purchases from front-running candidates. She also pointed to “robust advertising from the Olympics this summer driven by our strong NBC footprint.”

TEGNA Stock Chart

The chart shows a beautiful candle over candle reversal that has breached above the speed lines.

I like the stop loss just below $20.82 in case the trade goes south.

Disclosure: I do not hold any stock in TEGNA at the time of publishing this article.

Enova International Symmetrical Triangle Breakout

Enova International did a Symmetrical Triangle Breakout on the chart this week. The stock trades at a hot P/E of 9.32 and a forward P/E of 7.44.

Enova International has exploded over the last five days. Below is an interactive graph showing the performance of Enova over different time frames.

[graphiq id=”dUo1xu2kCoZ” title=”Enova International Inc. (ENVA) Stock Price” width=”460″ height=”628″ url=”https://w.graphiq.com/w/dUo1xu2kCoZ” link=”http://listings.findthecompany.com/l/30526863/Enova-International-Inc-in-Chicago-IL” link_text=”Enova International Inc. (ENVA) Stock Price | FindTheCompany” ]

Enova International provides online financial services to alternative credit consumers and small businesses in the United States, the United Kingdom, Australia, Canada, Brazil, and China. The company offers short-term consumer loans, line of credit accounts, installment loans, and CSO programs, including credit-related services such as arranging loans with independent third-party lenders and assisting in the preparation of loan applications and loan documents.

Disclosure: I am long Enova International.