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Archive for the ‘Chart School’ Category

What To Do With The Market’s Bounce

Courtesy of David Grandey.

Last week, we said: 

“However, both indexes are at or near MAJOR support levels. That means that we are ‘in the zone’ for a bounce of some sort in the next couple of days.”
 
And a bounce is exactly what we got:

 
 
 
But as you can see even with last week’s bounce, we are still locked in a downtrend.
 
As we look ahead to next week, should we break out of the downtrend to the upside, we’ll want to take advantage of buying stocks doing the same.  And should we remain in a downtrend, we want to short stocks that are also locked in downtrends. 
 
As we’ve said before: Success in the market comes from trading stocks in tandem with the indexes.   
 
Should the markets break higher, then FF is an excellent long side candidate:
 
 

 
Here we have a leading stock that like the Nasdaq is in a mini-downtrend and pulling back to a prior breakout level.  Think: “As go the indexes, so goes FF!”  Ideally, we’d like to see FF continue to pullback to retest support at the blue line one more time.  A break above the light blue line to the upside is your long side trade trigger.
 
But should the indexes continue to be in a downtrend, then we’ll want to take short sell positions in stocks that are in downtrends like PANW:
 
 
 
This stock has rallied off of recent lows up to an area where it could easily find resistance — the 50-day moving average.  A break of the pink line to the downside is your short sell trade trigger 
 
Either way — whether the indexes go or down, we have set-ups for our members to enjoy profits. 

To learn more, sign up for David’s free newsletter and receive the free report from All About Trends – “How To Outperform 90% Of Wall Street With Just $500 A Week.” Tell David PSW sent you. – Ilene





Gauging Investor Sentiment with Twitter: Weekly Update

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


The Downside Hedge Twitter sentiment indicator for the S&P 500 Index (SPX) is showing a lot of indecision by market participants. Both the daily and smoothed indicator are being dragged around by price. The consolidation warning issued the previous week came as the market was making a bottom and is another indication of chasing by traders on Twitter. They aren’t committing themselves to positions or more likely are getting stopped out by the volatile intra-day swings.

Smoothed sentiment is still below its confirming down trend line after signaling a warning so the consolidation warning is still in effect. This indicator has been bouncing back and forth above the zero line for over a month and adds to the argument of uncertainty.

Price targets gleaned from the Twitter stream continue to paint a disconcerting pattern with very few tweets calling for prices above current market levels. This has been a theme since late December which illustrates the reluctance of market participants to deploy new money expecting higher prices. The result has been a very choppy market since the first of the year. Over the past few weeks this condition has been exacerbated by a rising number of tweets for prices well below current levels. This sets up a situation where traders believe there is large downside risk, but very little upside reward. This alone urges caution and suggests that the market will need a reason to move substantially higher. Currently, major support is at 1840 and 1800 on SPX. Below that 1770 and 1740 garner the most tweets. Resistance is at 1875 with nothing significant above that level since the first of the month when there were a few calls for 1900.

Sector sentiment continues to show some defensiveness with Consumer Staples and Utilities highly positive. Basic Materials, Energy, and Technology are the leading sectors with the highest sentiment.

Overall sentiment is showing uncertainty by market participants. The indicators are moved more by price than expectations and hard observations, traders aren’t calling for higher prices, and sector sentiment is positive for both leading and defensive stocks.

Blair Jensen at Downside Hedge tracks Twitter sentiment and provides hedging strategies for individual investors.

 

 

 

 





Dow Jones Industrial Average Rallies Again

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


The Dow Jones Industrial Average and other major U.S. stock indexes stage another rally.

The Dow Jones Industrial Average (NYSEARCA:DIA) dipped slightly going into the Easter Holiday weekend but gained 2.4% for the week as the sideways trading range continues.

The S&P 500 (NYSEARCA:SPY) added 2.7% for the week while the Nasdaq Composite (NYSEARCA:QQQ) climbed 2.4% on the week.

The Russell 2000 (NYSEARCA:IWM) also gained, adding more than 2% for the week.

Major U.S. stock indexes have been rallying back from the previous weeks’ declines but remain in a trading range that began in mid-February.

Most of the recent damage was done in the Nasdaq (NYSEARCA:QQQ) and Russell 2000 (NYSEARCA:IWM) but these two have reclaimed their respective 200 day moving averages and the four major U.S. stock indexes have been in rally mode and apparently are ready to mount yet another challenge to breakout above their recent highs.

While all of the indexes remain on various technical “sell” signals, the tide is clearly changing and now we’ll have to wait and see whether or not this latest challenge will be successful.

A breakout higher would be positive for U.S. markets while another failure could open the door to lower prices. Trading ranges and false breakouts, both up and down, like we’ve seen in the last couple of months are frustrating. However, they always end in one direction or other, and the longer they go on, the more powerful the subsequent breakout usually is.

On My Stock Market Radar

The point and figure chart of the Dow Jones Industrial Average (NYSEARCA:DIA) paints a clear picture of the current situation.

The index has reversed course into a column of Xs which indicates that demand is now again in control of the markets, but the rally hasn’t been strong enough to generate a new “buy” signal and so the index remains with a bearish price objective of 15,600. A break above 16,450 would generate a new “buy” signal and open the door to a new challenge of the 16,600 level and new highs.

As usual, major factors are the Federal Reserve and the current earnings season that is now entering full swing.


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World Markets Weekend Update: Japan, the US and Europe Advance

Courtesy of Doug Short.

This past week, holiday-shortened for most indexes, was generally positive, with the Japan’s hyper-volatile Nikkei taking the top spot with a 3.98% advance. That’s impressive, but far short of reversing the dramatic 7.33% selloff the week before. The index is down 10.90% year-to-date. The second biggest gain was posted by the S&P 500, its largest weekly increase since July of last year. The three European indexes also finished the week higher. India’s SENSEX was essentially flat at -0.001%. China’s Shanghai and Hong Kong’s Hang Seng both declined.

The Shanghai Composite remains the only index on the watch list in bear territory — the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The index is down 39.57% from its interim high of August 2009. At the other end, India’s SENSEX is a mere 0.38% from its all-time high.

Here is a look at 2014 so far.

Here is a table highlighting the year-to-date index performance, sorted from high to low, along with the 2014 interim highs for the eight indexes. At this point, five of the eight indexes are in the red, unchanged from last week, although the S&P 500 and Shanghai Composite have switched sides in the red/green metric.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the…
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Weighing the Week Ahead: Will Springtime Bring Some Optimism?

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Some weeks feature a contrast between past and future — a possible inflection point. Here are the current elements:

  1. Important economic data with a forward look;
  2. Earnings news from major companies reporting on Q1 2014;
  3. Corporate conference calls explaining the outlook for future earnings; and finally
  4. Economic implications for improved economic growth and business conditions worldwide.

It is a big week for news and data.

Prior Theme Recap

Last week I expected the theme to emphasize volatility. The market was at interesting technical levels and there was plenty of news to push it one way or the other. In a sense I was right about the theme, since the talking heads made the moderate crossings of “unchanged” seem like big news. The volatility cocktail was more like a Shirley Temple.

The potential was there, but the economic news was mostly calming. The contribution of mixed corporate earnings was enough to prevent a major market move either way. It is easy to measure volatility objectively. The VIX index gauges the market expectations for changes in the S&P 500. (If you spend five minutes with this post from Bill Luby at VIX and More, you’ll know more than almost anyone about the VIX). Here is the chart for the week:

By the end of Thursday’s trading, the options market was already factoring in a quiet three-day weekend.

While the theme did not play out last week, it looked promising on Monday and Tuesday. Here is what I wrote last week:

If earnings satisfy, it might have a calming effect. This will be especially true if we get a little more confidence in forward outlook, some hints about future hiring, and more planned capital expenditures. In that case we could have a rebound, with plenty of reduction in the VIX.

As I try to emphasize, forecasting the theme is an exercise in planning and being prepared. Readers are invited to play along with the “theme forecast.” I spend a lot of time on it each week. It helps to prepare your game plan…
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Best Stock Market Indicator Ever: Weekly Update

Courtesy of Doug Short.

The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the “sweet spot” time period in the market when you have the best chance of making money.

The weekly charts below are current through the week’s close.

Weekly OEXA200R vs. S&P Comparison

Interpretation:

According to this system, the market is now Tradable. The OEXA200R ended the week at 88%, up from 72% last weekend.

Of the three secondary indicators:

  • RSI is POSITIVE (above 50).
  • MACD is POSITIVE (black line above red).
  • Slow STO is NEGATIVE (black line below red).

Background on How I Use This Indicator

The OEXA200R is a valuable metric used to accurately assess the state of the market in order to make profitable trading decisions. That is, whether we are in a bull, a bear or transitioning from one to the other, as well as market volatility and risk within each of those situations. Historically, it has also given traders a clear early warning signal of impending serious market downturns and later safe re-entry points. While not intended as a day trading tool per se it can certainly be used as background information by high frequency traders. Simply put, the OEXA200R gives traders the ability to identify the most opportune conditions within which to execute their various long, short or hold strategies.

Following a major market correction, the conditions for safe re-entry are when:

a) Daily $OEXA200R rises above 65% (I follow the Daily but do not publish the chart here)

And two of the following three also occur:

b) Weekly RSI rises over 50
c) Weekly MACD black line rises above red line
d) Weekly Slow STO black line rises above red line

Without the solid foundational support of two out of three Weekly secondary indicators it is unsafe to trade even if Daily OEXA200R edges above the 65% line. The market is considered safely tradable as long as Daily OEXA200R remains above 65% and two Weekly secondary indicators remain positive. Volatility and risk for long traders are relatively low. The trend is…
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Bank rally near end

Courtesy of Read the Ticker.

bank-rally-near-endThe bad boys of the 2008 financial crisis have come back strong over the last 5 years, it most cases bank stocks have recovered half of there loses. But like all energy, it does exhaust it self.

The stock market has had a great 5 year run from 2009 lows, many many charts are at upper channel lines and major resistance levels. Below is just another example.

Controlled distribution has been going on in the markets, however not so controlled in the tech stocks (FB,TSLA,AMZN,PCLN,NFLX). As always the market needs a catalyst to send it lower. In a market that has much to do with central banks, a negative catalyst would be rising interest rates that occurs due to market forces and not central bank wishes. A hint, keep an eye on Japanese bonds in the next month or two.

Click for popup. Clear your browser cache if image is not showing.
NAS bank

And the SPDR XLF…

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SPDR XLF



NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote…

..”Successful tape reading is a study of force. It requires the ability to judge which side has the greatest of pulling power and one must have the courage to go with that side”..

Richard D Wyckoff


..”Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it”..

Warren Buffett








Weekly Market Summary

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


The set-up coming into this past week was clean: SPX and NDX exhibited breadth extremes from which they usually bounce and April Opex is a seasonally strong week (post).

In the event, SPX rose nearly 3%. In the process it exhibited a familiar pattern: overnight gaps in the past 4 days accounted 60% of the week’s gain. Cash hours, when liquidity is greatest, was not where the meat of the gains took place. That was even more true for RUT and NDX which only posted cash hour gains during two of the four days.

After a sharp drop and a strong bounce, where does that leave the markets? Let’s run through each of our market indicators.

Trend

Long-story short: trend is a mess. There is still a 1-year uptrend but there is also a 6-week downtrend.

Start with NDX. The positives are that it is still in a larger uptrend channel and its MACD and 13-ema are setting up for bullish cross on further strength. The negatives are that it was the only one of the US indices to trade below its February low, it hasn’t made any net progress in four months, its under its 50-dma and there is a potential head and shoulders top being created.

 

 

RUT is not great either. The positives are that it held above its February low and the same MACD and 13-ema bullish cross may take place. The negatives are that it broke its larger uptrend channel and is now back-testing it; it’s below its 50-dma; it hasn’t made any net progress in six months; and it also has a potential head and shoulders pattern.

 

 

SPY is the most attractive of these three. Like NDX, SPY is still within it’s larger uptrend channel (good).…
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5 Things To Ponder: Income Inequality

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Since Easter is a time of family, compassion, forgiveness and resurrection I thought this would be a good weekend to think about the income inequality/wealth gap which will be part of the mid-term election debate. There are many questions that must be answered from not only “how” to solve the issue, but also “should” it be?

There is no historical evidence that wealth redistribution leads to stronger economic outcomes as it discourages “hard work.” However, there is also little argument that the current state of crony capitalism and corporate greed has gotten more than just a bit out of hand.

To start our thought process in this week?s things to ponder here is a study on the wealth inequality gap in America by Politizane:

1) Thomas Piketty, Whither The Bottom 90% by Scott Winship via Forbes

“Piketty?s book lays his cards on the table from the start. He titles it to evoke Marx and begins with an epigraph quoting the Declaration of the Rights of Man and the Citizen to the effect that all inequality should be viewed as suspect. He poses the question in which he is interested as whether capitalism is fundamentally self-correcting in a way that prevents inequality from getting out of control or whether it will produce ever-rising inequality. While he allows that his answer is “imperfect and incomplete,” his modesty goes out the door before that paragraph ends. Piketty?s thesis, in his own words:

‘When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.’”

2) The War On Poverty Is Grounded In Paternalism by Scott Beaulier via Real Clear Markets

“The plight of the poor is about a lot more than getting a better education or finding a job. It’s about repairing the damage that has been done to their lives on a multitude of margins--broken families, stress and depression, fear of crime, drug use, etc. And, the plight varies from person to


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Getting Technical: Weekend Update

Courtesy of Doug Short.

Here’s the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.


The S&P 500 resurfaced inside a previous sideways trading range (inside an uptrend), on above-average volume (adjusted for the short week) and on strong momentum.

 

Note: For newcomers to technical analysis, here are brief explanations for the two key indicators that Serge features:

  • ROC (Price Rate of Change)
  • RSI (Relative Strength Index)

(c) Serge Perreault CPA Inc.

 

 

 

 





 
 
 

Phil's Favorites

Japan Trade Deficit Largest in History; Imports Soar, Exports Barely Up In Spite of Collapsed Yen

Courtesy of Mish.

Those who think a collapsing currency are a sure-fire way to increase exports need to rethink their beliefs.

Despite a falling Yen, Japan Posts Largest-Ever Trade Deficit. The gap between the value of Japan’s exports and that of its imports grew by more than two-thirds in the 12 months through March, to Y13.7tn ($134bn), according to government data released on Monday. It was the third consecutive fiscal year of deficits, the longest streak since comparable records began in the 1970s.

Toyota, Hitachi and other large Japanese companies have enjoyed soaring profits as a result of the weaker yen, which has fallen by a fifth against other major currencies since November 2012.

But the improvement has come less fro...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here...



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Insider Scoop

Apache Agrees To Sell Western Canada Assets For US$374M

Courtesy of Benzinga.

Apache Corporation (NYSE, Nasdaq: APA) and its subsidiaries today announced an agreement to sell producing oil and gas assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million.

Incremental to Apache's earlier $2 billion share re-purchase announcement, the company plans to use the proceeds of this transaction to buy back Apache common shares under the 30-million-share repurchase program that was authorized by Apache's Board of Directors in 2013.

Apache is selling primarily dry gas-producing properties comprising 622,600 gross acres (328,400 net acres) in the Ojay, Noel and Wapiti areas in Alberta and British Columbia. In the Wapiti area, Apache will retain 100 percent of its working interest in horizons below the Cre...



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Sabrient

Sector Detector: Rejuvenated market seeks follow-through, but earnings loom large

Courtesy of Sabrient Systems and Gradient Analytics

As I suspected it might, the stock market bounced strongly last week. Weakness the prior week was due in part to traders exiting positions for vacation during the holiday-shortened week, protecting big capital gains, cashing out to pay taxes on capital gains, and “delta hedging” on put options. However, I’m not convinced that the pullback was sufficient to create the great buying opportunity -- but it was sure a tradable bounce.

Among the ten U.S. business sectors, the big winner last week was Energy, which was up about +4.5%. Also, Financial and Industrial were each up about +3%. Defensive sector Utilities still stands alone as the year-to-date leader, up about +11%, while Energy’s strong performance last week has it in second place, up about +5% YTD. Healthcare has been the big loser as i...



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Chart School

What To Do With The Market’s Bounce

Courtesy of David Grandey.

Last week, we said: 

“However, both indexes are at or near MAJOR support levels. That means that we are ‘in the zone’ for a bounce of some sort in the next couple of days.”   And a bounce is exactly what we got:      
But as you can see even with last week’s bounce, we are still locked in a downtrend.   As we look ahead to next week, should we break out of the downtrend to the upside, we’ll want to take advantage of buying stocks doing the same.  And should we remain in a downtrend, we want to short stocks that are also locked in downtrends.    As we’ve said before: Success in the market comes from trading stocks in tandem with the indexes.   
  Should the markets break higher, then FF is an excellent long side candidate:       Here we have a leading stock that like the Nasdaq is in a min...

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Market Shadows

Everything Looks Clearer... in the Rear View Mirror

Everything Looks Clearer… in the Rear View Mirror

By Paul Price of Market Shadows

Brave souls who write about stocks always subject themselves to potential embarrassment if they take a stand on the future movement of their selected company. Including both a price target and a time horizon makes you accountable if things don’t go as predicted.

For that reason many media pundits much prefer to explain what’s already happened rather than sticking their necks out. They would rather justify the (supposed) reason...



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Zero Hedge

Donetsk "Letter To Jews" Found To Be A Forgery

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In the days before the Geneva "de-escalation" conference (and coincidentally, days after the secret visit of CIA director Brennan to Kiev), the top story across western media was the "undisputed" proof that east-Ukraine, populated by "terrorist separatists", is preparing to unleash a neo-nazi wave against local jews, when a leaflet was unveiled, beckoning the Jewish population to register and declare their assets.

The ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

...

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Option Review

Wild Ride For Chipotle

Shares in Chipotle Mexican Grill Inc. (Ticker: CMG) opened higher on Thursday morning, rising more than 6.0% to $589.00, after the restaurant operator reported better than expected first-quarter sales ahead of the opening bell. But, the stock began to falter just before lunchtime on concerns the burrito-maker will increase menu prices for the first time in three years. The price of Chipotle’s shares have since fallen into negative territory and currently trade down 3.5% on the session at $532.89 as of 1:50 p.m. ET.

Chart – Shares in Chipotle cool by lunchtime

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>