TRADES PLACED - MA, V, VHT, ALXN

Hi

As mentioned in my last post, the S&P 500 seems to have found support. For access to that post where I do an analysis and give my opinion on where the market is heading from here, click here.

Based on that, I have identified a couple of stocks in order to try and capitalise on this potential market bounce back.

Disclaimer: I am not a qualified financial advisor and the following should not be taken as recommendations or financial advice.


VISA and MASTERCARD

If you have read some of my first posts, Visa and Mastercard are both stocks I have traded successfully before. For a previous analysis of both of these, please see here. And as the saying goes, "If it ain't broke, don't fix it". 

I thought I had already written a post about the fundamentals of Visa and Mastercard but it turns out I have not. But given that my first exam is in less than 2 weeks, I do not think I will be doing a fundamental analysis soon. Either way, if I recall correctly, both companies have outstanding fundamentals (also earnings season is coming up so relying on the market expecting earnings beat due to fundamentals and hype).

However, I am trading on technicals here. 

Mastercard

Bullish signals: 

• Seems to have found support at the 100 EMA (daily timeframe), confirming a medium strength trend
• Closed above the McGinley Dynamic MA
• MACD converging beneath the 0 line
• CCI just crossed -100 and heading upwards, indicating momentum, confirmed by Lane's stochastic crossover

Bearish/ Risk signals:

• Buy volume outweighed by sell volume
• Key resistance 50 EMA (daily), 15 EMA (weekly)

Conclusion:

• BUY (LONG): limit order placed at 207.50 for 8 shares 
• STOP LOSS: approx. 1 ATR below price at 200. 3.6% risked on this trade. 
• TRADE INVALIDATED IF: fails to breakout through 50 EMA (daily) i.e. sell if fails to break out, otherwise just trail stop loss.

Update 18/8/2018 - Order executed (bought)

Update 25/10/2018 - Stop loss triggered. Sold. Loss of 3.78% on this trade. Total account impact = 0.41% loss. 

VISA

Bullish signals: 

• Seems to have found support at the 100 EMA (daily timeframe), confirming a medium strength trend
• Closed above the McGinley Dynamic MA
• MACD converging beneath the 0 line
• CCI just crossed -100 and heading upwards, indicating momentum, confirmed by Lane's stochastic crossover

Bearish/ Risk signals:

• Buy volume outweighed by sell volume
• Key resistance 50 EMA (daily), 15 EMA (weekly)

Conclusion:

• BUY (LONG): limit order placed at 141.70 for 11 shares 
• STOP LOSS: approx. 1 ATR below price at 137.2. 3.1% risked on this trade. 
• TRADE INVALIDATED IF: fails to breakout through 50 EMA (daily) i.e. sell if fails to break out, otherwise just trail stop loss

Update 18/8/2018 - Order executed (bought)

Update 24/8/2018 - Stop Loss Triggered. Loss of 3.1%. Total portfolio impact = -0.04%

VHT - VANGUARD HEALTHCARE ETF

I haven't traded ETFs before but first time for everything. If not now, then when? To be honest there are so many different choices when selecting stocks to trade the market rebound, I picked this because I could not pick a single one - this allows the healthcare sector = diversification, and health care is a more conservative play in such a volatile market. 

Bullish signals: 

• Found strong support and rebounded from 100 EMA, closed above 50 EMA 
• Closed above the McGinley Dynamic MA
• MACD converging beneath the 0 line
• CCI just crossed -100 and heading upwards, indicating momentum, confirmed by Lane's stochastic crossover

Bearish/ Risk signals:

• Buy volume outweighed by sell volume

Conclusion:

• BUY (LONG): limit order placed at 175.32 for 9 shares. 
• STOP LOSS: approx. 1.5 ATR below price at approx. 170. 2.8% risked on this trade. 
• TRADE INVALIDATED IF: fails to stay above 50 EMA. 

Update 18/8/2018 - Order executed (bought)

Update 23/10/2018 - Stop loss triggered, sold at 169.91. Approx. $50 loss, 3% loss on this trade, 0.3% account impact (i.e. - 0.3% for whole account).

ALXN

This is my attempt at trading a range. Once again, don't usually do this. Also, I wanted to trial a trade purely on technicals rather than a mixed approach I tend to use. 

Bullish signals: 

• Found strong support and rebounded from 200 EMA, closed above 50 EMA 
• Closed above the McGinley Dynamic MA
• MACD converging 
• CCI below zero and heading upwards, indicating momentum, confirmed by Lane's stochastic crossover
• Also seems to respect support and resistance lines. 

Bearish/ Risk signals:

• There is still a probability nothing goes as a planned???

Conclusion:

• BUY (LONG): limit order placed at 127.60 for 11
• STOP LOSS: 122.35, close of the last candle.  
• TRADE INVALIDATED IF: reverses back down to support.

Update 18/8/2018 - Order executed (bought)

Update 23/10/2018 - so apparently I wanted to try trading on technicals only (trading range) BUT it turns out ALXN is releasing earnings in 2 days, therefore I've decided to change my strategy to a breakout one. It has a history of beating market expectations (average earnings beat of 14.98% past 4 quarters) so I am expecting great things, but you can never be too sure. Because of this, I've decided to move my stop loss to 118. A little riskier than I wanted but I guess this is my fault for not doing my research beforehand. Hopefully ALXN can deliver an earnings beat. Risk on this trade now around 7%, total account risk = 0.7%.

Update 25/10/18 - despite beating Earnings AND Revenue estimates. The stock went on to decline 10%. Sometimes I just don't understand how the market does this. But either way, no had feelings. I feel like I set out this play as best as I could (if there are any tips, please let me know via a comment).

Luckily my stop loss was in place so got out before the huge decline. Trade result = 5.86% loss on this trade. Total account impact = 0.5% drawdown.

We'll see how this plays out.

Cheers,

Howard