Trend Trading List of Suspects Update

Updates as Q1 2019 nears its end

This week’s update will include and update of the trend trading master ideas universe list resumed as of March 2019. The recovery on the long side for equities has been to put it mildly been robust enough to begin producing both long and short trend following ideas. Charts and list summaries will be posted below, along with some notes or observations about what I see from the charts.

First to the Top 10 LONGS and Top 10 SELLS charts and Top 10 summaries.

And now for the Top 10 SELL / AVOID / SHORT charts as of this week’s update.

As we see most of these charts reflect well established up or down price action over several months. For the day and/or swing trader, money is made in shorter-time frames but those who prefer weekly prices and longer time frames, the potential exists for enhanced returns: either through appropriately sized positions or reduced losses by avoiding or reducing holdings of securities with declining prices.

We have barely launched the new 2019 master ideas universe and we have two long ideas charts which have been stopped out. Boeing and Dick’s Sportings Goods. Many companies have faced crises which involved the tragic loss of lives - if they solve them, it will then involve negotiating a long road of earning trust. Investors must determine for themselves the risk and rewards and price paid and time necessary for them.

I want to move onto another cohort within the trend trading ideas universe, effectively the next set of 10 longs and 10 sells to consider. Combined with the above charts and list, they would comprise a “Top 20” leaderboard for this past week.

I wanted to highlight one issue about the charts we will see from this ideas universe. This is a trend following / trend trading /price following focused universe of ideas. We will not see some of the “hotter” charts that other traders have benefited greatly from, typically the mean-reverting, contrarian, or shorter-term swing trading variety. The charts posted here have usually approached new highs, or new lows. Many of the hot growth stocks which have enjoyed a wonderful V-shaped bounce, like in “SaaS” or elsewhere won’t be visible perhaps for at least another quarter. Perhaps they will join the list in Q3/Q4 2019 due to the long time frames involved.

On to the NEXT 10 SELLS / AVOIDs charts.

And now for your review, a broad top down list of the trend following ideas both long and short to consider and factor. Trade sizing recommendations have been offered to help you figure out trade sizing via “risk per share”. (Divide your planned capital risk for a trade by “risk/share”; e.g. you risk $100 USD/ (risk/share) to calculate trade size.)
For those of you who are new to Rooster360, this is NOT a very big list. This list used to scale to about 1000 ideas on average. After Q4 2018, most of the longs were “invert ETF” type ideas and the list was dominated by the same ever declining ideas. The cue to “leave” or stand pat or sit on hands (or whatever “do nothing but watch” metaphor) was in place last quarter. There are some potential green shoots already but we’ll see.

And now for some other thoughts.

Take your time, don’t stress. Review your trading plans. Take your losses or lumps. Move on and assess. Risk management is a real thing. Please stop making fun of it. Struggling and stress is no fun. I see too much ridicule of those who mention it as if it shouldn’t be mentioned. I will keep harping on it, as my mentor did it. You take in enough risks in life, so make sure risks that you do choose don’t “take” you out.

Adam Robinson on copper: ““Metal traders have not been wrong once, in the last 18 years, in regards to the direction of interest rates””

The total stock market view via no-frills Vanguard proxies shows the bounce.

And now for some relative view charts, thanks to the ideas of Adam Robinson.
A warning, various chart crimes are committed when you make these kinds of charts or any kinds of charts (e.g. “hey that’s NOT a Log chart… etc.”). p.s. Koyfin is great!

First chart is LQD vs. IEF (corporate vs. 10 year ETF). This is only a trailing 1 yr chart. You stretch out the chart to longer time frames and it looks different. I just wanted to see how Mr. Market was “feeling” via the bond view (via the stock jockey ETF view!)

Q2 2019 is the quarter to watch and take extra risk in if you’re inclined. Do we get more juice to squeeze out in Q2, or are we about to see profit taking dent returns?

Have a great week ahead.

Return of Trend Following List: 2019

Q1 2019 New Tracking Notes Begun With a new lineup of ideas to monitor

During the final weeks of Q1 2019, I will begin to assemble a simple tracking list of all the ideas for both “long” and “short”, and periodically updating on a week to week basis. A prior trend-trading tracking list, which had been running since 2016, was closed out during the market decline from Q3 2018 to Q4 2018. After a majority of long trends hit suggested stop loss exit prices, I had suggested that we might look forward to further updates as we got closer to Q2 2019.

It is now time to resume coverage of a new universe of potential trend following ideas.

Let’s review the first Top 10 lineup for 2019, as potential new trends and leadership unfolds. We don’t know where it will take us this year but it we will do our best of course to manage risks first and see what Mr. Market can capture along the way.

This list is drawn from the unofficial new master universe of ideas shared at the beginning of March 2019. These are weekly prices and are intended to provide a rough guide of which ideas are beginning to have an notional profit based on weekly prices. There are better ways of measuring but over longer time frames it should work out.

And now for the Top 10 “SELLs”. Note: I often write the phrase “sell / short /avoid" as a way of saying these are not long trend following ideas. Some may hunt for “shorts” but it may simply be helpful to understand which ideas continue to decline in price over longer periods of time. Case in point was energy in 2015 - 2016, GE or Deutsche Bank over the past 18+ months, many of you know many examples. That said, it is also a source of “bottoming” or “bottom feeding” distressed, or contrarian ideas as well for those who look for bargains of potentially mispriced unimpaired value investments.

Now for a view of the master list of ideas we have so far as Q1 2019 winds down.
Take your time, it’s a long list, sorted by notional profit/loss, based upon this first week of coverage of the ideas being generated by my price following approach. This list will likely be removed in a few days, and then updated - so that we can focus on specific ideas. Be aware that there is every possibility that most of these ideas could wash out, and be stopped out at any time. Having an idea is worthless, it’s what we do with them that matters. In this context, everyone’s focus should be the consistent and diligent practice of an investment system compatible with one’s own circumstances, personality and priorities. It’s only been one week, a/k/a one “price bar”, so many to go.


Observations on this “first” week for 2019’s resumption of Rooster360 master ideas list include the following thoughts:

The leadership for now has shifted decidedly, on a trend following basis, from a lot of formerly “hot names”. This does not mean old leadership which were juggernauts in 2018 will not return. We just won’t know. After what happened in Q4 2018, it will require time to see what Mr. Market is interested in.

A good portion of the ideas which all debuted last week, have moved lower. The sells are doing well but roughly 3/4 of the long ideas have weakened. This means nothing to me. Weekly trading ranges are what matter. The “risk per share” given freely help to describe just how much adverse price movement has to happen before an idea is stopped out.

That’s it for now from the viewpoint of prices.

We already see the running press coverage of macro. Nothing has been settled, and that gives a great deal of latitude for arm-chair quarterbacking. All I have is how the charts look. One chart highlighted in recent weeks and last week includes EURUSD, and I do not know how much longer USD strength will persist but a “long signal” from a pure price-focused approach with weekly prices and the house method says “buy USD”, albeit with a wary respect for an estimated 1.425+ cent average weekly trading range, equal to about $3500++ of risk per 1 futures contract, or about $1.2+/share of the FXE Euro ETF (which works out to $250+/100 shares).

Moving onto the Brent crude contract - No clearcut signal, and perhaps a “test” of the longer averages. No strong view.

Moving on to some U.S. equity futures. We have had our bounce hard into the longer averages. Moment of truth time or a pause.

DAX and Shanghai composite. Opportunities for “counter-trend”, or what I treat as “secondary” system trades. I use a tiny but very relevant proxy (for me) of emerging markets AND tech/internet - EMQQ (Warning, its so small, it’s not worth trading risk but it’s a fascinating basket and proxy for high growth future market tech platforms.)

EMQQ (which is a basket of internet emerging market plays) which trades like EEM.

and it’s not wonder that EMQQ is like EEM’s mini me. Both have Tencent Holdings.

“Back home”, let’s see how the “FANG” is doing. Facebook has so much to do.

The Juggernaut of Internet 1.0, 2.0, etc. Target of a lot of animus. No new signal.

APPLE’s evolution away from its iPhone will take some time. New UX, new trends.

Netflix has transformed entertainment and overturned many incumbents & habits.

GOOGLE actually could be building a new “base” and trend.

Bond futures - just looking at the price action. Not exactly encouraging either way.

Vanguard World Index ETF (VT) - rollover or base building? Let’s watch over Q2 2019.

Summary, we have had a great Q1 2019, one for the books, coinciding with the anniversary marking a decade of what would have defied belief during the market bottom of 2009. The recent Q4 ‘18 decline seems like a bump in the road. Pay it no mind, focus on your system’s risk sizing and relevant time frames.

Mr. Market Moving Past Winter

Q1 2019 transition to Q2 2019 has promise

This market may be moving from the deep frost and doldrums of Q4 2018 - with the swift rebounding of prices back to the heights of Q3 2018. The reasons “why” this has happened will be apparent in retrospect and they are not instructive for the purposes of systematic risk taking and price following. For the moment, we can observe the return of more “long” ideas than “short” ideas for the first time since Q3 2018. A new “master list” of trend following ideas can be created to track over the coming months but everyone seems primed for a pull-back, based on my read of other participants.

Time for charts and a simplified list of potential ideas. A word of caution. Anyone who wishes to trade off this list alone without fitting it to one’s internal process, mindset, circumstances and level of skill will only expose themselves to more character building experiences, to put it kindly.

Focus on your risk management, your "2019 lists” (everyone has a wish list), your routine and ritual (BTW, If you don’t have a routine in place, please spend most of your time designing one you can follow consistently from day to day, week to week and so on. And if you do have such a process but don’t follow it, realize then that is your actual “system”) and then you can actually put these “free” ideas to work. (Think “Reminiscences of a Stock Operator” and the lesson about how people “love tips” on ideas, or on what someone else is doing, as if that is what makes speculation work.)

Okay, the sermon is over, let’s review some charts and notes. First some charts and then “list” of sorts, sorted in order of trend “age”. The one thing emphasized is ‘risk/sh’ or risk per share. All of this is built on weekly price action observation. You can use a vast array of price following approaches and you will see the same ideas or at least substantial overlap. There is no mean trick to be captivated by noticing leaders at the top of the stairs and failures at the bottom of the stairs.

So many charts, so just a few to start with, all selected randomly. Many well known market “leaders” are already running, and have been shared in the past and on social media.

There are many more uptrending charts which you can generate from the list shared in this update. And now for a few charts going “down the staircase” as a reminder that trends run in both directions. The list for “avoid"/”sell”/”short” ideas is shrinking.

Things can run along for much longer than anticipated or hoped for (or wished against). This does not detract from other investment processes but it can be a humbling reminder of the limitations of our ability to evaluate value and outcomes.

David Einhorn, a well-known value investor, recently reported how difficult 2018 was for his hedge fund (he had similar losses several years ago in housing related investments and he had to confront the reality that being able to assess the health of a grove of trees would offer no protection if the forest surrounding them was on fire).

That said, there is also a price to be paid for “chasing” price action - one could be led off a cliff, sell out at what would later turn out to be turning point (i.e. top or bottom).

There are trade-offs regardless of what investment process one ends up using. The real job is to find out the “cost of business” is for the investment process you have chosen or have chosen by default (i.e. what your trading history reveals that you’re actually following). The “answer” for each of you is to figure out the cost of your approach, and see if it is affordable as part of a sustained investment/trading style. If it’s not then you’re either going to go bust or should hand over your funds to another practitioner.

And now for a few quick charts on the S&P 500, Euro and the Aussie. More to come but I wanted to take a look to see where we are as of this week. The US Dollar is robust, US equities have had a fast bounce, emerging markets and emerging markets tech as well. Q2 2019 sets the tone. Many “unicorns” have filed to go public, signaling that we may be approaching the final innings of a long-running epic game.

(UPDATE: “Master List” posted has been removed and will be updated in next post.)

A New Sunrise For Mr. Market

Q1 2019 mid-quarterly Market Update

Looks like an anticipated and hoped for reset, rest and revival of Mr. Market’s spirits is underway in Q1 2019. Looking ahead to Q2 2019 could be very promising. Let’s review this week’s update and consider a selection of charts from this update. One thing apparent is that “long” ideas are clearly in the lead, outnumbering sell/avoid ideas by a ratio of roughly 5 to 1. It’s not last quarter’s market - an alien sunrise is greeting us.

Below is a summary table of potential long and “short” ideas, arranged in order of rough “trend age”, their last weekly closing price and a “risk per share”. Imagine that Idea “X” has a price of 100 and the “risk per share” is say 5/share. $100/$5/share works out to a potential initial trade size of 20 shares, with an initial stop loss of $100 - $5 = $95. This is very simplified and might be distressing for those who require complexity as a proxy for certainty and conviction. It’s very primitive old school price following and risk awareness being shared here. There are other things that can happen if idea “X” continues to run in a profitable direction, a trader can then add to that position, while also over time gradually adjusting a trailing stop loss. But this should be enough for most folks to see ideas, charts and be reminded that many of these ideas could eventually be stopped out (and hopefully with something to show for the effort).

This sunrise won’t be like past ones. The leadership could be different and therefore active speculators’ trading books will not necessarily resemble 2018 at all.

Mr. Market Begins To Resurface

Q1 2019 Update

The market is breaking above the deep freeze of last winter’s decline. It is now time for an update. From the perspective of trend-following and price observant systems, there has been little to do until recently. The core system I observe has at last presented a meaningful list to share. The market has had a significant “V shaped” rebound in prices for many investment ideas. Prices action has now resulted in new highs, surpassing price levels last seen as Q3 2018 became the Q4 2018 selloff.

Let’s recap from the last notes:

”As has been hinted at in recent weeks, the final quarter of 2018 is about rebuilding and retrenchment - the optimist in me is prepared for better weeks to come in early 2019.

For the moment, this is a time for list building, and accumulation, profit-taking (or if necessary tax-loss harvesting).”

Time to shake the frost off. Faster systems are already in trades and doing well, and others are already taking money off the table, paring size or tightening stops, as well they should. There just is no telling. The purpose of this update is to highlight how robust the price action, so much that a basic trend trading, price following method is now filled with a variety of ideas, and not just sells and bearish inverse ETFs. There are no recommendations.

Let’s cut to the chase. Here is a preliminary list of stock tickers for long & short. Not a solid list to be cast in bronze or chiseled into marble. I’m willing to accept many of these ideas will fail to become long running winners and market leaders. The Q4 2018 decline was broad and profound enough to make any rebound back to prices that existed just as recently as last autumn to seem miraculous. But it’s a starting point.

Now that we have a modest starting point (remember it wasn’t that long ago that the idea coverage was approaching the hundreds), let’s just take a look at a few charts. I would like to post them all it would be all “forest” and you have the above shared list of potential ideas to review at your leisure.

This post may be updated with more charts but you should be able to generate them easily on your setups. The broad message is this: Mr. Market has been submerged below the ice sheet for months and suddenly blew tanks to shoot up in a V-shaped bounce to resurface in the middle of Q1 2019. No telling if he ends up crash-diving or continues on a new course heading, riding out the waves of the deep ocean. You each have a responsibility to take your charts, plot a course and navigate as best as you can.

Loading more posts…