[Premium] Diary of a Charting Session - Part 1

What music should I listen to? I opened up my player and Here Comes The Sun by The Beatles comes on. I can't turn that off with a straight face so we're going to this sort of genre and time period for today's session.

I decided to start with Consumer Discretionaries today. To be honest it's because I have my sector workbooks saved in alphabetical order. I do like to mix it up every time I do this in order to always get different perspectives. Doing the same thing over and over again gets you into habits. We want to consistently work hard on trying to keep a more open mind.

I'm starting with Internet & Direct Marketing Retail and $AMZN is the first chart. I see a pretty standard continuation pattern within a primary uptrend. There's no question. We want to be long if we're above $910. The next target here is above $1050 which is almost 150 points away. This represents the 261.8% Fibonacci Extension of the early 2016 correction that took it down 30%. 

Amazon $AMZN

We're seeing the same thing in Expedia. We want to be long if we're above $131 with a target near 172 which represents the 161.8% extension of the early 2016 sell-off.

Expedia $EXPE

Priceline is a mirror image of these prior two. Our upside target in $PCLN was hit in March. This was the 161.8% extension of the same late 2015 correction we see in Amazon and Expedia. After some further consolidation it appears we're heading a lot higher. The next target here is near $2075 which is the entire 261.8% extension of the 2014-2016 correction. We want to be long only if we're above $1800

Priceline $PCLN

TripAdvisor is a piece of garbage

As we proceed into more Traditional Retailers Macy's is showing a little bullish divergence. But this has failure written all over it. gross. Mean reversion? With those beautiful charts above? Why bother.

Macy's $M

Nordstrom is another piece of garbage

But Best Buy looks surprisingly strong. That was heading back to $60 remarkably. This one is only worth being long if we're above $49:

Best Buy $BBY

Whoa how about this Foot Locker? This is a long all day if we're above $77.50 with a target near 93, which is that 161.8% extension of the 2015 correction:

Foot Locker $FL

The Gap is a piece of crap but looks more like a bottom than a top. We'll be watching $GPS

L Brands complete garbage $LB

$TJX is strong bigger picture but I think needs a little time

Urban Outfitters, Tractor supply, Bed Bath & Beyond, Dollar General, Dollar Tree, Kohl's are all complete garbage $URBN $TSCO $BBBY $DG $DLTR $KSS

As we go through the Autos, the autoparts companies are all stuck in ranges:  Auto Nation, Auto Zone, Advanced Auto Parts $AN $AZO $AAP - Goodyear looks ok $GT

Ford and GM are both a hot mess. $GM probably has more potential than $F but nothing extraordinary here

Ford $F

The one that stands out to me is the obvious here. We need to stay long $TSLA if it is above $290 with a target near $360:

Tesla $TSLA

As we get into Home Furnishings and Accessories I know less and less about what these companies actually sell. Fortunately that's not relevant when it comes to making buy and sell decisions. Mohawk Industries, whatever they do, looks great. That has $250 written all over it $MHK

One I do know well is Home Depot. I also think this is a monster to $170. Primary uptrends don't get cleaner than this. Look how it reacted to resistance from our target near 150 based on the 161.8% extension of the 2016 correction. After a couple months of consolidation we have now broken out again. If we're above $150 this is a long all day:

Home Depot $HD

Lowe's also looks strong. This is a long if we're above $83.50 with a target near $95

Lowe's $LOW

The homebuilders need to be stayed away from. They're all stuck in nasty ranges. DR Horton, Lennar, Pulte $DHI $LEN $PHM. Here's DR Horton. Who needs this headache?

DR Horton $DHI

GoPro gross. Why did I add that to this list. My bad. $GPRO

Nike, Under Armour, Ralph Lauren all no thank you $NKE $UA $RL

Hasbro on the other hand. Wow. Nice. This is a buy all day if we're above $97 - going to $116

Hasbro $HAS

Mattel still exists? $MAT

In the Restaurant world Darden is a beast. All-time highs and heading towards $90. $DRI McDonald's is going parabolic. Amazing. $145 should be some trouble soon. That's where I think it's heading:

McDonald's $MCD

Starbucks, Dunkin and YUM Brankds are strong too but no in the category of the above two $SBUX $DNKN $YUM

The Cruiselines are monsters. Carnival can be owned if above $56 with a target above $65. The same with Royal Caribbean. If we're above $100 this needs to be owned with a target above $127:

Royal Caribbean Cruises $RCL

I don't love the hotels. I'd rather give them a little more time. $MGM looks interesting. I don't like the media companies either, especially when you compare these sub sectors to other areas within Consumer Discretionary.

As we move into Financials, it's hard not to think about how important this sector is to the overall US Stock Market and the rest of the world's equities for that matter. Do I try and forget this part and just focus on what's in front of us? Or do I keep that in that back of my mind as I open up a new sector workbook? Life's tough questions....

We're going to start with the Money Center Banks, then work our way into Regional Banks and then the Asset Managers.

Right off the bat it strikes me that most of these are stuck in ranges: Bank of America, Citigroup, Bank of NY Mellon, Citizens Financial, JP Morgan, US Bancorp, PNC, Suntrust, Wells Fargo, Zion, Keycorp, Morgan Stanley and People's United Financial. They look much different than the strength we were seeing out of some of those Consumer Discretionary stocks. $BAC $C $BK $CFG $JPM $PNC $STI $WFC $KEY $PBCT $USB $MS

All of a sudden September comes on by Earth, Wind & Fire. I'm feeling the groove. Financials not so much.

Goldman Sachs really tells the story here. We ran into the 2007 highs. That's kind of a big deal in kind of an important financial.....

Goldman Sachs $GS

The Discount Brokers are messy. Is that a long-term breakout in E-trade? No way:

Etrade $ETFC (weekly)

it has some work to do in the short-term though

Etrade $ETFC (daily)

The exchanges are definitely on the stronger side of the scale. But not worth buying here $CME $ICE  $NDAQ

Those Bond insurers though. Moody's and S&P Boom! I don't know who the are ripping off this time, but it's not my problem. Moody's is a buy all day if we're above $113.50 with a target above $135

Moody's MCO

Same with S&P. If we're above $128 this is a buy with a target near $160 which is where multiple Fibonacci extensions cluster together. The 261.8% extensions of the 2015 correction as well as the entire 2007-2009 correction:

S&P Global $SPGI (Weekly)

S&P Global $SPGI $(Daily)

The Insurance companies are a mixed bag. To me it's XL Group that stands out the most. If we're above $40 this is a buy with a target above $46

XL Group $XL

Willis looks ready to go to me. Here it is on the weekly chart:

Willis Towers Watson PLC $WLTW (weekly)

To me it's pretty clear. If we're above $132.50 we need to be long with a target near $150 in the short-term

Willis Towers Watson PLC $WLTW (daily)

Financials were a mixed bag. What does that make me think about the rest of the market? They didn't look bad, so there's that. But nothing I where I want to be buying them all like last Summer. Discretionaries definitely looked better "per capita" if you will.

At this point we've gone through 300 charts and Al Green Let's Stay Together comes on. Is it time for a snack yet? No let's keep plugging away. Since we've done the Discretionary and Financials, the obvious next choice seems to be Technology right? Stick with the "risk-on", "offensive" sort of names I guess. Let's go with that for now. I was impressed with discretionary but in financials you have to be more choosy.

This is the biggest sector in the S&P500 by market-cap, about 22%. So we want to start with everything but Chips and then end with Chips. I want to see how the rest of Tech looks before getting to the most important part of Tech.

I've liked Google for a long time and it's finally hitting our target just under $900. Let's see if we can get above it and stay above it before any new Google trades should be put on

Google $GOOG

In Apple, the trend here is higher. Thanks JC Mr obvious. But it's what it is. My favorite mentor Charles Dow (even though he didn't know it yet) said to never fight the primary trend. Who am I to argue? It's been a long only above $134 trade for months and I think it continues to be. The target is $162 based on the long-term Fibonacci extension from the 2015 decline.

Apple $AAPL

But like in Google, we want to see how we react to this $145 level that has been resistance for a month. This is the 161.8% extension of the November 2014 highs down to the 2016 lows. We want to be long $AAPL at this point only if we're above that $145.30ish if you really want to be tactical about it. The path of least resistance here is much higher, so theoretically this ultimately getting to 162 only takes its market cap to about $850B and not yet the $1 Trillion people are looking for. I think that is much further away in time. But for now, yes $162 is where I think we're headed. Getting and staying above $145.50 would be very constructive towards that thesis:

Of the Hardware and Data stuff, it's hit or miss. Those charts don't look like the two above.

The Payment companies really stand out though. Look at Global Payments $GPN in the most ridiculous uptrend of any of the charts we've seen so far. This one suggests $89 is the next stop:

Global Payments $GPN (weekly)

But when you look closer you can see a parabolic run could really get going based on that strength. I think if we're above $80 you need to be long with a target above above $113 if you're thinking a longer time horizon.

Global Payments $GPN (daily)

PayPal if breaking out of a base that it's been stuck in since its IPO. We need to be long if it is above $44 with a target above $50

PayPal Holdings $PYPL

Moving down the list TE Connectivity looks great. If we're above $74 this is a logn all day to $87.50

TE Connectivity $TEL

I haven't played video games since college. That was a long time ago. I get to play the biggest video game in the world for a living. Considering that I'm just solving puzzles by looking at pictures on a screen with a remote control, it's really not far off from a video game. So the last thing I want to do in my spare time is more of that sort of thing. I would rather go for a run, cook, hang out with family & friends. But hey. You need to buy Video Game Makers, there's no question. Activision is a long if we're above $48 with a target above $61.50

Activation Blizzard $ATVI

Adobe $ADBE. You just have to laugh. Wow....

Then there's the rest of the Internet software and services. Facebook is a monster but is running into a key extension and I would not be surprised to see it hang out a bit. I would put it in a similar category to the Google and Apple we saw before. They are where we thought they'd go, now let's see if they can get above and stay above it. That would give an excellent new pivot point to manage risk against, in this case $146:

Facebook $FB

There is a reason Twitter is not in the S&P500..... $TWTR

To me the one that stands out is Total System Services. This is a best. Look at the longer-term chart:

Total System Services $TSS (weekly)

Here it is shorter-term. Look at that base going back 180 months. That's studly. You buy this all day if we're above those late 2015 highs. The $68.50 target comes from the 161.8% extension of this entire base

Total System Services $TSS (daily)

The Systems Software companies look amazing. I we can own them all. Microsoft is the obvious one that I've liked forever. I think we're going to $88.

Microsoft $MSFT (weekly)

But short-term I think we see some trouble near the $71 level:

Microsoft $MSFT (daily)

Red Hat also looks good. If we're above $84 this is a long with a target near $100

Red Hat Inc $RHT

Finally the Semi's. We look to these guys as leaders for Technology, which is obviously an important sector for the overall market. So by default it makes Semiconductors one of the top 2 or top 3 sub-sectors in America.

Music needs to change. Classic Rock for Semi's is kind of my thing. We'll start with a little Paint It Black Rolling Stones

Applied Materials looks exactly like the chart of the PHLX Semiconductor Index. You want to buy strength? This one has a clear target back to 2000 highs. Short-term, $44 is the next level based on the 261.8% extension of the 2015 decline, but we'll see $57 eventually. It's liked a magnet

Applied Materials $AMAT

I don't know when the hell Intel is every going to break out. I've been waiting for this thing for what feel like forever. I think it's due. I like how momentum never hit oversold conditions at the 2015 lows. $38 is the level. When we break above that, I think we can really have the go ahead to press those longs.

Intel $INTC

Let's put this Nvidia move in perspective. Here is a longer-term look so you can see how price reached, acknowledged, consolidated and then exceeded both the 161.8% extension and the 261.8% extensions of the 2007 crash. Then we broke the uptrend line from last year's lows.

Nvidia $NVDA (weekly)

Here is a closer look. This is a monster uptrend. If we're above $95 this can be owned. From a price target perspective, why not $138? Why not $160? Those are the 161.8% and 261.8% extensions of the most recent consolidation the past 6 months.

Nvidia $NVDA (daily)

Qorvo is a buy if we're above $69 with a target back up towards the 2015 highs near $88

Qorvo Inc $QRVO

Qualcomm doesn't look like any of the strong charts we've mentioned before. You want to play a mean reversion on a piece of garbage? Go for it. I think the odds stand better owning strength $QCOM

We're almost half way through the S&P500 in just these 3 sectors alone. So far what we know is there are a lot more uptrends than downtrends. You've got Financials stuck in ranges but not in downtrends. To the contrary, they're mostly consolidating huge gains recently, which is not a bearish characteristic. A lot of Consumer Discretionary names look good, especially those internet related. Yea some retailers are dying, but so what. Amazon is taking that market cap. All good from a trend standpoint. And in Tech, again the worst thing I see is some big names achieving some upside objectives. Those aren't bearish characteristics. A lot more good than bad from the first, and in my opinion, more important of the two halves.

Next I want to go through the Consumer Staples and focus more attention on the more "Defensive" names. I use quotes because I don't think that's always a fair description so take it for what it is. Either way, the music needs to get pumped up because the betas of these stocks just plummeted. We're going from high beta Semiconductors to staples. A las vegas pool party mix from 2016 comes on. House music beats are pumping loud.

Let's start with the retailers. Walmart, Kroger and Whole Foods are in ranges for the most part, although some better than others $WMT $KR $WFM but it's Costco that catches my attention. I think if we're above 171, $COST is a long with a near term target above $190 but then $222 is definitely a possibility considering that multi-year base we're coming out of:

Costco $COST

The drug stores don't look great. Walgreens over CVS for sure. $WGA > $CVS

Chruch & Dwight. People need condoms. That hasn't changed I guess. It's hard to argue this is not an uptrend

Church & Dwight $CHD (weekly)

Short-term, however, it's really a no touch. This seems to be a big theme among Consumer Staples. Tactically range bound but within the context of a major uptrend.:

Church & Dwight $CHD (daily)

Colgate Palmolive is a beast bigger picture, but short-term it's a mess below overhead supply and near a flat 200 day moving average

Colgate-Palmolive $CL

Same thing with Kimberly Clark. Long-term uptrend but short-term a mess

Kimberly Clark $KMB

Of the soft drinks, Monster looks the worst and Pepsi looks the best. $MNST $PEP

Remember the hype of General Mills in 2016. Wow, welcome to reality $GIS

When Mondelez ever gets going this is going to be a monster. Looks at this base

Mondelez International $MDLZ

The Tobacco stocks are all in long-term monster uptrends. There's no doubt about it. From a tactical perspective they're messy. But it doesn't make it bearish $MO $PM $RAI

Of the booze stocks, I think Constellation Brands is the one long-term. Short-term it's at the upper end of a range. But this is the one in that group

Constellation Brands $STZ

Moving over to Utilities, we want to maintain the same level of energy in the music to make up for the lack of beta in the sector. They're not the sexiest of stocks but it doesn't mean we can't make money from them!

I've got a Tiesto Remix playing pretty loud as we enter the Electric Utilities Sub-sector.

Alliant comes out at me as it tries to resolve this consolidation higher. It won't be tomorrow, but when Alliant is above $40.50, we want to be long with a target near $49

Alliant Energy $LNT

Put Edison International in a similar category structurally. We want to be long Edison if we're above $78.50 with a target near $93

Edison International $EIX

The rest of them are mostly rangebound. Nemes like Entergy, American Electric, Duke Energy and Southern Energy are in the middle of where they've been the past couple years $ETR $AEP $DUK $SO

One stock that looks like crap is FirstEnergy. I would be a seller of any strength and if we're below $30, a short to $24 is warranted

FirstEnergy Corp $FE

As we enter the more exciting Multi-Utility space, it's generally more of the same type of behavior. Long-term uptrends and short-term rangebound or targets met. A good example is PG&E achieving it's target based on the 161.8% extension of the 2007 crash.

PG&E Corp $PCG

There are less than 60 charts in the Utility Sector so it's short and sweet.

Moving over to Healthcare, there are so many sub-sectors it can sometimes be overwhelming. It's not like Utilities where basically you have the Electrics and the Multi's. In Healthcare you have all sorts of business from Pharma to Biotech to Managed Health and Medical Devices. So you really need to be careful when generalizing this particular sector. What do Medical Equipment stocks have to do with a drug company in an entirely different space?

There are 130 charts in this workbook. We'll start with Biotech and then work our way to Pharma. Then the distributors and equipment. Then we'll finish up with the services and their suppliers.

Starting with the Biotechs, I've had a bad taste in my mouth from this group for some time. There have definitely been better places to be. But we want to approach this market with an open mind. Not be close minded JC!

Amgen tells the story well here. It's a long-term uptrend but a sideways range shorter-term within that primary trend. So it's not bad, I just don't think we need to buy it until it breaks out again.

Amgen $AMGN

Celgene in a similar situation. Not bad, just not worth buying yet

Celgene $CELG 

In Pharma, we're seeing similar setups. Look at Eli Lilly

Eli Lilly $LLY

Short-term the Distributors are also a mess. Bristol-Myers exhibit A of the hot mess that is this space

Bristol-Myers $BMY

The Medical Equipment stocks are the strongest ones in the Healthcare space. There's no question. This goes for both long-term and short-term charts. This is nothing new and should not be surprising. But we don't want to enter this group optimistically because of that. To the contrary, let's poke some holes.

Hologic looks great. If we're above $43, this needs to be bought with a target near $50

Hologic $HOLX

But then you have monsters like Intuitive Surgical who are going parabolic. We want to be buyers of any weakness back towards $750. This is heading to $1000

Intuitive Surgical $ISRG

For the Healthcare Facilities, Quest Diagnostics in the best in class. But it's achieving it's upside objective now. So not worth buying. It is, however, important to recognize the leadership qualities.

Quest Diagnostics $DGX

In the group of Suppliers, Dental Supply $XRAY looks ready for it's next leg higher after 18 months of consolidation. I like this one a lot higher. We want to be long if we're above $64 with a target near

Dentsply Sirona $XRAY

Cooper also looks good for the same reasons. We want to be long Cooper if we're above $190 with a target near $233

Cooper Companies $COO

Finally, in the Managed Care space, I think they pretty much all look great. It's amazing how much better these stocks look than the Biotech and Pharma. This is why, especially in Healthcare, focusing on the sub-sectors themselves is so important. To me Aetna sets up the best risk/reward. Not that it's the best. Trust me there are better names. But from a risk vs reward, Aetna is a long if we're above $135 with a target near $160

Aetna $AET

Here is is short-term

Aetna $AET

 

to be continued in Part 2 of the Diary of a Chart Session: All S&P500 Stocks Long-term & Short-term

 

Cheers,

JC