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Sunday, October 15, 2017

Market Wizard, Steve Clark on Trading: Grow Your Equity Curve

Trading wisdom recap: Steve Clark, founder of Omni Partners, was featured in Jack Schwager's 2012 book, Hedge Fund Market Wizards

Clark's interview with Schwager provided us with some valuable trading insights; "Lessons from Hedge Fund Market Wizards: Steve Clark" was one of our most popular posts ever.

If I had to pick my favorite sections from Clark's chapter, it would be boiled down to these two concepts: "Do more of what works (and less of what doesn't work)" and "Manage your equity curve".

Here's his full quote on the supreme importance of growing your equity curve

"Your job as a trader is to make the line of your equity curve go from bottom left to top right. That's it. Don't get hung up on other supposed "mandates". Protect your capital and the direction of that equity line."  

I will leave you with one last series of quotes from Steve Clark's interview with Jack Schwager. When asked about the characteristics of traders who succeed, Clark replied:

"They all work hard... Nearly all the successful traders I have known are one-trick ponies. They do one thing and they do it very well. When they stray from that single focus, it often ends in disaster."

"Really good traders are also capable of changing their minds in an instant. They can be dogmatic in their opinion and then immediately change it. If you can't do that, you will be caught in a position and be wiped out."

If you'd like to read more, just click on the Amazon links in our Hedge Fund Market Wizards post series and buy the book!

Related posts:

1. Your Job as a Trader: Manage Your Equity Curve

2. Maximize Your Trading Gains, Not Wins: William Eckhardt Interview 

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Friday, September 15, 2017

Tesla Rides Again (TSLA): New Highs Approaching

This post was originally published on September 14, 2017 in the Finance Trends Newsletter. Sign up to join our email list - you'll receive exclusive updates and market insights, plus the best of our website and social media content.

Tesla Inc. (TSLA) shares, which closed at $377.64 today, are trading just below their 52-week high.

A move above $387 would mark a new all-time high for the stock. That means no overhead price resistance, only the potential for blue skies above.


Here is a monthly chart (log scale, click to enlarge) that goes back to Tesla's IPO in 2010. It shows the stock's full trading history, including the breakout move from $40 to $290 in 2013 - 2014.


Tesla TSLA stock price chart monthly Elon Musk


The weekly chart below shows Tesla's recent breakout (from a long 3-year trading range) above $300 and the run up to its highs above $386.

If TSLA can hold these gains and advance an additional 4%, the stock will be trading at a new all-time high. $387 is the magic number here.


Tesla TSLA stock chart 2017 new highs breakout Elon Musk


Tesla CEO, Elon Musk sparked excitement this week with the announcement of a Tesla semi truck unveiling scheduled for late October. This marks Tesla's entry into the commercial transportation market. Production of the electric, long-haul semis will be underway "in about two years", according to Musk.

When I last posted on TSLA in late 2016, the stock was still stagnant and stuck in a rather wide trading range between $180 and $280.

At that time, the questions surrounding TSLA dealt with the Model 3 launch and mass acceptance of Tesla's products and corporate mission.

From our October 2016 update:

"...There is no doubt that Tesla Motors is an incredibly innovative and exciting company, and the Model 3 in question is a major product.
When the Model 3 is released to buyers in late 2017 and 2018, it will mark the full realization of Tesla's mission: to build and deliver an affordable electric car that will help kickstart mass adoption of electric vehicles (EVs)."

Last year, the market was still undecided about Tesla's future prospects, at least in terms of a Model 3 launch acting as a catalyst to new price highs.

However, by early 2017, Tesla shares were back above $250. In April 2017, TSLA crossed $300 and reached a $50 billion market cap, surpassing Ford (F), which has been in business since 1903 (and went public in 1956).

If TSLA can make a new high above $387, it will be a short hop to $400 and above. It should be noted that TSLA is prone to sell off in quick, sharp declines (see the plunge from $370 to $306 in July 2017) so your risk management safeguards must be in place, should you decide to buy the stock.

Tesla is among the top big-cap names in my watch list right now. I have been slowly building my exposure to US stocks in recent weeks and may add a starter position in TSLA to my portfolio sometime in the next week.

Note: Educational info is presented here, all stocks and securities mentioned are used as real-world (and real-time) case studies in trading. I offer no personalized investment advice. Readers must use their own due diligence and invest according to their unique needs and objectives.


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Friday, September 01, 2017

The Most Popular Posts on Finance Trends: Readers Choice

Welcome to our new readers across the globe. Be sure to check out our popular posts section, filled with market insights and valuable lessons for traders and investors of all levels!

Great starting point for new readers and traders: a selection of our most Popular Posts on Finance Trends.

Paul Tudor Jones PTJ Trader Insights Lessons Market Wizards Finance Trends Popular Posts
Paul Tudor Jones, photo by Annie Leibovitz via Audobon.org.

You'll find a newly expanded list of some of our favorite posts, with insights into emerging market trends. Plus, lessons on trading and investing from the masters: Market Wizards such as Paul Tudor Jones, Jesse Livermore, William O'Neil, Victor Sperandeo, Charlie Munger, and Sir John Templeton offer up their hard-earned wisdom. 

Equally as important, I hope you'll use our favorite posts to learn from the trading insights offered up by myself and some of the lesser-known (but no less experienced) trading practitioners quoted within. 

I have spent years and countless hours researching stocks, scanning charts, speaking with fellow traders, and poring through libraries of information in order to distill some of these valuable lessons down to a few readable articles. Money has been made and lost - a part of every speculator's "tuition" in the markets. I hope to learn more from my own small triumphs and mistakes in the markets in order to bring you additional insights in the future.

Thanks for reading. Feel free to explore, and enjoy some of our most popular posts!

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Monday, August 28, 2017

Gold Stocks Moving Up: Franco Nevada (FNV) at a New High

Gold stocks (GDX, NUGT) have been firming up and moving higher in recent days. 

This trend is especially evident if we pull up the chart of one of the world's leading gold miners, Franco Nevada (FNV). Sporting a $14.8 billion market cap, FNV is the 3rd-largest US-listed gold miner by market cap, behind $20 billion Barrick and Newmont Mining.

FNV just made a new all-time high above $81.16, the prior high from August 2016. You can see these price points on the updated chart below (the stock was just below the ATH price when I shared the FNV chart on Twitter). The stock has cleared resistance and has only "blue skies" above.

FNV Franco Nevada gold mining stock new high ATH chart


So the recent strength in gold mining stocks and utilities is reminiscent of early 2016, when these two industries were among the best-performing groups in the market.

The gold miners and utilities enjoyed a strong run through the summer of 2016, then pulled back sharply into early 2017. While utility stocks (XLU) have already gone on to make new highs, the gold miners ETF, GDX, has been treading water. In fact, GDX needs to gain more than 20% to reach its old high. 

The recent strength in FNV may be a sign that gold mining stocks are ready to turn higher.  

As my friend, Olivier Tischendorf has pointed out, Franco Nevada (FNV) is a gold stock leader that you must follow if you are trading the mining sector.

The biggest components of GDX, Barrick (ABX) and Newmont (NEM) are up around 3% today, but both stocks are trading well below their old highs. They'll have to carry some of the weight and move higher, along with FNV, in order to push the miners ETF into new high territory.

As it stands, FNV is currently outperforming the gold miners ETF and its large cap competitors. That means that Franco Nevada is the stock to own if you want to gain exposure to this new uptrend

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Tuesday, August 22, 2017

McDonald's (MCD) Trading Near All-Time Highs, Market Outperformer

McDonald's (MCD) is trading near an all-time high, even as the broader market has stumbled in recent weeks.

Quick chart update on McDonald's (MCD), a stock that was last highlighted in our "new all time highs" stock report from April 2017.

At that time, MCD was hitting new highs as the Nasdaq made a record high above the 6,000 point mark. 

Today, MCD is trading just below a new all-time high, even as the overall market has suffered through some late-summer gyrations/shakeouts and pullbacks. This is a sign of the stock's relative strength compared to the broader market. MCD is a stock to watch here.

See the performance chart below: MCD vs. SPY, QQQ.

McDonald's MCD SPY QQQ stock chart performance gains 2017
 

MCD has outperformed the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) during the August correction. The stock has moved higher from its July low, even as the indexes lost a bit of ground since late July. 

MCD (+31% YTD) has also outperformed SPY (+10% YTD), of which it is a component stock, and the tech-heavy QQQ (+21% YTD) since the year began.  

These are signs of notable strength. If you scan through your stock charts, you'll be hard pressed to find a lot of stocks holding up this well at the moment. 

Late last week, and over the weekend, I brought up the charts of every US-listed common stock trading over $5. Most of the charts, especially among big-cap retail and consumer stocks, did not look this good. MCD has outperformed the restaurants group and the major indexes.

Does this mean the stock will continue to move higher from here? We can't predict the future based on a price chart, but we can see that McDonald's remains in an uptrend and is showing continued strength since it reached a new high above $133 back in April. This is one of the stronger big cap names in the market.

If the overall market can firm up and move higher (or trade sideways) in the coming weeks, MCD could be a good candidate for a longer-term position trade. 

Note: I have no current position in MCD or the ETFs (SPY, QQQ) mentioned in this article.

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