The possibility of these Long and Short trades was shared in Superior Profit Traders Community a few days ago.
At that time we had a profitable trade in Finish Line (FINL), a Stock that we had analyzed in Weekly Market Roundups as Fundamentally Strong and at Optimal Price. We had used 360 Degrees Analysis for Finish Line at that time.
Here we provide the follow up in detail to the possible Long and Short Trade-Ideas. By joining the Traders Community, you could have a heads up on the trades probably!
We begin our 360 Degrees Analysis with CUE Edge Industry Analyst. It calculates the performance of 160 Industry Groups across multiple review periods and assigns Ranks and Heat Map Colors that instantly helps us see which Industries are getting stronger and which ones are getting weaker. Reading the data is easy. Magenta color means weakness. Cyan represents strength.
From the easy to read Visual Heat Map, we can instantly see the following:
1) Apparel Industry was languishing at the bottom for many months, with some of the worst ranks (160 being the worst possible rank among the 160 Industry Groups). Today, on 12th July 2017, it improved rank from 131 to 108.
2) Clothing and Accessories Industry was weak 12 months ago. During the month 1 to month 5, it tried to improve a bit. In the most recent periods, this Industry has again declined in Rank, indicated by the magenta color in the times from 10 days to 1 day.
What about their Fundamentals? We have a look at CUE Vital Scorecard for that. For CUE Vital Fundamental scoring, green and blue means strength and magenta, red represents weakness. Higher scores mean the Stocks is stronger than others in the Peer Group.
From Visual Scorecard, we can instantly see that LB (L Brands) is priced optimally and has strong fundamentals at the current price. And COH (Coach) is overpriced and poorer (than LB) earnings quality.
What about their Technical Analysis view? We use CUE Global for that.
LB dropped along with the Apparel Industry since Dec 2016 as seen from the CUE Hop On Daily chart. At the right edge, it stopped going down after exhausting down move that began in July 2017.
Technically, LB may give a possible Bounce Long Trade Setup. You may check the Unambiguous Checklists of CUE Trading System to pinpoint the Entry of either a Swing Long Trade or even a Long Term Investment. We have already seen from CUE Vital analysis that LB is fundamentally strong - this is our preference for Long Term Investing.
You may also keep an eye on Apparel Retailers Industry Rank from CUE Edge in coming days to add more probability of success to your Long Position's favor. That is, Buying LB if the Stock goes up and the Industry also shows strength.
Contrary to L Brands, Coach (COH) had a nice rally since Dec 2016. But now it is looking a bit tired. That, along with its weak fundamentals and the Industry's (Clothing and Accessories) weakness means one may consider booking profit or at least protect profit using Stop Order. CUE Vital Fundamental showed it is Overpriced!
Short Traders may even look for potential Short opportunity using CUE Global's Unambiguous checklist to pinpoint Short entry.
Using 360 Degrees Analysis in this manner, combining Industry, Fundamental and Technical Analysis, you can invest and trade confidently. Knowing that you have looked at the trade holistically before taking it.
And that is the Superior Profit Way.
Have you wondered how and why Stock Analysts regularly promote Stocks that are at 52 Week High and say how wonderful Buying Opportunities they are? Why they wanted you to Buy the Stock at the very top and not while it was going up from a lower price?
Take Tesla (TSLA) as an example, seen using CUE Hop On chart template. In the chart, green/cyan are Bullish, red/magenta are Bearish. Yellow is Neutral.
If you were listening to the media and Stock Analysts, you were probably hearing a lot about Tesla going up and up and away.
However, Tesla dropped after displaying several magenta (Flow) color Candle in this Daily chart. Using information from the CUE chart and the Fundamentals of the Stock using CUE Vital Fundamentals, you could Protect Profit in Long Position and possibly get ready to Short the Stock for Swing Trading.
Tesla is just one case. Instead of relying on other's recommendations that seem to confuse more than help, you could come up with your Buy/Sell Recommendation of a Stock yourself quickly and objectively using CUE 360 degree analysis. You could do that with Tesla, or with any other company in the world.
Here is another example of how CUE Traders gave a Buy Recommendation on a Stock in the USA Market using CUE 360 degrees analysis.
The Buy conclusion on the Stock CECE (USA) was achieved by combining Industry Analysis (using CUE Edge Sector-Industry Analyst), Fundamental Analysis (using CUE Vital Fundamental Analyst) and Technical Analysis (using CUE Global Technical Charts). This holistic CUE Analysis gives you a 360 degrees view of what is going on in a Stock. And you can Buy (or Short) more confidently.
CUE Edge Industry Analyst
CUE Edge Industry Analyst ranks Industry Groups in Real Time to show which ones are getting stronger and which ones are being weaker. This Ranking updates in Real-Time. You always have the most up to date information at your fingertips.
You do not even need to read the actual Ranks. Reading the Heat Map colors is enough. If you see an Industry is changing color from magenta in earlier months to cyan in recent months, you know it is getting stronger.
If you see multiple related Industries are getting stronger at the same time, then you have more confidence in the strength, which was the case with Industrials when we analyzed them in the Live Weekly Market Roundup of Saturday, 1st July 2017 (this is shown in the CUE Edge Industry Ranking Table above). Recording of the session is available on Video Center under Weekly Market Roundup.
How might you use this insight? If Industrials were gaining strength, you could look for Buy Position in Industrials, of course!
CUE Vital Fundamental Analyst
As a Stock Analyst, your next task as to find an Industrial Stock that had the right (low) price. CUE Vital Fundamental Analyst helps you do this analysis visually in minutes.
CUE Vital analyzes a Stock in itself and also relative to its Peer Group of Stocks. Presents all the data into multiple categories using easy to read color codes. There are various pieces of Fundamental information. For quick decision, you might just look at the CUE Vital Scorecard.
When we analyzed CECE using CUE Vital, the Scorecard looked like this on 3rd July 2017.
I will point to the few pieces of information here. You may get more detail on it from the Education Center.
1) CUE Vital can fetch a Stock's (CECE, in this case) Industry Peers and compared the Fundamentals. CUE Vital applies a Score of 1 to the weakest Stock and bigger scores to stronger Stocks across multiple dimensions. And finally, CUE Vital creates a Heat Map using intuitive color coding. Green/Blue is "healthy" or "preferred" condition. Red/Magenta is "weak" or "not preferred" status. Yellow is Neutral. That simple.
2) From column B you could instantly see that CECE had one of the best Earnings Reliability Score. Just seeing the Blue color was enough.
3) From column C you could immediately find out that Relative to its Peers, CECE was valued optimally. Blue background color told you that.
4) From column D's Blue color, you could infer that CECE had high Internal or Intrinsic Value.
5) Additionally, from column I, you could observe that CECE had a high possibility of Short Squeeze, again, merely reading the Blue color did the work for you.
What you had then? A Stock (CECE) with High Earnings Reliability that was Optimally Priced in itself as well as in comparison to its Peers and the Stock had a chance to shoot up due to Short Squeeze.
We already saw, using CUE Edge Sector-Industry Analyst that the Stock was in an Industry that was gaining strength.
You needed one last check before you could decide to Buy this Stock.
CUE Global Technical Analyst
You only make money Buying a Stock if the Stock goes up.
If you buy it while the Stock is going down, that is called "catching a falling knife". And you end up losing money. You probably would rather Buy a Stock that is not falling, like all other CUE Traders.
Therefore, the third and the last leg of CUE Analysis before deciding to Buy a Stock is to see if the Stock has stopped falling. Starting to go up. Or at least, forming a Base at the bottom and showing signs of strength.
You can analyze all these (and more) using CUE Global Technical Analysis. CUE Global Charing is also a Visual Tool like CUE Edge and CUE Vital.
On 3rd July, CUE Global chart of CECE looked like this (seen using Backdrop Weekly chart on the left and Hop On Daily chart on the right).
The chart labels tell the story. You may learn more about the colors and indicators on the chart from the Education Center.
Now, with the 360 degrees analysis, you had a Stock with a Buy Recommendation. Recommended by yourself!
And your recommendation would work well.
This trade idea was posted in Superior Profit Traders Community on 3rd July (here is the link to the post). And within two trading days, on 6th July, it has hit the Profit Target.
You may use the CUE 360 degrees analysis in this ways on any Market and any Stock in the world.
A) You might look for Industries that are weakening to either Protect Profit in Long Position or even to Short a Stock using CUE Edge Industry Analyst.
B) You might look for Fundamentally Weakest Stocks for Shorting and the Strongest Stocks for going Long using CUE Vital Fundamental Analyst.
C) You could pinpoint the exact Entry and Exit points of your investments and trades using CUE Global Technical Analyst.
With these three tools, you have everything to be your Stock Analyst. And invest confidently for profit.
Tesla had a stellar performance in last one year. Going up by 53% while S&P500 (SPX) went up by 21% in same period.
Out of that solid TSLA up move, last 3 months has seen a growth of 43%. SPX increased by only 7% in that period.
This lead to the quarterly earnings announced on 22nd Feb 2017.
What about so called experts' views after earnings data came out? Several of them came out with positive comments on Tesla like Baird's comment (seen from Thomson Reuters News): "Tesla Energy's potential is still undervalued", "Tesla suits the Made in America Theme ..." etc. And even went on to raise the price target of Tesla to 368. Tesla Close don 22nd Feb 2017, after earnings result was announced, at a price of 273. Huge potential upside - isn't it?
All these may lead a Superior Profit Investor to buy Tesla now. Not so for Superior Profit Investors. Why?
To start with, Superior Profit Investors are not lured by news events to buy at the top. Following Superior Profit Way, they would have taken a Long position in Tesla many months ago. And they would book profit or protect profit at current levels. Tesla is currently at CUE Pendulum High level now - too high a price to enter Long. Superior Profit's optimal place to enter Long Term Investment is at Pendulum Low Level.
Secondly (and secondarily; as Superior Profit Investors prefer to do their analysis rather than relying on others' estimates), though some analysts upgraded Tesla, the current target price of Tesla based on aggregate analyst estimates is about 245, which is about 10% lower than the current price. Current aggregate analyst recommendation is Hold and not Buy or Strong Buy. Also, though Tesla Q4 Revenue was somewhat above expectation, Q4 EPS came quite below expectation, and turned negative from positive.
Thirdly, as seen from the CUE Line Chart of Tesla using Weekly interval, it is at a resistance price zone and not at a support price area. This multi-peak resistance area is not a time to take a Long position in a Stock.
Finally, when we look at Tesla using CUE At A Glance view, which combines Weekly Backdrop chart with Daily Hop On Template, we see several indications of not going Long. And probably even signs to take a Low-Risk Short position in Tesla right now. Why so?
In Superior Profit Way of Trading Profitably, Fake Breakouts at CUE Memory or Watermark levels accompanied by Heavy Activity often gives us a Low-Risk Entry Point. Weekly Backdrop chart of Tesla is showing such Fake Upside Breakout. What's more, the Fake Breakout is happening at the same level where CUE Bearish Headwind foretold a sharp drop in Tesla around July 2015.
In summary, what is our view of Tesla for those holding a Long position? We suggest you book some profit. Or, at a minimum, tighten Stop.
In Superior Profit Way, we only take Low-Risk Trades that also have High Probability of success.
If you decide to Short Tesla at the current price, you might book or protect profit using CUE Protection price level once the Risk Distance ( the difference between Short Entry Price and Stop Price) is reached or if Tesla hits a Support Price Level after your Short Entry.
Where is the current Stop Price level for any Short position in Tesla? CUE System Traders use CUE Protection level for deciding that. In the last up move of Tesla that started in Dec 2016, this same CUE Protection let Superior Profit Traders hold on to Tesla Long position for the long haul and get a very significant profit while protecting it along the way with Stop orders. This same CUE Protection indicator may now be used for the Short position as indicated in the CUE Hop Off Template chart.
There you go. With Superior Profit analysis of Tesla, right after its earnings announcement on 22nd Feb 2017.
Our traders share such trade ideas regularly in our Traders Community (in forums including Trade-Ideas from Superior Profit, Graduates-Club, the invitation-only club for traders from around the world, etc.), and we discuss them frequently in our Live Classes. You may check those out. They are open to the public for free. As a Superior Profit's way of saluting the serious trades from all over the world.
For Day Trading, Superior Profit Traders enter trade precisely at the right time using CUE Fine Tune Real Time chart. And they book profit with discipline. Sometimes, if the trade has not entirely played out, they may carry the trade forward to next day. All along, executing the trade following a pre-thought-out plan.
The two trades I took on DIA (ETF) in USA Market using Weekly Options on 3rd and 4th January 2017 are good examples of this Superior Profit Way of Trading Profitably. I will share the detail of these two trades below.
To begin with, I like to keep an eye on the Broad Market indices, futures or ETFs of the country I am trading. For USA Market, these are the three ETFs SPY, QQQ, and DIA.
I had noticed earlier during off-Market hours that DIA was near Memory line in CUE Daily Hop On chart. I anticipated that the Memory might act as resistance and DIA might move sideways for a while or come down from the resistance; just long enough to make a Day Trade profitable.
Here is the CUE Hop On chart of DIA at that time.
As you may also notice, DIA had displayed a Bearish Headwind signal on the Daily chart a few days ago. That further supported my short term Bearish view on DIA for a Day Trade.
Next, I looked at CUE Fine Tune 5 Minute charts of DIA, QQQ, and SPY.
I noticed that DIA was the weakest. I observed this weakness by looking at the price movements of the three ETFs around the Fine Tune Pivot Levels.
CUE Fine Tune chart draws the Early Range Pivot Levels soon after Market Open. By looking at the Stock's move within or out of Early Range, we can see if it is Short Term Bullish or Bearish or Neutral.
If the Stock (or ETF) moves out of Early Range High, then the Stock is Bullish in the short term. And if it goes below Early Range Low, the Stock is Bearish in the short term. If the Stock moves within Early Range, then it is Neutral in the short term.
As seen from the Fine Tune charts below, DIA was not able to go above Early Range High. However, both QQQ and SPY went well above Early Range High in their respective charts.
In Day Trading, if I am looking for Shorting a Stock or ETF, I tend to Short the weakest among related symbols. This principle (and the Memory Resistance in DIA Daily chart) lead me to take a Bearish Day Trade on DIA using Weekly Short Call Vertical. I used "Short" Vertical to have time decay in my favor. Below is the Risk Profile of this trade.
I tend to place Good Till Cancelled (GTC) profit booking order on a partial position as soon as my Trade Entry is filled. In this case, I did the same. And within 1 hour; as highlighted in the chart above; half position was closed with 50% profit.
At the end of the day on 3rd Jan, just before Market Close, I looked up DIA in CUE Spotlight - which combines the Daily Hop On view and Intraday 5 Min Real Time Fine Tune view of the instrument.
This snapshot is shown below. I noticed that the Daily Candle was ending the day with a Bullish shape; with Long Lower Tail. And in the Fine Tune, 5 Min chart on the right, DIA had recovered significantly from Day's Low. As I initiated the trade as a Day Trade, and the day was ending with Bullish tone, I decided to close the remaining position at 25% profit. This trade resulted in a net profit of 37% on the full position within one day.
The trade was taken as Short Call Vertical using Weekly Options (DIA 6 Jan 2017, 199/200 Short Call Vertical). Below are the actual orders executed for this trade.
I closed the 3rd Jan DIA trade with profit. After closing this trade, I noticed that DIA was still below the Daily Memory Resistance. So, next day, on 4th January, I kept an eye on DIA. Looking for another opportunity to take a Bearish trade - provided the CUE charts signaled one.
As it turned out, again, DIA was the only one among DIA, QQQ, SPY that failed to go above Early Range High in the morning session after Market Open. And I took the same Short Call Vertical spread that I used the day before; using Weekly Options.
Here is the Risk Profile of this second trade.
As usual, I put my GTC profit booking order on half position at 50% profit level. However, this was not triggered. At the end of the day on 4th Jan, I looked up DIA in Fine Tune 5 Min chart. DIA did not go down. Neither could it go up. It Closed right inside Early Range. As the Daily Chart Memory Resistance was not violated, I decided to carry the trade overnight. Below is the CUE Fine Tune view of DIA at the end of the day on 4th Jan.
Carrying the trade forward turned out to be the right decision. Next day, DIA fell, and the GTC profit-taking order on half position was executed around 11 AM on 5th Jan.
I then put another quarter position profit-taking GTC order at 75% level. And before midday on 5th Jan, that was also triggered. I was then left with a quarter of the original position. And I decided to try to let it expire worthless. Knowing that from this point onward, the trade was a guaranteed Risk-Free-Trade. Even if DIA rallied, due to the loss-limiting feature of Vertical Spread, the overall trade was going to make a profit.
Here are the DIA Vertical Spread orders executed on this trade till this point.
Next day; on 6th Jan; which was the expiry day of the Vertical Spread, DIA did not come down. Instead, it went up and Closed at 199.51. Right in the middle of the two legs of the Vertical. The DIA Long 200 Call expired worthless. And the DIA Short 199 Call was worth 0.51. I had opened the Vertical Spared for 0.41 credit. So there was a small loss in this remaining position.
Overall, still, the trade made 44% profit in 3 trading days. I was able to capture a profit as I booked profit in a disciplined manner at 50% and 75% levels without hoping for a much larger profit on the whole trade.
The CUE Fine Tune 5 Min chart below explains the full trade Entry and Exits.
As these two DIA Day Trades show, a disciplined trader can use the CUE Charts to make a significant profit using Weekly Options. Superior Profit Traders do that regularly. And sometimes they share their trades while they are taking it.
Both of these trades were posted in Superior Profit Traders Community while they were entered. Not as a Trade Alert to fellow traders. But as a way of demonstrating how the CUE Charts may be used to take disciplined and profitable trades. The trades are posted before knowing their outcome. And sometimes; if required; our traders accept a small loss and move on to next trade. That detail is also shared in the Community posts.
You may find the 3rd January 2017 trade in Traders Community following this link and the 4th January 2017 trade following this link.
There are many similar Day Trade ideas as well as Long-Term Investment, and Swing Trade ideas in the Superior ProfitTraders Community.
I hope as you go through these trades, it will give you some insight on how Superior Profit Traders are taking profitable trades every day in different countries around the world.
If you read the many Internet sites explaining Options trading and listen to Options trading educators, you will find a deluge of information explaining how Options trading can be profitable.
Usually they proclaim: if the Stock is moving sideways, do this. If the Stock is going to break out and make a solid up move, do that. If the Options trade is not working out, then evaluate where the Stock is going to go next and adjust the Options. On paper, it all looks great. In reality, if you have traded Options following their advise, you will know that it is not so great in real life.
The secret and the challenge that the Options trading sites and educators do not tell you is how on earth can you know if a Stock is going to move sideways within a given time. Or how you can say if the Stock is going to go up or down in a period.
Why many educators keep quiet on this matter is because they don't have a profitable system to trade the underlying Stock in the first place. If one could do that, one could then apply Options trading strategies to multiply the profit percentage by using the leverage of Options.
Compare this with Superior Profit traders who everyday use the CUE Trading System to trade Stocks profitably. Using CUE System, they can reliably assess which direction a Stock may move (or not move) and make profitable trading decisions. And, therefore, they can also trade Options to multiply their profit on the Stocks using the same CUE Charts.
Here is an example of an Options trade I took recently using CUE Charts. I took this trade on Blackberry (BBRY) using Short Call Vertical (Bear Call Spread) just after Blackberry's earnings.
On 20th Dec 2016 as the USA Market opened, news media were full of reports of positive earnings from Blackberry. Below is one such news alert that caught the eyes of many investors on that day.
An ordinary investor might be tempted to buy Blackberry Stock on the news. After all, Blackberry lost only 0.22 cents per share in the current quarter compared to the loss of 0.71 cents in the previous quarter. And the Stock was indeed up 1 percent after earnings.
Looking farther back, Blackberry was down about 20% over last one year whereas S&P500 was up about 10%. BBRY was lagging the broad market, and one could think that the time has come for Blackberry to turn the corner and start going up after the earnings.
Like many other investors, I am aware of such earnigns news (I use Metastock Xenith/Thomson Reuters EIKON for news), and I am also cognizant of the earnings results/earnings surprise etc. However, unlike many other investors, I rely on CUE Charts to make my final trading decision. In fact, all Superior Profit Traders do the same every day. Let me explain how I took this very profitable trade.
Below is the CUE At A Glance view of BBRY after earnings showing how the trade was entered and how profit was booked. This snapshot of BBRY was taken during intraday on 22nd Dec as the Short Vertical Trade was partially exited with a profit.
As can be seen from the chart above, after earnings, BBRY tired to go up on 20th Dec. However, it had clear Memory Resistance above. That Memory Resistance proved strong enough, and the Stock reversed from that resistance with Extreme High Activity. This reversal was an opportunity to take a Superior Profit Bounce Short Trade.
What is Bounce Trade Setup? It is a situation where a Stock meets pre-existing Memory Trendline Resistance and then bounces down from there with extreme Activity (volume).
The Bounce Bearish Trade Signal came at the end of 20th Dec 2016. And the Bearish trade was established next day on 21st Dec, soon after USA Market Open, using CUE Fine Tune Real Time chart (not shown here). Below is the Reward/Risk profile of the trade as it was initiated.
At the time of entry, BBRY was just below 7.5$. For my trade, I used the BBRY 20th Jan 2017, 7.5/8 Short Call Vertical; thereby entering a Bearish trade.
This spread had about one month time and I was expecting BBRY to go down enough to let me book a good profit within one month. I used OTM strikes to set up the spread. This credit spread resulted in a positive Theta trade. Resulting in time decay favoring my trade; that is; the position would profit a little bit of money every passing day due to positive Theta.
I established Vertical Spread for a credit of 0.14$. Immediately after entry, I placed a Good Till Cancelled (GTC) order to buy back half of the position at half my credit amount; that is at 0.7$.
Very next day, on 22nd Dec, BBRY fell further, and my GTC order was filled. Resulting in 50% profit (calculated as 0.7$ profit on the original credit of 0.14$).
Today BBRY Closed above the Memory Support line - this can be seen from the CUE Chart snapshot below; taken at the end of 22nd Dec.
This day also had Heavy Activity. However, this is not a Bounce Long Setup. Such a setup would require the Close being above Last Day's Close. Which was not true in this case.
What will happen to BBRY tomorrow? Overall BBRY is Bearish in Weekly Backdrop chart (not shown here) though it has support at Memory Trendline in Daily chart. We don't know for sure what will happen to BBRY next. However, I have already booked partial profit. And will make sure that the rest of the position does not go into a loss. Thereby making it a Risk-Free trade from now on.
This BBRY Vertical Spread Options Trade shows how Superior Profit Traders trade Options. Using CUE Charts to analyze and determine which direction the Stock is more likely to move. And then use an Options strategy that helps take advantage of that potential move.
Once you use CUE Charts, you would also be able to uncover the untold secret of making a profit from Options. The "untold" secret being: "how to determine a Stock's potential move first; before deciding upon an Options Strategy." CUE Charts and the unambiguous rules of Superior Profit Way comes of good use to Options traders; just as is invaluable to a Stock Trader.
Citizen of Main Street.