Weekend Update: Return of the Red Candles


NanoString Technologies (NSTG)

Starting off this weekend an update on last week's new biotech recommendation, NanoString Technologies (NSTG).  It released 4th quarter 2018 earnings on Thursday which caused the stock to have a range on Friday from an open at $22.60 to a close at $29.54. For the week NSTG was up 9.7%. It is not too late to buy and now that earnings is out of the way, a lot safer buy, albeit almost 10% higher than it was a week ago. Note the breakout on the long term chart below. Here is link to a very upbeat conference call with the President and CEO: Q4 2018 Earnings Conference Call.



 Market Update

For the first time since the Thanksgiving-Christmas market mini-crash the S&P 500 red candles have won a week; putting in four red candles in succession. The last time the market showed such downward momentum was early December just as the Dow began a fall of over 4,000 points in less than three weeks. In addition, last week's lower prices broke important trend lines, the upward channel from Dec 27th,  as well as the S&P 200 day moving average. Probabilities favor the bears for the first time this year.

There is one catch: The Fed and Central Banks across the globe have been steadfast in their defense of global equity markets. They intervened over Christmas to prevent a global market crash from which the markets would likely have still not yet recovered. They intervened in 2008-2009 to prevent a financial catastrophe well beyond the scope of the Great Depression and in so doing probably prevented a worst case scenario of international political upheaval. The lesson is to not get too carried away with Armageddon scenarios (nor to be unaware).  Central bankers work as a backstop,  but should they ever fail in that role, the monetary returns on short positions will pale in comparison to the geopolitical ruin that would almost certainly be accompanied by a global currency and economic apocalypse.

Have a nice week. 

Most Interesting Charts of The Weekend


 Fifteen minute SPY chart reveals a series of 1-2 waves down. The pattern suggests (but doesn't guarantee) a gap-down 3rd wave next. So long as that probability is there, it made sense to be holding some puts over the weekend. The down red arrows represent system sell signals on these 15 minute bars, based upon the same algorithm that generates system sells on the Daily and 180 minute bars we use in the two trading services. 





*Note that 13 out of 16 open trades have reached +35% profit taking thresholds.