Twitter is gaining some serious traction as their business model is starting to make more sense with each passing day. Heck, even I am on Twitter now ;-) Kidding aside, the name of the game is to wait for the charts to confirm one’s bullish assumptions. The long white candle TWTR – Twitter printed today is the confirmation technical traders had been waiting for. There was no serious selling into the close which is a sign traders and institutions were building positions today in order to hold for the medium to long term.

As of yet FB – Facebook is the undisputed social media king but TWTR is starting to get its act together. To make a long story short, from a valuation perspective TWTR has probably more potential than FB and should start to outperform its peer stock. Time will tell.

Today’s break out to the upside with TWTR looks extremely constructive due to the significant volume increase and the break out of its recent sideways trading channel drawn in blue. If we see follow through within the next few days this will drastically increase the odds for TWTR to have started a run to the upside. I drew the potential start of an ABC chart pattern into the chart. According to technical analysis a conservative price target around 60$ seems more than reasonable.

Click on TWTR chart to enlarge:

What makes the current situation very interesting is that institutional money can easily pile into such a liquid big cap name like TWTR. Once they pile into a new name the run tends to last for quite some time as institutional money needs a lot of time to build their entire position. They also tend to support the stock all the way up until their initial reason for entering is invalidated.

Assets are worth owning when their price is going up. This seems obvious but it is amazing how many investors I meet who own stocks because they were going up in the past, not because they are going up now. There are a lot of investors living in the past. – Tyler Bollhorn

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Here’s another constructive looking Biotech stock I recently mentioned on social media. NLNK – Newlink Genetics is trading at an all time high. If you are a regular reader you know that this is a very bullish situation. Buyers are in control.

With NLNK I see the potential for the stock to gap up above the blue resistance line drawn into the chart. If that actually happens I would consider it to be a measuring gap. Often measuring gaps occur exactly at the mid-point of a move. In NLNK’s case that would be slightly above the 50$ mark which would open up the possibility for NLNK to reach the 100$ “century mark” at some later point in time.

As anything can happen with Biotechs, it is best to always keep in mind the bearish scenario. In NLNK’s case, the former all time high price area would serve as resistance and stop a further advance. The most likely scenario for NLNK would then be to move down to test weekly MA 30 support.

Conclusion: As I’ve outlined in my XON Intrexon – Superstock post, Biotech is the strongest sector around. So that’s the pond I want to fish in. The reason is simple: ‘In uptrends, surprise moves tend to be to the upside’. My job as a trader is pretty simple: Find strong trends and expose myself to those strong trends.

It’s not about smarts in this business. It’s about working with drive, ambition and tenacity, even when your results have been truly awful and you just don’t feel like it. Most human beings don’t do this. The great traders reject failure and overcome pain. – Charles Kirk

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These are two extremely bullish looking Biotech stock charts. Both are trading near their respective all time high. I recently posted them on Twitter and wanted to highlight them:

CLDN – Celladon

CLDN recently gapped above its all time high. From a purely technical perspective this is the most bullish price behaviour you could possibly ask for. It goes without saying anything can happen with Biotech stocks. That’s why you should never bet the farm on any single stock. Get exposure to lots of bullish set-ups and let the market do its thing. That said, the gap up has to be considered a break-away gap which implies potentially much higher prices down the road.

QURE – Uniqure

QURE is one of the strongest Biotech charts around. In order to qualify as ‘one of the strongest’ it obviously has to trade near its all time high. From a purely technical perspective, trading near the ATH is bullish behaviour.

Conclusion: When it comes to technical analysis it is best to keep things simple. When I am dealing with charts like the ones above this is what I always keep in mind:

In uptrends, surprise moves tend to be to the upside.

There are those who think that they are studying the market when all they are doing is studying what someone has said about the market instead of what the market has said about itself. – Richard Wyckoff

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If you follow me on Twitter you will have noticed my latest tweet on what to expect during uptrends and downtrends:

This is my 17th year trading the markets. The above statement is the essence of what I am experiencing on a daily basis. In order to get exposure to potential super winners you have to identify the right pond to fish in. Then cast your line in that pond and ignore all other ponds. As far as trading is concerned my job is to identify the strongest sector, to stick to the charts and to seek maximum exposure to that sector. I then keep doing that until it stops working.

Right now, the only game in town is Biotech. As long as fishing in that pond yields good results I will keep doing it. It goes without saying the party won’t last forever, but looking at the charts, the great majority of Biotech stocks do look extremely constructive and odds are they have a lot more room to run until the bubble bursts.

If the bull move continues, I highly suspect the Biotech sector will produce some spectacular winners like TSLA – Tesla Motors. Everybody wants to own and profit from potential super winners. But nobody wants to do their homework. And certainly nobody wants to go through the tough part of Embracing Ambiguity. That’s why most traders never end up owning these super stocks.

These are the characteristics of monster winners and why it is so difficult to buy them and hold them all the way up:

  • Their business is most often new and unproven
  • There is a lot of ‘information risk’, nobody knows if the company will make it
  • The stock is printing new all time highs
  • Price is extended and it feels like chasing
  • No earnings, no value in the traditional sense, the stock is extremely expensive

As you can see, there is only one way to own these type of companies. You have to be able to Pull the Trigger and assume full responsibility for your actions in an environment that is characterized by extreme uncertainty. Nobody can help you pull the trigger. You either do it or you are out. As I have said quite a few times in the past:

Great traders offer no excuses. They assume full responsibility for all their trades.

Here is how the weekly TSLA – Tesla Motors chart looked like before it proceeded to run up to above US $280. Click to enlarge:

Super stock performance produces superstars. I am pretty much convinced the Biotech sector will produce a superstar similar to Elon Musk. Maybe it is going to be a guy like Randal J. Kirk the CEO of XON – Intrexon. It really doesn’t matter. My point is, the stars are aligned for the Biotech sector to produce a cult figure. To make a long story short, XON has the look. The time is right, as it is part of the strongest sector around. Interestingly the chart looks very much like TSLA did a while back before it started its monster run.

Intrexon has huge story stock potential. The company could emerge as the leader of the ‘Bioindustrial Revolution’ one of the most compelling investment themes around. If you want to dig deeper, two companies with very bullish looking charts it has collaboration agreements with are: ZIOP – Ziopharm Oncology and SYN – Synthetic Biologics.

Click on the weekly XON chart to enlarge:

Conclusion: It simply doesn’t get more bullish than that. This is actionable advice as opposed to hindsight analysis where the results are always 20/20. That’s precisely why there are no guarantees this trade will actually work. What I do know though is the following: Get exposure to the very best stocks in the very best sector. Take lots of small trades. Don’t bet the farm. Manage risk. Stick to the process. Assume full responsibility. Over time you will be rewarded.

XON – Intrexon company profile from Yahoo finance:

Intrexon Corporation, a biotechnology company, operates in the synthetic biology field in the United States. The company, through a suite of proprietary and complementary technologies, designs, builds, and regulates gene programs, which are DNA sequences that consist of key genetic components. Its technologies include UltraVector gene design and fabrication platform, and its associated library of modular DNA components; cell systems informatics; RheoSwitch inducible gene switch; AttSite Recombinases; protein engineering; mAbLogix; and laser-enabled analysis and processing. Intrexon Corporation has collaboration agreements with ZIOPHARM Oncology, Inc.; Synthetic Biologics, Inc.; Oragenics, Inc.; Fibrocell Science, Inc.; Genopaver, LLC; AquaBounty Technologies, Inc.; S & I Ophthalmic, LLC; Biological & Popular Culture, Inc.; OvaXon, LLC; Intrexon Energy Partners, LLC; and Persea Bio, LLC. The company was formerly known as Genomatix Ltd. and changed its name to Intrexon Corporation in 2005. Intrexon Corporation was founded in 1998 and is based in Germantown, Maryland.

It takes effort to create the kind of disciplined approach that is necessary to become a consistent winner. – Mark Douglas

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A few months back I created a sector overview chart containing China ETFs and Shanghai A-Share ETFs. The huge move in the Shanghai Index SSEC looks like a long-term breakout implying much higher prices down the road.

No matter what happens in the long run, the short to intermediate term outlook looks very bullish as the charts are setting up in ABC move fashion. The uptrend leading into the recent consolidation pattern should resume anytime.

Click on the Shanghai Index chart to enlarge:

Always up-to-date SSEC Shanghai Stock Exchange chart on my public list.

Click on the China ETF Sector Overview chart to enlarge:

Always up-to-date China ETF Sector Overview chart on my public list.

The China sector overview chart contains the following ticker symbols: FXI, PEK, ASHR, CNXT, ASHS, ECNS

Click on the CAF Morgan Stanley China A Share Fund chart to enlarge:

As you can see in my chart annotations there is overall pattern pressure combined with immediate pattern pressure. The chart has built a long-term bottoming pattern and the recent run-up is most likely the first leg of an ABC pattern. Odds are very high for the uptrend to resume soon. The pattern offers a price target around 40$ which coincides with a former significant price high. On a break out to the upside this former high will most likely act as a price magnet therefore increasing the odds of the 40$ price target to be met.

If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right. - Ed Seykota

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MVNR Mavenir Systems – Mobile Internet Voice Over LTE VoLTE Bullish Stock Chart

February 14, 2015

Quick technical update for a stock I mentioned on Twitter. A few weeks ago the stock printed a ‘Silent Alarm’ candle. Although follow through came with a delay, the implication is the same. The ‘Silent Alarm’ pattern is simply a means to accumulate as many shares as possible while still flying under the radar before [...]

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IPHI Inphi Bullish Chart – Technical Analysis Implies Higher Price Targets

February 12, 2015

In order to find potential big winners in the making there is really not much you need to do. You look for big institutional volume footprints and you monitor how stocks react to earnings releases. I cannot repeat this often enough: Trading is not about guarantees. It is about waiting for all the stars to [...]

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IoT + M2M Sector Overview – Potentially Bullish Chart Set-ups For SWIR, MIFI, SIGM

February 3, 2015

Quick update with my thoughts on a few stocks that are part of the IoT ‘Internet Of Things’ and the M2M ‘Machine To Machine’ sector. The annotations I drew into the chart reflect my bullish bias for SWIR – Sierra Wireless, SIGM Sigma Designs and especially for MIFI Novatel Wireless. SWIR – If the stock [...]

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RGLS Regulus Therapeutics – Potential Biotech Super Stock

January 27, 2015

The Biotech sector IBB, XBI, FBT etc. is still the best performing sector out there. The Semiconductor sector SMH, is acting very strong and is somewhat more interesting as single stock risk is generally less pronounced as opposed to individual Biotech stocks that disappoint. But Biotech is outperforming Semiconductors right now. So one simply cannot [...]

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SIMO Silicon Motion Technology – Semiconductor Stock With Blue Sky Potential

January 22, 2015

The chart of SIMO – Silicon Motion Technology is a stock offering ‘Blue Sky Potential’. That will obviously only be the case once the bullish cup with handle pattern completes. A completion of the pattern will coincide with a break out to new all time highs. We are not there yet. Also keep in mind the [...]

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