WY: Weyerhaeuser Co. Building a solid base

WY: Weyerhaeuser Co. reports earnings next Friday July 30. No matter how you decide to find trades or investments you can’t ignore a huge spike in volume combined with a 24% increase in price.

Whether you are day trading or value investor this stock is building a classic base; one that is consolidating its recent gains as well as giving you a terrific risk point to plan for a solid risk/reward.

Initiating the first part of my trade here with a stop below $39, there is some short term resistance to get through at $44. A close above this level I plan to add to the trade which should take me to my profit target of just over $48.

If I start to see similar price action in IP: International Paper and LPX: Louisiana Pacific this will confirm money is flowing in to the sector for earnings season and I will increase my capital allocation on the idea.

Stcok will adjust for dividend today and conversion to a real estate trust, let the charts clean themselves up and scenario will still be good.

Keystone Trading

BRCM: Broadcom on the launching pad

Broadcom: BRCM is setting up for a terrific risk reward breakout play. The breakout level is the $37 area and the profit target is $43. In the current stock trading environment I do not recommend getting involved on the first breakout. Too many false moves lately.

I will be waiting for the first multi-day pause above the $37 level and then will begin to build my position in three pieces. Initial stop loss would be a close on the daily chart below $36.

Earnings are in two weeks (July 27) The best case scenario would be to begin accumulating our position before the earnings and sell into a good report.

How Does an Active Trader Handle This Market?

Ever since the “Flash crash” on May 6th, the markets have gyrated like a rubber band – no doubt fooling the “retail investor,” who typically buys high and sells low, ultimately chasing each and every move. The buy and hold strategy of years past has proven to be unsuccessful. In these markets, where some say as high as 80% of trading is computer driven (algo trading), it is more pertinent than ever to become more of an “active trader.”

At Keystone Trading, 85% of our trading is done on an intra-day basis. In other words, the positions are closed by 4pm EDT. The other 15% of our trades are in a 1-3 day time frame. Put simply, we are profiting from the short term moves, rather than sitting back and watching profits turn into losses. We are consistently monitoring order flow and looking for “high probability” situations.

As an active trader, we rely heavily on technical analysis rather than company fundamentals. Las Vegas Sands (NYSE: LVS), for example, happens to be one of the stocks that we watch closely and trade aggressively. Technically speaking, the stock has been a beast since early March, when it was trading at around $16.50 a share. It traded as high as 26.55 before the flash crash, only to regain steam after finding support at $19 and make a new high of $27.85 on June 21st. However, once it failed to hold the support level at $25.50, we quickly sold out of our long positions and shorted the stock, setting our stop at $26.59 with a profit target of $22.73. In other words, we were willing to risk $1.09 to make $2.77 on the trade. LVS hit our price target today and we covered for a nice profit.

Do all of our trades work out this well? Of course not. But the important point is that we always calculate our risk-reward dynamic before we enter a trade. Typically, we look for at least a 2:1 ratio. The key element to an active trader is to be constantly assessing probabilities and market conditions and only to take trades when these factors line up. We never trade for the sake of trading.
As a proprietary trading firm Keystone Trading Group seeks partnerships with both new and experienced traders.

Our traders trade exclusively for the firm’s own account and are provided with the proper resources to grow their trading business.

Experienced traders with a documented proven track record will be allocated firm capital to trade.

Firm capital allocation and risk management parameters are based upon experience and performance.

Aspiring professional traders and/or those that lack a documented track record can earn a trader position with Keystone Trading Group upon successfully completing a KTC (Keystone Trading Concepts) training program.

All trainees in the mentor programs will be allocated firm capital to trade while being instructed and coached by seasoned traders. Keystone absorbs any trading losses

Massive Selling Hits Wall Street

U.S. equity markets were besieged by sellers today as concerns about the state of the global economic recovery and sovereign debt problems in Europe continue to weigh heavily on stocks. Making matters worse were bearish reports from The Conference Board on Chinese growth and U.S. consumer confidence.

According to Reuters, The Conference Board on Tuesday corrected its leading economic index for China to a 0.3 percent gain in April rather than the 1.7 percent rise the group earlier reported.

The Conference Board’s U.S. consumer confidence index fell from a revised 62.7 in May to 52.9 in June. Consensus estimates were that the index would only fall very slightly to 62.0.

The Dow Jones Industrial Average fell 268 points to close below the 10,000 level at 9,870. The Dow traded in a range between 9,812 and 10,202. Year-to-date, the widely watched blue chip stock index has lost 5.35%.

The SPDR S&P 500 ETF (NYSE: SPY) lost 3.09% to $104.21 on Tuesday. Ominously, SPY volume was very heavy, with over 360 million shares trading hands compared to a daily average of just 262 million. Once again, volume has been heavy on down days, and light on up days – not a good sign.

Gold moved marginally higher, as the fear trade was back on across Wall Street. COMEX gold futures gained $1.80 to $1,240.40 an ounce. The SPDR Gold Trust ETF (NYSE: GLD) added 0.15% to $121.27. All-time highs were breached on an intra-day basis in the GLD yesterday, before prices pulled back. Look for a re-test soon.

The rally in Treasuries continued in a major way during Tuesday’s session. The iShares Lehman 20+ Year Treasury Bond ETF (NYSE: TLT) jumped 1.09% to $101.07. Treasury notes with a 10-year maturity are now yielding an ultra-low 2.9545%.

Keep a very close eye on the bond market to gauge the near term direction for stocks, as the continued push into Treasuries is suggesting investors are frantically reducing risk exposure.

The U.S. Dollar was higher today, as money flowed into dollars and away from currencies which are perceived to entail more risk. The PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the dollar versus a basket of foreign currencies rose 0.48% to $25.08. The closely watched EUR/USD pair is now trading at $1.2188.

Tesla Motors (NASDAQ: TSLA) began trading on the Nasdaq exchange today after the company’s IPO raised over $220 million. Tesla is a Silicon Valley electric car maker. The shares surged an incredible 40.53% to close at $23.99. The deal had been priced at $17 which was above the expected range of $14-$16. The size of the offering was also expanded by 20% on Monday due to strong demand.

Benzinga

trading your pre planned ideas

My plan today was a short bias on the markets and to sell stocks in my list that showed weakest on the daily charts, such as AK Steel (AKS) and Best Buy (BBY). Looking at Fridays trading, I planned two scenarios that I felt had high probabilities of playing out. The markets where either going to open weak and continue to sell off in which case I would short the 15 min ORB (open range break) or the markets would open with buying pressure and I would trade the first 15 min swing high, with the first profit target being the lows of the day; and possibly a break of those lows for continued selling momentum. As you can see from the price action the latter happened as the SPY in the first 45 min of trading tested the 15 min 20 period SMA which held as resistant creating a swing high, which gave us our first opportunity to short weak stocks.

Unfortunately I was not able to catch a good risk reward in AKS as the markets created the swing high, so I had to be patient and wait for a break of the lows around 13.07 as the next possible short; which unfolded for a nice momentum move down to the 12.80 area. In the afternoon BBY seemed to be the best short on my list in the lunch time consolidation below the morning lows. Even though price action did follow through to the downside in the late afternoon trading, you had to be quick on the keys and get a good entry to take advantage of the downward momentum.