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Jun 12

Entering Long Lockheed Martin ($LMT)

Call me crazy, but I’m still finding uptrends out there. People seem to be getting awfully bearish all of a sudden, and I get it, the market is off its highs, it’s started having reversals from gaps higher – always a bad sign – but there’s always an uptrend somewhere, and we have one in $LMT which we will enter at Thursday’s open.

AlphaCapture

There’s nothing to not like here. Smooth uptrend over the last 3 months, each rally phase on increased volume, including the most recent upswings as it resumes its uptrend and tries to reclaim those highs. I think a break of support at the $102.01-$101.35 level can act as a stop, and gives us a good risk-reward trade.

AlphaCapture

Looking at a chart for the last year we can see the bigger context. $LMT had been in a lengthy consolidation pattern, held in a $10 range for over 6 months, and has arguably only recently emerged from that by the same magnitude so it could still have legs here. The chart relative to the $SPY (below) also shows it well. It’s only recently started to shine after a lengthy period of underperformance.

AlphaCapture

 

 

 

10 comments

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  1. truecharttrader

    hello jboorman,
    appreciate all your detailed notes here.

    instead of asking questions in stocktwits, i thought i can post here.

    i am thinking this entire stock market is a rigged game. i am new to markets. was there after the 2008 crash and quit and now back for close to 1 year.

    1. what i don’t understand is that there is bid bid and bid always. meaning let’s take brcm for example. this stock was falling for last continous 10 days and bids are there always. why? can’t somebody see from charts that support is 50 dma and if that broke it is 200 dma and if that also broke, it is easy low 33 and in panic low 32 to 31.5 as well? so why bother bid bid and bid every tick. is this the shorties hedge funds who are accumulating shorts and killing the stock?

    2. when there is no reward for good earnings release and beat guidance why bother to buy and hold any stock. examples are kors and brcm. both are down 10 to 15% from their top on stellar earnings. kors is pathetic. it has not reacted to 2 HUGE earnings release. so why bother buying stocks at all.

    3. trends. a trend is a trend only if you think so. for instance kors can do 51 all the way now from 60 and then come back to 66. so you have got good earnings release at 63, you bail in panic at 60, then you buy the dip at 55 and then panic at 51. so the trend is not in the charts but in your mind. (51 i put as it is a solid support area for a long time).

    4. screwed up markets weirdly reacting. look at safeway swy today. in a.h it went to a price NOT seen since 2008. so the market has been pricing the stock WRONG all 5 years and only when swy canada division was purchased for the price of the entire company worldwide the hedge funds knew it was cheap!!

    5. manipulation – aapl is a classic example. on repeat missed ER, they rigged this from low 500 to 700 on iphone 5 fantasy and even at 640 when iphone 5 came and it was just an ordinary upgrade, they ran it to 700. now so many families have been hit brutally buying the hype here.

    6. weird sectors like solar. stocks like fslr spwr ldk has wiped out families. these stocks are trading as though they are bull stocks every day. bid bid bid and bid every tick in this. fslr for instance was bid every time from 300+ to 11+!!

    7. some stocks like visa or mastercard can outperform and can be in uptrend due to their unique nature. but a few stocks like these does not make a market.

    8. chip stocks – these kind of stocks has no upside. look at qcom. stuck for nearly a year and still in uptrend. brcm at 33.5 is at 2006 price!!

    in summary, i think stock market is extremely unsafe, unreliable and unworthy. maybe your trend helps you but trend is a trend until it is not a trend in your mind :-)

    -truecharttrader

    1. Jon Boorman

      Thanks for your note. There is a common thread in many of your points. You clearly have a preconceived idea of how things should be, how stocks should react to certain events. So when they don’t, or the reasons for the price moves don’t make sense to you, you resort to calling it manipulation or being rigged, because otherwise it can’t make sense. You are trying to make the market price action fit your idea of how things should be. Wherever you got this idea from, you need to abandon it, you will not be able to trade successfully if you think everything always has to make sense. Things will never make sense all the time. I have learnt to only trust price action. I don’t care why something moves, only that it does. Price is the final arbiter of everything. I want to sell something higher for what I bought it. I don’t care whether the move is justified or not, or whether it accurately reflects earnings expectations, or if it fits in with Goldman’s upgrade. None of that stuff helps you make money. Only price pays. Price is what you pay when you enter, price is what you get when you exit. You can’t cash in earnings or research upgrades. Only price pays. Study price and trends, forget the why. There are great trend followers out there who consistently make money every year in up and down markets. It’s not through stock picking, it’s through their exits and position sizing strategies, that’s what makes money. Start by reading Michael Covel’s books on Trend Following, and take every indicator off your charts except price. And turn off your TV. You’ll be glad you did.

  2. truecharttrader

    I am not able to agree with you sir. Meaning, I am also talking only about the price in all my points. I am just telling earnings is one of the factors to consider (on top of charts, price, trading averages, price in last 3 months, last 6 months, last 1 month, etc, etc).

    But that so called price, in a trend, is illusional. Meaning, yes, if you got gmcr cheap at 15 or 20 where it bottomed and you are lucky. Or visa like stock early like 60 or 70 where valuation wise it was cheap which supported its uptrend. or apple in 200′s. So this price – your favorite and perhaps the only point you look at – is illusional.

    That illusion is manipulated. As I put above you can be lucky early on some stocks and get avoid the maniuplation but most stocks at most times are manipulated. Very few stocks like visa or celgene or splunk which are unique avoid the manipulation.

    let’s take visa for instance. it went to 185 (from 165) due to earnings. it will easily bid bid and bid back to 165. if you are early say 120 or 130 you can still hold and need not bother. but in this uptrend you got say 300 or 500 visa at 178 support you got slammed by 5k easily when it finds big time support at 160 to 165. so the price is the illusion on the uptrend expect that you have raked in losses where if you are early like 100 you can sit pretty tight.

    Like in real estate where you buy really low and hold and make profits, in stocks too, you have to do that. And when you do that talking about trends is easy. Why? because you were early like visa for instance or aapl at 200 for instance when it was trading at super cheap valuation and very early in growth cycle.

    Let take brcm. You are telling you are going to quit 33.5 breakage. But if you look at that stock, it is exactly at support area in low 32′s and HUGE support area in low 31. which means as per your trend you are quitting exactly where you should buy or even hold much tighter. But if you are in brcm from 12 (my friends are), you do not bother as you are early and can talk about uptrend!! :-)

    I think trend is one and only useful if you want to buy the dips and sell the rips because the stock is not broken. But to hold on to dear life for that trend will smack losses if you are not in that trend early. For instance visa you can buy the dips and sell the rips with if it dips into 178/77/76 depending on trading as the stock is not broken. But on say crm salesforce which is now a broken stock, you do that you rake up huge losses as the stock is broken.

    1. Jon Boorman

      Price is not an illusion. Price is the only thing that is real, and not subject to revision like earnings or forecasts.

  3. yogikeung

    why buy a book on trading when you can simply print out Jon’s reply and paste it beside your screen. :-)
    I’ve just added the following to my mantra “Only price pays, study price and trends, focus on exits and position sizing”,….results = make money :-)

  4. yogikeung

    I can’t help myself and post another. I don’t want to elaborate, and definitely not trying to be disrespectful but as a beginning trader, all I can say is “I identify myself with every point truecharttrader posted so far”.

    1. Jon Boorman

      Van Tharp says ‘The more you believe something to be true, the more you will have accumulated evidence to support it.’ When you trade, you don’t trade the markets, you trade your beliefs in the markets. My set of beliefs have been accumulated over 25 years, they will be different to yours and truecharttrader’s. I can only tell you what I believe and what works for me. Everyone has to find their own way, but I do know that cynicism, or belief that the system is rigged etc, has never featured in any winning trader’s playbook.

  5. yogikeung

    I mentioned I did not want to sound disrespectful, but I should clarify.:-)

    My identification with Truecharttrader’s comments reflect my current belief system in regards to trading, in full disclosure, it has not worked very well for me so far! :-)

    I have not read Van Tharp (yet), but looks like a must read,…thx

  6. StockThrust

    and what if it is rigged? how is that going to make you money. you are not going to know where the exact turning points in any time frame chisen with 100% accurracy.

    Nor do you dont control the instrument you are trading. You are just a participant. Your beliefs of the market being rigged doesnt help you even if it were true.

    instead of complaining about the market being rigged, spend more time seeking trending instruments, jumping aboard and riding it to your comfort level. thats all trading is about … finding trends, getting on and getting off.

    1. Jon Boorman

      Agree, I find accusations of the market being rigged lazy and tiresome. It’s the catch-all excuse for when something doesn’t work out, rather than looking within it’s easier to blame ‘them’ and think of yourself as a victim.

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