Forecast for Tuesday

My forecast for Tuesday has changed due to new information at the end of the day. I know think that the cubes are going to move up a bit tomorrow and then chop. Lets refer to the chart:

I have drawn in the path that the QQQ is likely to take over the next several days, in part because the three indicators are showing some up is on the way. Note for the last 2-3 days there has been candles with bottom tails. The adx DI- is showing its second double peak in a series of double peaks that I have circled above, and now the red line is due to drop, which means the inverse for the stock price.
The Williams %R has a bit more until the bottom of the graph, however there was a middle bottom in the middle of last april when the other indicators looked similar.
So for tomorrow, a bit of up.

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Purchase Put on VTL

Today we are going to purchase a put on VTL.

VTL therapies reported a Q2 loss but slightly beat expectations so the stock is climbing erroneously. Lets look at the chart:

You can see that today's candle has a top tail. This combined with the semi poor results should have this stock deflating a bit over the next day or two. Surprisingly, the option prices were rather high for August, which expires in three weeks. Below is our in:

I am still checking around for today. It doesn't look at though there is any strong buy or sell signals for the QQQ and SPY, however I expect them both to drop tomorrow. I will explain why in a later post today.

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Short LXRX

Today we short Lexicon Pharmaceuticals. They had a good phase 3 trial result. Lets look at the news:

What: Shares of Lexicon Pharamceuticals (NASDAQ:LXRX) skyrocketed by over 50% today on massive volume after the tiny biopharma announced that the experimental drug, oral telotristat etiprate, met its primary endpoint in a pivotal late-stage trial of lowering the average number of daily bowel movements in cancer patients with carcinoid syndrome not adequately controlled by the current standard of care. Carcinoid syndrome is a rare disorder affecting patients with neuroendocrine tumors, causing patients to experience severe bouts of diarrhea. 

So what: Since its inception, Lexicon has seen numerous clinical products flame out. Today's news marks the struggling biopharma's first late-stage clinical success of any kind, and potentially the turning point in the company's operating history. 

Now what: Following these positive top-line results, Lexicon plans on filing oral telotristat etiprate's regulatory application for this indication with the U.S. Food and Drug Administration in the near future. Given that the drug was previously granted Fast Track designation by the FDA, it could be on the market as soon as the first-half of 2016, assuming approval.

While the drug's peak sales potential is somewhat fuzzy due to the rare nature of this disorder (typical of orphan drugs in general), oral telotristat etiprate was granted "Orphan Drug Status" by the FDA for this patient population, meaning that it would likely garner a premium pricing structure upon approval.

But perhaps more importantly for investors, at least in the short-term, is the fact that the industry's appetite for gobbling up orphan drugmakers with promising clinical-stage products has gone largely unchecked this year. Lexicon's name is therefore almost certainly going to make its way into the buyout rumor mill in the wake of this positive clinical update. 

The news today was basically like a loose football that everyone piled on. I think it was too premature, the stock wont have a product out on the market making any money until next year. On top of that, it still has another stage of approval to get through with the FDA, and it could be halted at any time. I think a 50% jump is an emotional overreaction to something that is not yet making any money. The options were out of range with this stock, so we just short it at 13.56.

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Update in Progress

Back from a meeting update in progress

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A new Trading Indicator: F-Score

I was looking around for new technical analysis tools and I came across something called the X indicator: The below link is from a website that is trying to sell you something but I took a long hard look at what this guy was doing...the website  has a video presentation. If you watch it, again, hes trying to sell you something like an advisory service. But I found out what he is doing and what indicators he is using.
The link:
http://pro.moneymappress.com/MMRWND129/PMMRR7BJ/?iris=390803&h=true

It turns out that what the red line and the green line is a form of the Aroon Indicator, which can be found on stockcharts.com.

I have found that if you go to stockcharts.com and overlay the Williams%R with the Aroon Indicator and the ADX with - and +, DI (the red and green line with the solid dark line) you pretty much have his indicator and it is more accurate than what he is using.

What this guy is using in his presentation is an attempt to make an easy graphical representation of the actual study paper from the University of Chicago on how to accurately predict value stocks with a very good filter. The actual study and corresponding links are found through the below link:

http://www.stockopedia.com/content/one-indicator-to-rule-them-all-the-piotroski-f-score-66530/

This is an excellent starting point in discovering about the Piotrosky F-Score. It has 9 perameters to screen out stocks that have a great chance in making some big up moves. And it does not involve a chart like in the guys video presentation from the first link on this page.
It turns out that my indicators that I use, the Aroon, the ADX with -DI and +DI and the Williams %R is actually more accurate if you are looking to use indicators. You can find these on stockcharts.com.

The above is trading for the more long term. This is if you plan on holding a stock for min 6 months. With the 6 month+ model you can go through 3 thousand stocks with a preprogrammed scan from the above 9 criterion.
Check it out.

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Market Forecast for Monday

So what is going to happen Monday? I feel that there is going to be a failed push up and then confusion in the markets and choppyness Monday afternoon after a push up in the morning. Lets take a look at the chart for QQQ:

Things were looking good until there was a red candle on friday. Even though the red candle had shown up friday, it still had a bit of a tail on the bottom. But not by much. A few things here: number one, there is divergence with the Williams %R indicator, which usually spells trouble. This makes me thing there is going to be a slight push up monday morning, but there just wont be any steam left behind the market to keep things up in the air. Expect chop Monday-Tuesday.
Also I am seeing the beginning of a coiled spring here. If this continues to coil we will check to see which way things are going to blow: the topside or the bottomside.
But for now what you need to know is to expect chop Monday and Tuesday.

Look for an interesting post on a new type of indicator I discovered later today to greatly help you in your stock scans.

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