Week of uncertainty

Good morning,

This is a new week for us to filter and decide which stocks to buy using the KUTE trading system. First let us evaluate the macro for the week. This week will be a shorter week as the US market will be closed on Monday. I am expecting this week to be tough, as there will be many earnings reports and results from the big financial companies will take centre stage. There will be more than 400 companies issuing their reports between Tuesday and Friday, two important housing reports on Tuesday from the National Association of Home Builders and the Commerce Department December report on housing start and building permits and the weekly oil inventories and jobless claims. The Cycle Trend weekly charting is indicating a downside decline potential but the weekly candlestick “buy-if” formation does not confirm the cycle trend direction. Considering these factors, I am expecting the markets to be trading with a broad range and my strategy for the week will be to buy and set limits at 10% for return targets.

The KUTE selected stocks for this week are: NOV, NE, PDE, TDW, DSX and MGLN. These are stocks that I have covered previously so I will only look into the technical for these shares.

NOV weekly cycle trend is indicating a flat direction but the candlestick formation is a “sell” signal. Since there are no definite buy signals, my tactical decision is to wait for intra-week’s weekly buying signals to decide if I will enter the market to trade this share. With the daily candlestick indicating a “buy-if”, I am hopeful that my existing NOV share will achieve its target this week. If it is done, I will decide if I will continue to trade this share.

NE, PDE, TDW have the same downside potential for its weekly cycle trend. The candlestick formations are “wait” for NE, “hold” for PDE and “sell-if” for TDW. Since there are no buying signals for these companies, I will not trade these stocks.

As for DSX, the weekly cycle trend is flat with a downside decline potential but its weekly candlestick is a “buy-if” formation. My decision for this stock is the same as NOV. MGLN is the only stock that I will be interested in this week since the weekly cycle trend is an upside advance and the weekly candlestick is a “hold”. The daily candlestick formation is a “wait”; I will wait for this stock to drop 0.5% to enter, in accordance with KUTE’s trading rules.

Have a great trading week.

Francies Cheng
BBus MAppliedFinance