The worst place to be is in stocks/sectors that used to be great! Check out the airline stocks, and some former super stars. $XAL, $AAL, $UAL, $DAL, $SWIR, $PI, $JD, and several others. (August 17, 2017)
KAL--X UAL DJUSRR UAL AAL DAL LUV BLU HA SAVE SOL XAL--X PI SWIR SP-500 SWIR ID UUP
I have no good news for you if you are a bull. I am sure we can find something to trade, in fact, let’s take a walk down memory lane. This ( INDEXNYSEGIS:XAL ) actually looked pretty good, pretty good, I can find all kinds of issues with it, but generally speaking airlines, long base for the entire year, starting to squeeze a little bit. Hey! It looks like they are starting the next leg up, and they did for about a point and a half, and now they are down here.
We look at the airlines and in my view, this is a key breakdown. You can really see it here on the weekly chart. It kind of looks ugly. If we look at the individual names (United Continental ( NYSE:UAL )) we see similar patterns. You don’t even have to watch the rest of this video if you don’t want to. Here is what I will tell you: You definitely want to be out of airlines. I think airlines are kind of a forecasting tool for the broader market. We need to see airlines moving up. We need to see railroads ( INDEXDJX:DJUSRR ) moving up. If we are looking for a stronger economy we are really not seeing that. Not a huge breakdown in the rails, but with the airlines we are. I would short these on any bounce.
Look at American Airlines ( NASDAQ:AAL ); don’t short it here. I actually considered it today and then I thought better of it and went, “Wait a minute. Markets go both ways. Came down here, rebounded off the 200-day moving average. Oh, I know it is going to break down here. I am going to short it right here.” Well, that didn’t work out too well. I am not saying short this stock here. I would actually expect a little bit of a rebound. But you have got to respect the bears. Delta ( NYSE:DAL ), this is breaking down. How about LUV ( NYSE:LUV )? That is not showing us any love here (I couldn’t resist that). And then JetBlue ( NASDAQ:JBLU ), this is not working for you either. I am sure if we look long enough we can find some kind of airline that is not doing too bad ( NASDAQ:HA ); so far I haven’t been able to find it. That ( NASDAQ:SAVE ) is definitely not it. Let’s go down under, not that far down under. Gol Linhas ( NYSE:GOL ), I will let you pronounce the rest of it. Do you really want to be here?
What I am saying is that #1) Only be long stuff that is working ( INDEXNYSEGIS:XAL ). If it is not working just get out, don’t punish yourself. Do the hammer technique if you are having trouble with that. What I mean is, go out to the tool shed, grab a hammer, a ball-peen hammer would probably be better than a sledge hammer, go in the garage, put your hand on the counter, and then slam your hand as hard as you can with the hammer. Then ask yourself, what would you rather do? Hit yourself in the hand with a big hammer? Or, be holding stocks that are moving lower? And you know what the cool answer is? You are probably going to go, “Neither one.” So that is what I am telling you; don’t be long stocks that are moving lower. Just don’t.
When stocks have these key breakdowns, and I am JUST not talking about airlines, I am right now, but check out these names that are totally away from airlines: IMPINJ ( NASDAQ: PI ), this was a must own. This is the RFID company that is probably going to get a pretty big contract with Amazon ( NASDAQ:AMZN ) and Whole Foods ( NASDAQ:WFM ). That is why this started to move up so much. Now would you really want to buy IMPINJ ( NASDAQ: PI ) if I had some to sell you? I would, but I don’t.
Sierra Wireless ( NASDAQ:SWIR ). I love this. I loved the way this stock was setting up. It got a little bit choppy here. When it broke out here it was too choppy of a base, it is not really a base it was just trading in a channel, and then it is coming back here. I did a tutorial on this and I was pointing out all these different flaws. That is fine, hindsight, but then ultimately they report earnings. The stock gaps down, trades all the way to the 200-day moving average. OMG! Here is a buying opportunity. Great! You are up 10 percent, now you are down. It looks a little bit like the S&P ( INDEXSP:.INX ). Buy the low, now you are up here, up a point and a quarter, and then now you are back down to where you started from.
So we look at these stocks. You look at the airlines. You look at Sierra Wireless ( NASDAQ:SWIR ). You look at JD ( NASDAQ:JD ). We could go through a bunch of these stocks. But the bottom line is, yesterday’s heroes aren’t today’s zeros, but they are certainly not stocks that you want to be owning. Here is what I suggest: Even though this ( NYSEARCA:UUP ) is in a downtrend, put your money in dollar bills. That is what I do. I have got like 95 percent (I think) in cash and the rest of it, frankly, is just allocated to margin, based on short option spreads that I have open. And those are hedged. So it is like I make money if the stock goes one way. I make money if the stock goes the other way. But generally speaking what I am looking at is just time. So have a lot of cash, and then when I see some trades that I think are really important I will put most of them in our Strategy Session. But I promise you this, I will give some out to the freebies too, that is what this is all about.
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