BHT identifies meaningful trends and important supply and demand levels in the financial markets. An understanding of these dynamics will help identify low risk trading opportunities. The following are important factors to consider:
“Again, I will repeat my Mantra...don’t enter the trade until the downtrend is broken and it is on the way back up! Too many investors, both professional and amateur, try to catch the exact low trade. This is due to the human compulsion to prove that they are smart. However, the Risk Reward dynamics are much better if you wait until the downtrend is broken. You won't catch the exact bottom but you probably won’t get run over either. Remember…if the current levels break it could head much lower. If the current levels hold, then it will probably rally and trend higher”.
-Mark Putrino, CMT
Superior Industries International, Inc. – SUP is a possible long idea. It is down around -50% since last year’s highs. It is trading around $16.50, which is where it found support in July of 2015 and January of 2016. There is a good chance that if it holds these levels, it will rebound. The key is to buy it on the way up after the downtrend is broken. Conversely, there could be a short here. If these levels break, it could head significantly lower. It will probably take a few days to see which way it will move.
International Business Machines Corporation – IBM was on my radar screen for a potential long trade. It was down significantly since earlier this year and was testing support around the $144 level. This level was the low from March through June through 2016. However, I never went long because the price never rebounded even though it did spend some time consolidating there. Now it has broken this level and I went short with a stop out at $144.
SNAP Inc.. – SNAP has broken its recent downtrend and may be reversing, so there could be a low risk long trade here. August 3rd was a classic ‘reversal day’ as well, and this is also a bullish dynamic. This means that it traded down significantly during the day, but by the close it had reversed and closed near the highs of the day. It was also accompanied by large volume which could mean that there was a capitulation by the sellers.
Tenet Healthcare Corporation – THC sold off big today due to an earnings miss. It was down about -15%. It closed right at the same levels that were support in November and December. The important dynamic now is to see how the stock acts around this important level. If it holds for a few days, there will probably be a tradable rally. If it breaks, it could be a short...similar dynamics to where IBM was last week. Once again the key is not to guess. Wait until it starts to trend…one way or another, before enter the position.