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Deron Wagner is the founder and portfolio manager of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his swing trading strategy with The Wagner Daily newsletter, which provides exact entry, exit,... More
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Morpheus Trading Group
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Morpheus Trading Group - swing trading blog
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Advanced Technical Analysis of ETFs
  • Why Yelp Is Now Poised For Low-Risk Swing Trade Buy Entry ($YELP) 0 comments
    Aug 21, 2013 11:05 AM | about stocks: YELP

    With the market in substantial pullback mode, the number of leading stocks showing relative strength and still presenting low-risk swing trade buy entries has dwindled. However, there are a few lone holdouts, each of which could quickly jump back to new highs if the market suddenly recovers (as it has been prone to do many times this year).

    One such stock with relative strength that is currently set up for ideal buy entry is Yelp, Inc ($YELP).

    Since printing a bullish reversal candle on August 16 (the big green candlestick three days ago), $YELP has been trading in a very tight range over the past two days. Most importantly, volume has dropped off to extremely light levels during these two days as well.

    When a stock demonstrates bullish reversal action after bouncing off a level of support (the 20-day exponential moving average in this case), it will often enter into one or two days of tight price consolidation. When that sideways price action occurs on substantially decreasing volume it is usually a sign that the current pullback may be over and that the uptrend is ready to resume.

    If $YELP can rally above its three-day high on increasing volume, we would then look for the price action to consolidate for another week or two, while simultaneously forming higher "swing lows" within the base.

    If that scenario plays out, the August 16 low (which coincides with near-term support of the 20-day EMA) should end up being the low of the current pullback. Assuming the broad market at least holds up, we would subsequently anticipate a rally to new highs thereafter:

    (click to enlarge)

    The next two weeks will be quite interesting for large-cap NASDAQ stocks like $AMZN, $GOOG, and $PCLN, as they attempt to hold or reclaim important support levels. With $AMZN breaking below its 50-day moving average last week, for example, we would like to see the price action hold above $280 (just below the highs of the last base).

    If these key large-cap stocks begin to break down, along with leaders like $LNKD, $TSLA, and $KORS, our market timing system will signal it is time to move into cash and/or begin establishing new short positions. However, as followers of our swing trading methodology already know, we prefer to shy away from predictions and take it one day at a time instead.

    Always remember to trade what you see, not what you think!

    To receive preset and exact entry, stop, and target prices of our best swing trading stock picks every day, register here for your 30-day risk-free subscription to The Wagner Daily newsletter with live trading room.

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    Original Article Source

    DISCLAIMER: There is a risk for substantial losses trading securities and commodities. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. Morpheus Trading, LLC (hereinafter "The Company") is not a licensed broker, broker-dealer, market maker, investment banker, investment advisor, analyst or underwriter. This discussion contains forward-looking statements that involve risks and uncertainties. A stock's actual results could differ materially from descriptions given. The companies discussed in this report have not approved any statements made by The Company. Please consult a broker or financial planner before purchasing or selling any securities discussed in The Wagner Daily (hereinafter "The Newsletter"). The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in The Newsletter. The Company and/or its affiliates, officers, directors and employees may or may not buy, sell or have positions in the securities discussed in The Newsletter and may profit in the event the shares of the companies discussed in The Newsletter rise or fall in value. Past performance never guarantees future results.

    © 2002-2013 Morpheus Trading, LLC
    Reproduction without permission is strictly prohibited.

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