Liam McMahons Stock Newsletter

Sponsored by Wright Time Capital Group

Volume 1 Issue 6 January 28, 2014

WRIGHT TIME CAPITAL GROUP January 28, 2014 Authored by: Liam McMahon

Liam McMahons Stock Newsletter

Sponsored by Wright Time Capital Group

Introduction
Welcome to my stock newsletter. For those of you that dont know me, my name is Liam McMahon and I am a strategist at GlobalFxClub.com, a subsidiary of Wright Time Capital Group. While my work over at GlobalFxClub.com is mostly dedicated to forex, I have been trading stocks since 2008 and though I share a lot of my stock setups on twitter (@Duke0777), Ive decided to formalize the process in an effort to provide more in-depth fundamental and technical analysis. I will be focusing primarily on US equities, though I will also discuss some foreign indexes, especially the major European markets and the Japanese Nikkei. The goal of this newsletter is to provide in-depth analysis and point out both longer and shorter term trading and investing opportunities in the US stock market. I will be rating stocks as buy, hold, or sell and I will provide possible targets for the setups that I see. I will also be providing time frames to consider on all the stocks I analyze. The newsletter will focus on the clearest opportunities out there, not necessarily the most popular stocks. If I dont see a clean setup on Apple, I wont be talking about Apple, regardless of how many people love talking about it. I will be releasing the newsletter twice a week, on the Sunday before the trading week starts and then on Wednesday morning before the US session begins. Thanks for joining me on this exciting new venture; I look forward to communicating with you throughout the coming weeks, months and years. You can contact me on twitter (@Duke0777) or at LMcMahon@wrightinv.com

Liam McMahons Stock Newsletter | 1/28/2014

Disclaimer
Liam McMahon and Wright Time Capital Group LLC are not paid to promote these stocks. Investing in the stock market is a challenging venture and entails a substantial amount of financial risk. Investing in stocks may cause you to lose some or all of your investment and should only be done with risk capital. Always trade on your analysis and within your own risk parameters. Wright Time Capital Group and Liam McMahon are not responsible for any loss you sustain based on any advice distributed through this newsletter or through any of our various social media outlets, email, and any other type of communication, electronic or otherwise. All analysis and recommendations are solely the opinion of Liam McMahon and Wright Time Capital Group team, we can be wrong like anyone else. Please understand and accept the risk involved when investing. These recommendations are intended for educational purposes, to help you understand different types of technical and fundamental analysis. Only trade with money you can afford to lose.

Liam McMahons Stock Newsletter | 1/28/2014

The Indexes
After the strong bearish moves last week, weve seen most markets consolidate and retrace to begin this week as some of the bearish pressure in emerging markets has abated. From a Fibonacci perspective S&P 500 futures have retraced to about the 38.2% level of the decline, and now have stalled this morning at the 1800 handle. Weve seen some bearish moving average developments on the four hour chart as well, with the 50 period EMA moving below the 200 period EMA (the so-called death cross) for the first time since early October. Those moving averages are not going to stand as resistance levels should futures stage another rally later this week. As things stand right now (at about 8:00AM Wednesday morning): resistance on S&P 500 futures starts at 1800 and extends to 1820, where support is 1767, the low of the correction so far. Below that level, the major daily trend-line mentioned on Sunday at about 1740 stands as huge support.

S&P 500 Futures (Four Hour Chart) NASDAQ futures have had to deal with a good deal of Apple (AAPL) selling after investors were disappointed by some of their sales numbers, and right now the index doesnt look that great. After breaking the 200 period EMA on the four hour chart on the 24th of January, the NASDAQ headed lower before bottoming (for now) at 3465.75 and staging a small rally. That rally has faded last night and this morning, retreating as price neared that same 200 period EMA. Resistance on the NASDAQ starts at 3435 and extends up to 3550. The 3550 level is huge as it represents a retest of the previously broken trend-line and the confluence of the 50 and 100 period EMAs on the four hour chart. 3450 still stands as major support for the NASDAQ, marking a key long-term trend-line dating back from June. Only below this level threatens the medium term bull trend.

Liam McMahons Stock Newsletter | 1/28/2014

NASDAQ Futures (Four Hour Chart) Dow Futures have recovered a little bit of their decline as well, after breaking below 15.8k they managed to stage a rally that nearly reached the 16k figure before sellers stepped back in. the major resistance level of Dow Futures extends up to 16.2k, and the major support stands at 15.7k. Right now the Dow looks like it wants to consolidate a bit more before doing anything, but with major event risk later this afternoon; it may not get that chance.

Dow Futures (4 Hour Chart)

Liam McMahons Stock Newsletter | 1/28/2014

The Nikkei has played out very technically so far this week, with the head and shoulders break taking the index down to touch its major supporting trend-line before a nice bounce. Is that is a true head and shoulders, however, then we havent seen the end of the downside in the Nikkei 15.5k should hold as resistance and we should see the index manage to break that trend-line at 14.75k. The Nikkei and other indexes have found some support in the fact that the Turkish and now South African central banks have hiked rates in an attempt to stem the sell-off in their emerging market currencies. Whether or not these interventions will have any lasting impact remains to be seen. Even as I type this, the South African and Turkish currencies have undone a most of their gains, which is sending risk lower to start the morning.

Nikkei Futures (4 Hour Chart)

This Week
The major stock news so far this week has been earnings reports from some major US companies, including (but not limited to) Caterpillar (CAT) and Apple (AAPL). CAT rallied aggressively after its better than expected earnings report, which saw the major construction company report EPS of $1.54 on $14.4B in revenue. Wall Street was expecting $1.28 on $13.6B. CAT saw revenue decline y/y. The stock reacted well, and is now trading above $92.00, up from around 86.00 before earnings were announced. On the other hand, AAPL disappointed markets with their earnings report, and the stock is suffering for it. Despite hitting record sales for the iPhone again this holiday season, Apple still missed sales expectations thanks to increased competition in the smart phone market. AAPL also issued new guidance for 2014, below that of expectations as the company expects declining revenue. This was enough to offset what were otherwise very strong numbers from the tech darling as their EPS and revenue both beat analyst expectations. Apples EPS was $14.5 on $57.6B in revenue, as compared to expectations of $13.47 on $57.5B. AAPL has been lagging the overall smart phone market lately, as increased competition from Samsung and
others have begun to eat into their market share. Apple also faces increased pressure in the tablet market as well. Most analysts seem to think that Apple needs to release a new product in order to boost their growth prospects (and their stock price), but famed investor Carl Icahn made it a point to announce that he added to his long AAPL position on the earnings dip. Apple is now trading around $500 after losing about $50 after the earnings report.

Liam McMahons Stock Newsletter | 1/28/2014

Trade Idea Update

F reported their earnings on Tuesday before the bell, and the numbers were actually pretty good. EPS was $0.31, higher than expected on increased revenue. Ford also increased their US market share and managed to reduce their European losses, but the stock still lost ground on Tuesday, despite broader market resilience. As a result Im adjusting the short call we have on the stock. If you took profits before the earnings report as I suggested last issue, then adjust your second target down to 13.85 from the original 14.5. If you remained in a full-sized short going into earnings, keep your first target at $15.5 but adjust target 2 down to 13.85. If F manages to close green today, take first profits now, and keep the second target at 13.85. CSCO never triggered as the stock opened below that trend-line support. A daily close above 22.10 would re-open the long call. XLV long was technically invalidated, but the stock managed to open up back above its trend-line, so long as it remains above there, its a buy.

Homebuilders
Homebuilders performed well this week, despite a very disappointing New Home Sales report on Monday. Economists were expecting 457k in new home sales, but instead 414k was reported lower than last months 445k. Still, homebuilding companies like Lennar (LEN) saw very strong bounce on Tuesday. LEN closed at 36.91 on Monday, and touched a high above 39.00 on Tuesday, before closing at 38.52. The stock looks to have broken out of a bull flag formation on the daily chart, which would suggest a move to new highs above 40.00. LEN lost 2% at the open, however, pushing the stock back into the flag. A move above 38.00 should trigger renewed buying and the pair looks good for longs.

Liam McMahons Stock Newsletter | 1/28/2014

LEN (Daily) CALL: BUY ENTRY: ABOVE 38.00 TARGET 1: 39.50 TARGET 2: 43.00 TIME FRAME: 3-5 WEEKS INVALIDATION: DAILY CLOSE BELOW 36.00

Liam McMahons Stock Newsletter | 1/28/2014

Utilities
Ive talked about how I like utilities to out-perform the market in 2014, and Ive already issued a couple long calls on Utility stocks (namely SO and EQT), and right now there is another utility that looks poised to make a run for new highs. Dominion Resources Inc (D) is consolidating in a triangle pattern right now, and should price manage to push above 66.70 and hold there, it should trigger more buying targeting a move above 68.47.

D CALL: BUY ENTRY: ABOVE 66.70 TARGET 1: 69.00 TARGET 2: 72.00 TIME FRAME: 3-6 Weeks INVALIDATION: DAILY CLOSE BELOW 65.65
Liam McMahons Stock Newsletter | 1/28/2014

Conclusion
Only two new setups for you today markets are in a very tricky positions, and with earnings still in full swing, dont overload longs or shorts. We still have several active trade ideas from previous issues that you can check out if youre looking for opportunities. Good luck today, remember the Fed will be talking this afternoon!