Liam McMahon's Stock Newsletter Vol. 1 Issue 1

8/13/2019 Liam McMahon's Stock Newsletter Vol. 1 Issue 1

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WRIGHT TIME CAPITAL GROUP

January 12, 2014

Authored by: Liam McMahon

Liam McMahons Weekly Stock

Newsletter

Sponsored by Wright Time Capital GroupVolume 1 Issue 1 January 12, 2014


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cMahonsWeeklyStockNewsletter|1/12/2014

iam McMahons Weekly Stock NewsletterSponsored by Wright Time Capital Group

IntroductionWelcome to the first issue of 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 andthough 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 selland 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 weekly,

on the Sunday before the trading week starts.

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

[email protected]


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DisclaimerLiam 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.


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The IndexesThe S&P 500 used an afternoon rally on Friday to finish green, up 0.23% on the day and 0.63% on the

week, despite the very disappointing US jobs report that was released on Friday morning. Economists

expected the US economy to add about 196k jobs in November, but instead the NFP report showed a far

more anemic growth of 74k jobs. The unemployment rate ticked down dramatically, to 6.7% against 7.0%

expected, which, considering the jobs added, is actually more bad news. The drop in the unemployment

rate is largely a result of a drop in the participation rate, as more and more frustrated workers give up and

leave the labor force. According to the Bureau of Labor Statisticsreport, the participation rate fell by 0.2%

in December, bringing the total decline up to 0.8% in 2013.

The S&P 500 has been holding up fairly well since it made its most recent record high on 12/31/13,

moving mostly sideways these past 7 trading days. Price is currently about 7 points below that all time high.

Resistance stands at 1849.44, while support begins at 1813.55. Continued sideways action is possible, and

may even be healthy as the market digests the beginning of the New Year.

Images via ThinkOrSwim

The NASDAQ is also trading slightly below its record high, which stands at 3592. The tech-heavy index

finished the week up 1.03% and finished out the week with a 0.35% gain on Friday. The index has been

riding its 21-day EMA higher, and Friday saw another perfect test of that key level before a significant rally

in the afternoon session. Price looks primed to test that record high, which stands as resistance, while the

21 day-EMA at 3534.95 stands as support. Below the 21-day EMA, the next major support level stands at3512.45.


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Consumer Discretionary Retail)XRT, the retail ETF from SPDR has doubled in value since August 2011, from 43.5 to the high of 88.95.

Since we touched that high, on 11/29/13 XRT has moved sideways, twice now finding support around the

85.15 figure. XRT moved down to that level before bouncing on both Thursday and Friday, suggesting a

possible move higher in upcoming weeks. The 8 and 21 day EMAs align with the top of the cloud at about

86.60, providing the first level of resistance, but a break above this level should open a test of those

previous highs. Price currently resembles nothing more than a bullish flag pattern, and a break 89.00 could

open up a strong move to new highs.

CALL: BUY

ENTRY: 85.84 (Market)

TARGET 1: 88.90TARGET 2: 92.50

TIME FRAME: 2-4 WEEKS

INVALIDATION: DAILY CLOSE BELOW 84.90

Macys(M)provides another possible long opportunity in the retail sector. M is currently testing the

100% Fibonacci expansion following the move from 36.75 to 50.77 and then down to the 61.8% fib at


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about 42.18. This level should provide some resistance, and hopefully a dip to buy. M consolidated nicely

between roughly $51 and $54 before gapping higher on Thursday. Price moved from 51.84 to 55.15

between Wednesday and Thursday, suggesting strong buying interest. A retest of the $54 level would

provide a nice buying opportunity, should it occur.

CALL: BUY

ENTRY: 54.20

TARGET 1: 58.50

TARGET 2: 65:00

TIME FRAME: 3 WEEKS 10 WEEKS


UtilitiesUtilities have underperformed the market since April of 2013, as the SPDR ETF XLUhas fallen from 48.74

to a low of 40.03 despite the record breaking run from the market at large as the perceived safe-haven

status of most major utility companies have failed to attract new capital as investors have pursued sexier

opportunities elsewhere. I am relatively bullish utilities for 2014, especially if we see some sort of market

correction as the higher yields and stable revenue of utilities should become more attractive during a

downturn. While there isnt a clear setup on XLUright now, there are some attractive opportunities in thatsector.

Southern Company (SO) is an example of a utility with good value going forward. Yielding 4.9%, it combines an

attractive technical setup with a strong dividend. SO appears to be finishing a descending wedge reversal pattern and

Fridays 1.9% rally temporarily pushed price above the key descending trend-line and the cloud, before price fell

back slightly to finish the day. If we see follow-through this week on Fridays rally, SO offers a terrific buying

opportunity.


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CALL: BUY

ENTRY: DAILY CLOSE ABOVE 41.55

TARGET 1: 43.00

TARGET 2: 44.30

TIME FRAME: 2 WEEKS 5 WEEKS


There is also a longer term buying opportunity in SO as price is currently respecting and bouncing from a

major 38.2% Fibonacci retracement on the weekly chart. Price fell from 48.74 as SOput in a double top

reversal pattern which has not completed its measured move yet, so there is some bearish pressureremaining, but a reversal here could accelerate price to new highs.


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cMahonsWeeklyStockNewsletter|1/12/2014 CALL: BUY

ENTRY: DAILY CLOSE ABOVE 41.55

TARGET 1: 46.00

TARGET 2: 52.00

TIME FRAME: 6 MONTHS TO 12 MONTHS

INVALIDATION: WEEKLY CLOSE BELOW 40.00

EQT Corporation provides another shorter term long opportunity in the utilities sector. EQT has held up

pretty well despite the sector weakness, peaking at 94.42 back on 9/19/13, before falling a bit lower. Price

on Friday closed at 86.02, up 0.02% on the day thanks to a recovery during the afternoon session aftertesting a key ascending trend-line dating back to 11/7/13 and the bottom of the cloud. Volume studies

provide some bullish context as well. On 12/30/13 price touched 90.19 before beginning a decline to its

current level. During this decline, volume has remained relatively low, below the 50 day average. A strong,

high volume buying day would provide further evidence of a pending move toward the 94.40 highs.


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CALL: BUY

ENTRY: 86.02 (Market)TARGET 1: 88.30

TARGET 2: 94.42

TIME FRAME: 2 WEEKS TO 8 WEEKS


ConglomeratesBecause of its size, General Electric(GE)gets a category all to itself. In this case, however, that is not a

good thing. GE in my only sellrecommendation this week, as it offers a distinct warning sign to bulls, and

a very clean short set-up for bears. After hitting its recent high at 28.09 on the last day of 2013, GE has

been on the slide for all of 2014, falling to a low of 26.86 on Friday. GE appears to have broken out of a

descending wedge on the daily chart, and looks poised to continue to correct for the near term.

Considering the recent strength of the market, shorts should be undertaken with a firm understanding of

the risks, but a GE short here offers some protection if we do see the market begin to correct in the

upcoming weeks.


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CALL: SELL

ENTRY: 27.14 (OR MARKET FOR AGGRESSIVE TRADERS)

TARGET 1: 26.10

TARGET 2: 24.50

TIME FRAME: 1 WEEK TO 6 WEEKS

INVALIDATION: DAILY CLOSE ABOVE 27.40

ConclusionMarkets continue to hold up well to start the New Year, and I see no major cause of concern (other than the

typical overstretched / overbought arguments) that a major correction looms. With that said, we may be

seeing the beginning of some (perfectly healthy) sector rotation as the utilities sector begins to perk up a bit.

Considering their higher than average yield, and their supposedly safestatus, utilities may be an excellent

area to keep an eye on this year.

There are also opportunities in the retail sector as well, though Im not as confident in consumer

discretionary names this year as low employment persists, and fears of a weaker than usual Christmas season

may eventually bear fruit. With that said, there are some solid names with good opportunities, as

highlighted above.

Last, though they werent addressed in this newsletter (lack of clear setups, for now) I remain bullish on

Financials, as higher rates will likely boost bank profits. Bank of American and J.P. Morgan are on my watch

list for next week.

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Liam McMahon's Stock Newsletter Vol. 1 Issue 1