Trump and Stock Charts

Momentum Speculative Runs
There is no question that anything Trump tweets about any company that is publicly traded can impact the stock price, often with high volatility or sudden huge speculative emotional reactions.
This is a new twist on market manipulation and volatility that the professional side is discussing and debating as the new White House will soon take over. The Professionals are also taking advantage of the situation regularly.
Charts often reveal aspects of the Market Participant Groups that are overlooked by Retail Traders, who are unaware of what they need to focus on. All too often the Retail Trader is strictly looking for a stock to trade rather than seeing the bigger picture.
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One area of extreme speculation right now is of course the Financial Sector. When checking these stock charts, many are so similar they could almost be laid over one another. These is abnormal chart patterns.
Although sometimes stocks in a similar industry or competitors, may have somewhat similar trends up, down, or sideways but when a momentum speculative run is nearly identical another factor is at play.
When studying the Big Bank and Financial Services company charts since the election there are patterns that are nearly identical, even though the firms have completely different fundamentals and prior technical patterns had not been nearly so similar.
The stock charts below are the two most speculatively traded financial stocks right now, and they are abnormally similar.
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As a Retail Trader you should be asking WHY, because this is not typical. Chart #1 is in the Global Banks Industry while Chart #2 is in the Capital Markets Industry, so they are not even under the same industry based on the Financial Services lists of industries. They are not competitors nor are their fundamentals and financials similar. Their stock chart patterns should not be this similar.   
The reason why these two charts are so similar are the “drivers” for the two speculative momentum runs are the same Market Participant Groups. Drivers can be Professional Traders, Dark Pools, High Frequency Traders, and sometimes “Deep Pockets” which is an inside term for Billionaires and Raiders who sweep in opportunistically at a crisis.
The question then is who is controlling price during these two momentum speculative runs, which are both separated by a resting profit taking phase that lasted exactly 10 days for both stocks.
These are both great runs for Swing Traders but in order to trade them for the profitability that was presented, it is necessary to go beyond the basics of Swing Trading rules and understand the drivers behind the action. Then and only then, can you be ready for this type of speculation.
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As a side note this type of momentum speculative run has not been around since the 1998-1999 dot.com era, but for Swing Traders this is an ideal environment for as long as it lasts.
There are several types of price drivers: 
  1. Opportunists taking advantage of a sudden unexpected event.
  2. Predators taking advantage of a legal manipulation of the emotions of the retail crowd.
  3. Liquidity providers who take advantage of liquidity flux situations.
  4. Instigators who create the environment via commentaries, recommendations, and other legal manipulation.
These charts show instigator and opportunists both driving these two momentum speculative runs. They are highly skilled and are using non-event highly emotional news to move price and motivate the new investors, uninformed investors, and less informed traders to buy these two stocks.
Their goal is to create such an emotional reaction from the retail crowd that they can literally buy and then sell ahead of the retail group. The overlapping of the candles is where they are taking short-term profits. The resting 10 days of very tight consolidation is where the retail crowd interest abated. A High Frequency Trader gap inspired renewed retail interest from new investors. Then both stocks ran with heavy profit taking even while the stocks moved up at a vertical Angle of Ascent™ far beyond the fundamental support bracketed on the charts, AND well beyond the swing style technical weak support of the 10 day tight consolidation. 
Summary
Trading these stocks required high skills at placing technical stop losses instead of percentage stop losses, due to the heavy profit taking that caused the candles to overlap.
I want to remind you that speculative runs are challenging to trade, because the run can often abandon all fundamental values AND then go beyond technical patterns as well. Knowing when the inevitable retracement or correction will occur is often harder to anticipate. Therefore, exiting early is often the better decision. High Frequency Traders can and do gap down this kind of run, often hugely.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com


Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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