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WRIGHT TIME CAPITAL GROUP

February 9, 2014

Authored by: Liam McMahon

Liam McMahons Stock Newsletter

Sponsored by Wright Time Capital GroupVolume 2 Issue 3 February 9, 2014

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iam McMahons Stock NewsletterSponsored by Wright Time Capital Group

IntroductionWelcome 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 alot 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, Iwont 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

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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.

The intent of this newsletter is not to encourage you to take every trade setup suggestedthe goal is to

point out opportunities, both long and short, of varying durations. Always trade on your own due diligence

and research.

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 oftechnical and fundamental analysis. Only trade with money you can afford to lose.

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The IndexesS&P 500 futures rallied aggressive from the support zone mentioned on Wednesday, and have erased a

little over 50% of the recent decline over the past 3 trading sessions. Markets chose to interpret Fridays job

report as good news, despite another disappointing headline number. The US economy added 113k new

jobs last month against expectations of 185k new jobs. The unemployment rate did tick downunexpectedly, to 6.6%. The drop in the unemployment rate is actually pretty good news, considering the

participation rate actually edged slightly higher last month, meaning that the unemployment rate didnt

drop because more people have gotten discouraged and left the work force. Still, this makes back to back

disappointing months for job creation in the United States. Markets may have rallied on the expectation that

weaker jobs numbers will slow the progress of the ongoing taper under new Fed Chairwoman Janet Yellen,

meaning more cheap liquidity going forward. Whether or not this plays out though remains to be seen. The

unanimity of the last FOMC decision to taper suggests a certain determination to push toward a

normalization of monetary policy over the coming months, perhaps regardless of softer US employment

numbers.

In any case, S&P futures held their key ascending trend-line dating back to June and may be looking to

return to the 1825 level where significant resistance awaits. Futures are challenging the 50 day EMA at the

open this week, a not insignificant technical level. While not quite the last stand for bears, it would be a

good area to try and defend. A break above this level would open up a return to the bottom of the broken

trend-line dating back to early October. Support is the recent low just above 1725.

S&P 500 Futures (Daily Chart)

NASDAQ futures also held their key ascending trend-line on Wednesday with a very nice doji candle off the

100 day EMA before a strong rally on Thursday and Friday. Futures are now encountering resistance at the

backside of the broken trend-line dating back to early November. The NASDAQ may actually give us some

clues this week as it is the first US index to test major resistance, allowing us to get a good sense of the

relative strength of bulls and bears. Below 3600 and the bears have the edge, but a move above that level

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puts the bulls firmly back in control. Watch 3400 for support if we do move lower to start the week. There

is also some micro support in the 3525 area to watch if youre looking for a place to buy.

NASDAQ Futures (Daily Chart)

The Dow went from most bearish to most confusing at the end of last week as bears couldnt sustain the

significant break of a long standing trend-line and key moving average. As a general rule, when the market

has every reason to go in one direction (in this case, down) and it cant manage to do it, it doesnt bode

well for that direction going forward. The break back above the 200 day EMA and that long standing trend-

line leaves bulls in good shape going forward. A general turn in market sentiment would of course hit the

Dow hard again, but as long as futures remain above 15.5k (roughly) things look ok for industrials.

Dow Futures (Daily)

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The same cant be said for the Nikkei though. The Japanese index continues to be a major concern for

equity bulls despite the rally over the past few days. Futures have managed to regain their 200 day EMA,

which is a good sign for bulls, but price now has to contend with the retest of the broken trend-line dating

back to early June. Should this trend-line hold (it coincides roughly with the 15k level) it could easily

prompt another round of intense selling this week and must be carefully watched. 14k provides first

support if we see a move lower to start the week.

Nikkei Futures (Daily Chart)

Trade Idea UpdateXLU longs got off to a good start, then faded a bit, but have since rallied. Price held cloud support and

rallied back above the descending trend-line that sparked the initial call. This trade seems like its going to

be a slow grind higher and may take some time, but considering XLU has a 3.75% yield, patience will

probably be rewarded.

XLE will be starting off the week testing key resistance as it retests the bottom of the broken wedge. The

original setup and plan remains intact.

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MaterialsWith the bounce weve seen in the indexes the past few days, Im looking to keep a more balanced

portfolio, with both some shorts and some longs. The markets could really go either direction this week, so

I want to be prepared for more upside and a resumption of selling. Materials have been pretty hard hit

lately, and a major part of that has been weakness in Monsanto (MON). After missing the consensus on its

earnings report in the beginning in January, the stock has on the back foot, until about a week ago, where

price held at 105.00 and the stock rallied with markets. MON is back near resistance at 112.50a retest of

the broken neckline in the potential head and shoulders topping pattern. Shorts from here offer a terrific

risk reward ratio thanks to the very real possibility that the 117.5 high in MONis a major top.

MON

CALL: SELL

ENTRY: 110.75

112.50

TARGET 1: 105.00

TARGET 2: 97.50

TIME FRAME: 1-3 MONTHS

INVALIDATION: DAILY CLOSE ABOVE 114.00

Gold (GLD) may finally be starting its corrective phase higher after a significant sell-off over the past 4

months. Concerns that the disappointing jobs data may slow the pace of the Fed taper should help provide

gold with a boost over the next couple weeks as inflationary fears increase and combined with a nice

technical setup GLD offers a nice long opportunity over the next couple weeks. GLD has broken the

descending trend-line that has capped price since August and is quickly approaching the top of the cloud, a

break above would really confirm upward momentum.

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GLDCALL: BUY

ENTRY: 122.17

120.50

TARGET 1: 125.00

TARGET 2: 127.50

TIME FRAME: 1-3 WEEKS

INVALIDATION: DAILY CLOSE BELOW 119.50

onglomeratesOur GE short paid off nicely, but now I think its time to try a long on the stock. GE tested and a held a

major trend-line dating back to June of 2012 and a good sized bounce seems likely. After all, GEs earningreport was better than a lot of people expected and the company seems to be optimistic about its prospects

going forward. So long as that trend-line holds, bulls have the edge. This is absolutely a near-term long as

price remains well capped by the cloud above 26.00.

GE

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CALL: BUY

ENTRY: 25.1924.60

TARGET 1: 26.11

TARGET 2: 26.59

TIME FRAME: 1-2 WEEKS

INVALIDATION: DAILY CLOSE BELOW 24.30

onclusionThe major indexes are split nowthe bears have control in some, and the bulls seem to have found their

footing in others. Keeping a balanced portfolio is a good idea at these potential turns, if we see the market

gain ground and start to rally here, well begin scaling out of our existing (in the money) shorts and youll

notice fewer and fewer short setups being issued while our open long trades will ideally start to move

toward their targets and more and more stocks will begin to repair the damage that has been done during

this sell-off. On the other hand, should the selling resume, long trades will be fewer and further betweenand our open shorts will move toward their targets. This is a challenging period for bulls and bears, and

sometimes damage control is the only option. Markets will be keyed on Janet Yellens first testimony as

head of the Fed on Tuesday this week, and traders will be looking for clues about how (if at all) the recent

poor jobs numbers will affect Fed policy. I dont expect her to admit that any changes will be made due to

one (or two) bad reports.

Thanks for reading, see you on Wednesday.