Tempur Sealy (TPX) Acquisition and Product Launch Trade Setup! 📊 Analysis:
Acquisition of Mattress Firm: NYSE:TPX has acquired Mattress Firm in a strategic move valued at approximately $4 billion.
Vertical Integration: The acquisition complements product development and manufacturing capabilities with vertically integrated retail.
New Flagship Products: Launch of new flagship products addresses consumer pain points and contributes to potential explosive revenue growth.
Entry Point: Consider entry above the $47.00-$48.00 range.
Upside Target: Bullish sentiment suggests an upside target in the $75.00-$77.00 range.
🌐 Note: Stay updated on the integration progress, market reception of new products, and industry trends.
TPX
Separate Buy Signals for Tempur SealyBased on historical movement, the trough could occur anywhere in the larger red box. The final targets are in the green boxes. The pending top should occur within the larger green box as has been the historical case. Half of all movement has ended in the smaller green box. In this instance, the signal indicated BUY on February 18, 2022 with a closing price of 37.08.
If this instance is successful, that means the stock should rise to at least 37.42 which is the bottom of the larger green box. Three-quarters of all successful signals have the stock rise 6.508% from the signal closing price. This percentage is the bottom of the smaller green box. Half of all successful signals have the stock rise 11.562% which is the end point of the black dotted arrow. One-quarter of all successful signals have the stock rise 19.856% from the signal closing price which is the top of the smaller green box. The maximum rise on record would see a move to the top of the larger green box. These are the same concepts for the levels in the red boxes as well.
The ends/vertical sides of the boxes are determined in a similar fashion. The peak of the rise can occur as soon as the next trading bar after signal close, while the max rise occurs within the limit of study at 40 trading bars after the signal. A 0.5% rise must occur over the next 40 trading bars in order to be considered a success. Three-quarters of successful movement occur after at least 13 trading bars; half occur within 29 trading bars, and one-quarter require at least 37 trading bars.
The black dotted arrow represents median historical movement. Medians are a good metric, but they are just one of many I use when forecasting future movement.
As always, the stock could decline the very next bar after the signal without looking back (therefore the red boxes would not come into play) or the stock may never decline (and the green boxes may never come into play).
S&P vs TPX: Normally, I like to bash JapanBut in this instance i think on a relative value basis, theres a bit more near term room for upside in the land of the rising sun. Retail Japan have been heavy buyers of US mutual funds and for good reason given the hefty outperformance. Earlier in the year BoJ announced that their ETF purchases would be more in TPX than NKY and given the Omicron overhang, I would not be surprised to see them in the market to smooth out any downside moves. Domestic instos rumored to be bid at NKY 27,500 (only 1% lower) and retail will likely cut their US exposure into CYE. Would really like to see USDJPY above 113 to help the exporters...
Thoughts: Strength of Move (SoM) vs Trader Pressure Index (TPX)Recently I posted updates to both my Strength of Move (SoM) and the Trader Pressure Index (TPX) indicators
as promised, i'm sharing this post to share how i use both of these indicators together as i trade, and how they act differently but complement each other.
Please note that these are only my own (humble) thoughts, based on how i thought about and designed these indicators, and what i expect them to show me. these thoughts are not professional recommendations and they may not work for other style of trading - they may even not make sense to someone who trades differently or if i flexibly use (or misuse) some of the classic technical analysis terms - apologies upfront for all that. also apologies if it's a long(ish) read,
Let's start with some background... How is TPX different from SoM?
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TPX is designed to represent the battle between buyers and sellers - or bulls and bears - by inspecting the highs and lows of consecutive price bars - in simple terms, if the highs and lows of bars are moving up, that's considered "bull pressure" - and if the highs and lows of bars are moving down, then that's considered "bear pressure" - a simple averaging calculation captures these values, and calculates also the Net Pressure - we plot these 3 values on an oscillator - and that can help show us who (bulls or bears) is in control of an ongoing price moves.
So TPX shows Bull / Bear Pressure ..
how is this different from "Strength of Move" ? isn't "strength" and "pressure" kind of "similar"?
SoM is designed to track the average change of price within a short period of time (2 to 5 periods) - and then looks into how that average change compares to a "longer average of move" -- for an analogy, think of this as if we're driving a car on a road - we're taking readings of the "distance covered" per time unit as we go - say our time unit is an hour. now, for the last 3 hours, we covered an average distance of 5 miles per hour -- but we used to be able to cover 15 miles per hour before -- this would be an indication that "we are losing speed" - we're travelling "less confidently" than we used to before -- but if before we were able to cover only 1 mile per hour, then 5 miles per hour is a great number, right? and in fact would show that we're accelerating.
SoM depends on the fact that price action is "relative" to previous / recent price action - if you're watching AAPL for the last 2 weeks, and it was in an up-trend, making jumps of 1.5% ~ 2% per day - then all of a sudden AAPL starts slowing down to 0.3% and 0.1% per day - or even registering down days - we know that the honeymoon (up-move) is over and that the trend may come to an end, or even reverse, soon.
long story, but that's how SoM was designed -- SoM reflects the "bias" or "confidence" of the average price move
-- note: bias is short-term-focused and is different from Sentiment (which is long-term) -- this is how i utilize these terms here.
-- another note: a -100% in SoM doesn't necessarily mean a price move to the downside - since SoM is relative to recent average price moves, it may just mean that "we're registering very weak moves that are the weakest we have seen in x (the length value) period" -- this can get a bit confusing. if it does, please keep it aside for now.
Now with this part clear - let's look at the examples here.
We have SoM and TPX overlaid in the same panel (they're both +100/-100 oscillators and it saves space - colors become a bit of a challenge though :)) - there's a moving average on the price chart and a MACD in the lower panel - this is actually one of the setups i use for my trading.
here's the key benefits i designed the SoM to achieve:
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1 - early detection of weakness & strength:
in the AAPL chart example, we can see how SoM can be early to detect the end of a trend (the car in the above analogy is losing speed) - and shows a bias towards weakness, before both the trendline and the MACD. what i also like about SoM is that (because of the use of the stoch function) its behavior is "unambiguous" - so we can't mistake that it is going down when it does. This is an important parameter IMHO for a good indicator.
in the example below, a similar scenario shows couple of times on a smaller/faster timeframe - example (1) shows price moving in a range with a slight "bear pressure", but SoM detects a bias to the upside - and in example (2), SoM detects the end of the trend before any of the other indicators - this is not an issue with TPX or MACD, it's just that SoM is designed to be more sensitive as we explained above.
2 - Shows good entry / exit opportunities
Another benefit of SoM is that it can show good re-entry or exit opportunities, when the trend and pressure are up and we established a move up for price, i can use SoM to locate opportunities with the most "price weakness" to enter with a long position, to maximize profit -- same with an established move-down, i can find best "strong" bars to open a short position - i use that approach to time my entry into covered calls against my stocks - I highlighted couple of examples on the chart above.
3 - SoM helps confirm strong trends
the recent addition i made in v4, is to show a (blue/magenta circle) signal when the unsmoothed SoM plot (shows as a very faint silver line) hits 100% in either directions - when this happens, it reflects a strong price bias to that direction - our car all of a sudden accelerated to 50 miles per hour - these "relatively big moves" usually mean something is underway - and if the SoM continues to print these signals with confirmation from MACD and TPX, then the probability of a well-established trend is high and i can plan my trades & risks accordingly
- best way to learn how these indicators work together, is to add them to a chart of something you already trade and are familiar with how it behaves, set the chart to a small timeframe, say 3 mins, and watch it for a while - try to interpret what the signals mean and expect the next move - we will not be 100% accurate and don't let that frustrate you - but once your success rate is reasonable (70% or so) , you'll feel more comfortable using them in real trading - especially now that you're familiar with the "inner works"
in closing, i hope this wasn't too much, and provided what i promised - to share more about the use and the "internal" workings of these 2 indicators - and how I use them in my trading with some examples .. I will be more than happy if this post helps inspire some ideas for fellow traders, and make them a bit more successful in their trading.
happy to receive comments or feedback - or thoughts from fellow traders who already played around with these indicators and would like to share their experiences. "constructive criticism" also welcome, we're all here to learn 😄
good luck and trade safe.
US Stock In Play: $TPX (Tempur Sealy International Inc)$TPX traded to a new all time high of $39.40, closing the session at lower at $38.51 as major U.S. Indexes were flat in overnight trading with investors awaiting for the outcome of the U.S. Federal Reserve’s two-day policy meeting in the later trading session.
The overall gain achieved for $TPX in this month of March has exceeded +15%, with price action treading up tightly within a consolidated trend channel. The immediate support for a convincing breakdown of this price channel is at $36.00.
$TPX together with its subsidiaries, develops, manufactures, markets, and distributes bedding products in the United States, Canada, and internationally.
AUDJPY: (Still) best SPX macro correlation Wide Aussie - JGB yield spreads in the 2000’s leading up to ‘08 crisis made Aussie dollar / JP yen the go-to levered carry trade used to fuel the US housing CDO bubble (with subsequent bubble burst → mass unwind which strengthened jpy to 70 vs USD).
Post crisis era saw the AUDJPY carry trade out back on. 2016- BOJ implements YCC, pinning 10y JGB yields at ~0%, which made Aussie yields the moving variable- AUD became a gauge of macro risk sentiment as carry trades funded risk assets, including NKY & SPX.
In the wake of the global slowdown (starting pre COVID), with Australia facing the end of it’s 3 decades without recession, the RBA has since slashed Aussie cash rates to record lows and then moved to implement YCC itself, making RBA the second developed market central bank to do so after BOJ.
AUDJPY remains a favorite fx pair among japan margined retail traders, who are more bullish US equities vs domestic NKY. Japan retail is the “glue” between AUDJPY & SPX (eminis) & NKY (NKY mini futures- which now exceed standard NKY index futures in notional traded value)- when japan retail goes risk-on, AUDJPY & equities rise. When they unwind on margin calls, AUDJPY falls alongside index futures liquidation.
With other major FX pairs (namely USDJPY) as well as cross asset UST yields, gold, copper, oil, even VIX no longer having any consistent correlation to SPX, AUDJPY is the one macro asset indicator left with positive correlation.
And now that US rates have been cut from above → below Aussie rates with Fed Funds pinned at zero for the foreseeable decade+ and UST 2s approaching zero quickly, the RBA policy meetings are the “new” FOMC with respect to central bank short term SPX influence.
Three Percent Trade Idea: Go long TPXHere is a great opportunity to pick up TPX .
At Three Percent Trades we have a price target of $90.00 / share, which is a potential upside of 14.6%.
We use a combination of fundamentals & technical analysis to trade high probability set-ups, and believe this is a great opportunity to take advantage.
TPX could bounce Technicals
RSI(10) @62 reaching for higher highs - OBV confirming trend
ADX (directional index) on a continuing positive trend
We see a very bullish move, as a hammer candlestick is formed at the 61.8% retracement level.
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This is happening as the market as a whole is on a rally.
I would wait to see if we can break $68 (heavy resistance) on Monday.
TPX Hourly SwingOn both the daily and the hourly chart, TPX has been creating a pretty nice divergence. I'm thinking this will be a position I sell by the end of the week depending on if it goes overbought and/or starts breaking daily moving averages. I don't use intraday MA's as I like to swing and, in my opinion, see daily MA's as the strongest of support/resistance.
TPX - Inverse H&S formation Long to $62.13TPX seems breaking out of a inverse H&S formation. It has broken out the neck line, retested it from upside & now resuming its upward move. We think it was good upside potential from here.
* Trade Criteria *
Date First Found- July 13, 2017
Pattern/Why- Inverse H&S formation
Entry Target Criteria- From current label
Exit Target Criteria- 1st Target $55, 2nd Target $62.13
Stop Loss Criteria- $49.57
Please check back for Trade updates. (Note: Trade update is little delayed here.)
NEXT WEEK: IF LAST WEEK WAS SLIM, THIS WEEK IS "SLIMMER" PICKINSThere are a few names popping up on my radar for earnings plays, but when I "look behind the curtain," they aren't that attractive ... .
TEVA, for example, announces on Monday, but it's an ADR, so it could be before market open or after market close or, indeed, not at all, but on some other day. It's tough to put on a volatility contraction play when you don't know exactly when the contraction is going to occur. Moreover, it's biopharm; when it moves, it tends to move big and bigger than you'd want.
BKD has the right metrics -- >70% implied volatility rank, >50% IV, but it's probably too cheap to make a play worthwhile and, moreover, only has monthlies, which can be a pain to work if you need to roll. TMX suffers from the same affliction ... .
TMUS, however, may be worth a play, with implied volatility at the high end of its six-month range and a background implied volatility of 43%. It announces earnings on 2/14 (Tuesday) before market open, so you'll want to put on a play in the final hours of the NY session on Monday if you want in. Preliminarily, the Feb 24th 20-delta short strangle (which currently would be at 58.5/67) would bring in 1.09 credit at the door.
As far as exchange-traded fund plays are concerned, there isn't a single underlying with >70% implied volatility rank (over the previous six months) and >35% IV at the moment, and the broader market instruments (SPY, IWM, DIA, QQQ) (I'm basically playing like a broken record here), implied volatility is too low to put on premium selling plays (which is why I've been looking at low vol strats like diagonals to do something there; see Post Below).
For similar reasons, I can't do much with the VIX/VIX derivatives. My experience has been that playing these long is generally unproductive, and I'd have to go out to June to sell a 50-delta short call vert with the short call strike at 16 or above to see the kind of credit I like to get out of these (e.g., the VIX June 17/20 is currently paying .75 at the mid).