Thursday, July 30, 2009

Is This Breakout Sustainable?

The market and leading stocks are breaking out after a short consolidation period and overbought readings that are still extreme. Due to the extreme overbought readings, I'm taking a few "speculative" shorts. However, they are done with caution and small positions size.

The idea behind these trades is to expect a small loss. If the trade works, it will be a multiple R gain. It goes to my trading philosophy of small losses and multiple R gains.

Tuesday, July 28, 2009

Monday, July 27, 2009

Speculative Entry: SRS

I took a small positions in SRS today. It is very oversold (meaning real estate is overbought) and, if history is a guide, should bounce soon. I am using a tight stop with a target near the moving average.

Monday Game Plan and Free Trade Report

Here is the strategy I laid out for subscribers to start the week:

http://docs.google.com/View?id=d5z8q8w_1205gxt3rxp3

The market is in a very bullish made right now. As we can see on the SPY chart, RSI confirms the recent breakout over resistance, as it makes new highs along with the index. The volume patterns shows there's some real velocity behind this move, as price is being pushed by some real volume. It's not supercharged, but steadily increasing.

The market is overbought, so entry is not optimal until we get a pullback to support. At that level, one could enter SPY or SSO for extra leverage.


If by chance the market continues to ramp up, we can take another stab at the oversold bounce or rubber band trade. If SPY bounces close to $100, I'll look to take a quick short trade with a tight stop.

Trade Tracker:

I was stopped out of the X trade on Friday.

Focus List:

A few specific short setups with triggers:

Some stocks are showing extreme overbought conditions and setup as "rubber band" short setups on a bounce.

AAPL is stretched about as much as it has been over the past year. Notice that it is piercing the bollinger band and showing extreme overbought conidtions. It's not just oversold, it's extremely oversold. If it bounces again tomorrow ($162-165), I'll look to get short. Only on bounce, which would make a pullback almost inevitable.



SRS is an inverse ETF. While it is a bearish trade, we have to look at it as if we are going long. As with AAPL, it is at extreme levels, but I'd like it to get more extreme. A dip tomorrow to around $16-$16.25 and I will enter.




AMZN is a "failed breakout" trade. The stock broke out of major resistance with a huge price bar and major volume, only to breakdown the following day in equally powerful fashion. I will look to short on strength tomorrow. Stop should be around $91. Low risk, high reward.



Long watchlist

Remember that the market is overbought so I'd like to wait a few days for most long entries. Here is my watchlist:

breakout-pullback candidates: SBUX, NFX, POOL, TXI, ALB, ISRG, CELG

Hot stocks showing accumulation (many commodities): BHP, PCU, NOV, RIG, FCX, ACI, GRMN, RL

Hot sector: Solars are looking really good in terms of price and accumulation. They can turn on a dime and are volatile, but I'd like to take a position on pullback of one of the following: SOLF, SOL, CSIQ or FSLR.

Disclaimer: All information and opinions expressed in this report are to be used for entertainment purposes only. The author of this report is not an investment adviser and does not give buy, sell or hold recommendations. Trading stocks is a risky undertaking, and due diligence is required before making a trade. Consult an investment professional before making a trade. The information in this report is not verified and may be incorrect. The author of this report may or may not hold a position in stocks mentioned in this report.



Thursday, July 23, 2009

The Obvious Line

The chart below shows the obvious breakout-breakdown level. A break below that level would mark a failed breakout. See my last post on current strategy.

Exiting Short Positions

Here is an alert I sent subscribers this morning:

I was stopped out of the SPY short (via SDS) for a small loss. Also exited most shorts.

I am NOT taking on any short positions. This is not an orderly pullback. Instead, SPY is showing a strong breakout bar. We'll see if it holds, as conditions are now getting extremely overbought.

While I won't short here, a few more days of bounce would setup "rubber band" shorts, based on extreme overbought conditions (current shorts were only overbought setups, not extreme overbought).

You may be wondering why I differentiate between the two . . .the overbought setup is based mostly on risk and a slight edge. The extreme overbought setup offers a significant edge and I am willing to up my position size.

Wednesday, July 22, 2009

Buy the Dip: SBUX

Starbucks had a great earnings reaction today and broke out over resistance. While the stock is too overextended to enter now, I will stalk this chart and likely enter on a pullback to the bottom of the breakout bar.

Remember for all breakout-pullback trades, the pullback must be orderly and on low volume.

3 Week Free Trial to the Trade Report

I am offering a 3 week free trial to my nightly Trade Report. The Trade Report features my current market outlook, updates on my own trades and my focus list which tracks the stocks I am looking to trade the next day. It is the journal I prepare for myself in preparation for the coming day. I also occasionally supplement the Report with intraday trade alerts.

You will have to sign up to the report via paypal through the link below. If at the end of 21 days you do not want to subscribe, simply e-mail me and I will refund the subscription payment.

The free trial will also include *archives* to reports going back to January 1, 2009.


Sample reports:
http://docs.google.com/Doc?id=d5z8q8w_826f9n94jdv

http://themarketspeculator.blogspot.com/2009/01/monday-game-plan.html

http://themarketspeculator.blogspot.com/2009/04/mondays-game-plan.html





Tuesday, July 21, 2009

Bearish Engulfing Pattern Forming in X

A bearish engulfing pattern is forming in X right near resistance. This trade is easily managed by shorting the next intra day bounce, placing a stop above today's high with a target near the 50 day moving average.

Today's Trade: SDS

I am shorting SPY using inverse ETF SDS. SPY has reached resistance and is very overbought. This is a recipe for a pullback, as it is very hard to make meaningful advances after a big run up and extreme overbought conditions. The trade is low risk and offers a decent edge.

Friday, July 17, 2009

The Short Apple Setup

AAPL is showing a negative divergence and is extremely extended at new highs. I am short with a tight stop.

OT: My All-Time Baseball Team

A few buddies and I were debating our "all-time" baseball team. This is going back to when we started watching (early 80s). Nobody we haven't gown up with is allowed:

C: Joe Mauer
1B: Albert Pujols
2B: Joe Morgan
SS: Alex Rodriguez
3B: Mike Schmidt
RF: Ichiro Suzuki (torn betwen him, Reggie Jackson, Vlad and Tony Gwynn)
CF: Ken Griffey Jr
LF: Ricky Henderson (toughest position with Bonds, Yaz, Manny)
DH: Frank Thomas

SP: Pedro, Clemens, Maddux, Randy Johson and Nolan Ryan (tough to leave off Carlton, Santana and Smoltz)

Closers: Rivera, Eckersly and Goose Gossage (another tough one with Sutter, Nathan, Hoffman)

Thursday, July 16, 2009

Too Extended to Enter Longs

While them market is too extended for my to add to my long positions (report members know that I was long before the move using the oversold bounce strategy), there are some low risk short setups among inverse ETFs.

Tuesday, July 14, 2009

Head and Shoulders Pattern is Still Intact

As long as the head and shoulders pattern holds, I remain ready to initiate shorts on a bounce.

Monday, July 13, 2009

Charts: BRE and PALM

I entered two trades today. PALM is a trend pullback setup and BRE is oversold bounce.



Thursday, July 09, 2009

Trade: FWLT

As noted in the alert to subscribers yesterday, I entered FWLT at $19.03. The stock is extremely oversold and due for a snapback.

Wednesday, July 08, 2009

Quick Hit Game Plan

1. SPY has decent long entry here at support. Tight stop.

2. Short SPY and watchlist stocks on bounce.

3. Many watchlist short setups can be entered long as snapback trades if we get major weakness in the coming days.

4. Tech looks bad. Short Qs on stength.

Tuesday, July 07, 2009

Monday, July 06, 2009

Monday's Free Trade Report

Here is the report I sent to subscribers to start the trading week.

http://docs.google.com/View?id=d5z8q8w_1145dtxkzjcp

A lot more longs than shorts, which is a clue for the overall market.

Friday, July 03, 2009

MON Oversold Trade

Chart shows extreme oversold conditions. Entry as close to $70 support line as possible. Tight stop.