“Trend is your friend” and it works to the downside too. From what the charts are saying the risk/reward is to the downside. That won’t change until buyers step in, which could be Monday or in 6 weeks. Don’t fight the tape.
Looking at this SPY chart this morning I started thinking I might be looking for reasons to start selling short. Perhaps, I was over analyzing the chart and developing a dangerous bias.
I cleared everything off and took a step back, looking at a larger time frame this rising wedge was the first thing that popped out at me. We’re heading lower, in my opinion.
Same chart as the $IWM
I am watching a few longs but the majority of my focus will be on shorting this correction. When stocks breakdown, they breakdown down fast and violent. People as a whole are irrational and panic easily. This is why stocks can grind and grind higher for months and give it all back in a day or two. Large moves available for capture but you have to act quickly.
I am currently long $RTN. We closed below this resistance level but were sitting above it the majority of the day. I am chasing here (because lack of volume) so I am light and have a tight stop.
CVS – This one caught my attention during my scans. Nice rising ascending triangle intact. You could buy here for a nice risk/reward entry.
ACE – This one has seen heavy buying volume the last two days and cleared resistance levels. May see a follow through day on Monday.
INTC – Still watching this rising wedge. When the failure happens on heavy volume I’ll sell short.
AAPL – Watching closely for a close below Tuesday’s (4.17.12) lows for the next leg lower. Note* Earnings after hours on 4.24.12.
CMG – Losing major support on huge selling volume. This one is heading lower.
MCD – Support becoming resistance. Setting up for lower prices, would love to buy some puts after another test of the descending trend line.