SPX Neutral Range with 15 Deg Tilt Bull Flag / Week’s Potential Setups

The SPX is in a neutral range. Today, the market established a 3rd point on the bottom range, giving the appearance of a bull flag with a 15 degree tilt. As long as the present levels hold, this is  bullish. Another thing to note is that the market is forming a rising wedge…within a larger rising wedge as it can be seen on the 10-month chart. This is bearish for the intermediate-term. Therefore, focus must be placed on the high probability setups with the least positive correlation with the market.

I’m pretty impressed by the community. You guys are playing the same stocks I’m playing…despite that fact that you don’t know what I am playing. I kind of calmed down on posting trades to see if it would make any difference to my ability to focus on my actual trade execution. There isn’t much of a difference, but it is time consuming so I’ll try to post what I can if time permits.

Some of you ask dumb questions. Questions like “Are you still going to blog when in school?”. Duh. I have 3 days out of the week free, too. In fact, I skipped my first day of classes to make 9% yesterday (and I’m sure you would too). Also, a few of you ask me questions with answers that can be found in my educational articles. Stop being lazy and get reading. I don’t have time to answer questions like that.

Finally, I’m looking at a variety of potential setups this week, most of which have been played multiple times over the past few months: Ashford Hospitality Trust, Inc. [[AHT]] , [[ANPI]] , [[BCRX]] , CIT Group Inc. [[CIT]] , Capstone Turbine Corporation [[CPST]] , [[DVAX]] , [[EDAP]] , Fifth Third Bancorp [[FITB]] , Huntington Bancshares Incorporated [[HBAN]] , [[HEB]] , Human Genome Sciences [[HGSI]] , [[INO]] , [[JAZZ]] , [[MRNA]] , Novavax, Inc. [[NVAX]] , [[OCLS]] , [[ONTY]] , Quantum Corporation [[QTM]] , Repros Therapeutics Inc. [[RPRX]] , Rentech, Inc. [[RTK]] , [[SCLN]] , Tenet Healthcare Corporation [[THC]] , Unisys Corporation [[UIS]] , XOMA Limited [[XOMA]] , and others that may just randomly pop up during the day.

Another note: I am NOT taking more students, so stop signing up. I have enough people for the next 2+ years, and I guarantee you that I won’t be doing this for 2 years.

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I am looking at SAY, SVA, AIG, HEB, INO, PNX, PACR, ETFC.

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I am getting burned out. I was coming a long time ago. If I “ignore” your questions, just know that I’m not really ignoring them.

I wrote up an educational post on Chart.ly blog here. I’m sure it’ll be useful for some of you.

I will be in Alabama this weekend. I will likely be in all or mostly cash by the close.

Make note of the neutral range in the SPX:

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Starting today, I will be extremely busy. I am preparing for my first day of school on August 31st. As you know, I will be starting a new shrink program. I have many, many reasons to do this, but I have no idea why I really chose to go back to UMD. I’ve been having recurring dreams for over a year telling me that I have to go “find something”. Who knows what that is, but my dreams or visions are usually correct. Say what you want, but I’m not crazy. I executed the delegation of my responsibilities in all of my businesses yesterday, except for my personal trading and anything that’s internet-related.

Most of you figured out the way I day trade. You see a lot of break even trades for a reason, and that reason is because I am testing out the market. I have to see what is working early on, and when I do, that’s when I go in “heavy” sometimes doubling or tripling my positions. It’s pretty simple if you think about it: find what works then heavily allocate your capital to the best ideas, thus maximizing your gains and limiting your losses. Winning almost everyday is not some kind of bizarre mystery or stock market “secret”…which also brings me to another point.

I still don’t get why people complicate trading with complicated and worthless indicators, computer programs, spreadsheets, or anything else that wastes your time. Here’s a tip – if you can’t even trade profitably and consistently off of the basics, then you’re going to run into major problems down the road. No method is 100% perfect, but make sure you perfect the basics first, then move onto other shit.

This post will be two parts: the usual SPX analysis and the biotech/pharma sequential breakout analysis.

First, the SPX charts in the following time frames: 2-day, 5-day, 10-day, 1-month.

Now, I heavily day traded biotech stocks yesterday. By heavily, I mean that I was executing trades every 1-3 minutes which made it pointless for you to follow. I took the charts for BCRX, NVAX, SVA, INO, HEB, VICL, DVAX, and AGEN and stuck them all together into two images.

Yes, I know that some are not swine flu related, but they moved anyway, didn’t they? I could careless what you think and only care about WHAT is moving. I find out the WHY part later, after my trades are finished.

The long black vertical line marks the breakouts for BCRX and NVAX, which were the first breakouts of the group. Scroll down a little to INO. The remaining charts show sky blue boxes. These mark the delayed movements in the rest of the group where you only had several minutes to take action.

The long red vertical line marks the pullbacks for BCRX and NVAX. Note how SVA pulled back first, HEB kept going higher, and some of the others just didn’t move at all. During pullbacks, you want to heavily allocate towards the strongest in the sector, which was HEB (you can check out my twitter stream and assess how urgent I made it to get into HEB).

The area between the long black vertical line and the long red vertical line shows the breakout volume. Volume should and must be heavy for a stock to gain momentum, which reduces the risk of failure.

The area between the long red vertical line and the long green vertical line shows the importance of pullback volume. For most of the stocks, you should see lower, steady volume, which indicates a healthy consolidation zone. High volume inside this zone flashes a big warning sign of instability.

The period after the long green vertical line is mixed. You can see secondary breakouts in BCRX, NVAX, SVA, and VICL – all marked by heavy volume that should be similar to what you saw in the initial breakout volume area (between the black/red vertical lines).

Finally, chart patterns made sure that you got in at the right moment.

When you see 2 or more stocks in the same or similar industry/sector, then you must immediately scan and chart the entire group’s components. Some of my biggest plays are due to sequential breakouts which give you windows of opportunity to get into stocks prior to high-probability breakouts. Good examples were my end of April/early May oil/gas shitstock plays in XTXI, XTEX, APL, AHD, and a few others. I believe I wrote a post on it, but I’m not going to dig for it.

That’s your lesson for the day.

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