Being a swing trader that seeks to profit from intermediate term moves, most of my money is made on the long side when the broad market is operating above the 50 day moving average–preferably a rising one. Below it, my focus is on preserving capital. As much as I would love to be a raging bull here, with virtually all of my portfolio allocated to long positions, the fact remains that we continue to operate below a declining 50 day moving average in the broad market. As the updated and annotated daily chart of the S&P 500 shows, the bulls have made some short term progress, but are going to need a sustained effort to pull us up through the tough overhead supply (see below).
Thus, my best strategy is to gradually get involved with some select longs, since there are most certainly pockets of strength forming in the market, which is definitely a plus for the bulls. I also hold a very high level of cash, currently at 61%, along with some small hedges in $TZA and $TLT.
With the market at a key battleground zone in the form of the 200 day moving average, I want to be nimble and ready to pounce on a break either way. Note that because of the recent progress by the bulls, I have shifted gears away from my 100% cash strategy. Above all else, I want to continue to exercise patience while the market tries to heal itself, although as we all know there are no guarantees that it will be successful in doing so, anytime soon.
Below, you will find my top long ideas for the upcoming week. Feel free to pick and choose whichever setups best fit your style. I urge you to use stop losses (I prefer a trailing stop of 7-8%, on average) in order to mitigate your downside risk. Please note that these are merely trading ideas only.
I hope that you find these actionable.
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FULL DISCLOSURE: I am currently long $APKT $LULU $CRM $MDAS $ISH $DECK $THOR.
hey pro,
nice list you have included in your post. i long most of the stocks in your list 😉
ty, for posting!
Thanks, Duane. Good luck this week.
Thank you for taking the time to post such great ideas on a regular basis. Your blog is awesome. Keep it up!!!
Thanks, Jimbo. Really appreciate that.
Chess,
Excellent post which gives me a great idea of how you’re looking at charts. I will keep reading and thinking about what was said here tonight so that maybe someday I’ll be able to see these patterns with out your assistance.
I think I’m starting to understand why you drawing some of the conclusions you do, but need to keep studying.
Do you recommend any books?
On another note, I was just looking at last week and noticed that the NAS put in a follow through day last Tuesday, which I had somehow missed, but which I think is quite encouraging. I guess we’ll see.
Hey Chess-
I enjoy the blog. Keep up the good work.
I agree with a lot of what you have to say. I have been long CMG and LULU for about 3 months now.
Both high growth companies who are the big dogs in their industry with no significant competitor to challenge them. Layering in the strong technicals, I am going to enjoy the ride north. Hard to imagine LULU won’t overtake it’s all time high from ’07 at some point this year.
I wanted in on CRM too for the same reasons, but the stock has been so hot it’s not easy to find an entry point. Will look into your other recommendations. Thanks for the tips.
Chess – Regarding the CRM chart, how does that pattern differ from a rising wedge? It looks like the volume is also declining. What else are you seeing that I’m missing? Thanks.
Could be, but to me it looks orderly and more of an ascending triangle. I guess we will know for sure shortly, but I wouldn’t short this one.