For many key names, as well as in the broad indices, this is where the rubber meets the road. Either we are forming the right side of many bases and inverted head and shoulders to move us higher, or we are breaking down to retest the late May/early June lows…or worse. Therefore, I thought it would be useful to update two key tells for the broad market:–$FCX and the small caps.
$FCX is hanging on by the hair of its chinny-chin, chin. Either it is forming the right shoulder of an inverted head and shoulders bottom, or it is slipping away from the crucial $65/$66 zone. The volume on Monday’s move higher was impressive, but the bulls are going to need to follow that up in short order with more strength, or else this is likely going below $60 again.
____________
_____________
The small caps have held up relatively well throughout this correction, compared to the broad market. The daily chart of their index shows the potential for an inverted head and shoulders. Either way, the line in the sand is pretty clear. Should the right shoulder not materialize, we are likely going back to those early June lows.
_____________
CnWIG
What are you going to do if we break these levels to the downside? Will you sell?
My ARUN got a downgrade today, from Barclays and fell over 5%, but is now coming back to 4+.. not sure what to do here.
I’ll respect my 7-8% stop losses.
I can sense you are struggling with the idea of stop losses. It really is very subjective in terms of your risk tolerance, which varies from trader to trader. I suggest that you keep even tighter than usual stop losses on if you are having trouble being an unemotional trader. This is not an easy market, by any means.
Thanks Chess,
So basically you will hang in until stopped out or the market turns?
For now, yes. That can change at a moment’s notice, but I will post regardless. Keep in mind, however, that I am hedged and still have a huge cash position.
Chess,
Sorry to keep bugging you, but is there a formula or way to figure out how much to hedge in uncertain markets?
No set formula. Are you a member of The PPT? The Fly frequently discusses the idea of portfolio allocation inside.
Ugly close on FCX but still in the realm of a reverasal, not going back to cash yet.
Closed my VXX hedge EOD for an oversold bounce…
I didn’t take part in the “Chess Moves” setups but if I am considering opening a positions here unless we break down before noon tomorrow.
good plan–nice trade on VXX. Thanks for reading and for the feedback.
C & W: I have seen before where you have said your trades are time stamped on the PPT. Where would someone go to look at those. I not asking because I want verify your trades. I am asking because I am new to PPT and I am trying to figure out its layout. If I go in the PPT with the idea that I wanted to look at your info, I wouldn’t know where to begin to look. I thought if you could point me to your info maybe that would give me a clue where I should be going for other info. Thanks in advance
No problem–even if you wanted to verify its cool. At the very top right hand corner of your screen inside The PPT, type in a symbol, such as APKT. Then, The PPT will take you to its own page. You will see all of the info on the stock there, but on the right hand side you will see the user notes on it. Scroll down, look for my name and when I noted that I bought shares.