When I introduced my setups last Sunday evening, I noted that the major indices were at key support levels. Accordingly, I was finding many of the best setups to be that of the “buy the dip” variety, as opposed to stocks on the verge of significant breakouts to new highs. Fast forward to the end of this past week, and we have more or less come roundtrip to find ourselves in the same predicament, as a rally early last week quickly disintegrated into a bear victory.
As I noted in my market recap on Friday, the senior indices continue to probe multi-month support zones. The more we probe these key support levels, the more like it is that they will fail. Thus, the bulls have yet again painted themselves into a corner. Either they will rise to the occasion this week and defend these support levels once and for all, or we are on the cusp of a major breakdown to retest the early July lows. Just as the case was last week, I am finding the best setups on the long side to be those of stocks that have nicely consolidated their moves higher throughout the summer.
With that said, my top individual idea is to go short $ANV. The chart can be seen below, and I give my reasons as to why I think it makes for a nice swing short.
Also below, you will find my best trading ideas on the long side for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk–I prefer a trailing 7-8% stop loss.
I hope you find these ideas helpful.
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Shorting one of Jake’s faves (ANV) eh?
Jake is short term cautious on it.
Interesting set of ideas. I wish I could juggle that many positions! I usually pick one or two after serious internal debate but I am a hacker anyway.
Just pick and choose which ones are best for you–you don’t have to juggle.
WIth so much Hype in gold I wouldn’t be looking for that much down action in ANV. I don’t like that idea, but thats my view. I mean the trend is clearly up so you would be shorting against the trend for a little gain.POSSIBLY
Why are you assuming the gain would be little? It is a high beta gold stock that has shown clear signs of slowing momentum after being up seven days in a row (bearish hanging man candle). The risk/reward is excellent so long as one uses a tight stop loss to cover. The stock could easily retest the 50 day moving average at $19.16, which would represent more than a 10% drop from here.
You are correct chessnwine. However, I just think that this momo in gold is going to catch people off guard that keep on trying to short them. The rally that most of these gold stocks had where from short covering, but yes you are correct good risk to reward if this is in fact the top. You can use the previous days candle as a stop near the high. I’m not trying to knock your trade, but just see these gold stocks as creepers. Lets see how it plays out “)
Fair enough–the trade takes on a lot of risk if you’re not careful. I will definitely admit that. While I was looking for short setups this weekend, there are just too many charts that can go either way. Not too many fat pitches down the middle of the plate if you know what I mean.
Couldn’t agree with what you said about charts going both ways in this uncertain market. Am I right in saying we have the little people getting hurt( most of them ) and some hedge funds getting it wrong also?
Chris–I agree with you. It is a chop fest/meat grinder of a market. Most I have been long all summer is 60%. Been 100% for a fair chunk of the late spring/early summer correction.
All very true.
Chess… thanks again for the Setups piece, as always , very helpful, interesting, enjoy every single one.
good week to you!
Nice call on ISLN…BTFO