A Clean, Well-Lighted Correction

I am still holding a piece of a TZA long (triple bearish ETF for the small caps in the Russell 2000 Index) which I initiated inside the 12631 Trading Service last week. After scaling some gains on Friday, I am debating whether to add back to or lock in the final piece, or perhaps leave it on and let it run.

This morning’s failed bounce illustrates that sellers are lurking into rallies, even though the market is indeed oversold. Still, if the bounce trade is crowded then the pain trade is lower.

Conjecture aside, I am keying off the 30-minute IWM chart. You can see the bear flag rollover threat today. However, we are back to Friday’s lows where buyers tried to step in.

So, if they present themselves again today with force I will take off the TZA and reassess.

Other than that I am in heavy cash and waiting for better trading setups.

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Courtesy of @WrigleyTom on Twitter

Click to enlarge

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday. 

The weak Amazon versus the strong Facebook may as well be the prize fight for this market, in terms of gauging the price action in the leading, marquee issues with tons of institutional sponsorship.

Amazon remains a very weak chart, especially after earnings, while Facebook is still strong, overall, after its earnings gap higher. 

Still, you can see Facebook in gap-fill territory, below, perhaps a candidate to fill the gap from earnings if the market remains under pressure. 

If the market does sustain a strong bounce this week, Tesla is as attractive as any leader on the long side, ripe to break higher from its well-defined symmetrical triangle consolidation, below. 

As far as the marquee issues, though, traders should still focus on…

Please click here to continue reading

If you are looking for some (quick) support buys here, a good algorithm screen to have, courtesy of The PPT, is one I made called “12631 Quick Bounce Plays.”

In the screen, I am looking to isolate stocks with positive daily Hybrid PPT scores, but negative weekly ones.

Thus, they are ripe for a quick bounce as the momentum seems to be turning, if only for a bit. I also screen for PPT Relative Strength scores, as well as volume and % from 50 day moving average.

Members please click here to view and save the screen

Here are the readings as of Friday’s close. Remember, we are talking about short-term flips here, not high quality, multi-week swings. Keep those stop-losses in place.

(Click on image to enlarge)

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Two noteworthy charts which have clearly been outperforming many other stocks in this market of late are: BITA GPRE. Note the strong uptrends, below. The only concern here is that they are perhaps becoming a bit steep. And if the market pullbacks depends then I expect just about everything to get hit.

Still, in the face of a bounce this week I would favor these.

Drop me your top tickers overnight.

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I’ll be back later tonight with market-focused content. But last night at the Annual iBankCoin Dinner the Option Addict and I were discussing legendary Massachusetts basketball player Chris Herren.

Herren was a nationally-regarded player (he was a member of the 1994 McDonald’s High School Basketball All American Team) out of Durfee High School in Fall River, MA., who played at Boston College, then Fresno State, then in the NBA for the Denver Nuggets and Boston Celtics. He eventually played overseas. However, he was plagued throughout his career by a terrible drug problem which eventually limited his considered talent and potential.

He recently cleaned himself up for good and now serves as a very blunt and inspirational speaker about the topic.

In the following video he gives a great speech to the Memphis Tigers college basketball team.

I urge you to take the time and check it out.