Step Up and Show some Heart

After the Labor Day holiday, the varsity starters will be back at their trading desks fresh from the Hamptons and ready to kick ass. You can bet that they will be itching to get back in the swing of things, and I suspect that they will be ready to pounce on retail traders who are fatigued from a long, choppy summer. If you have endured this tape for the past several months without much of a break, it is crucial that you show up on Tuesday mentally focused.

I expect trading volumes to increase, and there is a decent chance that we will see a break of the increasingly ubiquitous trading range, in either direction. Thus, you had better bring your “A” game. I will be back tomorrow and Monday with more in-depth analysis of the market. In the meantime, below are several videos that I have chosen which best exemplify the broad concepts you should be revisiting before next week.

Preseason is over, folks. It is time to step up when it really counts.

_________

Red Auerbach on the importance of being practical and versatile. Applied to trading, you need to be able to have many different tools in your box. If you are a one trick pony, you will have a tough time being consistently profitable, since the market is so dynamic. Also note the significance of confidence in great players in terms of rising to the occasion and “being clutch.”

_________

[youtube:http://www.youtube.com/watch?v=DtN8VeHbSRE 450 300]r

_________

Bob Knight on the importance of not making bold predictions about the future, just for the sake of it.
_________

[youtube:http://www.youtube.com/watch?v=50LsvwmgJ7I&feature=related 450 300]r

_________

Winston Churchill on the unconditional commitment to keep fighting and never surrender.

_________

[youtube:http://www.youtube.com/watch?v=Utv9rCHlpkM&feature=related 450 300]r

_________

Bill Parcells on the importance of knowing–and being true to–yourself.
_________

[youtube:http://www.youtube.com/watch?v=cwu3zCMU7Ks 450 300]r
_________

Tired of feeling like a scrub while being treated like third class steerage when you fly commercial airlines? Here is the motivation to keep banking coin with The PPT.
_________

[youtube:http://www.youtube.com/watch?v=EDkotF3Taa0 450 300]r

_________

Pat Croce on staying positive.
_________

[youtube:http://www.youtube.com/watch?v=qlpPugLwRss 450 300]r

_________

Finally, as a reader of iBankCoin and/or Member of The PPT, you need to remember to behave like a gentleman (or lady) at all times, or else face consequences for acting disrespectfully to the authority on this site.
_________

[youtube:http://www.youtube.com/watch?v=9Bv24EcQxWA 450 300]r

Comments »

__________

I am buying a 3/4 long position in $TQNT. The chart looks to have built a nice base over the past few weeks, and is now above all major moving averages. The firm is also a supplier for many key $AAPL products, as well as some other smartphones.

All trades are timestamped inside The PPT.

__________

__________

TOTAL PORTFOLIO:

EQUITIES: 62%

• LONG: 56% ($TQNT $CTRP $CTXS $CMG $NTCT $RBCN $MELI $HMIN $RDWR)
• SHORT: 6% ($LULU)

CASH: 38%

Comments »

_________

Yoga balls, that is.

I wrote a post a few days ago where I discussed the major breakdown that $LULU saw on Monday. Rather than immediately short it, I gave the stock some time to fill the gap. Today, I see the stock has retraced back to the original breakdown point, as well as to the 200 day moving average on declining volume.

I decided to go short a 3/4 position. Upon any reversal to the downside, I will quickly fill it up.

All trades are timestamped inside The PPT.

__________

__________

___________

TOTAL PORTFOLIO:

EQUITIES: 56%

• LONG: 50% ($CTRP $CTXS $CMG $NTCT $RBCN $MELI $HMIN $RDWR)
• SHORT: 6% ($LULU)

CASH: 44%

Comments »

___________

Into today’s third straight day higher, I am taking some short term profits.

• I sold out of $AAP.
• I sold out of $CMI.
• I sold 1/2 of $MELI, leaving me with 1/4 left.
• I sold 1/4 of $RDWR, leaving me with 1/2 left.

All trades are timestamped inside The PPT.

__________

TOTAL PORTFOLIO:

EQUITIES: 50%

• LONG: 50% ($CTRP $CTXS $CMG $NTCT $RBCN $MELI $HMIN $RDWR)

CASH: 50%

Comments »

You are going to need to keep an eye on China here. Like it or not, the Chinese have led our markets for quite some time now. After the 2007 run up and subsequent 2008 crash, the Shanghai Composite bottomed several months before the S&P 500. Moreover, after the reflex rally during the next several quarters, China topped out way back in August of 2009. While we know that the S&P did not officially top out until mid April of this year, many key stocks, such as $GS, topped out back in October of 2009.

My point is that to cavalierly dismiss inflection points in the Shanghai Composite is, at best, a misguided strategy. Despite the likes of Hugh Hendry calling for a collapse in the “super-sized” forecasts of growth in the out years of the Chinese economy, the chart of the Shanghai is indicating that a major bottom is brewing.

The daily chart, seen below, indicates that the potential inverted head and shoulders bottom is at a crucial stage. A break above the neckline would confirm the pattern, giving us a measured move target up to roughly 3,050. Note also that the right shoulder has been consolidating higher than the left shoulder, a sound indication of strength by the bulls. Also note the 50 day moving average flattening out below price, on the cusp of turning up.

___________

___________

The monthly chart should give some perspective about how easily the Shanghai could move back up to the 3,000 area, yet still be within the context of a broad sideways channel after the huge moves in 2007 and 2008.

___________

_____________

While it would behoove the bulls to count their chickens before the inverted head and shoulder neckline cracks, if you are short China here you really need to reconsider your position on any further strength.

Comments »

____________

MARKET WRAP UP 09/02/10

If I had to most precisely isolate the overarching sentiment of traders, it would best be described as cautious pessimism. By now, the secular headwinds facing the economy are well known. When these macro issues are combined with the sharp correction that we saw in equities in May, followed by the past three months of choppy, amorphous price action, it is no wonder that most market players are expecting, at best, a continued sideways market.

With the prevailing belief being that we are either going down or sideways, in addition to the fact that we held the lower end of the trading range this week, I am still in the camp that says it is correct to have a hearty risk appetite at this point in time. If we move above 1120 or so, then I will likely become more cautious again (as many others will presumably become more and more bullish). Normally, my preferred style is to not be much of a contrarian, as I want to ride established trends. However, as I noted several months ago, I was either going to have to adjust to this market, or sit out entirely. Given the fact that this broad trading range can continue much longer than anyone thinks possible, I decided to adjust.

As for today, the bulls impressed with solid follow through on yesterday’s massive rally. With the S&P 500 closing up 0.91% to 1090, the bulls recaptured both the 20 and 50 day simple moving averages, as the updated and annotated daily chart illustrates below.

____________

____________

Updating the daily charts of other key indices and sectors, we likewise saw sound follow through from yesterday’s rally. This follow through helps to reinforce the possibility that a series of double bottoms and inverted head and shoulders have been formed.

____________

____________

____________

____________

____________

____________

After trend traders dominated in 2008 (down) and 2009 (up), my working thesis for 2010 is that those trend traders need to be humbled. The nature of a secular bear market, which I believe we have been in since 2000, is that all excesses are washed out, not just in the economy at large but also in the market. When we tested 1040 a few days ago, many traders mistakenly assumed the downtrend would persist. Instead, we are seeing that 2010 is shaping up to be the year of the range trader.

_____________

[youtube:http://www.youtube.com/watch?v=H3QEKT2mk_Q&ob=av3e 450 300]r

Comments »