CHESS MOVES

I have made three trades thus far today.

1. I bought 1/4 more of my position in $LULU. I have now 3/4 of a position in the stock.
2. I initiated a 1/2 long position in $DECK.
3. I initiated a 1/2 long position in $THOR.

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TOTAL PORTFOLIO:

EQUITIES (Including ETF instruments):

• LONG: 33% ($APKT $LULU $CRM $IAG $MDAS $ISH $DECK $THOR)
• SHORT/HEDGED: 6% ($TLT $TZA)

CASH: 61%

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NOTE: These are posted to be trading ideas only. Should you follow me in, I urge you to use stop losses to mitigate your downside risk (I prefer a 7-8% trailing stop loss).

[youtube:http://www.youtube.com/watch?v=uS5utRRlqXM 450 300]

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MARKET WRAP UP 06/17/10

On the back of yesterday’s consolidation, the market yet again put in a boring, choppy day. With the S&P 500 staging a last minute mini-burst to close up 0.13% to 1116, this market is quickly becoming fodder for an hibachi chef. Traders trying to play intraday trends are being sliced and diced like tender chicken, noodles and onions on the grill.

After the run up that we have seen since we printed 1042 a mere nine days ago, a quiet period of consolidation is a solid check in the bulls’ win column. This type of price action is far more constructive for the bulls in terms of tightening up extended daily charts, and building sound bases. What the bears were hoping to see was a quick reversal on heavy volume, giving back the previous nine days’ gains, presumably taking us to new lows. Instead, the current benign toggle between bulls and bears is helping to offer very good long setups, should we see a few more days of this type of action.

Anecdotally, I am seeing a high level of apathy and disinterest amongst traders, which is often found after the kind of fast, emotional selling that we saw in May and early June. Usually, apathy is the last stage of sentiment during a correction before we turn back up. Of course, prognostications aside, the price action on the updated an annotated daily chart of the S&P 500 tells the story of a healthy flattening out just above the 200 day moving average (see below).

Looking ahead, the bulls can afford to see a bit of a pullback from here, so long as it is not on heavy volume. A light volume dip to 1085-1100 would likely invite some aggressive bulls to load up on longs. The bears, on the other hand, need to start asserting themselves quickly, as the longer that we come to terms above the resistance trend line (see my chart above) as well as the 200 day moving average, the more likely it is that our next move will be much higher from here.

Regarding my portfolio, my top three performers today were: $APKT, $CRM as well as $IAG again. All three of those charts continue to look bullish. As for $LULU, I noted last night that I expected a pullback in that extended name, and indeed we saw that today. I am content to hold my 1/2 position, as the daily chart of that high momentum name presumably takes a healthy breather.

With a cash position of 67% and some small hedges in $TLT and $TZA, I am well positioned to take advantage of any more consolidation and/or healthy pullbacks. Note also that my current allocation limits my downside, should the bears regain the initiative. Seeing as we remain below a downsloping 50 day moving average, a cautious approach is still preferred. While the character of this market appears to be changing in favor of the bulls, the bears have by no means been left for dead yet.

[youtube:http://www.youtube.com/watch?v=4SSOTm0hEDQ 450 300]

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Oh, the drama! I say Academy Award nominations for all fine members of Congress as well…

[youtube:http://www.youtube.com/watch?v=fTfyWI7_A9U 450 300]

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“Worked all week now it’s time to play/Gonna get a little bit…Sideways”

-Dierks Bentley, “Sideways”

MARKET WRAP UP 06/16/10

For the first time in several weeks, we witnessed a relatively tame trading session, as the S&P 500 closed off 0.06% to finish at 1114. Despite closing flat on a few occasions during the past two months, we have seen wild intraday whipsaws. Compared to the market’s recent price action, today qualifies as an orderly consolidation session. In particular, after the huge move up from 1040 over the past ten days, the lack of a huge selloff today can be viewed as a bullish.

For many weeks now, I have talked about the idea of becoming more aggressive on the long side if and when we saw a few days of quiet consolidation. Not only is it important to digest our recent move higher in an orderly way, but this type of price action helps to firm up many short term extended daily charts. In fact, many of the high growth names that I highlighted last night have been up for five/six days in a row on solid volume, and need to take a pause.

As I note in the updated and annotated daily chart of the S&P 500, seen below, the bulls are by no means out of the woods yet. We are looking at a declining 50 day moving average, as well as a fresh batch of overhead supply from early to mid May. Thus, several more days of building a sound base is crucial to being able to tackle all of that tough resistance, in my view.

Because we could pull back to the 20 day moving average at 1084, and still be in a short term uptrend, I added some small hedges into the closing bell today. With a cash position of 67%, I am still taking a wait and see approach at this point. Being aggressive in all forms of gambling may be a fun time, but selective aggression is what gets the money over the long haul. Even in other professions, such as with fighter pilots and police officers, selective aggression is the hallmark of the most successful people. Letting the market reveal itself in the face of all of the recent events will continue to require a great deal of patience…and cash.

My top performing long today, $IAG (which I bought yesterday), is a pretty good example of a daily chart firming up and forming a sound base before breaking out (see below).  Props to Jake Gint.

On the other hand, another one of my top longs, $LULU, needs to take a breather. I will likely add to my 1/2 position on a light volume pull back.

My two new longs today both offer appealing charts, to the point where took 1/2 positions in each, seen below.

[youtube:http://www.youtube.com/watch?v=qfj93IQAfEE 450 300]

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Into the closing bell, I have decided to pick away at some hedges.

(All buy orders time stamped inside The PPT)

LONG:

• 1/2 position $TLT
• 1/3 position $TZA

TOTAL PORTFOLIO:

EQUITIES:

• LONG: 27% ($APKT $LULU $CRM $IAG $MDAS $ISH)
• SHORT/HEDGED: 6% ($TLT $TZA)

CASH: 67%

NOTE: These are posted to be trading ideas only. Should you follow me in, I urge you to use stop losses to mitigate your downside risk (I prefer a 7-8% trailing stop loss).

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Continuing with my theme of putting out feelers into this market until proven wrong, I went long two more issues today. I consider today’s action to be bullish, and would be enticed to buy more, should we see a few more quiet days like today.

(All buy orders time stamped inside The PPT)

LONG:

1/2 sized positions in: $MDAS $ISH

WARNING: Both stocks are relatively thinly traded. Please be aware of this, should you choose to follow.

TOTAL PORTFOLIO:

EQUITIES: 27% ($APKT $LULU $CRM $IAG $MDAS $ISH)

CASH: 73%

NOTE #1: Should I add any more long exposure from here, I will likely put one some hedges to the short side.

NOTE #2: These are posted to be trading ideas only. If you choose to follow me in, I urge you to use stop losses to mitigate your downside risks (I prefer a 7-8% trailing stop loss).

[youtube:http://www.youtube.com/watch?v=LeCYvHIISg0&feature=related 450 300]

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