Just before the market ramped over the last hour or so, I considerably lightened up my SBUX short (discussed on this blog several times) inside 12631.
I may very well add back to it, but with this ramp in front of the FOMC tomorrow I have to stay disciplined with all trades.
Here was my note to members:
Comments »Covered 1/2 of 3/4 $SBUX SHORT @ $74.93 from $77.29 core entry and $76.77 add to lock in some partial gains. 1/4 position left.
Casinos remain under pressure, with MGM Resorts sporting a notable breakdown this morning.
On the zoomed-out daily timeframe, note well-defined support being broken today. Unless $23 is immediately recaptured by the end of this week I view this action as consistent with a major, multi-year top now confirmed for a premier casino operator. The sheer size of the pattern projects a move down to around $18.
Also note that LVS MPEL WYNN have already broken down.
Elsewhere, small caps remain under pressure amid some mixed action.
What are you trading this morning?
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With a backloaded week, in terms of events, the market is drifting slightly higher this morning, with a few of the momentum names bouncing back from yesterday’s drubbing. There is of course an air of uncertainty about the precise language the Fed will use in their new statement and forecasts, let alone the Chair Yellen press conference, which is probably another reason why we may see more of this action into tomorrow.
Treasuries are buidling out a bear flag on the 30-minute timeframe thus far, something we talked about yesterday for the TLT ETF. Still, I am likely to wait until tomorrow’s reaction before adding back to my remaining shorts.
Casinos are sporting further breakdowns virtually across the board, namely MGM. I will come back with that chart in a bit.
The huge bounce lower and then squeeze higher this morning in Pandora (P) may be indicative of the type of pre-FOMC action we could see today and tomorrow into the meeting.
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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.
Our three “keys” to the market from last weekend experienced a choppy/red week, and so did the broad market.
As a result, we are going to reiterate the thesis that headed into this week, it is hard to see the market sustaining any meaningful upside if the high beta, small market capitalization stocks housed in the Russell 2000 Index do not make a move at least over 1,180, if not prior highs of 1,213. Recall that while the S&P and Nasdaq made fresh highs this summer, the Russell did not. That still remains the case, and we await for the small caps to declare their next directional move to resolve this glaring, ongoing market divergence.
As the updated daily chart of the Russell indicates, failure to break over 1,180 keeps a potential major topping pattern in play, spanning all of 2014, with a close below 1,082 necessary to confirm.
Beyond that, last week’s choppy action saw Thursday’s sharp rally more or less given back in its entirety on Friday, driving home the point that bulls have yet to sustain strength in the Russell for a while now.
Moving on, the weekly timeframe for the marquee, liquid, leading momentum issue Tesla still shows the potentially bearish reversal candlestick from two weeks ago, known as the “shooting star” (yellow arrows point to it, where price begins the week near the highs and finishes near the lows after a prior uptrend). Last week’s grinding action was a textbook “doji,” essentially a stalemate and not yet declaring the next directional move for the stock.
Should Tesla follow-through lower in the coming week, however, it would likely serve as a sign that the market is adopting a more cautious approach to momentum stocks. Should the market, however, shrug off the shooting star candle by pushing Tesla higher yet, or instead quietly grinding sideways, it would stay consistent with the resilient bull we have seen heretofore.
Thus, against this backdrop, TSLA‘s price action remains a key to the coming week.
The third key to the coming week is…
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Here are some actionable short ideas on this list, especially if the market sees another day of weakness.
Courtesy of The PPT algorithm, here are some very aggressive ideas for short trades headed into Friday If you are not comfortable shorting (especially in a bull market), there is nothing wrong with taking a pass. Keep those cover-stops in place.
Nonetheless, a good chunk of readers are always looking for short ideas.
Members of The PPT can click here to view and save this “Titanic” Screen, as I named it when I created it a few years back. The screen isolates stocks vulnerable to further weakness.
Please click on image to enlarge
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After showing signs of getting rejected away from well-defined resistance (light blue horizontal line on daily chart, below) NetSuite is a viable short setup for Tuesday on any further weakness, playing for another leg down in what is still a corrective chart.
On the long side, I have my eye on the junior gold miners and corn in the commodity complex.
Drop me your top tickers overnight.
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