Be This General

“The general who advances without coveting fame and retreats without fearing disgrace.” -Sun Tzu, Chapter 10, The Art of War (1913).

Be that general in trading, and consider how the phrase applies.

In particular, note the “retreats without fearing disgrace,” and how it applies to stop-losses.

Also follow @SunTzuSaid on Twitter.

What is your favorite Sun Tzu quote?

I have had more money behind the short bond thesis since August 29th, inside the 12631 Trading Service and profiled in my Weekly Strategy Session, than at any point prior to that.

But the thesis continues to be the same; that rates on the 10-year put in a multi-decade low back in the summer 2012.

As evidence, consider the TNX weekly chart, below. The TNX is the CBOE 10-Year Treasury Yield Index.

Note the falling wedge pattern resolving higher this week, after several quarters of consolidation. I am playing for higher rates in the coming months, well over 3%–Perhaps up to 3.7%. A move back over $118.41 on TLT would negate my thesis.

Over the weekend, consider joining those services for more actionable, inter-market analysis.

In addition, I would be remiss not to implore you to consider attending the first annual iBankCoin Investors Conference in Las Vegas, Nevada, this November 8th. Although I will not be able to attend, you can be sure the keynote presentation given by The Option Addict, as well as two respected guest speakers, will be value-added to your process as a trader. Having met OA and his wife over the summer, I can assure you he is a true professional and a class act. Please click here for more details about attending.

Have a great weekend!

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The inability of names like PCLN WYNN to bounce from oversold conditions of late likely indices a meaningful change in character is at hand for these winning, leading issues from recent years.

In addition, bonds of course are also sporting a change in character with dip-buyers stuffed at each and every juncture since August 29th, not long after which we saw a confirmed “island top” pattern on the Treasury ETF, TLT. Commercial real estate stocks in the IYR have also abruptly weakened, a rate-sensitive sector in its own right.

Feel free to drop me any other changes in character you see out there.

To update my Starbucks short position inside 12631, discussed again this morning on this blog, the first chart below of the daily timeframe shows the head and shoulders top coming into play with a push lower. In addition, note Starbucks has a declining 200-day moving average (yellow line).

What gives me more conviction in the trade potential, however, is the weekly chart, second below.

Note the possibility of a base breakdown on this timeframe, looking for a move down into the mid-$60’s.

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Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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The small cap ETF continue to gravitate towards that mystical $115.50 level we have been tracking for a while. You can see how important it is on the zoomed-out 30-minute chart, below, with the light blue line.

The Russell 2000 was one of my keys to the week for Weekly Strategy Session and 12631 members from last weekend’s note. Until we see more clarity above the small caps’ next big move, I expect continued chop with fading the edges of a given range.

Elsewhere, I took some partial profits in my bond short instruments, but still have core short positions on.

Should we see a rally this afternoon, momentum traders should keep an eye on GRUB LOCO longs.

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