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I flagged BSFT for you a few weeks back, but had trouble swinging it in front of the firm’s earnings. With that out of the way now, you can see what a tough throwback the chart endured. The stock broke out from well-defined resistance trend line, only to see an aggressive “throwback” to it. However, the post-earnings sell-off and volatility has subsided in favor of the bulls, despite the numerous bears betting against this stock having had every opportunity to break it lower. From an intermedaite-term perspective, price is acting well above all moving averages in a broader base.

Beyond that, you are talking about a low-float/heavily-shorted stock with plenty of aggravating factors for a big upside move. I am currently long BSFT inside the 12631 Trading Service and playing for a continued breakout, with a stop-loss below $35.50.

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It is often said that the market is a brutal beast that makes it tough for you to become wealthy. However, during sustained uptrends quite the opposite is usually the case. In fact, there can be times when the market seems, if only for a bit, downright easy, like a cute little piggy bank dispensing tens of thousands of dollars to nice passerby’s. Unfortunately, that scenario has very little to do with the current market, and for much of 2011. Although we have seen sporadic periods of decent trading this year, by and large the going has been tough with plenty of headfakes in both directions.

Currently, the volatility index (VIX) is stubbornly holding just above 30. Generally speaking, when the VIX holds above 20, and especially 30, for a long period of time it makes swing trading far more difficult, and capital protection should be focused on more than capital appreciation. The increased volatility is usually a function of extreme uncertainty, and violent indecision tends to favor the bears, or at least it makes life that much more difficult for bulls. If anything, timeframes should be shortened considerably for trades. Even with the progress made by the bulls in recent weeks, the large gaps up and down seemingly at the beginning of every session keep me trading relatively light, buttressing positions with heavy cash.

We are doing well with some individual trades inside 12631, including the ERTS position I initiated yesterday, #TIMESTAMPED in our chat room (No McCOOLah). All in all, though, we are very likely going to need to see volatility abate in order for a sustained uptrend to have a chance.

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Members of The PPT and 12631 can click here for the consumer credit industry screen, ranked by PPT Technical score. In sum, many are impressively set up. They showed relative strength to the market throughout the summer. The big ones are obviously MA and V, which look excellent here too.

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The afternoon breakdown in the broad market saw me locking in some gains and cutting some losses inside 12631. However, I am on watch for this divergence that appears to be playing out: While the SPY lost its morning lows during that afternoon breakdown on a 30-minute timeframe, the small-cap dominated IWM did not. Usually, the higher beta small caps would be leading us lower if risk is truly heading for the exits. This is a possible bullish divergence that I am looking at, headed into tomorrow.

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Direct Vimeo Link Click Here

Members of The PPT and 12631 Can Click Here for My Regional Banks PPT Screen

Tickers Mentioned in Video: $BPFH $CHFC $FCF $HCBK $SUSQ $TAYC $TCBI $XLF 

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The market has failed to roll over in any sort of way that would reward those who took on levered instruments to the short side, relative to the risk of further upside. Whether we are looking at a central bank-engineered phantasm of a a market should be irrelevant to you as a stock trader. As a citizen, you can certainly vent your concerns, but there is a huge difference between what you think and feel about politics, versus how you form a market posture.

Looking at a short-term chart of the SPY, you can see that we continue to “go sideways” as a substitute for violently rolling over like we did many times over the past several months. Underneath the surface, I am seeing more and more stocks beginning to act better technically. Headed into next week, I have my eye on a few areas of the market that I will be keying off of to see if I should expect continued upside.

We are putting the finishing touches on another awesome week inside the 12631 Trading Service in The PPT. We are not selling the idea of cherry-picking winning trades, but rather we believe that we have the best community and chat room for traders in the world. And that is too much value to pass up. Come check us out.

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