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I flagged the auto stocks for you, especially TSLA,  in this post this past Monday. I have been long the stock for several days now, timestamped inside 12631. The stock is the quintessential heavily-shorted/low floater play. However, earnings are next Wednesday. Consistent with my discipline, I will sell before they report. That said, the stock is breaking out from a tight base, and has the shorts in a very tough spot here. Hence, I expect further upside before I sell next week.

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Of my portfolio holdings inside 12631 ATPG FST (will sell before earnings on Monday) and SLV are acting the best. Indeed, my thesis of playing technically sound charts that are heavily-shorted in order to punish numerous bears leaning the wrong way is coming to fruition. The issue going forward is whether this continues. Given the chart setups, I am inclined to say yes. However, given that I expect the market to come to terms with the 200-day moving average on the S&P 500 for now, I believe there is going to be a premium placed on stock selection over the next few days.

As for the broad market in general, we are putting in a rather dull session so far. This type of action is the main scenario that traders fail to recognize as a distinct possibility when they aggressively short a market that has been a huge run up–The idea that benignly pulling back or going sideways barely makes shorting worth the effort. The Halloween power period may have also come to pass, but simply consolidating up here is likely a win for the bulls. The 1260-1280 area should be viewed as our short-term consolidation zone, and the bears have a lot of work to do to get reverse some of these confirmed inverse head and shoulder bottoms that I am seeing on plenty of daily charts.

Many traders take issue with the idea of ever buying a stock that is already up 10-15% during the session. While I think the more important point of analysis is how the stock’s daily and weekly timeframes are shaping up, it is tough to talk someone into buying a stock that has already seen a huge move on a day like today.

So, here are a few stocks that I arrived at inside The PPT screens that are still viable, non-extended setups.

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All but the most agile of this morning’s faders jumping into inverse levered short instruments are being punished viciously by the market as this session is progressing. We are seeing some intense short squeezes across the board, delivering a homemade gluten-free, organic Whole Foods free-range farm produced Humble Pie to arrogant bears insisting that the market was incapable of rallying this much.

The S&P 500 is slightly above its declining 200 day moving average as I write this, but I expect that widely-watched reference point to be somewhat of a battleground for the rest of the session, as well as tomorrow. More importantly, I continue to monitor the health of individual setups underneath the surface as a better proxy for how healthy this market truly is. In addition to sinister, sexy short squeezes, I am seeing more tight bases and breakouts being permitted, which is obviously constructive for the bulls. Over the coming weeks, there is still more more to be done, despite the thrill of today’s session for bulls, as longer-term moving averages need to be negotiated.

We are all over the plays that are working well inside the best chat room community for traders in the world inside 12631, and no, we are not hindsight trading. Here are a few patterns and trades pointed out in recent days that are materializing well.

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My post from October 13th entitled, “Listen Up, Gang,” alerted you to the BIIB setup in the biotechnology space, and I have been holding that position for over two weeks now. I sold half into this morning’s huge pop, since it is always a good idea to take advantage of a positive news item and reaction that comes across the wires in your favor. However, I would argue that the stock was technically set up well regardless of the news. As you can see below on the long-term quarterly chart, we are looking at a decade-long breakout to all-time highs. In other words, the news was an excuse to take the stock where it was going anyway, just more quickly.

Either way, I am proud of the 12631 members who took this trade and are profiting handsomely even in an erratic tape. Then again, I did not just keep the idea reserved for subscribers, as I presented it to you many times in this tab. Any way you slice it, we all have trades that work well for us, and those that do not. What is more unflappable than that is the fact that inside 12631 we have the best community and chat room for traders, anywhere in the world.

And you take that to the bank along with your profits in BIIB.

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In my opening post this morning, I laid out my strategy of seeking technically set up stocks with heavy short positions, so as to maximize the pain inflicted on bears leaning the wrong way. Inside the 12631 Trading Service in The PPT, I went long Brown Shoe Company this morning. In addition to posting the trades in our state of the art chat room, we send out email alerts for the trades that RaginCajun and I make, and here was the timestamp of this trade with entry:

Frankly, I will place more emphasis on that type of price behavior than anecdotal evidence about how “everyone is now a bull,” or something akin to that. One thing I am convinced of right now is that focusing on many individual charts is probably the best way to block out the noise and not get caught up in over thinking things. If the market really is going to violently reverse lower, I promise you will see it quickly reflected insofar as breakouts failing, and Brown Shoe types of trades getting stuffed back in my face.

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