We are putting the finishing touches on another solid week of blocking out the noise and emotions of the moment inside the 12631 Trading Service that @RaginCajun and I direct. You simply must put in rigorous work on a daily basis to stay on top of a market that can change character quickly. With that in mind, the pullback on the senior indices this week was met with a noticeable uptick in bearish sentiment. And yet, plenty of individual stocks have consolidated on light volume, and more than a few are being permitted to break higher today, including my Amazon.com long. While no guarantee of a further bull run, the selling this week was of the mild variety, and not nearly enough to push me off my longs.

I will reserve the rest of my analysis for members of my Weekly Strategy Session product. In last week’s editions, I discussed the idea of judging whether individual breakouts are permitted even as the indices correct. In fact, unlike during the 11% correction we saw earlier this summer, that scenario is more conducive to a healthy market with staying power. Here is what I wrote:

We want to see not a loud, violent disagreement between bulls and bears reflected on the charts (which would be represented by loose and sloppy chart patterns with wild price swings), but instead simply boring, benign consolidation. That latter scenario of quiet digestion is far more likely (but still no 100% guarantee) to produce lower risk, higher probability entry points to long trading setups for traders who have been patiently waiting for them…even if the senior indices correct sideways or slightly down, a healthy market will still permit a fair amount of individual stocks to break out.

Please click here for more details about subscribing to my Weekly Strategy Session at a very reasonable price structure.

And just like that, the S&P 500 is back printing multi-year highs this morning, at 1426.

Even though I have treaded lightly since April of this year, I have refused to fight the persistent bulls along the way because of that pesky rising 200 day moving average. When the market seems confusing and flashing mixed signals, observing the direction of a long-term reference point on the senior indices like the 200 day is often a useful tool for seeing the big picture. This whole time, the 200 day has indeed been rising, as I pointed out nearly every day in my market video recaps even at the depth of the 11% spring correction.

When the market pushes higher in a way it is doing now, all of the seemingly reasonable and practical calls for a top go by the wayside. The reason for that is likely because too many market players are either short or way too underinvested for the market to actually roll over. Beyond that, as I pointed out the other night in my post on the KBW Index (BKX), the bears had plenty of chances to roll this market completely back over and failed each time this summer. Instead, the bulls kept coming back and reaching for the sky.

I see quite a few individual charts that could probably use a few days of resting, but then again with many traders likely out of position we could easily keep pushing higher to frustrate the majority.

Inside 12631, we are sticking to the game plan of methodically legging into good performers, quickly cutting losers, and being in tune with the tape. Come check us out.

“Do it”

chessNwine’s Weekly Strategy Session has been published and sent out to members this week. I am confident that you will find this week’s version to be of tremendous value in your weekly preparations for the market. It is never too late to sign up at a very reasonable price, so please click here for more details about subscribing or even making a one-time purchase (the subscription plans offer much better value over time).

Also, current Weekly Strategy Session members, please be sure to check your spam/junk filter if you do not see the W.S.S. in your inbox. 

Beyond that, you can see how important stock-picking remains in this market. Despite bouncing lately, steel and coal stocks have plenty more overhead levels to conquer, and the SLX weekly sector chart below for steel indicates as much. That may very well be a major double-bottom, but even if it proves true I do not expect the action to be as smooth as other stocks and sectors in the market that are much better set up technically.

We constantly push each other to find and stick with the best of the best setups inside 12631.

We are winding down another great week inside the 12631 Trading Service. After exuding patience and protecting capital by and large since the spring correction, we turned up the aggression a bit this week and benefited on the long side. The market has indeed improved over the past few weeks. We have worked very hard through the long periods of patience and maintaing very heavy cash positions. Hopefully, we can start to open up our games into the fall.

Of course, complacency is the enemy of the trader. So, I am not just going to presume that we are completely out of the woods. However, I am trading what I am seeing, and so are over 300 of my closest friends inside 12631 with @RaginCajun. As long as many individual stocks are permitted to break out and consolidate in a tight manner, it is tough for me to actively look for a market top.

If you are too busy to join our services in The PPT and 12631 then I urge you to look at our most recent product, my Weekly Strategy Session, where each weekend I prepare you for the upcoming week with a simple email delivered to your inbox.

Please click here for more details about subscribing to my Weekly Strategy Session at a very reasonable price structure.

Obviously, the shorts are on the run in this type of market.

Above, you will see today’s results for my ultimate short squeeze screen that I created in The PPT (all members can custom-make their own screens to help be prepared for various types of markets). Please click the image for a larger view. Now, what we do inside 12631 is filter the above results through sound technical analysis, applying risk management principles to find the best of the best setups and trading ideas.

Members of The PPT and 12631 should check inside my PPT home page for the actual screen of my “12631 FINISH HIM! SHORT KILLER SCREEN”