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…mighty Rick’s has struck out.

I got stopped out of my 1/2 long position in $RICK earlier this morning, just south of $6.40. All kidding aside, I still like the risk/reward of that kind of setup. The stock had been in a steep downtrend and printed two hammers in a row. I bought with the intention of selling out below the low of the most recent hammer, and I did just that. For all of the times that I buy and get stopped out in this type of trade, they are more than made up for when the stock follows through on the hammer to the upside and rips.

So, all things considered, on to the next one.

UPDATE: I took profits and sold out of the rest of $ISLN.

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TOTAL PORTFOLIO:

EQUITIES: 56%

• LONG: 50% ($APKT $KOG $LVS $MELI $HMIN $RDWR $CMI)
• SHORT: 6% ($ANV)

CASH: 44%

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Since late May, Mr. Market has truly been a royal pain in the ass to both bulls and bears.

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[youtube:http://www.youtube.com/watch?v=TwBa3XA3Sl4 450 300]r

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You better check yo self.

I am down on my $CMI position since its purchase. So, how am I supposed to react to it? Do I say, “Oh wow, man. I’m losing money here, man. I’m a total loser, maaaaaaan. Let me smoke some nugs and munch out on Funions and Bugles.”

Answer: No. I do not say that.

$CMI is still a top tier company that makes great, hi-tech engines. Rather than getting all frustrated and emotional about being down on the position, an analysis of the daily chart tells me how I can best define my risk from here. As you can see below, I am willing to admit I am wrong and sell out of the name if the stock falls and holds below $75. If that happens, then the prior breakout earlier this summer can be deemed premature, at a minimum.

Of course, if the prior resistance turns into support now, the stock could easily be setting up for a run to new highs. Thus, having a clear line in the sand is important for not only mitigating your downside risk, but also helps to keep open the possibility of capitalizing on a reversal back to the upside.

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[youtube:http://www.youtube.com/watch?v=AJR62vsAg-0 450 300]r

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After taking some profits into the 10% spike higher in $ISLN this morning, I made a few more trades:

• I initiated a 3/4 short position in $ANV
• I sold out of $LCAPA
• I sold out of $BZ

All trades are timestamped inside The PPT.

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TOTAL PORTFOLIO:

EQUITIES: 64%

• LONG: 58% ($APKT $RICK $KOG $LVS $MELI $HMIN $ISLN $RDWR $CMI)
• SHORT: 6% ($ANV)

CASH: 36%

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[youtube:http://www.youtube.com/watch?v=6o5NweFWjAw&feature=related 450 300]r

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TOTAL PORTFOLIO:

EQUITIES: 58%

• LONG: 58% ($APKT $RICK $KOG $LVS $MELI $LCAPA $BZ $HMIN $ISLN $RDWR $CMI)

CASH: 42%

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When I introduced my setups last Sunday evening, I noted that the major indices were at key support levels. Accordingly, I was finding many of the best setups to be that of the “buy the dip” variety, as opposed to stocks on the verge of significant breakouts to new highs. Fast forward to the end of this past week, and we have more or less come roundtrip to find ourselves in the same predicament, as a rally early last week quickly disintegrated into a bear victory.

As I noted in my market recap on Friday, the senior indices continue to probe multi-month support zones. The more we probe these key support levels, the more like it is that they will fail. Thus, the bulls have yet again painted themselves into a corner. Either they will rise to the occasion this week and defend these support levels once and for all, or we are on the cusp of a major breakdown to retest the early July lows. Just as the case was last week, I am finding the best setups on the long side to be those of stocks that have nicely consolidated their moves higher throughout the summer.

With that said, my top individual idea is to go short $ANV. The chart can be seen below, and I give my reasons as to why I think it makes for a nice swing short.

Also below, you will find my best trading ideas on the long side for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk–I prefer a trailing 7-8% stop loss.

I hope you find these ideas helpful.

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