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I made two trades:
All trades are timestamped inside The PPT.
UPDATE: I bought a 1/2 position in $NOG.
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TOTAL PORTFOLIO:
EQUITIES: 58%
OTHER INSTRUMENTS: 8%
CASH: 34%
Comments »
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There are times in the stock market when it is important to not become too dramatic. Just because a rally gets faded into the closing bell does not mean that we are suddenly in the midst of a huge inflection point. Similarly, when a selloff does not close at the lows of the day, it does not necessarily mean that the bears have lost the initiative.
In my view, however, the current market predicament is of a most critical nature. As an example, check out the updated daily chart of the Nasdaq Composite Index, seen above. If the Nazzy loses this crucial support level, a retest of the July 1st lows seems all but assured, as many stop losses will be triggered. Alternatively, if the techs can find support here, we should be setting up for a nice rally (I am positioned for the latter scenario).
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[youtube:http://www.youtube.com/watch?v=7_q0wn5oQKU 450 300] Comments »[youtube:http://www.youtube.com/watch?v=lV7DzFP6FUY 450 300] __________
A few weeks ago, I took a speculative position in $COCO. Every so often I will make a “casino” trade, where I venture outside my usual parameters, for the sake of mixing it up and hopefully making a quick score. By definition, they will be higher risk entry points than what I usually look for. These trades must be made rarely, and they absolutely have to abide by the rules of risk management.
After losing a quick 7.5% in the trade, I sold out of it without hesitation. Today, the stock is down over 20% on enormous volume. Now, the first lesson here is just to reinforce something you already know–Always have a stop loss in mind. You simply must be willing to admit at a certain price that you were wrong about the trade.
Beyond that, $COCO may actually be setting up for a true bottom here. Perhaps the education stocks will all go out of business, in the face of a student debt bubble and government regulations. However, the huge volume combined with the wipeout to the downside may be indicative of classic capitulation. I am going to wait to see a hammer or some type of bottoming confirmation before I get back involved with this one, if at all. Nonetheless, keep this one on your radar.
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Thus far, I made two trades today:
Both stocks were featured last evening in my top setups for this week.
All trades are timestamped inside The PPT.
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TOTAL PORTFOLIO:
EQUITIES: 52%
OTHER INSTRUMENTS: 8%
CASH: 40%
Comments »The bulls gave up the initiative last week, as the bears aggressively turned us away from that stubborn late June resistance, which is around 1130 on the S&P 500. Going into this week, the temptation is to automatically assume that the bears will take us back down to the July 1st lows at 1010. Just as quickly as everyone seemingly became bullish, they have now become bearish. However, in addition to The PPT signaling that the next broad market move is higher, I am seeing many charts of stocks that have broken out, and only recently pulled back to what should be support zones. Perhaps some excellent short selling setups will present themselves soon, but for now I believe the easy bear money was made last week during the rapid selloff.
Below, you will find my best trading ideas 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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[youtube:http://www.youtube.com/watch?v=nfrQctjGMzA 450 300] ____________
Before I even get close to organizing my list of setups for next week, I can tell you that the first textbook trading idea that jumps off of my screen is $MS. In addition to the $XLF closing the week at a key support level, $BAC has also given up many of its recent gains, as it was down eight consecutive days before managing a green close on Friday. When I look at former CEO John Mack’s (“Mack the Knife” as he is known) firm, Morgan Stanley, I see a classic gap fill situation.
As you can see on the daily chart below, the stock broke out on heavy volume back on July 21st, and has since seen a slew of red closes on tame volume to bring it back to its breakout point, which by the way happens to coincide with the now flattening out 50 day moving average. From a trading perspective, your setup is to go long right here, right now, with a tight stop loss below $25 or so. You are looking for this key breakout point to hold, and for the stock to make another important higher low.
Why do I think this is a high probability? To begin with, the initial breakout on 07/21 was on very heavy buying volume, illustrating the conviction of the bulls. Moreover, ever since that breakout, there has been no menacing selling volume, indicating that the original buyers have staying power in the name, as they believe the stock can go higher still. In addition, the stock has now been down for over a week on consecutive days, setting it up for a mean reversion play. This perfectly coincides with the stock having perfectly retraced its breakout, as well as retesting the 50 day moving average.
It is your money and your decision, but I will be looking at $MS first thing on Monday morning.
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