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I can feel myself being chopped up in this market. Rather than fight the tape, I am going to raise more cash and possibly redeploy it later today. Thus far, I made the following trades.

(All trades timestamped inside The PPT)

• I sold out of my 1/2 long position in $DECK for a loss.
• I sold out of the rest of my $APKT long for a gain.
• I sold out of my $TZA hedge.

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TOTAL PORTFOLIO:

EQUITIES (Including ETF instruments):38%

• LONG: 30% ($LULU $CRM $GMXR $ISH $THOR)
• SHORT/HEDGED: 8% ($TLT $QID)

CASH: 62%

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These are posted to be trading ideas only. If you choose to follow me in, I urge you to use stop losses to mitigate your downside risks.

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As I discussed in my previous post, the broad market is still in a wide and choppy range. Buying breakouts in these types of markets has been an unprofitable strategy thus far, and I expect that to continue. A better strategy for the long side is to look for strong stocks holding up exceptionally well, that have come back to support.

My best trading idea for this week is to go long $SNDK. I currently hold no position in the name, but the daily chart shows a very bullish volume pattern working in concert with strong price action over the course of the past several months. I like how the stock printed a hammer on Friday, after a week of pulling back in an orderly way. I would place a stop loss below the 50 day moving average, around $43.20.

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Another name to keep an eye on is $WYNN. Even if you do not trust the breakout, the chart has stabilized nicely since early May. If you have patience and a bit longer term time frame, you need to be stalking this one to see if it continues to setup and build a healthy base.

Steve Wynn is, bar none, the best casino operator in the world. His properties are best in breed, and this stock will lead the sector on the way up, should we see a breakout in the coming months. Patience is key here, so please do not rush out and chase this name.

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Some of the China names have been performing well lately. $CTRP, $BIDU and $HMIN are all fine examples. The higher beta “Chinese burritos” that got crushed over the past few months appear to be stabilizing here. Again, these are not names you necessarily should be chasing, but you should keep them on your watchlist to see if they continue to base out.

Look for low selling volume, and stronger buying volume, coupled with moving averages that start to flatten out after having been in a steep slope down for several months. $CGA, $RINO and $CAGC are all examples, as well as $HEAT, which The Fly owns.

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Finally, I am in agreement with Jake Gint and the Ragin’ Cajun that the gold miners may indeed be on the verge of a major breakout, and my favorite in the group is $IAG, which I traded for a nice profit earlier this month. Below, you will see the ETF for the miners, followed by $IAG.

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By now, you are probably aware of the possible scenarios for the broad indices, going forward. The sexiest thing to talk about is the longer term head and shoulders topping pattern that we may have been forming since the beginning of this year. I have also discussed the possibility of an intermediate term inverted head and shoulders bottom. It is important to always consider scenarios as a trader, so as to try to limit the amount of times that Mr. Market will catch you off guard.

With that said, I am going to focus this post on what the market is actually giving us at the present moment. The updated and annotated daily chart of the S&P 500 shows that the bears owned all of last week. After Monday’s head fake and subsequent sharp reversal from 1131, we saw a steady move lower to 1067 (see below).

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Since that huge down day on May 20th, the market has been in a channel. Although we have made higher highs, we have yet to make lower low. At the same time, the trading channel is very sloppy, and not particularly bullish looking. Moreover, the channel needs more time to develop and, especially, needs to make another higher low before we can determine that it is constructive for the market. The chart below should illustrate this channel, which I have denoted with yellow lines.

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It is not quite a megaphone topping pattern like we saw in late April, because we have not been making lower lows. Thus, the channel can best be described as neutral for now. We are simply going to need more information before making more aggressive directional bets. The bulls need to see a higher low–and subsequent rally–this week. The bears, however, are looking for yet another test of 1040, which could easily fail given how obvious of a support level it has become over the past eight months.

Thus, my portfolio continues to be hedged, with an overweight cash position.

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Finally, let’s take a big picture look at the ETF’s for the two main precious metals. The weekly chart on Gold remains bullish. Trying to call a top to the move in Gold is proving to be, well, fool’s gold. The yellow metal is in a secular bull market, and I do not see any evidence of a blow off top that usually accompanies the end of secular bulls.

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The Silver weekly is still trying to break out of the triangle that I pointed out several weeks ago. If Silver is going to catch up to Gold, you have got to love the upside here.

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Although the precious metals got crushed in the 2008 crash, Gold and Silver have historically done quite well during prolonged periods of debt deflation in society. If going long these metals and/or their miners is not your style, then so be it. However, I must say that I see absolutely no evidence that would lead me to believe that shorting these metals is a high probability trade.

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

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Continuing with my strategy of a hedged portfolio, with an overweight cash position, I made two trades today:

• I bought a 1/2 position in $QID, an ultra short technology ETF.
• I bought my final lot in $GMXR. I now have a full position in the name.

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TOTAL PORTFOLIO:

EQUITIES (Including ETF instruments):49%

• LONG: 37% ($APKT $LULU $CRM $GMXR $ISH $DECK $THOR)
• SHORT/HEDGED: 12% ($TLT $TZA $QID)

CASH: 51%

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Please remember to respect risk, use stop losses, and do your own homework. Otherwise, you may have to go see “The Special Man.”

[youtube:http://www.youtube.com/watch?v=XI7jC57GuZM 450 300]

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For many key names, as well as in the broad indices, this is where the rubber meets the road. Either we are forming the right side of many bases and inverted head and shoulders to move us higher, or we are breaking down to retest the late May/early June lows…or worse. Therefore, I thought it would be useful to update two key tells for the broad market:–$FCX and the small caps.

$FCX is hanging on by the hair of its chinny-chin, chin. Either it is forming the right shoulder of an inverted head and shoulders bottom, or it is slipping away from the crucial $65/$66 zone. The volume on Monday’s move higher was impressive, but the bulls are going to need to follow that up in short order with more strength, or else this is likely going below $60 again.

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The small caps have held up relatively well throughout this correction, compared to the broad market. The daily chart of their index shows the potential for an inverted head and shoulders. Either way, the line in the sand is pretty clear. Should the right shoulder not materialize, we are likely going back to those early June lows.

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With the influx of new subscribers to The PPT, I think it is important to take a moment to review the rules of decorum and attire, as per the private policy found inside:

“FORUM RULES AND REGULATIONS:

This is a classy joint. Don’t act like you’re in the Yahoo Message Board.
Be sure to honour the iBC Dress Code (boardroom attire) at all times.”

All riff-raff will be treated in the following way:

[youtube:http://www.youtube.com/watch?v=Fr3mlbv16Cw 450 300]

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As for the market, it is another choppy Fed day. The good news is that we appear to have stabilized at the 1085 level on the S&P 500, and many charts, like $LULU, have bounced at the 20 day moving average. The bad news is that we have not seen any buying with conviction. Until this murky market clears up a bit more, I am holding off on making any moves.

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