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It is no mystery by now that we are back inside that summer trading range on the S&P 500. Even though the shorts are having their way, the nature of being inside a well-established price range is that there remains considerable risk to either direction. By many indicators we are currently oversold. Beyond that, sentiment seems to have turned soundly cautious, if not outright very bearish. All of that means nothing, though, when the bears are able to ride the momentum of a downdraft. As we saw last summer, Mr. Market seems to have a knack for laughing at indicators and sentiment at the most inopportune of times.

My main focus, as it has been for much of 2011, is in largely playing defense and engaging in a hit-and-run trading style, be it to the long or short side. Given the lack of a clear, sustained trend throughout this year, I want to be prepared for anything, and The PPT algorithm is as great a tool for that as any. I am going to hold off on any potential short swing trading ideas at the very least until some of this oversold condition is alleviated via a bounce. Despite how harsh the selling was on Monday morning, the bullish seasonality should not be dismissed just yet.

Hence, here are five long trading ideas. Note that if the bears remain in control of the market then I will take a pass, as at least eight out of ten stocks move with the broad market, and breakout plays tend to fail in bearish overall markets. That said, if the bulls can finally stabilize things and push us back above 1220 on the S&P I am going to look at these standouts.

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While many issues formed their respective bear market lows back in either late-November 2008 or March 2009, Priceline.com bottomed several months in front of the S&P 500 in October of 2008. Without question, the global online travel company, with a clever business model that conveniently allows you to negotiate favorable deals, has been one of the marquee stocks in the entire market over the past three years. You are talking about an appreciation from $45 per share to just over $560, pocketing famous spokesman William Shatner hundreds of millions of dollars along the way.

As the holiday season rapidly approaches, conventional wisdom dictates not only that fund managers will scramble to own “the winners” through Christmas, but also that bears are going to step aside given the likely lower trading volumes and traditional bullish seasonality. So, going long PCLN here must be a no-brainer then, right? Well, technically there are several major reasons to factor additional risks into any potential upside rewards.

First and foremost, the more mature a primary uptrend becomes, the more vulnerable it is to late-stage base failure. In a similar vein to my post on Salesforce.com last Friday, that does not necessarily mean that the stock has topped out forever. Instead, it simply means that the chart needs to, at a minimum, form the basis for another sustained move higher, which is a lengthy and tedious process at best. Beyond that, Priceline has formed multiple tops at the $550 area over the past several months. While it is tough to be a bear if price can get above that level, the risk of a multiple major top being formed is high and in no way should be cavalierly dismissed, as some of the most vicious and ferocious declines are seen when price is finally turned away from a multiple top serving as impossible resistance.

There is also the possibility that this is simply a bullish consolidation pattern before eventually going much higher and continuing the uptrend.  Generally speaking, my analysis almost always revolves around looking at potential rewards in a trade and in the market through the prism of risk. Given the increased price swings that you can see on the below weekly chart since last April’s first touch of the $550, I would argue that we are seeing an increasingly violent confrontation between bulls and bears. As you know, loud arguments are reflected on charts via loose and sloppy patterns which tend to favor bears over bulls, especially after a prior steep uptrend. So, again, extreme caution is urged for longs.

After becoming part of the elusive ten-bagger (and more) category, Priceline.com might very well be a microcosm for many of the marquee, high momentum growth stocks over the past three years. The stock has earned a band of loyal longs who have been rewarded for buying and holding since 2008. This time around, they might be out of line and pushing their luck a little too much, regardless of how skilled their negotiating tactics may be.

Disclosure: I have no position in PCLN at the time of this writing. 

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What separates the winners from losers in financial blogging and trading, beyond basic position sizing and risk management discipline, is an ability to laugh off the inevitable negativity. With the way this market has been acting for much of 2011, I will let you in on a little secret that most of your resident gurus and self-appointed trader phenoms on Twitter are actually on mega-tilt and have likely, or are currently, blowing up their bankrolls. When that happens, be it in a casino at the poker table or in this social media age of the stock market, you have to avoid being an innocent bystander who gets caught up in that emotional nonsense.

If you are a blogger with tons of web traffic, like we have tons of here on iBankCoin, then of course lazy competitors are going to argue that writing one long blog every few days is “better” than multiple posts per day. In a similar vein, if you actually dare to have a short-term trading style and care to analyze the markets frequently, then of course some washed-up has-beens are going to call you pathetic. It is quite easy to sashay in and out of blogging, hindsight trading after the closing bell and declaring you are up for the year and going on vacation, but in the end you cannot fool all of the people all of the time.

Beyond that, if you have the audacity to actually post…wait for it…witty photos, then of course self-righteous readers are going to pipe up and declare that they are offensive to “all readers,” when the reality is that my reader base and web traffic has done nothing but get off to a huge start and exponentially grow every single month for two years, being linked to constantly by the The Wall Street Journal, Abnormal Returns, TheStreet.com, The Reformed Broker, among others along the way. You see, there simply are not enough hours in the day to fight all of these battles against negativity, especially when it comes to trading, blogging, and the stock market. And that might as well apply to anything else in life. So, the idea is prioritize and to focus on what matters most, while laughing off others losing their heads and capital. In this life, some people are undeserving of your sympathy.

Currently, the stock market has broken down from a widely-watched consolidation pattern. There seems to be a good deal of talk about whether this is actually a trap and not a true breakdown at all, but objectively speaking we have seen a nasty reversal on Wednesday and downside follow-through on Thursday. So, the bears have the ball for now and it is their to lose. With that in mind, two short setups to watch are in the seemingly perpetual laggard-ridden engineering and construction sector. FLR and FWLT look to be quality shorts upon further weakness, indeed.

A sense of humor goes a long way in life. You can laugh off trivial things like some idiot cutting you off in traffic, without escalating the situation into a road rage felony crime, as just one example. So let the haters keep hating while @RaginCajun and I, along with 230 of our closest friends, keep outperforming this market and having fun along the way inside 12631.

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A quick update here for those of you who have been interested in my short AAPL trade. The daily chart above tells me to stay short here, given the confirmed island top, breakdown from the initial consolidation, and then the further breakdown from a bear flag today. I could easily see a test $360 coming soon. I will let the price action guide me, with a buy-cover stop above $395, but for now this remains my type of setup and trade.

I am also staying short due to the weekly chart. Note the bearish MACD divergence on top of the bearish MACD cross. Historically, this is a big deal for the stock, and favors either a sideways or down period of price action over going higher. I have no desire to call a generational top to Apple. Nor do I wish to argue how many iPads they will sell for Christmas.

I am simply trading what I see.

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(Sorry, this post is not about GMCR)

Despite high momentum names that are susceptible to late-stage breakdowns lagging today, such as CMG DECK LULU, there are plenty of individual issues and areas of the market that have been hanging tough in the face of this morning’s gap down. In recent weeks, and essentially since the October 4th broad market low, the bears have had a difficult time of extending losses beyond a morning, or perhaps a day or two at most. The bulls, on the other hand, have been showing more and more resilience in buying these assorted dips. Unfortunately for them, though, it has amounted to taking mere baby steps as we are overall still muddling along and a sustained uptrend has yet to materialize.

With the aforementioned “leaders” displaying chinks in the amor, energy stocks appear to be leading the charge higher. My FIRE and SNDK continue to act very well. In addition, the oil service plays are extremely strong today in both absolute and relative terms. From a more intermediate-term perspective, you can see the OIH is breaking out from consolidation and has potential to test its 200-day moving average above. NOV looks to be one of the better prospects in that sector. I also detailed a certain other area of the market that is exceptionally strong today earlier for members inside 12631.

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Another morning gap lower is currently being sorted through, as the bulls are trying to stabilize things. With all of the consolidations taking place on many indices, sectors, and individual charts, there are a few ways to interpret this action. On the one hand, you can argue that the bulls simply have insufficient conviction to break us up and out of this range and into a trending market. Alternatively, you might say that we are shaking out the “weak hands” before eventually screaming higher into the seasonally strong holiday season. The VIX remains stubbornly high above 30, although we do have options expiration this Friday which traditionally adds to the shenanigans in stock fluctuations. Despite the uncertainty, it is encouraging to see some areas of the market acting constructively. As a result, I have been running a long/short strategy, albeit net long, with good success inside the 12631 Trading Service.

In particular, I went long SNDK last week, timestamped inside our streaming, Twitter-like chat room with email alerts to boot. Currently, the stock is exceedingly strong in this tape. I am looking to add to this position should these morning gains hold, with the presumption of a breakout from consolidation looking to be a strong one.

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