Heads up on VIX, GMCR

This is from a bear’s perspective…

We were using VIX <30 as a place to short complacent rallies.  That worked well in the past two weeks.  Still yet, it has been very tricky out there, and rookies should avoid the shorting game for now.  The VIX has not been giving clear signals either as it did before, since many of these dips were fought back with yet another mini-relief rally.

From the chart, you’ll notice the red-shaded areas were signs of complacency on the VIX which led to a nice sell-off in the market.  I’m switching it a little here though, using the yellow-shaded area as a better place to short.  In other words, I’m giving priority to “momentum in selling” over “complacency in market.”  You should be thoroughly confused now.  If you are, stay on the side-lines and wait for a technical breakdown instead.

In other news, I just wanted to give a heads up to the coffee investors that I will be selling 1/2 of GMCR over 90.  We have to take advantage of the late money here; if we get bigger volume then better yet.  It’s time to sell on the news, and let the rest ride to triple digits if we get it.  I still think you can get GMCR under 86 so I’ll pause on buying here and instead mess around with PEET.

Go Lakers!

-gio-

Game starts 3pm Hawaii time, so I’ll be throwing a small party.  I’ll be tweeting the game, complete with insults and harassment against the refs and @DwightHoward.

Tomorrow I will be watching a few stocks carefully due to an important test of pivot points, or reaction to news and data.  These stocks include:

–  AIPC (needs to break 29, otherwise it will follow AFAM’s pattern.

– GEOY (this stock got hit on “bad image data” a few weeks ago, which seemed way overblown at first.  Regardless, it’s important to remember that investors are very picky on this satellite stock.

– SNDA (this fortune cookie, which looks like a big move in either direction is coming.  I like all three stocks for a trade for the next few weeks.

Finally, I just noticed that Monday’s VIX <30 presented another good entry for short-term shorts.

New shorts:  SFLY (14.08)

Other notes:

–  LXU …big drop in PPT daily.  Current hybrid = 3.06.  A sell signal is coming up.

– SNDA …hybrid = 4.06.  Will short on the retracement.

–  APSG ..added to watch.  Surveillance systems company beat expectations.  Volume surges.

I got 5 stocks that entered buy/short areas for me on Monday.  I will probably enter at least 3 of these tomorrow, depending on the market’s mood.  I mean, Monday didn’t really tell us much, and the VIX is favoring a “side-line” position. 

– Already in PEET at 27.70 from yesterday.  Looking to add the rest tomorrow. 

– Already in LINC, looking to add APOL for more school exposure.

– And I have two short term swing setups in LULU, and SFLY

Stocks I’m watching (heavy priority):  ICUI, JJSF

Mr. Coffee! 

This one hit my radar late last year after noticing stellar growth numbers, and it wasn’t in the IBD 100 yet.  Still has triple digit quarter-over-quarter growth.  See, finding stocks the hard way (doing homework) works!  Also check out PEET, which is piggy-backing this stock.  Target for PEET is >30.  Grab some coffee… America needs to get up extra early to earn back some money.

… long GMCR since early 30s, 50s, and 79.  

Today, PEET got a nice boost off the news.  Picked this up on The PPT, and we’ve been trading in and out of it there:

Sharing some of my notes with you here.  With the VIX moving up and down like a small firecracker I think it’s time to start changing strategy here.  Whenever the VIX starts moving crazy again, then you know you have some opportunities for day-trading setups.  For the past few MONTHS, the VIX sort of just coasted down, which made for great swing long plays.  With the game changing here, I suggest scaling out of dead swing plays and reserving more cash for quicker day-trades, aka “the matrix trades.” So far I’m looking at two spots for high surf:

1)  Solars:  we are going for a “sell-the-news” effect.  Obama loves alternative energy, so in the long term you want to stick with bigger names that have contracts for future revenue, stuff like SPWRA, FSLR, ENER.  There should be some great opportunities to fade the smaller plays like YGE, SOL, CSIQ.

2)  Precious metals:  there are two raging gold markets.  First, there is gold … have you seen all those “cash-for-gold” commercials?  I think this rally has no real legs, but is more of a play on inflation safe-haven.  These safe-haven stuff always reverse, but take a long time to do so.  I’m pretty sure we will see some big haircuts in the sector, so short them; or if you have a nice average cost, then the proper move will be to buy the dip until we start heading back under the 200MA.  Yep, gold is one of the few bright sectors that is trending above all important moving averages.  Still yet, the quick day-trades will be found in shorting small caps on reversals, stuff like SLW, FRG.  Oh yeah, and the other gold that has yet to reach its high… purple and gold baby!  Go Lakers!!

One last tiny note about foreign markets…

China has been secretly rallying under the radar.  Remember the 2-fortune cookies?  One thing I noticed is that America’s stock market is following China’s path, in a macro sense.  China stocks had explosive growth, then followed with a major decline, followed by consolidation, and have since rallied.  Our stock market has done the same, but the recovery part is happening too fast in my opinion (which is told in the VIX moving from 80s to 20s in a very very very very very short period of time).  In that sense, I think China’s market is more healthier than ours.  Not saying that they have a better economy, it’s just they’re taking a better path so far.  Anyway, pick any stocks that sound Chinese and play them either way.  Volume, aka institutional money, is starting to resurface so I am slowly getting away from watching tech and banks, and instead keeping an eye on these Chinese lotto tickets.