In what could be described as profit taking in a name that has been strong all year, the selling pressure in DDD has moved price lower all September.

Today the stock has pulled a bit of a turnaround, as buyers reacted to the discounted prices and began buying in the morning.  The buy flow has continued throughout the day and I’m watching as we enter the afternoon session to see if buyers continue to dictate price higher.

The CCI indicator below my charts is something I monitor to get a feel for momentum.  I use a shorter timeframe to gauge the small swing, and a longer for the intermediate move.  This most recent move lower has set up a divergence.  Price has moved lower while the indicator failed to make new lows.  It’s a signal we could be seeing downside momentum decelerating.

FD: Long with a cost basis of $38.75

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The 20 year Treasury bond ETF has put in three significant swing points since its late July peak, and I’m positioning for what I expect to be significant point four (second lower-high) and the potential for significant point FIVE (lower-low, momo hoes).

Have a look:

I bought TBT this afternoon in anticipation of the above scenario. You will notice it’s a near mirror image of the TLT chart. I will look to take my first 1/3 scale if price trades into reference point “(3)” to lock in some gains. Not rocket science, just a bit of risk management wrapped into a momentum mentality.

Beyond that, I’m planning some grandiose events for this upcoming weekend to welcome the gentle seasonal change.

Cheers,

http://www.youtube.com/watch?v=GR8jOJZERhs&feature=youtube_gdata_player

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In treu #costanza form, Goldman Sachs (GS) is ripping today after their bro bro (full Keith “sweat” McCullough) Kaiser comes out with a selloff decree.  I’ve been long “your favorite senator’s bank” since August 20th here in the blogger network halls with an intermediate/long term hold intention.  It’s my finance exposure, ya dig?

I plan to leg into the name quarterly, because frankly, they raul the world.

I don’t really have much more to say about that.  Carry on.

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The pullback occurring on the major indices over the last three sessions occurred in a very smooth manner. Compare it to the pullbacks occurring during the early summer months leading up to our most recent advance. The character of this pullback is defined by steady rotations, overlapping price bars, shorter “candle wicks”, and tighter daily ranges.

Tomorrow and Monday will be critical to the pullback we are experiencing with Monday having a higher possibility of producing a gap. If we continue to see this type of less violent price consolidation, it could stage for a healthy leg higher. “The Fly” is cautioning us about a September surprise, and investor sentiment is cautious at the least.

Should we see price stabilize and attempt another leg higher, I will put more cash to work. At today’s close I bought back my Expedia position. I think the EXPE chart exemplifies the price action I want to see prior to a thrust higher. Should the market rise it could be entirely reasonable for EXPE to do likewise.

Stupid trade of the day: buying the highs in WFM. I may close this position out tomorrow should this bearish momentum continue.

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As we work into Monday afternoon’s trading session we have a market firmly in favor of the bulls.  Beneath the surface of a rather benign tape we have productive action in banking, miners, and Apple.  Even hated Facebook has made an interesting intra-day reversal and is firmly in green territory.  Not the entire energy space, but refiners participating in the upside as well.

TLT notching higher has been a discussion point today, but considering the violent move lower last week it could be interpreted as a relief as opposed to genuine support.  On the weekly chart, a green close in TLT would signal an opportunity for me to buy for a swing.  It will be interesting to see how TLT plays out this week as it now has overhead resistance to work though should it work higher.

US Dollar also looks poise on the weekly chart for a bounce.  It also faces recent supply and resistance should it trod higher.

YELP is murdering longs.  Being in a six percent loser on a benign day where other sectors are rocking can be damaging to ones psyche.  I implore you to have a solid plan in place should you choose to play this name and others like it.

Overall it appears money is rotating into miners and banks.  I initiated a position in Gold man Slacks, aka your congressman’s bank, to partake in a potential financial equity inflow.  It helped my man Ragin’ Cajun highlighted the name over the weekend.  I also bought SNY via Scotty Bleier’s commentary on the healthcare sector.  iBC FTW.

I started a small (~2%) position in VHC.  I’m willing to double down sub $22.75 should I like the price action.  I’m using my second setup, the lower probability one (see last post), to participate in this story.

I’ve increased my equity stake with today’s purchases to 35%.  The rest remains cash.  I will very patiently put the rest to work should we see price action continuing to favor the bulls.

TPX and EXPE make up the rest of my book.

Top pick: EXPE

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Online travel services empower smart phone wielding travelers to navigate the madness of bookings via their ever impoving mobile apps.  The charts for three big dogs PCLN, TRIP, and EXPE all have my interest.

The EXPE setup differs from the setups in PCLN and TRIP.  I thought this would be a good opportunity to explain my two setups.  First, the charts:

Setup #1:

“Define the direction of the trend, trade the pullback and potential thrust in the direction of the trend.”

Expedia currently has the look.  I see price in a clear uptrend.  Recently we’ve pulled back.  I bought shares at the close.  This is a setup I trade in many markets including index and currency futures.  I will play this position with as large as a 20% position.  Currently I have a 6% position.

Setup #2:

“Fade an overextended directional move using a two tier entry.”

PCLN had the look over the last two trading days.  I was stalking the name, but ended up missing the entry.  TRIP however still is a candidate.  The play here is put a half position on with a plan to double the position should it trade lower.  The key element to taking this type of trade is defining “I’m wrong” price.  The other key element (perhaps the most important) is to scale off the original purchase when price trades higher.  This lowers the risk on the trade and gets your cost average down to the second tier of purchase.  Then, you can reassess the risk and potential.  I have no position in either name, but would be more apt to purchase TRIP at this point.

 

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I came into this most recent market thrust with a cash position hovering near 50%.  During this entire year the lowest my cash position has ever dwindled was to 25%.  That felt fully vested.  I’ve lightened up as we’ve climbed the wall of worry.  Today cash is at 90%.

I’ve swung some multi-month positions, a few winners, a few scratches, and a few losers.  All documented within the sacred halls of iBC.  You see, this is my 100^th post!  101^st actually.  AND WITH IT COMES A GLEAM OF WISDOM:

DO NOT LISTEN TO ME, WHEN I TELL STORIES OF BUSINESS GRANDURE.

Let me explain.  I trade two setups well.  The more I trade them the more natural they feel.  When I trade these two setups, I know my risk and define my targets.  They’re very nice, very clean.  They’ve been my biggest winners and smallest losers of the year.

When I tell a story, about management panache, product elegance, AND SUCH…it’s puff.  There I said it.  It’s all just me building subjective interpretations of a company and its operations to support my bias based off a chart setup.  And it’s fun, so I will continue to do it.  But don’t be surprised if I sell off stock in a company I think is great once price gets sloppy.

Like how I sold RGLD today.  The setup broke down on Friday, but I suspected I would have a better price opportunity to close the trade today.  I got my early morning pop, it had no follow through, so I scratched off the trade.

But know this and you will enjoy my pieces more.  My trading centers on two setups:

Setup #1: Define if price is trending and trade the pullback and thrust in the direction of the trade.

Setup #2: A two scale purchase of a beaten down price, scaling off the original piece if price retraces.

Both setups rely on exponential moving averages.  I’m a momentum and overreaction trader.

So I will likely delve into the aforementioned setups in greater detail in posts going forward.  I’ll post the charts too, why not?  I will not, however, delicately place perfectly cropped babes on my charts.  I don’t have time for all that foolishness.  However, thank you KCScott for lowering my blood pressure via babe shots.

Regarding the markets, we’ve made a thrust higher.  And in my opinion the play now is to buy, but I need to find positions I can wrap a risk profile into.

I’m considering PCLN, should buyers step up.  It will be a small position if it gets triggered.  I like TOT on pullback too via this chessNwine piece.

I bought some STEM this morning for some riverboat action.

I need to get some of this cash out of my purse.  I’m walking through the hood without a piece.

To 100 more posts I salute you!

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