Your Friendly Neighborhood…

[youtube:http://www.youtube.com/watch?v=4o29VoxtsFk 450 300]

Take note that either a symmetrical triangle or ascending triangle is taking form. The upper and lower ranges are drawn out on the charts below. It will be wise to actually wait for a breakout or breakdown, because I find no hard edge benefiting one side (in an obvious way) right now. We could head higher or lower, and the odds are pretty much the same. That’s why is continue to stress careful selection.

At this time, my goal is to preserve my gains. In a few days, I will rid myself of all of these $1-4 stocks that I own and let the general market consolidation continue. If you noticed, my picks that did not follow the market…are starting to follow it. The dynamics have changed since Monday and the end is near for these stocks if the market takes a plunge.

Holdings include FEED, CAR, FIG, RUTH, and an initial scale-in of the devil’s ETF going by the name of FAZ. If done right, everything should hold steady, and I will be able to close out April with my largest monthly gain ever (over 60%). I find it interesting how March (with a gain of 2%) was my worst month in 2009. Perhaps, the souvenirs I bought for dirt cheap in Cancun made a difference. In any case, I hope you’ve had just as much success following my plays this month.

Nothing has actually changed. We remain in the 830-860 range.

My previous post was executed in full and the 830-850 bounce took shape in it’s entirety by yesterday’s close. At this point, I am looking for 2 things: 1) the market continues to execute the neutral flag in preparation for a move lower, or 2) the breakaway fills it’s gap and heads even higher. Regardless of what takes hold, both scenarios will “box” the market. We are now in a multi-day consolidation. There needs to be more time to consider taking on short positions.

For long positions, however, I warn that you must be very, very selective. The stocks cannot, and must not, correlate too closely with the general market. A good example of this is FEED or SIRI, or stocks that love to move up, regardless of how the market behaves. If you do want to short, you also must be very selective and find stocks that have the highest probability of moving lower, regardless of how the market behaves. Otherwise, incur the wrath of the whipsaw.

My MTD gains stand at +57%, with YTD gains exceeding +120% and I am fully long with no short positions. Interesting, no? I only have two positions, which are FEED and LVLT. FEED makes up the vast majority of my portfolio, and God knows what LVLT is doing. Let me reiterate my $5 target on FEED right now, due to the 40 some e-mails I’ve received on it. Quit asking me “if I am still holding” or “if I sold yet”. I’m sick of it. I fully intend on making 100% on this stock inside my 3-week holding period.

Back to the market. The SPX has double MA support with the 100-day and 20-day MA’s sitting 2 pts below the close. Before shorting, I’d like to see a weak bounce and some all day flagging action. This will set up the market for another major move down. It all depends on what happens tomorrow, and possibly Wednesday, before I start scaling in short positions. Note that the wedge has technically broken down, but it’s all about the entry. Entry will depend on a neutral flag (developing between 830 and 850) that rides the 100-day and 20-day MA’s. If it doesn’t happen, then it doesn’t happen. If it does, be ready for it.

When I was a kid, I would help my mom gardening by plowing the ground, planting the seeds, and watering the plants each summer. We planted all sorts of vegetables and fruits, such as lettuce, strawberries, carrots, melons, radish, tomatoes, eggplants, cucumbers, and many others. We even had a large row of apple trees, which would have provided 100% all natural apple juice if it weren’t for all the bugs getting of them first. It was tough work preparing the ground and helping them survive, but in the end, we all got to enjoy the fruits of our labor.

Trading is a lot like farming (and gardening for suburban folk, but I’ll stick with farming here), especially with my style of swing trading. We are all farmers if you haven’t realized it already. Every stock you buy (or short) is a seed which you are planting in the ground. Now, before you plant anything in ground, you have to make sure the weather and season favors any such plantings. You have to make sure the ground is soft, moist, and fertilized. You also should have a fence around your garden to protect your plants from animals and neighborhood kids.

You toil endlessly, day after day, making sure the ground is prepared to plant your seeds. Every stock that you buy (or short) is the seed of a plant that you are hoping will provide you with sustenance. You make sure the seed is deep enough into the ground, but not too deep, so that it will have the chance to grow. You watch over your garden each day.

As the days go on, you may notice some weeds. You must remove the weeds or they will rob the soil of the nutrients that your germinating seeds require. As your baby plants poke their heads out from the ground, they will require sunlight to activate the process known as photosynthesis. However, if you do not remove these weeds, they will grow tall and block out the sunlight. remove these unwanted weeds from your garden, or they will kill your plants. Some of your plants will not make it, so cut your losses early so the others have a chance.

Now, some people are very impatient and expect their plants to grow up in one day to be harvested. Ridiculous, who taught you that nonsense? Does make any sense to pick a seedling? No. Give your baby plants time to show you what they can become. It might seem really exciting to see them start to grow, but i you pick them now, you will never realize their full potential. You kill your plants the moment you pick them. Some plants need time, so give it to them.

You’ll also notice that not all days are sunny and clear. You’ll have days like this:

or this:

But, do not fear. You are the farmer and you are watching over your plants every single day (I hope). If the rain and winds are strong, you can put tarp (not TARP) on top of the garden for protection. Again, some plants will die because nature is not always nice. Cut your losses and give the others a fighting chance.

One day, you may notice a nosy deer walking. He likes what he sees. The deer may look pretty and gentle, but as a farmer, you know what kind of destruction that deer can bring. Good thing you have a fence around your garden, but sometimes, the deer will fight to get into your garden. You’ll just have to scare him off, or if you’re Alpha, just shoot the thing so it never comes back. There will always be creatures trying to kill your garden. It is your job to watch over and protect it. The fence is there to act as your support.

Towards the end of summer, you’re garden is lush with life. It practically looks like a jungle full of colorful vegetables and fruits. It is time to harvest. If you do not harvest now, you will let the bugs eat up everything. You can spray pesticide as often as you’d like, but your veggies and fruits won’t stay on their mature plants forever. They will fall to the ground and rot. It is time to harvest, so do it now. Know when to buy AND when to sell. Too many people buy without knowing when they will exit. You may lose all of your strawberries for no good reason.

A great thing about fruits and veggies is not only are they delicious to enjoy, but they provide you with even more seeds than you previously had. You may even be able to double the size of your garden in time for the next season. If you just eat up all of your fruits and veggies right now, then you will not have any seeds left. You have become greedy and wasteful and the only seeds left are the ones that go through your digestive track, if you know what I mean.

Save the seeds and grow your garden.