Developing Your Thesis

______________

One of the most common mistakes that students in academia make is superficially touching on a given thesis in their writing, without truly fleshing it out. As an example, a well-meaning history student might attempt to discuss the entire Revolutionary War, from start to finish, rather than zeroing in on the significance of George Washington and the Continental Army’s winter at Valley Forge, as the professor had called for in the assignment. Indeed, an insufficiently focused paper will not only see you well on your way to a straight “C” grade at the end of the semester, but it will also inhibit your analytical abilities when applied to various situations faced in the “real world,” outside of the ivory tower.

In trading, by far one of the most difficult skills is sticking with a thesis that has proven true. Making the initial correct call is far less difficult than trading around it, yet still maintaing the given bullish or bearish posture. In the case of the solars, I have written quite a few posts recently discussing the initial high probability swing trade setups after the consolidation stemming from the rare bullish abandoned baby reversal in TAN, the ETF for solars. Indeed, I made some nice, quick profits in TSL and YGE, only to sell out of them as they were taking a much-needed rest. Presently, I have no solars in my portfolio, but you can bet that I will be actively stalking them tomorrow.

As you can see on the annotated charts below, the solars had a healthy pause over the past few days, but the strong buy volume has not abated. Indeed, developing the solar thesis is unquestionably one of my main tasks at hand.

______________

______________

______________

Comments »

Direct Link Click Here

Comments »

_________

The big banks are looking good, especially MS and GS (I am long GS), as well as some regionals. The post and video that I made last week about using The PPT for the financials seems particularly useful now, so I am going to repost it here.

Direct Link Click Here

Comments »

____________

Ok. So, maybe not. At any rate, I went long RSH yesterday based in large part on a daily chart that is showing signs of stabilizing amid accumulation. Essentially, RadioShack has seen strong buying volume and improved price action on basically no news, which is something that I love to see as a technician. What that tells me is that the buyers are starting o present themselves in a meaningful way without needing headlines as a catalyst or excuse to get involved. Whether they see value here or have inside information is irrelevant to me.

Instead, I am content playing this name based on the improved technicals. Specifically, we have an inverted head and shoulders bullish bottoming pattern with an initial neckline breach, giving us a modest price objective of $17. Moreover, price has had plenty of time to negotiate the 20 and 50 day moving averages, respectively.

Even if RadioShack eventually goes the way of Blockbuster, I see enough time from now until then for a high probability long swing trade. Note that I will probably move my stop loss up to the ” neckline,” of around $15.60.

____________

Comments »

____________

Back in January I wrote this bearish piece on Genco Shipping. With the stock trading above $13 at the time, it was an exclusively technical call, based upon the theory of a bearish descending triangle breakdown on the weekly chart. Fast-foward a few months later, and GNK is trading with a $10 handle. So, does it still make sense to be bearish on Genco? Well, we know that many other shippers have seen quite a run after the events in Japan. However, Genco has been oblivious to that move, and instead has looked so heavy that you would think several of its vessels had been hijacked and sunken by Somali pirates in the Gulf of Aden.

First, let us take a look at an updated weekly chart. Note the bearish descending triangle breakdown, with still some room to drop before 2009 support levels are tested.

____________

____________

Clearly, the stock remains in a firm overarching downtrend, and has been a notable broad market laggard for as long as the eye can see on the charts. With that said, a look at the daily chart shows a steep downtrend with a potential bullish hammer reversal candlestick being printed today. While calling a major bottom to Genco is too ambitious, I am stalking this name for a long swing entry as the afternoon progresses. I am looking for a close at or near the highs to likely get involved.

____________

Comments »

___________

It truly is fascinating to see how the S&P 500 and Nasdaq Composite Index are coming to terms with their own price magnets–1332 and 2800, respectively. In essence, it is tough to make an audacious directional call about the broad market until these two key senior indices have adequately negotiated those levels. While it is not quite “The Wonder Years,” the market is indeed experiencing its “wonder days,” as it comes of age before our eyes in the face of those key price levels.

Underneath the surface, the coal and steel names, not to mention many areas of the energy space, are taking a well-deserved breather after showing some strength this morning. The financial space still piques my interest, and I have been long GS and MA for several day now. On the whole, we have got ourselves another benign doji day, as we head into afternoon trading.

Comments »