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No Respect I Tell Ya

Mon Mar 7, 2011 3:01pm EST 4

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“In high school, when I played football I got no respect. I shared a locker with a mop.” -Rodney Dangerfield

Downtown Josh Brown is out with a great piece today, affectionately titled:

TIME’s Embarrassingly Useless “Top 25 Financial Blogs” List”

Here is the list he is referring to:

Complete with a shoutout to iBankCoin, Josh notes the glaring omissions from the list, namely active traders who blog, as well as writers who focus on technical analysis.

My take: Too many economics professors on the list. Way too much macro; Not enough micro. The TIME list illuminates a basic lack of desire to seek out independent blogs that are actually well-read and respected within the realm of traders and investors who take a proactive role in managing their finances. As cool and intellectually stimulating as a blog post may be about why, for example, people in Spain eat less tapas when the economy is under pressure, I believe just as many–if not more–readers are looking for actionable stock ideas and timely broad market commentary.

(Click here for original TIME list)

(Click here for Josh Brown’s piece)

SEE ALSO: Click here for Abnormal Returns’ take on this issue.

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To Drive a Point Home…

Mon Mar 7, 2011 1:48pm EST 2

The chart of JDSU is the perfect microcosm for this market. It had already seen a spectacular run since last fall, yet headed into the past two sessions still looking perfectly set up for higher prices. On Friday, we saw the big breakout. However, not only did we see a lack of follow-through today, but all of the gains–and more–have already been given back.

So, is JDSU a high probability long swing trade now? No. Even if it continues higher, the giveback today negates a disciplined swing trader from entering.

Is JDSU a high probability short setup now? Not necessarily. Although the breakout failed, we’d need to see at least some follow-through to the downside.

The same can be said for the market at-large.

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Cash Was, Is, and Always Will be a Viable Position

Mon Mar 7, 2011 12:32pm EST 4

Midday Update 03/07/11

In my weekly prep video series for 12631 subscribers last evening, I discussed the concept of having a clear game plan and being prepared. Despite all of the enticing long setups, I noted that it was crucial to not jump the shark and suffer a vicious bite wound. Instead, we wanted to first see the bulls show that they would, once again, emerge from a short-term pullback victorious. If we saw that, then we were prepared to strike, and we knew which sectors and stocks to quickly attack.

However, after popping up to 1327 this morning, the bulls failed yet again to take out the 1330-1332 area on the S&P 500, which is where I wanted you base your market posture off of. Instead of blasting through this recent volatile range to new highs, the market sharply reversed, and now we find ourselves below last Thursday and Friday’s lows. To make matters more troublesome, the small caps and Nasdaq Composite Index are leading us lower, which usually indicates a pretty clear case of risk aversion.

Many of those setups we had are eyes on are not broken by any stretch, but they’re obviously not working anywhere close to the point where it is worth risking precious capital. Going forward, I am eyeing the 1312 level on the S&P. At the time of this writing, we are just below it at 1311. If the bulls can recapture it, then there is a decent chance for a more spirited bounce this afternoon. That 1312 level represents the lows from last Thursday and Friday. We also need to closely watch the 2730-2740 area on the Nasdaq Composite Index (currently at 2740). A breach of that area, and I expect sellers to swiftly take us lower to at least 2700.

If you insist on actively trading, please respect your stop losses and do not get rattled by the increased volatility. Speaking of which, given how choppy and unpredictable the market has been of late, I want to reiterate that cash was, is, and always will be a viable position for individual traders to have when the market is violently indecisive. Seeing as 12631 subscribers are paying for our service, I take their portfolio account balances very seriously, despite not managing their money. Playing great defense is more important than trying to hit home runs every single day the market is open, particularly when we are faced with a market like this.

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Chew on Another Big Red

Mon Mar 7, 2011 11:15am EST 1

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The small caps and Nasdaq Composite Index are clearly leading to the downside this morning, which is a troubling sign. Those two areas of the market are usually a great gauge of risk appetite, since they contain the high momentum stocks of fast growing companies. In particular, the Nazzy is printing another big red candle today. The increasing size of price candles over the past few weeks contrasts sharply to the small candles we saw last fall during the slow grind higher.

Although increasing price swings and volatility on heavier volume are friends of the bears, the Nasdaq is still operating not only above its rising 50 day moving average, but also above last week’s support at 2730. Watch those levels closely. Given the increasing selling pressure of late, I would not be surprised to see the bears really seize control for a swift move lower upon a breach of that zone.

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“Traders Only” Chess Links

Mon Mar 7, 2011 10:32am EST Comments Off on “Traders Only” Chess Links

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Plenty of excellent sites out there include more macro commentary in their links, namely Downtown Josh Brown and Abnormal Returns. I thought I’d share a “Traders Only” collection. Here are the traders that I am reading today (click on links):