Not Drawing for a Straight Flush in This Market

“…great card players aren’t trying to prove anything. They’re just trying to take each other’s money.” -Don “The Matador” Everest, Tilt (ESPN Series from 2005).

________________________

Stocks like BIDU have broken daily and even weekly charts (more on this later; Hat Tip to my friend Russel of “Brooklyn Waters Research”), and yet they can easily bounce a bit here after printing hammers yesterday. With today’s mean-reverting action, I would think the bears are apt to back off the accelerator into next week. That said, we are not looking at a multitude of marquee long setups here. The damage inflicted on many charts forces me to respect the odds and probabilities, which tells me to remain patient on the long side. Regarding the short side, a few days of light volume bouncing followed by the beginnings of a roll over in a stock like BIDU would be excellent conditions to initiate shorts.

Comments »

__________________________

We had a sudden spike higher around noontime on the east coast when the IMF announced a lending facility for Euro Zone member countries. Previously, we have seen similar sudden intraday bursts based on news out of Europe only to see them quickly fizzle out, leaving eager bulls holding empty bags smelling like a baguette and stale French cheese.

Looking below at an intraday chart of the SPY, you can see the heavy volume that accompanied the spike, taking us up right near this morning’s highs. Also note a simple resistance trend line drawn back to this morning’s highs can potentially turn into support here. Indeed, it would behoove the bulls to hold this $119.20 area, or else this spike is in danger of, yet again, breaking bad.

If you are looking for individual long trading ideas, see some of the ones working very well that I posted last night here.

__________________________

Comments »

________________________

After yesterday’s broad market gap lower, we ended up printing a series of candles on quite a few daily charts that looked like mini- Japanese hammers. Even with those smallish post-gap candles, today the major indices appear to be close to printing “inside days,” with price residing within the confines of yesterday’s range. There is not too much to take away from this type of flattish action, other than the potential for bulls to stabilize things. Beyond that, trying to make too many daytrades during an inside day is usually a mistake, given the compressed intraday playing field.

Above all else, I am looking to see whether today’s intraday weakness occurs without taking out yesterday’s lows. As this week progresses, I expect volume to continue to dry up, with tomorrow being busiest traveling day of the year. Currently, the S&P 500 is at 1185, with yesterday’s lows at 1183. If the bulls are going to claim progress with an inside day, then they should see to it that the lows are in for the day.

Comments »

___________________________

It is no mystery by now that we are back inside that summer trading range on the S&P 500. Even though the shorts are having their way, the nature of being inside a well-established price range is that there remains considerable risk to either direction. By many indicators we are currently oversold. Beyond that, sentiment seems to have turned soundly cautious, if not outright very bearish. All of that means nothing, though, when the bears are able to ride the momentum of a downdraft. As we saw last summer, Mr. Market seems to have a knack for laughing at indicators and sentiment at the most inopportune of times.

My main focus, as it has been for much of 2011, is in largely playing defense and engaging in a hit-and-run trading style, be it to the long or short side. Given the lack of a clear, sustained trend throughout this year, I want to be prepared for anything, and The PPT algorithm is as great a tool for that as any. I am going to hold off on any potential short swing trading ideas at the very least until some of this oversold condition is alleviated via a bounce. Despite how harsh the selling was on Monday morning, the bullish seasonality should not be dismissed just yet.

Hence, here are five long trading ideas. Note that if the bears remain in control of the market then I will take a pass, as at least eight out of ten stocks move with the broad market, and breakout plays tend to fail in bearish overall markets. That said, if the bulls can finally stabilize things and push us back above 1220 on the S&P I am going to look at these standouts.

___________________________

___________________________

___________________________

___________________________

___________________________

 

Comments »

Direct Vimeo Link Click Here

 

Comments »

____________________________

I normally reserve updates on my trades for the hallowed halls of our state of the art, real-time chat room inside 12631. However, since I have been so open about my short AAPL trade here on iBC, I thought I would note that I covered 1/2 of my full position just now, for the sake of discipline and not being piggish.

Specifically, I covered 1/2 my AAPL short at $367.77, and the initial short I started was at $385.24. I am letting the rest stay short for now, namely because the daily chart “island top” formation above $400 has been confirmed and the weekly chart is still flashing both a bearish MACD cross and divergence to price.

 

Comments »