Mid-Week Newsletter

The MARKETS HATE UNCERTAINTY and that’s where we are at currently.

That uncertainty can be summed up in a few words MID-EAST, from Libya to Bahrain and then some is what’s creating the uncertainty. Should Libya fall then some of the uncertainty will with it. We’ve all seen it before once some sort of certainty comes back into the markets the futures will be up big in after hours markets (think 1991 Iraq). When Libya’s Saturday Night Live dictator falls (and how), sure it could create a knee jerk down on the news event but keep in mind fast that a level of uncertainty will have diminished too.

But here is the catch, at what level will it start and when? Short term here we are tagging some technical levels so be aware.

We are all for in the face of fear errrr uncertainty around here but we aren’t for loading up the truck either on the long side until we see some stabalization. We’ll take it one step at a time and nibble for some long side exposure in some of the key leaders that are still intact SLOWLY right in here in the next 24 hours so be aware — with emphasis on NIBBLE.

Let’s look at a little index action right now:

Well folks here we are in the face of uncertainty at/below the 50 day average. See that thin blue line? It’s the next support level should this 50 day average level not stick. As you can see the Full Stoh’s (below the chart) are getting into the oversold zone much like last time so we are technically speaking getting close to some sort of level where stabilization could occur.

The S&P 500 as usual looks a tad different but the blue lines and the 50 day are your guide. An event could be what it’s going to take to get this issue to the 50-day or even the 1275 support level. But that’s just one more bad day in the indexes and we are basically there.

Yesterday we said and still stands today:

For the last few weeks we’ve been going slower to go faster all based upon what we’ve been seeing and now you all know why! Heck just ask Daytona 500 winner Trevor Bayne!

It really does pay to not chase buses now doesnt it. Heck just sit back and let it come to you folks just like Trevor Bayne did. AND SO DID WE!

One catch, how far down are we going and how deep is this thing going to be. We don’t have the answer to that nor does anyone else for that matter.

BUT what we do know is where support levels, 50 day averages, and trend channel supports are and that has go to be good enough and is good enough as we’ve all seen it time and time again that those are levels where things tend to stabilize.

And thats what we’ll be watching for over the next few days and yes we will probably be taking some probing long positions in this sell off too. I think the phrase is "In The Face Of Uncertainty" around these parts.

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WHAT EXACTLY DO I WANT TO ACCOMPLISH WITH MY OVERALL Virtual PORTFOLIO IN 2011 REGARDLESS OF WHAT THE MARKET DOES OR THROWS AT ME?

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SHORT SELL WATCH LIST

NONE — Why? Look at the indexes. We are fast approaching the 50 day average and prior supports.

Besides, look at most of the names on the watch list, see any topping patterns that one can sink their teeth into? For the most part they are just spikes higher that are now pulling back off highs.

Now if over the coming weeks we sell off to the 50 day or prior supports, bounce and then fail? We’ll get short in a major way. Should that occur it will set up a lot of double tops and first thrust down snapback rally chart patterns.

For more on first thrust down chart patterns take a look in the featured section of this newsletter specifically at BCSI and SLAB

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LONG SIDE WATCH LIST

If I were to put money to work here. Where do I put it?

Remember it’s all about Pullbacks Off Highs of issues in clearly defined uptrends above the 50 day that we are most interested in. From the looks of the last few days it sure seems that is exactly what’s transpiring.

2-23 NOTE: As you can see we are weak and staying weak all in the face of uncertainty. Should the markets get a knee jerk gap down tommorrow at the open make sure you check your email or the subscriber side of the website as we will probably use that weakness to do a little long side nibbling. In fact, odds are 90% that should that occur we will step in and do a little buying, assuming nothing really nasty and we mean really nasty takes place that is.

Remember it’s all about us being in a zone and being opportunists this year. If you are looking for instant gratification in here when putting new money to work? Tell the most expensive thing you will ever own which is your ego to take a hike.

AAPL is definitely trying to stabilize here and has been up all day trying to hold the index up errr make it not as bad as it really is rather. Still though we are really liking this issue in the 330s and are willing to go long in the face of any intra day uncertainty (especially a trap door open) on a small position. This name is top of the pecking order for us in the next 24 hours.

AAPL

Anywhere in the low 330s level is fine by us for a probing nibble position.

SINA

SPRD

SOHU

The way this issue trades? Might wanna leave it alone as this is the type that can blow through the blue line and fill the air pocket below it to the 50 day average.

NFLX

This name is starting to bother us. The action that we’ve seen over the past few months has been that of indecision except for the earnings announcement pop. Since that time it’s acted miserable. The other concern is that all the talk back before earnings (when the stock was going nowhere) was that of increased competition and yesterday Mr. big pockets AMZN entered into the fray. Whether we are back into that frame of thinking (increased competition) or not remains to be seen. But overall this issue right here is Pulling Back Off Highs to the 50 day average plain and simple no thinking there.

BIDU

CMG

OPEN
Back On Watch List

FFIV

2-22 Looks like we are either going to stabilize at this 115 level OR its 105 here we come.

2-23 Looking like the 105 zone is on its way.

LULU

LLNW
Back On WATCH List

We like the thin blue line and better still the 6.5 level.

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Featured names but not trade triggered by us

CURRENT POSITIONS

"Let Your Stocks Tell You What To Do By The Action They Exhibit"

Long Side Positions

NONE BUT, we see names that have leadership characteristics that are in Pullback Off Highs (POH) mode and that bodes well for some trades coming our way soon here.

SHORT SIDE POSITIONS

CYMI (We are SHORT 200 shares at 47.66)

To our NEW SUBSCRIBERS

What we’ve tried to do is break our watch list down into chart pattern recognition structure from a visual standpoint. Learn the patterns and the components of patterns and you’ll blow those Wall Street MBAs away. You don’t need a $3,000 software program either. All you need is a BURNING DESIRE to be the best that you can be and we’re here to help.

We have a lot of new folks here and we thank you! We want you to take it easy, get to know how the routine works around here for awhile and to feel comfortable.

We hope you all aren’t here because you are chasing performance. For us it’s more about educating and making you the best you that you can be first (that’s what we focus upon!). Like many of our long time subscribers they have all found out that they have no use for traditional Wall Street (and we don’t blame them) and it’s our hope that over time you’ll have acquired enough knowledge from us to say the same with conviction.

One of the most important things we want to stress is that of RISK MANAGEMENT via POSITION SIZING. You don’t need to stack your account with just a few big positions as we’ve seen it time and time again that those who get into trouble are the ones who take large positions and do not employ any risk management system IE shoot for the fences. Those are the people who live on the fringes of extremes and yes ultimately get burned.

As a guideline a good initial system is that of the following example.

Let’s say you have a $100,000 virtual portfolio and let’s say that as a guide you never place more than 10% ($10,000) into any one position. Now let’s say that one day a news driven event hits (over which you have no control over anyway) and one of the positions tanks 20%. On its own that position is sporting a $2,000 loss, while that may seem devastating on its own its really no big deal overall.

Why? Simple its all about risk management being properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the virtual portfolio in this example.

Answer: A whopping 2% LOSS. Now you know why we say no big deal.

We can also tell you new people here that you will get stopped out of names and you will take hits. There is nobody on the planet living that has ever hit 18 holes in one and there never will be. We’d rather get you grounded in reality right away vs talking about pie in the sky all the time like a lot of other sites. In so doing your head is screwed on straight from the start and when those days happen (and they will) mentally it won’t mean a thing to you. To us that’s what’s most important is YOUR state of mind as it’s your most important asset. We hope you appreciate our honesty.

We have a very good retention rate here at All About Trends and a lot of great outstanding people here. We like to think that a part of that is being upfront about what can happen (in both directions). Verses those up 500%, I turned $50,000 into $3 million or some other absurd number to get you to bite. That’s not who we are.

WELCOME ABOARD!

Lastly with regards to taking any trade:

Remember the moment you take a trade you are at the mercy of the market and have no control except when to sell. If you are not willing to take the risk and are not willing to pay that price do not take the trade. We are willing to take that risk knowing full well the end result could be a loss. That said make sure that virtual portfolio management trade size is used accordingly. With any position you may take make sure that should something go awry the amount of total impact to your account does not devastate your acct. Try to stick to a 5% position That’s the key to virtual portfolio management, not biting off more than you can chew.

Remember the mechanics of reality with regards to the stock market states a stock can only do one of three things: Up, Down, Nowhere. The moment you hit the enter button you are at the mercy of the market therefore the only control you have is when to sell/cover. You can’t manage your gains as you have none to manage initially. Knowing this in advance it allows you to stay in outcome, that being you will either:

1. Make a gain
2. Wash
3. Get stopped out at a loss

Remember the market IS the boss. IT is going to do what IT wants to do.

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PERFORMANCE

So far in February, we are basically flat — a gain of $909.50 in our stock virtual portfolio and a loss of $1,100 in our options virtual portfolio. For a trade by trade summary, click on the performance link at our subscriber only web site.

To see TrendTrader’s Members’ Content, click here.