It’s Madness We Tell You! Simply Madness with a side of Jack Be Nimble Jack Be Quick thrown in on the side.
If your name is Jack, and if you WERE nimble and quick you are loving life and probably locking in gains after the huge blink your eye grand slams down to the 50 day average or prior supports on numerous names yesterday. Below are some examples.
When looking at them, we want you to first key in on the daily charts (first ones) as all of them show the tags of the 50-day averages. Then what we included below the daily charts are the 2-day one minute time frequency charts to show you the action off of those levels and where some of the patterns that All About Trends is always on the look out for showed up — that being double bottoms and 1st thrusts up in a nano-time frequency.
CMG
NFLX
BIDU
OPEN
SWKS
The point we want to make with all of these is that from a daily perspective they all basically tagged the 50 day and YES in the face of fear/uncertainty too.
For the trader who is short term oriented (as in hours) it just goes to show you that double bottoms and first thrusts up show up in short term 1-day, one-minute time frequencies as do most other patterns. It just comes down to who you are and who you choose to be.
If your basically a day trade grinder then these patterns are what you want to be on the lookout for here BUT you still need to know where the 50-day average is because otherwise the charts above on their own look like falling knives and that is that.
For the rest of us who are more daily chart pattern oriented?
We’re all for buying in the face of uncertainty, we’re all for buying grand slams to the 50 day but the speed at which these issues tagged the 50 day averages or prior supports? Sheesh.
So to summarize it all, once you see a pattern on the daily chart frequency show up zoom in on the short term time frequency so as to get a birds eye view in order to plot your entries with better precision.
In the meantime we really aren’t out of the woods just yet and here is why:
In the daily charts we still have a bit to go (stohcastically speaking) and we’ve still got those blue supports and 50 day averages to contend with as well. On top of that here we are, we got the pop off the lows and are now fading. Of course from here on out today it’s all about sink or swim into the close.
With many of the names on the long side of our watch list, we’ll want to watch what happens to them should they retest their lows of the yesterday — think CMG’s chart above — as in double bottoms or even sideways stabilization.
The inability to bust through new lows from yesterday’s lows would be encouraging in the realm of stabilization. Now if only AAPL can get slammed in here we’ be more than happy to jump on some and sweat it out.
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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? (for more than a few hours mind you) 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.
AAPL
The last 3 days has this issue at the 50 day and trend channel support, that’s good and bad. It’s good in the sense that it could be trying to stabilize. It’s bad in the sense that it’s consolidating at the lows as in catching its breath before another down move? For us? It’s good either way as we are in watch mode with it.
Anywhere in the 330s level is fine by us for a probing nibble position.
SINA
What bothers us thus far is that of it running back up to the 50-day yet it couldn’t get through it. We’re going to be watching for some sort of bear channel snapback rally to build itself out right here over the coming days (see BCSI and SLAB charts below for examples of what that pattern looks like).
SOHU
The way this issue trades? Might want to 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, BIDU, CMG, OPEN and SWKS are all shown above.
FFIV
Looks like the 110 level is going to be a floor here. Why? Do yourself a favor and check out the 2 day one minute time frequency chart of this one if you get a chance.
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
Long side featured
CLR
Can you say trend channel resistance? We know what we’d be thinking right here if we had bought it on the Pullback Off Highs upside crossover and that is — lock down gains.
RIG
Well there you go, nice gains on the crossover of the pink line have all but evaporated. That’s if you are an investor. To the hit and run get in get your points and your $500.00 work of gains trade your plan trader? They’re gone with money in their hands.
Short Side Featured
BCSI
Classic first thrust down, puts in a bear channel, snapback rally call it what you will in pink, breaks it and it’s bombs away. One catch, the bombs away was earnings related. BUT that’s the pattern we want to see on the short side with names.
SLAB
Well there you have it, first thrust down, snap back rally and bombs away I might add. Come to think of it didnt we feature GS and RHT a few weeks back that were both sporting the same pattern? Do yourself a favor and pull a daily chart of each of those and check out the patterns. This name gets moved to the featured list as we don’t chase buses on the short side either.
WAY TO GO JOHN! Nice trade on SLAB!
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All About Options In The World According To All About Trends
NOTE: The exchanges recently started WEEKLY EXPIRATIONS of options. Going forward, make sure that you check to see which ones you are buying. Let’s stay with traditional options expirations which are the ones that expire the 3rd Saturday of every month.
Current Holdings
NONE
We want to keep an eye on AAPL and CMG March in the money call options. As we get closer to an entry on these we will post the ones we want to consider.
Remember, Paul Masson said it best when his 1970’s TV comercials said:
"Never Buy A Wine Before It’s Time"
Same can be said for stocks and options if you ask us.
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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)
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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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