Mid-Day Update

Courtesy of David at All About Trends

(Reminder: David is available for questions from members in the comment section!)   

When the S&P 500 and the OTC Comp were both in nosebleed levels hugging trend channel resistance we talked about what happens to leading names when the markets pullback. We talked about the power of the 50-day average and sure enough that’s exactly what happened to them — they tagged the 50 day and POW ZOOM TO THE MOON ALICE.

It’s as simple as that. What’s NOT simple is having to operate in millisecond time frames in order to make decisions. We guess it’s much easier being a trade bot as trade bots have no memory, have no emotions (fear, doubt etc.) they just trade, to a trade program (their weapon of choice). To them, it’s all about buying (or selling) a basket of stocks all at one time. That’s why you saw a multiple trade trigger alert to buy this morning out of us.

One look at CMG, NFLX, BIDU, FFIV, OPEN and SWKS shows how the 50 day strikes again! How many times have we talked about that level around here. Out Of Control comes to mind too by the way. Sure wish our name was Jack and was quick amongst a few other names of our "Do It Yourself" ers who did just that.

Let’s take a look at those names, we all know them.

NFLX

Off the 50 day average level this issue has already put on 12 points through its highs. This issue is starting to bother us here.

BIDU

Off the 50 day average level this issue has already put on 8 points through its highs.

CMG

Off the 50 day average level this issue has already put on 20 points through its highs

OPEN

Off the 50 day average level this issue has already put on 10 points through its highs.

SWKS

Off the 50 day average level this issue has already put on 4 points through its highs.

FFIV

Off the 110 level this issue has already put on 12.65 points through its highs

Now ask yourself at this moment in time AFTER they have already ran as far as they have in 2 DAYS! Can you honestly say you are ok with buying them here after they have all put on these many points? Not us.

One thing is for sure right here and that is that you can forget about buying these names right here but what you can do is learn from this because we assure you grand slams to the 50 day are common occurrences that happen time and time again. Another name you can throw out the door for any type of low risk entry point right here is Acme Packet — APKT can you say trend channel resistance?

As for the indexes? So where to index wise from here?

Well we either fill the waterfall gap down for a retest of the highs or this push up here stalls or backtests a broken trendline and rolls over.

At the least we’ll have to monitor closely as it looks as though someone forgot to tell it that the Daytona 500 is over with its 200 MPH speeds that were reached during it.

We’ll get into more detail about it this weekend so don’t miss our newsletter. In the meantime those of you who are do it yourselfers and were able to close your eyes and buy the last few days in the names that bolted off the 50 day and are now nowhere near any low risk entries like the two days ago face of fear/uncertainty? You would do yourself well to trail some stops to protect and even feel free to prune some gains here. This goes for the screamers listed above.

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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 bounced off the 50 day average and prior supports.

Now if over the coming weeks we sell off to the 50 day or prior supports,(2-25 Been there already did that) 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.

AAPL

Well no sooner than we release the mid day update and AAPL breaks the 340 level and goes into the 330’s level and pow! The OTC comp retests its lows from the day before for a double bottom and off to the races. So where too from here? Who knows, what we do know is that it WAS struggling at the 345 level the last few days and now it’s busted through it. 345 is micro support right now.

SINA

Gosh, who’s not to say this isn’t the start of some sort of right shoulder developing here. We’ll want to watch for that too over the coming weeks. If you were one who bought the face of fear here recently? Well you got a good 4-5 point swing trade out of it that’s for sure.

SOHU

LLNW

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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

Per the trade trigger alerts this morning we are now long LULU, RAX, IDCC and CVLT.

So here is the deal with these. One of three things are going to happen here. We’ll either make a gain, wash or stop out at a loss. It can be no other way.

In each of the charts we laid out stop loss levels to be aware of should something go awry, those levels (And Trade Size Per Position Risk Management) define your risk.

Are they going to work out? Nobody knows. We are there and now at the mercy of the market. At this point it’s all about managing that risk as defined because right now we have no gains to be able to manage and quite frankly that IS always the way it is going to be the split second after you take a trade.

LULU (We are now long 150 shares at 77.26)

IDCC (We are now long 250 shares at 47.34)

RAX (We are now long 300 shares at 36.79)

CVLT (We are now long 300 shares at 35.40)

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!

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.