After a 168 point drubbing to see a little green this morning wasn’t out of line. As we post though here we are FAILING/ STAGNATING.
Makes us wonder if we aren’t back in the old days of "Downtrending markets open up and get weaker, Uptrending markets open down and get stronger"
But that was the 90’s and before trading robots with wicked alglo’s from a millisecond standpoint. Also back then we really didn’t have these days where 80 to 100% of the days move took place in pre-market gaps either, at least not to the degree we do now anyway.
So the question remains as to whether we are still going to retest the highs in the indexes? Or that was it and it’s stair step down time. What we can tell you is that we are STARTING and we stress STARTING to see decent things on the long side setting up and decent things on the short side setting up. So call it a market of stocks with something for everyone. All of which leads us to it being a stock pickersTRADING (with emphasis on trading) market from an opportunistic standpoint being the rub.
As you can see we are still within the pink channels and above the 50 day average here but when looking at a lot of individual stocks pin action here? Not all that great if you ask us.
The fact that as we post we have pretty much given up all gains in the indexes with a fair amount of leaders going flat to negative tells us we have more work to do to the downside here — indecision to say the least.
Even the short term wave count for you Elliott wave fans out there shows this as a potentuality. If If If this is the current script the market is following? The we have 5 blue waves down of wave 1 (blue), then a classic 3 waves up of 2 (with a double top to boot) in pink numbers. Now the next part of that equation is that of 5 waves down of wave 3 would be the next sequence with us so far sporting a 1,2 and in 3 out of 5) . IF IF IF that is. This is the bear count.
The bull count is from the 1295 lows to the 1330 highs is a first thrust up now in POH mode.
So still both counts are valid for those of you who are into that sort of thing. Call us being in the middle of the road here.
So what do we do about it? How do we make money off of this information?
Below in our educational section we have a sector setting up for some "Grand Slams" that we want to watch for on the long side in here for one thing.
And of course AAPL isn’t near the 330’s support level either so it’s hurry up and wait on that one so no rush there. Besides look at the chart — it’s basically gone nowhere for about 6 weeks. The same goes for a lot of other leaders, or at least last year’s leaders that is.
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Let’s talk about chasing buses, let’s talk about letting stocks come to us, let’s talk about "What Do I Need To See To Make Me Take A Trade" on the long side, let’s talk about "Grand Slams", let’s talk about "What To Watch For"
Recently, we’ve shown you first hand why it pays to not chase buses and allow stocks to come to us.
We’ve shown you first hand the power of the 50 day average
We’ve shown you the power of grand slams to the 50 day average and prior supports, albeit this most recent one has for the most part been that of a jack be nimble don’t blink. But overall time and time again its a great trade set up for those looking to get long- trader investor alike.
We’ve shown you why it pays to understand and know those things all in the realm of "What To Watch Out For" and "What To Watch For"
That all said look at all the names below.
Know what they all have in common?
They are all of the bus chasing variety right here. They are all energy, they are all extended, they are all out of sync with the overall market, they are all setting up grand slams (just like the recent growth leaders did) and they are all STARTING to Pullback Off Highs (POH).
All of these names get added to the long side watch list. As these names approach trend channel supports, the 50 day average etc. we’ll want to consider getting long for trades on them. In the meantime its hurry up and wait.
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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
See below we’ve got a few names POTENTIALLY setting up
Now if over the coming weeks we sell off to the 50 day or prior supports, (2-25 Been there already did that) bounce (2-28 Now doing so) 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. Below are a few examples of what Double Tops and First Thrust down patterns look like.
MOTR
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 we might add.
All of the below fall into the realm of watching for a Double Top breakdown to occur. A break of the pink lines are what we need to see to make us take some short sells.
ARMH
ADTN
One could say this issue and ARMH are there. The face of fear trade on the short side is any strength as long as it doesn’t breakout. That’s what we’ll be watching for to consider taking a short sell position on strength. Or for those of you who are more "In The Zone" traders it can be taken right here but you’ll need to allow for intra day gyrations in here in the event it doesn break down. In that case give yourself a wide stop loss to allow for volatility.
SWKS
One could say this issue is there. The face of fear trade on the short side is any strength as long as it doesn’t breakout. That’s what we’ll be watching for to consider taking a short sell position on strength. Or for those of you who are more "In The Zone" traders it can be taken right here but you’ll need to allow for intra day gyrations in here in the event it doesn’t break down. In that case give yourself a wide stop loss to allow for volatility.
Here too, all three of thse issues are middle of the road the last few days. The market makes the call.
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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
Ask yourself where is the gimme trade on the long side should the markets break down here? Quick answer is to look no further than the blue support level.
Those who are investors and have had this issue for the long haul? If this issue breaks the green line and goes to the blue line it’s really only another 10-12 points and we’d be buyers there anyway so you MAY want to consider hanging with it even if it does drop from the green line. Of course this all assumes that the market is finally in the process of a "Change In Trend" mind you.
Other Names That Are STARTING to look interesting here are:
VMW
The blue line and 200 day average get us interested on the long side for a trade.
Notice off its peak it staged an ABC down? Notice off its peak to the mid Jan. lows it was a first thrust down, then snapped back up to the 50 day for a snapback rally then a classic bombs away to the downside? Just saying folks, patterns repeat themselves time and time again, memorize them.
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Featured names but not trade triggered by us
Long side featured
SINA
NFLX
BIDU
If we are going lower? Then the 110 and green trendchannel gets us interested on the long side but not until.
CMG
Well here we are testing the 50 day average yet again. It’s sink or swim time coming soon here for this name. If it breaks lower? Gosh 210-220 looks to be support. If it breaks higher? A retest of the highs would be about it. For us? Too middle of the road here.
OPEN
SOHU
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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.
NONE currently
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CURRENT POSITIONS
"Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
NONE
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!
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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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