Another day another round and round we go, where we stop nobody knows. Sounds like the wheel of fortune to us. Up down and all around is the trend currently.
When we look at the daily charts we really can’t say we are out of the woods yet and are now going to roll over here as the indexes are tightening up. Why? Line up the tops off the last 5 days. Therefore we still can’t rule out a retest of the highs just yet. But when one looks at the action under the surface of leading names? It doesn’t look all that great.
Who knows maybe a knee jerk news event in the form of the Libyan equivalent of Charlie Sheen stepping down could be the knee jerk event. But then what?
Well look no further than the chart patterns of the standout stocks highlighted below as to what to look for then.
Today’s standout stock of the day is FNSR — all one had to do was look at the chart the last few weeks to know that buying this issue was not a good idea. Not to mention trading ahead of earnings isn’t either. All the makings of a top were there BEFORE earnings came out.
Just another example of why we pay attention to double tops and negative RS (relative strength) divergence. While we’re at it? Check out JDSU below.
Double tops folks, they can be your best friend. Friend in the sense they alert you that a change in trend MAY be near. Those who are long only they are your what to watch out for pattern, those looking to buy? They are all you need to know to stay away from. Do yourself a favor and make them a part of your daily scans.
This is one way the market talks to us — chart pattern recognition.
When we start to see a lot of these type of patterns show up it makes us take a step back on the long side of the market which is what we’ve been doing.
Sometimes you have to go slower to go faster.
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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.
ARMH
We are going to delete this name as its too far away from any type of pattern we can work with, it sure looks like that spike was it and it was the most opportune time to take a short sell, not here.
One could say the same about ADTN below as in the most opportune time was on the retest of the highs on that blink your eye you missed it failure.
ADTN
Classic double top with a shake out high. This is why we don’t buy breakouts AFTER A TWO YEAR RUN in a mature market with numerous names showing developing change in trend patterns. But you all already knew that right?
ARW
ARW and RJF below look to be the two best we have on the short side watch list currently for those looking for more short exposure in the realm of individual stocks. It’s all about the pink lines OR right here with a 11% stop loss, should one consider taking them right here? Consider it a "90% Of This Is Getting In The Zone And 10% Is Sweating It Out While In The Zone" type of trade.
We have a fair amount of short exposure currently and are fine with what we have out there. What you do is up to you.
RJF
Head faked and back into the channel, but one could say it’s also near the end of the process of putting in a double top. Keep an eye on this one close.
AXE
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LONG SIDE WATCH LIST
If I were to put money to work here. Where do I put it?
SDS- INVERSE ETF at 2 times market risk. Remember that works for you and against you.
Going long this issue is the equivalent of being short the S&P 500 Times 2. What this means is that if one were to take 10% of their virtual portfolio as an example and put it into this name you are effectively short to the tune of 20% of your virtual portfolio due to the leverage of this issue.
As for Energy?
Until we see a Pullback to the 50 day average there is nothing to talk about with regards to putting new money to work. It’s all about a grand slam to the 50-day in all of them to get us interested in the long side.
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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.
CAT — We are now long 1 April 110 put to open at 9.00 as we post they are currently trading at 8.65
DE — We are now long 1 April 100 put to open at 10.60, as we post they are currently trading at 11.10
From Tuesday’s trade trigger:
Keep in mind that resistance is still 7.50 points higher just in case, that resistance defines your risk.
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CURRENT POSITIONS
"Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
SDS — INVERSE ETF at 2 times market risk. Remember that works for you and against you. (We are now LONG 400 shares at 21.67)
As we post this issue is at 21.40 for a small 27 cent loss per share or $108.00 Per our position sizing this issue’s impact to our overall virtual portfolio is less than 1/10th of one stinking percent. That’s the beauty of trade size risk management and not biting off more than you can chew.
Going long this issue is the equivalent of being short the S&P 500 Times 2. What this means is that if one were to take 10% of their virtual portfolio as an example and put it into this name you are effectively short to the tune of 20% of your virtual portfolio due to the leverage of this issue.
As for initial stop loss purposes that can be adjusted along the way? Any break into a new low on a closing basis ( little blue double bottom lines) can be used to define your risk.
SHORT SIDE POSITIONS
CY (We are now SHORT 350 shares at 20.89)
CYMI (We are SHORT 200 shares at 47.66)
Just more of the same old same old back and forth net nowhere for 2 months now.
CAT (We are SHORT 125 shares at 102.12)
As we post this issue is at 102.36 for a 24 cent per share loss or $25. Per our position sizing this issue’s impact to our overall virtual portfolio is less than 1/10th of one stinking percent. That’s the beauty of trade size risk management and not biting off more than you can chew.
From the trade trigger alert yesterday:
Keep in mind this stock is prone to 1-3 point swings on a daily basis quite regularly
DE (We are SHORT 150 shares at 90.30)
As we post this issue is at 89.70 for a 60 cent gain or $90.00. Per our position sizing this issue’s impact to our overall virtual portfolio is less than 1/10th of one stinking percent. That’s the beauty of trade size risk management and not biting off more than you can chew.
Broke and head faked just like the market. Still sloppy now though.
From the short sell trade trigger: Keep in mind that resistance is still 7.50 points higher just in case, that resistance defines your risk and its less than 10% given where the stock is.
WCC (We are SHORT 200 shares at 58.14)
As we post this issue is at 59.58 for a 1.14 point loss or $288. Per our position sizing this issue’s impact to our overall virtual portfolio is less than 1/10th of one stinking percent. That’s the beauty of trade size risk management and not biting off more than you can chew.
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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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SUBSCRIBER ONLY WEB SITE
Don’t forget you can view updates in the middle and the end of each trading day complete with current charts, along with our current performance at our subscriber only web site.
