Repeat after us:
90% of this is getting in the zone and 10% is sweating it out while in the zone"
"First Thrust Down, Snapback Rally, Bombs Away"
"Nice Uptrend, Above The 50 Day, Puts In A Double Top And Down She Goes"
Today is a good example of all of those statements that we hammer you repeatedly with — and now you know why.
On to the indexes:
In the MICRO SHORT TERM if you are wondering why the S&P 500 stopped where it did on the opening gap down look no further than the chart below.
That’s because it’s a support level, albeit MICRO. It’s also why SDS intra-day topped out where it did. Notice we said INTRA-DAY. Keep in mind today’s action creates a gap, and yes that gap can get filled, doesn’t mean it will, doesn’t mean it won’t. We just bring it up because it’s there and if it were to occur at least you know of it in advance vs. getting emotional if it were to come out of the blue and magically get filled.
On to the 60 minute charts:
Moving on to the daily chart of the indexes:
As you can see we stopped at the Feb. lows as shown in the 1 minute chart at the beginning of this update. But you can also see a break of the Pink Snapback rally (bear channel) that we’ve been highlighting as a what to watch out for on the long side and a what to watch for on the short side for what seems like eternity. So could we keep going down here? Yes, as we got the break. But we still need to get through the close today right? You know the one where all the magic stick saves happen.
We’ve laid out a dark blue line in the daily charts here as they are prior support levels to be aware of. Should we get there in a hurry? It’s where we’d take some hit and run short side gains off the table, and probably want to go long some energy for quick trades and we stress "trades" (think hit and run get your gains and go).
In addition to the above we’ve also laid out some Fibonacci levels in light blue for you to be aware of If If If this is the real deal. If it is the start of the real deal? The watch that 38.2% fib level to possibly be tested over time.
There is an alternative bull count per Elliott Wave but we’ll talk more about that this weekend or tomorrow.
All of this aside have you seen the damage that’s been occurring in the leaders? Many of which we’ve highlighted here in advance of the pummeling they have been going through that in itself ought to make you stand up and take notice too.
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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
Yesterday in our mid-week newsletter we talked about deleting ARMH and ADTN from the watch list and that’s what we’ve done. We show them today as more of another example of why it pays to trade what you see (double tops) and to ingrain in your brain the power of these patterns.
ADTN
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.
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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.
If you’re not already there you are a tad late to the party, however if this is the start of something bigger? Well we are there and will sit back with our position. Again 90% is getting in the zone and 10% is sweating it out while in the zone.
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?
For weeks we’ve been saying:
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.
Feast your eyes on these names.
WLL
COP
CVX
One more day like today and we’ll be tagging the 50 day and considering on the long side for a quick trade. The same goes for the others above.
On a side note? What happened here! We mean the drive by media has been screaming about how the market will take off once oil comes down and here we are oil down and Market down!
This is why we don’t listen to the drive by media. We listen to the market and listen to what are stocks are telling us by the chart patterns that they are showing. Besides those around here for awhile all know the drill and that is: We Don’t Chase Emotional Buses, we let our stocks come to us.
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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 11.40
DE — We are now long 1 April 100 put to open at 10.60, as we post they are currently trading at 12.40
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)
Much like the indexes hanging on the lows of Feb. this issue is pushing the highs of February and the 50 day average. If the index is sitting on a short term support level then this issue is sitting on a short term resistance level. Today’s action MAY be just what we’ve all been waiting for, that being over time the start of something larger than what we’ve seen. We’ll just stand pat with our position on this one. If the SPX tags the 38 or even 50% Fibonacci levels as shown in the daily index chart at the top? There’s some room to the upside here BUT it won’t happen overnight.
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)
Anywhere near the blue box level is worth about $1,000 per our position sizing and good enough for us to ring the register.
CYMI (We are SHORT 200 shares at 47.66)
CAT (We are SHORT 125 shares at 102.12)
First Thrust down, snapback rally (Pink bear channel) and bombs away. Now lets see much like the S&P 500 index whether or not its going to hold the 50 day and the Feb. Lows. Another break to the downside here and we want to consider locking some gains. Same goes for DE below.
DE (We are SHORT 150 shares at 90.30)
Say it with us, first thust down, snapback rally (bear channel in pink) then bombs away to the downside. Now we need to see if it’s going to stabilize here at the Feb. lows or keep going down.
WCC (We are SHORT 200 shares at 58.14)
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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.
