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Well here we are retesting the recent highs as shown in the micro chart below.
In addition to that check out the 60 minute SPX chart below.
Particularly those blue circles.
One look at the current climate shows that of a potential "Here we go again" look to it just like in April when we tagged the green line shortly thereafter. This makes me want to consider staying away from new holdings here. If we are not going down and we are on our way to a retest of the highs? Well its got that feeble feel to it. Not a POW horsepower type of move.
This also makes things tricky for our holdings here. Tricky in the sense of if we roll back over for the D wave to the green line then I’m sure our holdings will suffer in that, and so will everyone elses on the planet. Recently we’ve stopped out of a bunch of names and upon looking at all of those we walked away from in the recent days (with small losses) it was the right thing to do as they are lower now than when we stopped out of them. That seems to be the order of the last two weeks- getting chewed alive if you will. And we’ve heard from a fair amount of you out there that concur with that.
We bring this up as PAY and SLV have both rallied back to near the 50 day averages quite nicely. The question is for us do we stop out with miniscule losses and manage the total value of the virtual portfolio? (Always the safer bet as we’ve seen the last week) Or do we hang on and HOPE they get to breakeven (only about 50 cents each away on each) and run the risk of that extra 50 cents to breakeven ends up costing us 2-3 points to the downside IF they were to roll over because we needed to see (thats an ego thing) the extra few cents wheras the market doesnt care about that.
Remember principal preservation is A#1 when it comes to money management. For example based upon our position in SLV this issue was bought at 48 ran down to the 44 range. On our stock position alone that was $1200.00 lower than where we are now, same goes for options ($2400.00 ish total) . Then there is PAY we bought this issue at 52 and it ran down to 47. On our position that swing down was about $1000.00 , same goes for options (2000.00 total) so you see If If If these names were to roll back over thats about 4400.00 ish that we’d be back under water. We’d prefer to NOT take that ride back down.
We are opting to play it safe and manage the total value of the virtual portfolio vs being a hero if you catch our drift. What you do is up to you but its like weve all seen the smallest loss is the best loss. Besides we live in outcome here and know full well that there are only three outcomes we live in, Gain, Wash, Small Loss.
If you can’t get the gain then the next best outcome is to wash, if you cant wash then take the small loss. In so doing you always will live to fight another day vs playing around in a market that is chewing around. If there is one name I’d consider going long its AAPL soon.
With our holdings don’t be suprised to see some walking away alerts from us soon. Remember nobody said you had to trade in tandem with us all the time, if you feel otherwise thats your choice, we say that as we don’t truly know nor does anyone else. All we know is what we’ve been seeing occur out there. After all we want to stay in synch with the market not impress our will and wants because the market IS the boss not us.
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INDEX ACTION AND GAME PLAN FOR THE WEEK Of 5-9 through 5-13
For the last 2 weeks we said and still stands today:
"As you can see in both index charts we have a lot of structure. First off we have the current wave count of 4 waves with us in wave 4. If we are going to complete 5 waves up then we still have work to do with a pullback to boot (5-8 Which we are still in). What’s interesting is that any pullback ought to be contained to the green trend channel support and the neck line support of the head and shoulders bottom. So you see we have a floor baring any unforeseen events.
Remember this potential pullback is healthy and allows stocks to digest the recent thrust up. If we are going to continue to follow the 5 waves up script then we have one more swing higher after a buy the dips pullback. We want to be prepared for that as it’s going to set up a lot of names all in the realm of Pullbacks Off Highs (POH) with a lot of names already doing so that could go at any time."
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Short Side Coming Attractions — The First Thrust Down
5-10 Today’s featured First Thrust down comes to us from the oil patch, no surprise there huh?
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On Friday we talked about us highlighting first thrusts down, snapback rally and then a bombs away to the downside. We will, but given that we are still in this pullback off highs pattern we aren’t going to spend a lot of time on it but will try to keep showing that pattern all week and as we see fit so as to get you mentally prepared for it from a visual standpoint because AFTER we get a final run higher (assuming this is just a pullback to trend channel support ) it’s going to be the premiere pattern out there and yes it’s a short sell pattern. Stocks fall fast than they go up as we’ve all seen recently with energy.
One of the patterns we want to be on the lookout for from here is that of a FIRST THRUST DOWN. This is when an issue breaks a trend to the downside then stages a snapback rally and upon commencement of the snapback rally rolls over and dies. We’ve featured this pattern a lot over the years and has served us well. Two recent examples of this pattern is shown below.
Some names that we want to watch for in the coming weeks are shown below. That’s why they are called coming attractions.
CVX
WWW
OPEN
It might be a little premature to put this up here but like cvx and wwww we know what we need to see from here and that is for a snapback rally/bear channel/POL (pullback Off Lows) to develop. Much like the example of the past we’ve shown above you can see its going to take time.
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LONG SIDE WATCH LIST 5-8 AND WE STRESS WATCH
If I were to put money to work here. Where do I put it?
NOTE: It’s earnings season, make sure you know when that is to occur with whatever issue you are stalking.
Only The Best And Forget The Rest
NFLX
5-10 Notice that today’s highs is a retest from a few days back. Might end up being a resistance level short term.
AAPL
5-9 The longer this issue sits in this channel the more powerful an upside break is going to be when it breaks. Of course this assumes its breaking to the upside mind you. The flipside is support is in the 325-330 level. Personally we have no problem picking off 50 shares here (we’d prefer to do so on weakness though, which we’ll do should we see it) and sitting with it. If once we are in it breaks to the upside? We are there, if it breaks to the downside to say 330? We’d add to our position.
SINA
NEW NAME
5-10 Lot of names in this space feeling the heat today- SOHU,YOKU,DANG,MOBI,BIDU Its a group thing!
IBM
5-10 popped and fizzling here, same with cat below
CAT
RVBD
NEW NAME
5-10 Popped and fizzling here.
5-8 NOTE: AAPL, SINA, IBM and CAT are setting up call options trade for those who trade options. When the time comes we will then point out the options class to be looking at. Right now? It’s all about being prepared in advance and that is what watch lists are for.
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FEATURED BUT NOT TRADE TRIGGERED BY US
This is where names that we have on our watch list that have triggered but for whatever reason we did not take them (can’t do them all) in our trade trigger alerts. This section is because a lot of our subscribers opt to use our information as they see fit from a do-it-yourselfer standpoint.
Long side
ISRG
5-10 Not liking the up 5-6 points and now at lows of day.
ALLT
5-2 The blue line is definite resistance, it’s going to take this issue to catch its breath and give it another attempt if it’s going to go.
PANL- 5-9 Earnings AFTER the close!
5-10 This issue gets deleted as its broken down
GLD
5-9 Last week in the SLV chart we talked about huge volume marks a turning point and we’ve seen that with this issue and SLV, sure enough the massively huge nervous nellie volume a few days ago marked the lows thus far.
5-6- Sure enough, hits the 50 day and?
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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.
Options Watch List
ALL JUNE Expiration from here on out folks
IBM
CAT
NEW NAME
See our long side watch list for more on these names.
5-10 Right now per the index action at the beginning of this update we are going to continue to watch these names. We are not going to step in here and pick any off.
Current Holdings
SLV (We are now long 3 MAY 34 Calls to open at 5.10)
As we post they are currently trading at 3.60
5-10 Make sure you read the notes about this name at the beginning of newsletter
DANG (We are now long 3 May 21 call options to open at 3.10)
As we post they are currently at 2.15
PAY (We are now long 2 MAY 46 Call Options to open at 7.40)
(We are now long 1 MAY 46 Call Options to open at 8.10 from 4-19-11)
As we post they are currently at 5.70
5-10 Make sure you read the notes about this name at the beginning of newsletter
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"Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
IRBT (We are LONG 300 shares at 32.15 as of 5-5-11)
INFA (We are LONG 200 shares at 51.44 as of 5-5-11)
5-9 This and IRBT are looking good here. Still though be aware that if the market do stage a C wave down to complete the POH just like last time these two issues could retest recent lows. Not a big deal though for us due to trade size risk management.
SLV (We are LONG 300 shares at 38.18 as of 5-4-11)
5-10 Make sure you read the notes about this name at the beginning of newsletter, can you now say resistance? As in 50 day average resistance?
5-9 Well now that this issue broke its 50 day average this issue MAY stall at it. More often than not it tends to become a resistance level once broken. Should that occur? We may just walk away. We did the right thing by knowing that capitulation of nervous nellie always takes place at the lows and in so knowing that it has allowed us to not get emotional and here we are up 2 points better than nervous nellie who is probably pretty upset with herself currently. Why? She got emotional thats why.
DANG (We are LONG 300 shares at 23.51 as of 4-28-11)
5-10 Catching a china downdraft along with a lot of other names within that theme.
5-8 Sure would like to see 26 next week but the market makes that call. Should it get there? We know what we’d be considering doing.
PAY (We are LONG 200 shares at 52.00 as of 4-12-11)
5-10 Make sure you read the notes about this name at the beginning of newsletter
Can you say resistance? As in 50 day average resistance?
5-8 Given we might have some inflight turbulence next week this issue could (doesn’t mean it will) retest its recent lows. Just laying it out there so as to be aware in advance so one doesn’t have to get all amotional if indeed it experiences some turbulence. This goes for all our names.
MOBI (We are Now LONG 150 shares at 12.39 as of 4-11-11)
5-10 Came down to the red line as mentioned in advance because its a support level and has got a lift. Still though, this issue going forward needs to hold above the red line and make a stand. For us? We bought at 12.39 and its now at 12.00 so we are going to walk away from this piece.
Something tells us that it just doesnt have the allure anymore.
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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.
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