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Over the weekend we said:
All indexes have support floors just below so any weakness baring an unforeseen event (over which you have no control over anyway) ought to contain any weakness in the short term.
Thus far that is what we are seeing going on right here with regards to the indexes.
5-16 We’ve got some cross currents in the NASDAQ Comp. vs the SPX so lets drill to the 60 minute time frequency charts.
See the accelerated swing down? its labeled abcde (which is the same as 5 waves down) Its even got a mini capitulation look to it. Say isnt that what SLV recently looked like before it caught a bid higher? Given that we’ve got 5 green waves down, and a break of what looks to be support It would not suprise me to see a shake out low here in next day or so. We’ll see. In the meantime we stick to the plan and watch our lists and our stocks.
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INDEX ACTION AND GAME PLAN FOR THE WEEK Of 5-16 through 5-20
For the last 2 weeks we said and still stands today:
"We talked about an ABC pullback in the indexes and that is still in play however as we move on in time since we first laid the abc pullback pattern out its becoming more evident that more and more leaders are biting the dust or have done initial breakdowns. The initial breakdowns are what we call the first shot across the bow and most need snapback rallies in order to get us to short them, this falls in line with the indexes being in an abc pullback with one more potential move higher to complete the 5 waves up of 5 pattern.
Our game plan for the week is to take those names that technically are still intact or are big components of the indexes to go long on (CAT AAPL) (Which is what we’ve done) and we’ll also use that strength (assuming we get it) to watch and hone in on our short side watch list so as to (when the time is right) lay out and start to build positions on the short side."
Don’t forget it’s options expiration and we all know the market likes to mess with people that week by typically moving the opposite direction than it’s been moving. Think about how many people are now short AFTER the fact with SLV and SINA. Those who are firmly convinced those names are going to heck in a hand basket AFTER they already have could be in for some turbulence (5-16 See SINA today? all over the place but green al day) We’re not saying their going up but it’s our "ought to be interesting to watch for kicks and giggles for the week" .
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Short Side Coming Attractions
Last week we said and still true today:
Suffice it to say in all the broken names ALL RALLIES ARE SHORTABLE but wait for the rally because we don’t chase buses here on the short side AFTER they have already initially fallen apart.
5-16 Given there is a strong possibility that we see some upside strength next week per our index action section we DO NOT want to short anything early next week. This is our GET PREPARED IN ADVANCE LIST.
Remember the game plan is to focus on the longside and let the short side set up better patterns and that means lifts higher for shorting purposes.
The name of the game in this department is that of First Thrust Down’s and Double Tops. We’ll keep XEC up as an example of both for the time being.
One could even say CVX had that look before it tanked, as well as CLF too.
CVX
See the double top, then a break of the green uptrend channel?
CTXS
NEW NAME
Speaking of double tops in the making?
5-16 For now we’ll leave this issue alone per the game plan
ARMH
NEW NAME
OTEX
NEW NAME
IBM
Gets deleted for the time being in favor of space and
better looking patterns eslwhere.
SRCL
NEW NAME
In the process of carving out a double top?
5-16 As you can see this issue looks as though its broke to the downside, so why arent we shorting it? Because of the index action we are seeing thats why. Its like our good friend Dennis says- 3 out of 4 stocks trade with the overall trend of the market and right now we’ve been pulling back in the indexes BUT are trying to carve out a support level here. Besides the order of the week is to focus upon the longside, let the short side set up then we get serious with them. But not now.
PANL
NEW NAME
5-12 Should this issue rally back up to the 50 day we know what we’ll be thinking about doing as the 50 day is now resistance.
TSCO
WWWW
OPEN
5-12 Let’s see what happens at the 50 day/100 level, assuming we get there that is.
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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
OXY
NEW NAME
LULU
PLCM
MAKO
NEW NAME
5-16 This issue gets moved from the short side to the longside as its got more positive structure than it does negative structure.
IPGP
NEW NAME
5-16 Not a bad bunch of names setting up here if you ask me- Trade what we see right?
Its all a matter of them crossing over to the upside or tagging supports (IPGP).
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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
GLD
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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
Current Holdings
CAT (We are now long 2 JUNE 95 call options to open at 11.10)
As we post they are currently at 12.40
AAPL (We are now long 1 JUNE 320 call option to open at 22.30)
As we post they are currently at 19.85
DANG (We are now long 3 May 21 call options to open at 3.10)
As we post they are currently at 60 cents
These expire Friday folks.
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"Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
AAPL (We are LONG 50 shares at 338.15 as of 5-5-11)
5-16 Just an observation, look at all the lows on this stock the last 4-5 months, notice something? They all happened to be of the spike low variety. We made our bed now we have to sleep in it. Not a problem when you use trade size position risk management.
CAT (We are LONG 150 shares at 105.15 as of 5-5-11)
IRBT (We are LONG 300 shares at 32.15 as of 5-5-11)
5-15 Any break of the May lows and we stop out of this issue none the worse for wear.
INFA (We are LONG 200 shares at 51.44 as of 5-5-11)
5-15 Gosh, another day like today and we’ll consider locking down some gains on this one.
5-11 Any break of the blue line and we stop out of this issue non the worse for wear.
DANG (We are LONG 300 shares at 23.51 as of 4-28-11)
5-15 Any break below the double bottom lows and we stop out of this issue.
5-16 For the most part all of our remaining positions are holding their own in here. We’ll sit tight and not get excited nor depressed either way in here today.
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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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