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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.
We talked about the horizontal supports on the 60 minute charts which on the NASDAQ Comp we’ve blown thru. We talked about trend channel supports which we are at/thru depending upon what index you look at and fnally we talked about the 50 day average which tends to act as a strong support (keep in mind its a zone). So you see all in all we’re still intact here. Just as importantly like we’ve been talking for weeks about around here we have the ABC being complete so consider us in the zone, all in advance we talked about this so this action shouldnt be too suprising here. Keep in mind this zone is typically where nervous nellie makes her moves which just tends to amplify things from a shoot first (get emotional) ask questions later (after a bounce the question is "Why did I get nervous and sell?").
Now its just a matter of stabilization and for the US dollar to pullback off highs from its first thrust up pattern as shown below
So what are we going to do about all of this? Nothing. What we arent going to do is get all freaked out nor do we need to be. Why? Because we live in a grounded reality around here. Namely TRADE SIZE RISK MANAGEMENT and OUTCOME and knowing what they are in advance.
We stress to you all the time about trade size risk management and in every trade trigger we talk about knowing your outome (3 outcomes and no need to ever get stressed about it). So you see for us? This is all part of the process and by design and now you know why. Days and weeks like this is why. As for the highly emotional hot money chasing crowd that doesnt adhere to trade size risk management? Ya they got issues these days. If you got issues you are one of them.
You know what they say right?
The fastest way to find out WHO YOU ARE is to start trading.
You’re going to find out real fast just what you are made of. The way you TRULY do that is to find out how YOU handle inflight turbulence. Remember lets not confuse brains with bull markets, everyone can do that. But to navigate thru treacherous waters and football fields? It takes guts and guess what YOU ALL HAVE WHAT IT TAKES TO DO SO! I cant tell you how many amazing people we’ve got as subscribers. The knowledge level of a lot of you is enough to put most cookie cutter index mutual fund mangegers out on the street. Give yourself a pat on the back!
In the meantime? We let our stocks tell us what to do by the action they exhibit and from the looks of all our holdings and new aditions? This is all par for the course.
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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 (OXY) (Which is what we’ve done with CAT, AAPL, LULU,PLCM,IPGP) 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 (5-17 See SINA today? all over the place but green all 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
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.
5-17 There is a good possibility that the bulk of this list disappears in the next day or so. Why? NONE for the most part are anywhere near any sort of low risk entry point for shorting that we feel confident with. THAT ought to tell you something about the market too here.
CVX
CTXS
ARMH
OTEX
SRCL
PANL
TSCO
WWWW
OPEN
5-17 Doesnt take a rocket scientist to know what this name gets deleted from the watch list.
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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
SFLY
NEW NAME
OXY
NEW NAME
MAKO
5-17 Huge pop for this name today, earnings if Im not mistaken. This name gets deleted as its nowhere near a POH entry anymore.
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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 8.55
AAPL (We are now long 1 JUNE 320 call option to open at 22.30)
As we post they are currently at 18.20
DANG (We are now long 3 May 21 call options to open at 3.10)
As we post they are currently at 30 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
LULU (We are LONG 150 shares at 94.29 as of 5-17-11)
IPGP (We are LONG 200 shares at 63.94 as of 5-17-11)
PLCM (We are LONG 200 shares at 54.65 as of 5-17-11)
AAPL (We are LONG 50 shares at 338.15 as of 5-5-11)
5-17 How about that, right to the support zone and stabilizing.
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)
5-17 As we talked about yesterday, this is a zone. We are down a whopping 2.5% in this issue so at this point seeing as how the indexes are saying what they are saying we will leave it alone just like the last time when we bought at 107, and it went to 103 on us then shot right up to 115 and we walked away. Consider this a zone.
IRBT (We are LONG 300 shares at 32.15 as of 5-5-11)
5-17 Make sure you read the notes on this name in the chart.
INFA (We are LONG 200 shares at 51.44 as of 5-5-11)
5-17 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)
5-17 Any break below the double bottom lows and we stop out of this issue.
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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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