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Yesterday we said:
Just below here the 1300 level looms.
And there it is an opening gap to the downside and a bounce away from it for all the indexes. Remember the opening gap the other day to the upside ? Both of these events brings up an interesting word. That word is called HEADFAKE. In the charts below you’ll see reference to that in a few our holdings and a featured name (CAT IBM APKT) the theme these days has been to fade them- the market gaps these days.
Which is a fancy way of saying when the market rips you sell (that means you dont buy strength folks, thats where traditional IBD type folks have been getting hammered lately BTW). When the market dips it gets bought (that means you dont short weakness either). Just look at the chart of IBM and CAT SFLY for this or even APKT today. All of this in itself is a trend if you will.
Yesterday we said:
As for the short side? We’ll want to continue to build out that list but not go short as the 60 minute index charts show us potentially being near an bounce point.
And that is exactly why we took no short sells of issues breaking (CVX, IRBT) and most importantly didnt react to the gap down this morning either, When markets make big opening moves we tend to let the opening dust settle before we make decisions. Case in point had we REACTED to the open we would have walked away from IBM and CAT yet here they are right back up from the opening reaction with CAT even going positive as I post. Even shorting CVX would have been a mistake.
This is why we hammer you daily with phrases like: Don’t react, Don’t get emotional, let your stocks tell you what to do and the like.
See you this weekend
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Short Side Coming Attractions
CVX
Tentatively we add BIDU and SINA with emphasis on tenative as these two stocks are not for the faint at heart and always make big swings. With each of them its all about a break to the downside of the pink bear channels for shorting puposes.
BIDU
SINA
IRBT
NEW NAME
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LONG SIDE WATCH LIST If I were to put money to work here. Where do I put it?
"Only The Best And Forget The Rest "
"We Trade What We SEE, NOT What We Think, Hear Or Fear "
Remember the name of the game is Pullback Off Highs (POH) as it’s the only pattern you’ll ever need.
APKT
NEW NAME
6-2 If you own it, the red support level is all you need to know for stop loss levels, a downside break that is. Same goes for if you are looking to go long in here.
6-3 Support held in the gap down open in the markets and here it is at 75.50 from a low of 71.50 folks thats huge for an intraday but the dips mentality. Those who own it already? This morning was a test of your dont react abilities.
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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
SLV
6-2 Gosh one more trip back to the 50 day with failure is what we need to see to consider taking a short sell on SLV.
ABV
6-2 Still looks ok but we’ll end up deleting this name and ACOM,ARBA in order to free up space soon.
ACOM
6-2 Right down to support from the looks of the chart.
GLD
6-2 Approaching resistance in red
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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 — Nothing new at this point
Current Holdings
IBM (We are now long 2 JUNE 160 call options to open at 7.30)
As we post they are currently trading at 5.30
ILMN (We are now long 2 JUNE 65 call options to open at 6.30)
As we post they are currently at 6.90
SFLY (We are now long 2 JUNE 50 call options to open at 5.40)
As we post they are currently are 8.60
CAT (We are now long 2 JUNE 95 call options to open at 11.10)
As we post they are currently at 7.80
AAPL (We are now long 1 JUNE 320 call option to open at 22.30)
As we post they are currently at 25.35
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Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
ILMN (We are LONG 200 shares at 70.59 as of 5-25-11)
6-1 Sure likes that 50 day/ trendchannel line huh?
SFLY (We are LONG 200 shares at 54.24 as of 5-25-11)
6-3 Today’s don’t react/buy the dips buzzword case in point? 54.36 to 58.70. Just think if you were a Nervous Nellie and walked away this morning think you’d be a little ticked off about right now? Moral of the story today? Don’t react, let the opening dust settle.
AAPL (We are LONG 50 shares at 338.15 as of 5-5-11)
CAT (We are LONG 150 shares at 105.15 as of 5-5-11)
6-3 Here too, Had one reacted?
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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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