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WEAR EM OUT OR SCARE EM OUT
Well folks what we have here in the short term is a market that tries to get up and go each day only to be turned back into the close. Because of that it sure seems intent on getting to the 1250 support level on the S&P 500 we talked about recently and the other blue line supports for the other indexes we’ve also laid out.
A month or so ago (last time we were in this position and just before we made a killer move to the upside) we touched upon how markets tend to make lows (notice I said lows not bottoms) and that is they normally chew around in a range sucking up the selling supply hitting the market OR they shake the nervous nellie tree of all the weak holders (Think shaking the tree is when they slam the markets down in capitulation form to get those last emotional apples).
We’ve seen the chewing around bit with IBM the last few days and we’ve seen the shake the tree variety with AAPL the last few days. So at this point its going to be either a wear em out or scare em out that make the low after which we can get some sort of bounce that lasts for more than a few hours- thats what its going to take.
If it comes in the form of a capitulation shake the tree? DO NOT be afraid of it, instead welcome it because it marks the beginning of the end of the downswing.
IF IF IF Keep in mind I’m not saying its going to I’m not saying its not, this is all just to make you aware so as to not have to get emotional in the event something like it were to occur. I will also tell you this- No matter what you own on the longside it will be taking some heat in that event so why bother looking at it and running the risk of getting emotional after the fact, you already know your down right? Why make it worse mentally. After all your state of mind and staying centered are your mosst important asset around these parts.
Game plan for week of 6-6 thru 6-10
6-8 Given how short term oversold the indexes are here along with some of our holdings our game plan is to work with what we have and start a search and destroy mission for names that are still in clearly defied uptrends that are Pulling back Off Highs (POH) and look to employ some money into those. One such name is INFA and one could even say an issue that is basically in the zone here too is that of AAPL.
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Short Side Coming Attractions
PLCM
NEW NAME
TPX
6-8 Until we see some sort of snapback rally for shorting purposes there is nothing to talk about with this one.
This issue as you can see needs some time as in chart time to develop the pattern
We talk about buy the dips and sell the rips around here right? Well in this case we get a rip we’ll consider selling that rip as in short selling it. Wait for the bounce.
OTEX
IRBT
6-8 We’ll delete this name as its just not following thru to the downside or setting up the way we’d like to see it.
6-7 So much for downside follow thru. While Im on that subject check out a chart of CVX. It too never really followed thru either. But BIDU, SINA and MELI? Just goes to show you how powerful the FIRST THRUST DOWN chart pattern set up can be. MELI and BIDU have been moved to the featured but not trade triggered list.
SLV
6-8 for us untill we see what a retest of the 50day average blue line looks like there is nothing to talk about for shorting purposes.
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LONG SIDE WATCH LIST
"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.
INFA
NEW NAME
6-8 consider this issue "In The Zone" Sure maybe it has another day of weakness as the 50 day and trend channel support are about a point away but KEEP THIS NAME HIGH ON THE SHOPPING LIST. We already have a trade trigger drawn up for this so we are really prepared for it should that tag of the 50 day occur OR heck even right here then sweat it out.
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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.
SHORT SIDE
MELI
BIDU
6-7 It just goes to show you these patterns work. First thrust down, snapback rally and bombs away. The hard part about these two was that you had to short them when the indexes were already down quite a bit and short term oversold. Folks if these are our problems? In the form of missed opportunities? Well then thats a good problem to have vs the alternatives.
LONG SIDE
APKT
6-8 Gets deleted from our listings
6-7 Any break of the red line and you need to walk away. Why? It’s a support level.
GLD
6-8 Approaching resistance in red
6-6 It ought to be interesting to see what happens at the red resistance line over the next day or so should it get tagged. Ahhhh Hmmmmm Notice the Negative RSI Divergence?
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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
6-4 Folks, we’ve got two weeks till expiration to see some sort of bounce in the indexes beit dead cat or otherwise.
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 5.20
6-8 Sitting at support and stabilizing for the last 4 days. Thats a good thing.
ILMN (We are now long 2 JUNE 65 call options to open at 6.30)
As we post they are currently at 8.90
SFLY (We are now long 2 JUNE 50 call options to open at 5.40)
As we post they are currently are 3.80
CAT (We are now long 2 JUNE 95 call options to open at 11.10)
As we post they are currently at 4.80
AAPL (We are now long 1 JUNE 320 call option to open at 22.30)
As we post they are currently at 14.55
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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)
6-5 Sure likes that 50 day/ trendchannel line huh? we will say this, should this issue break then it’s a short sell. Why? Trendline break and a break of the 50 day average too.
SFLY (We are LONG 200 shares at 54.24 as of 5-25-11)
AAPL (We are LONG 50 shares at 338.15 as of 5-5-11)
6-8 (332.80) Those who are more investors than they are traders this issue is basically in the zone per the notes in the chart. If you are one who doesnt mind an issue flip flopping around a bit then you are in the zone but take your time as we still have to get thru those wicked closes.
CAT (We are LONG 150 shares at 105.15 as of 5-5-11)
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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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