Reminder: Harlan is available to chat with Members, comments are found below each post.
For us the big question here is that of whether or not the indexes stabilize here at the 20 day average or head to the 50 day average. Its the first day of the month and we have a lot of time to see what transpires from here on out not to mention a lot of cash to be able to deploy as we go so lets see what happens over the next few days and use weakness to pick off some names on the longside from a selective and opportunistic standpoint. Watch that 50 day average I know we will be.
And sure enough the indexes stopped cold at the 20 day average which isn’t out of line as its a support level. For us to get an upside reaction off of it AFTER the markets got slammed hard the last few days isn’t out of line either. Again the question we find ourselves facing is whether or not that was it to the downside or we’ve got a little bit more work to do.
I’m leaning toward we have a bit more work to the downside to do here Uncle Ben or not as the charts below are showing that of a POTENTIAL ABC Pullback Off Highs (POH) brewing with A and today’s action being B with C yet to rear its head.
In a lot of the individual name charts in this update we’ve included the short term one minute charts and a ton of them show the same thing as the indexes here so that makes us wake up and take notice.
Now if we are going to see a C wave to the downside? Its a face of fear and yes we will be buying stocks on that potentiality. Be prepared! Don’t forget we’ve talked about this numerous times about having the gun loaded in advance and this is an advance notice.
Part of me also will be watching to see if this is just going to be an ABC Pullback Off Highs (POH) or will it trace out ABCDE (5 waves) I’m leaning toward it only being an ABC as the daily stoh’s are getting down there and the swing up off the Oct. lows was a 5 waves up affair. According to Ewave theory IF we are on our way higher then it should wind out at 5 waves up of 1 3 waves (ABC) down of 2 (where we are in now) then? 5 waves up of 3 for a potential retest of the May 2011 highs. This is the bullish count by the way.
Its early in the month still and plenty of time to reach your goals for the month regardless of who you are and who you choose to be as an investor or trader. Its really all up to YOU.
Current Game Plan
10-31 So here is the bottom line through year end. We buy weakness and we’ll use the 50-day average to define our risk once in a position. We’ll also want to try to be investors (longer term) and hang on to some thru end of year or thereabouts. As for trading here too we’ll want to do some hit and runs while at the same time holding a position for the longer into year end push. Said another way? Keep a core position and trade around with some too.
Keep in mind some names will pullback and others won’t. There is a strong possibility that we’ll start seeing names trade to the beat of their own drum from here and we can start to selectively nibble all along here on the long side.
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SHORT SIDE WATCH LIST
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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 "
10-30 Recently we’ve been highlighting the SNDK chart below as a first thrust up example. This weekend lets use it as an example of "What We Need To See To Make Us Take A Trade" on the long side.
In simplest terms? From here on out it’s all about Pullbacks Off Highs (POH) long side trade triggers. In uptrending markets they are the only pattern you’ll ever need to know.
10-31 As you will see below every name on this list is doing exactly what its supposed to be doing and that is starting to pullback. How long it lasts nobody knows but the names we like are getting cheaper and our risk is being reduced for near term future entries. Sit back, let them come to you and that is what we are doing today and hopefully for the next few days.
FOSL
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FRAN
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