Reminder: Harlan is available to chat with Members, comments are found below each post.
Let the circus begin! The EU circus that is. From here on out the rumblings out of the EU Summit are going to start to take center stage. So what are we going to do different about it? Nothing really, regardless of what is going on over thereWE ARE OVERBOUGHT from a daily chart perspective. You see folks off the August and October lows all we’ve done is trade our plan and plan our trades. Which really isn’t anything new around here for us. Our plan has been and will continue to be focused upon:
How Serious Are You About Accomplishing Your Goals And Are You Willing To Pay The Price And Do Whatever It Takes To Accomplish Those Goals? Regardless of what the market throws at you!
When we said that it wasn’t just lip service, we meant it. Think Rocky Balboa’s mindset.
What is interesting to note is that all the while we have been focused upon the above statement the EU continues to burn and Washington still doesn’t get it. But even in the face of all that we’ve stayed focused and honed in on what is important to us. And that is the charts. Gaps and all regardless of what is going on in the world. We’ve said it in the past in one of our articles and that is:
Eventually you get to a point where it doesn’t matter. You trade what you see not think hear or fear.
That is where we are here at All About Trends. We’ll be spending more time on this too in the coming weeks as the new year is fast approaching and if you sincerely want to make the most of it you might want to pay attention to what we have to say on the subject of "BE ALL THAT YOU CAN BE".
In the meantime here are the index charts for the day starting with the daily chart frequencies.
60 minute time frequency charts that show both the bullish and bearish counts
10 minute micro time frequency charts that hone in on this current upleg off the Nov. lows.
Honestly regardless of what happens in the EU umpteenth summit we’re overbought and we want to get thru this week and start to look on the longside for some trades we can sink our teeth into for year end hit and runs.
Personally? I’d love to see us get slammed from here for a bit. Why? It relieves the overbought status and sets us up for a final suck in the little guy run higher into year end for the "Print".
BUT the market is the boss not us (Understanding that is a big reason for the success we’ve had) . Charts are sure setting up for that. So hopefully the EU summit will be the trigger lower and we can use that to our advantage to pick off some hit and run longside names. If it gets popped higher? We will re access and decide what the best course of action is if any.
BIG PICTURE BULLISH AND BEARISH COUNTS
All week we’ve been talking about the big picture going forward according to Elliott Wave theory. We are going to keep that whole conversation up here because its that important.
It sets the tone for 2012!
Here’s what we said the other day:
Let’s move on to some big picture Bullish and Bearish count charts on the indexes. We talked about showing you all some Ewave 3’s and 5’s So here we are.
First let’s look at the bullish count charts.
For you forward thinkers (Which should be ALL of you) I want you to think about what happens IF this run is a five wave up affair to a retest of the highs. Well on the surface it will look like good times. HOWEVER and this is the important part WHAT HAPPENS AFTER we complete the 5 waves up? Simple answer – 3 waves down at least and the end of this bull-market off the March 2009 lows. CONSIDER YOURSELF WARNED IN ADVANCE!
Now let’s look at the bearish count charts.
IF this count is correct then we really did top in May with the first leg down (red 1 Oct lows) being complete and all this bounce up off the lows is is just a bear market rally. Given the Debt cycle climate, the political climate both here and abroad that doesn’t "Get It" it would not surprise me to see next year being the nastiest we’ve seen in a long time. Errrr since how about 2008.
Also of note, IF this is the correct count? Know all that 401k mutual fund money of yours that hasn’t gone anywhere in 10 years except with your input and the companies match if available? Its going to take a hit. A1 of money management is PROTECT WHAT YOU HAVE. That means cash is king with no equity risk. If your employer matches you? You are already doubling your money due to the match. How much more do you want?
Don’t get Ewave? Don’t worry about it, all you need to know to get out is to watch the PINK lines on the bearish count charts. A downside break of those gets the ball rolling. Its also a huge opportunity for the short side and for those who can’t short to pick off some Inverse ETF’s.
We’ll be monitoring the situation over the next few weeks and will be featuring them when appropriate.
As far as those pink lines are concerned? Two things (also very important)
1. In between those are what’s called a BEAR CHANNEL
2. For those of you who are O’Neil fans if you look in his book "How to make money selling stock short" It’s a carbon copy of the diagram on either pages 31-32 or 39.
At All About Trends we call the drop to the Oct lows (red 1) the First Thrust Down. Everything since then (the bear channel in pink) is the snapback rally. Those who have been with us thru thick and thin and not fair weather (and we thank you!) know what comes next IF IF IF we follow that script. Its Bombs away to the downside. The mantra around here is First Thrust Down, Snapback Rally Bombs Away!
12-7 Now let’s zoom in on some of the shorter term frequency charts
BULLISH COUNT
BEAR COUNT
12-7 The more we look at the counts and the more depth to which we look into the market via what individual stocks charts are starting to develop we are leaning to the bear count here. That doesn’t mean that we are going to hang our hat on a particular outcome just yet. The key to being successful for us has been to remain flexible and not become attached to any one outcome.
We are still in an upwave here. It’s just a matter of which one is it going to be. The jury is still out and we need more chart time to show up before we can hone in any further.
But regardless of what count shows up each say down after they complete themselves. Stay tuned for further developments.
SHORT SIDE WATCH LIST
12-5 This is a WATCH LIST and we stress WATCH. DO NOT SHORT ANY OF THESE NAMES JUST YET.
Over the weekend in the change in trends section we said:
Keep in mind that these names are still in the 5th wave up. This also means that they could breakout into new highs. To the novice IBD type person that would be a breakout to buy (of course in keeping with the trend of gaps and go odds favor they breakout in the form of a gap assuming that is what takes place mind you).
DO NOT even consider that as we’ve seen in detail what has been happening to breakout buyers who operate from looking only at patterns in a sideways horizontal fashion verse multi-dimensional like we do. Not to mention as shown above in the index charts after a gap up they tend to go nowhere right after. Just saying.
All of which makes me say for the most part these issues are toast going forward and will end up topping out and stalling up in here. Said another way, the party ends are midnight and its 11:30 PM with these names.
GMCR
NEW NAME TO WATCH and we stress watch
12-7 Could easily bounce back up towards the upper red line and 50-day on a continued Santa rally. At that point, we’ll want to take a serious look at a short-sell position.
12-6 Given this could just be a pullback in the markets to relieve the overbought nature of things before one more potentially ENDING push higher into year end we’ll just watch this issue to see if it too could get one more final push. Then we get serious on the short side.
The same goes for everything else on this list. Think "Back to The Scene Of The Crime"
There’s two ways to trade each of the following:
1. On the short side — a bounce back up to resistance (red lines) and we’ll want to get serious about initiating a short-sell position in tandem with the indexes continuing to be overbought.
12-8 Odds favor though that we’ve got one more push higher before we see that.
2. On the long side — a continued pullback to trend channel support at the green trend line and/or the 50-day — and we’ll want to get serious about initiating a long side position in tandem with the indexes having relieved the current short-term overbought position.
RHT
AKAM
FFIV
SNDK
CVLT
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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 "
12-1 Given what we’ve seen in the indexes the last few days it stands to reason this list should be very small and rightfully so. Until we see some work off of the overbought conditions (sideways or down) this list will stay small. There is enough names out there on the back burner that given some sort of backing and filling and of course some POH-ing that we’ll have enough to work with in the coming days. As they develop we’ll bring them front and center. Right now though let’s exercise some caution as we just ripped.
ATHN
12-7 Pulling back towards support at the blue line and the 50-day. This issue is high on our priority list especially should the indexes continue to pull back or consolidate sideways to relieve the temporary overbought condition.
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CURRENT POSITIONS
"Let Your Stocks Tell You What To Do By The Action They Exhibit"
NOT YOUR EMOTIONS!
LONG SIDE POSITIONS
NUS (We are long 250 shares of this at 46.42 as of 11-28-11)
12-8 Still looking good. Pulling back nicely toward trend channel support — a move into the low 50’s and we’ll look to lock in our gains.
12-1 Looking ok here. A break below the C (red line) and we have to walk away.
VHC (We WERE long 300 shares of this at 21.64 as of 11-11-11)
12-8 What I want you to key in on with regards to this issue is that at one point we were down 17% but yet we turned that scar into a star with a 12% gain. So how did we do that? The notes from 12-4 say it all. You might want to re read them below.
12-4 At one point this issue was down for us to the tune of 17% on its own. HOWEVER due to trade size risk management and this issue only making up 3.6% of our overall portfolio the impact to the whole was a measily, stinking, lousy less that 1/10th of one percent!!!!!!!!!
Look (and this is very important) trade size risk management will save you every time! As for the 7-8% traditional stop loss rule that many of you apply? The Gecko says forget about it. In this climate? When you have a market that week in week out puts on 7-10% weekly ranges up and down with most stocks doing double that? You’ll do nothing but get stopped out left and right. Again, this isn’t the 90’s anymore.
An important point we want to make about that is also that about the time you start freaking out with fear (an emotion and you know how we feel about trading off of emotions around here- no wimps allowed) the damage is already done (otherwise why would you be emotional right?). It’s also just about the time the stock is ready to turn too. Those lows were also stabilization at the 50 day on the daily charts. Notice how the technicals were saying to hold on at the end of December by the double bottom? The launch also happened to correspond with the market taking off too.
The point we want to make folks is that there is more to placing stops than just saying heck 7-8% and being done with that.
You have other factors to consider of which the above is exactly those other factors we are talking about.
We’ve even talked in detail here about how you can be down 20% in a growth name and still only have it show an impact to your overall portfolio of only 1% thanks to trade size risk management.
SHORT SIDE
NONE BUT that may change by the end of the year!
