Disclaimer: The majority of these ideas come from the @Tickerville Saturday morning brunch. In fact, many of these are direct quotes that I use as a check-point during the week. Trade at your own risk. Any reference to "I" is from @tickerville. The blog author did not grammatically update that piece.
**Thanks to StockTwits for hosting. An excellent venue!
OK, market continues to melt higher with no one on board and most betting against it. Setups seem to come and go. I think what we have to stop asking ourselves 'what the market will do' and stay focused on the patterns that develop for trades. Let's break down the indices a bit, shall we?
You can see that the SPY has started its consolidation, working off the V shape action. http://twitpic.com/4eimd The good thing about the SPY chart is it looks like it could be setting up for a trade in either direction.
Leadership QQQQ grabs 8th straight week of gains. I want in, but not here. http://twitpic.com/4eitf
But this my friends will be the ultimate tell. XLF http://twitpic.com/4ej2f Note how the XLF is consolidating for third straight week. The break here is what will be our guide for the rest of the tape.
Many weeks ago, we talked about the 'anxiety' within BTU. It was a pattern that I wanted to be in, regardless of the break. Remember? I traded BTU on Friday and executed well. The trade paid off, but I want to break down what I saw.
This was BTU from Thursday and what I saw. Tons going on here. Study it. http://twitpic.com/4ejn1 Friday, got in and partialed into strength. Not a chest thump, but shows how setups are working if you wait. http://twitpic.com/4ejsg
There is no question the commodity run was exceptional on Friday. The SLX broke out and Coals were on fire. If you were leaning against the tape or in disbelief you missed the move. IT is why we must focus on setups, and block out the darn noise.
The deep V (IYT)here concerns me quite a bit. Worthy of our respect. http://twitpic.com/4ek9f The "V" can continue, but the problem is there is no logical point of support, so we must wait until one develops.
So to give you a clue where I am. I sit with heavy heavy cash. Sticking and moving within trades that set up, waiting for pullback. The problem of course is that I don't know of a soul who isn't always waiting for a pullback to enter or short so it could take more time and is why we must keep finding opportunities, defining our risk and taking the trades. Quite simple really ;-)
If you look at the S&P, the reason this is so tricky is that it is really the first sustained bear run we've seen since this started. That is fine, as we should expect these in the context of a bear market. However a true trend has higher lows. Which we have to remain patient for. When it comes, and provides us with entry, you'll hear me talk about the trend as our friend and hopefully you'll hear me talk about how we must sit in the trend and ride it out. But this move is move 1 in what maybe a larger move.
That is why it is so tricky to time and why we SHOULDN'T try. We have to remain patient and wait.
So, if you have anxiety over what to do here, shelf it! No need. The tape is dancing high wire. It will consolidate sideways or down. But don't let it keep you from good trades. If they are out there, you identify them, take them and set your stop.
Alright let's hit some charts in the cue and then we'll digest some ideas long / short for the week ahead.
Per request, AINV, in full disclosure a good chart but not for me. http://twitpic.com/4elmp
One of my dearest friends and exceptional trader @PrakashT discussed with me the disconnect between stocks and UNG http://twitpic.com/4em09 If you noticed, the Nat Gas stocks and OIH started selling off first on Thursday, while UNG was trying to turn up. That was the sign. Sometimes you don't need to know the reason, you just need to see something that gives you the edge. If you can quant your risk then go. So with UNG, I took it with size all over. Minyanville portfolio, Fund, Sep Accounts. Then took half off on Friday.
Per request. DRYS. I was in this and took very quick gain. Did not wait and missed real move. Lesson learned. http://twitpic.com/4emhe What is interesting about DRYS is it gave everyone ample time to get in but you had to remain patient for the break. BREAKS ARE WORKING.
POT - Normally, you would look at this daily and get pretty encouraged. Maybe go long. http://twitpic.com/4enha The long off the daily may work. But don't forget this weekly. It still looks VERY Dangerous. http://twitpic.com/4enio
How about some Qman ideas? First let's start with a few longer term shorts I re-entered this week. Off their weekly charts.
Old time favorite MCD. The slow roll over. I am short here. http://twitpic.com/4eoc5
I think ORCL short still offers good risk reward with a defined stop above the Mother Trend line http://twitpic.com/4eodr
EQR I tried and took stop here on Friday. I will try again if break sets in. http://twitpic.com/4eomj
Mystery chart time. Are you ready? Tell me your thoughts here. http://twitpic.com/4eovs Failed break there was right shoulder on small H&S too. Now, you are more inclined to see the pattern and develop a strategy. Long or short THAT is good trading. Any guesses on what it is?
DrumRoll...... Pattern is..... IYR Daily. Thought it worthy of our attention since SRS about the most popular ETF going now. LOL
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