Trade Update: JRCC

I took a small short position today in JRCC. The stock has been in a strong topping downtrend and has pulled back up to the 50 day MA. Stochastics are near overbought levels and volume has been average on the pullback. This is a low risk entry with stop placed just above the 50 day MA.

Sectors with Bottom Formations

No matter how bearish your fundamental thesis is on the following sectors, it's hard to deny that price and volume are showing bottoming formations in financials, casinos and real estate.

Here is what I wrote about these sectors in the Trade Report to start the week:

I have narrowed my list of stocks this week, focusing more on sectors. I also am not labelling sectors as bullish or bearish, since I've been reversing biases as extremes in buying and selling dictate. Here is how I am grouping them:

The beaten down sectors that were oversold but quickly became short term overbought. Well, they still look like bottoming patterns since the recent pullbacks have been on low volume. If one buys the bottoming thesis, it could be time to reverse again and go long.

Financials: SKF to short and UYG long.
Real Estate: SRS, TOL, DHI, HOV
Ailines: CAL, UAUA
Casinos: LVS, MGM, WYNN

These sectors have made strong moves this week, and the bottom formation thesis is still in tact.















Click here for trade report subscription details.

CAL setup

I mentioned earlier today that I entered to airline stocks. Both CAL and UAUA have similar setups.

CAL shows a classic bottoming formation. Note the volume pattern. Entry close to the moving average is ideal, with the upside target at the first sign of strong resistance. I may buy more tomorrow on early morning weakness.

Why I like to take partial profits

X is a good example of why I like taking partial profits. I would have been inclined to take full profits when I had a decent gain. Instead, I took partial profits, moved my stop up to break even, and now am reaping the benefits of today's huge breakout.



Note: I took small positions in a couple of airlines today and initiated a couple of commodity related shorts (not steel!). More details tonight.

Where's the Volume?

As I type, I am sitting on the deck of a cottage over looking Lake Superior. Listening to the waves gently crash against the rocky shore below me, I am hard pressed to look at any charts. I don't know of many places with more natural beauty than Minnesota's Northern Shore. Maybe Yosemite, which I've been to at least 20 times and know better than the back of my hand.

I smartly did my weekend trading research Friday evening, before heading out on my weekend getaway. However, I couldn't help but take a peak at the index charts again. The more I look at them, the more bearish my stance is. Take a look at the negative volume during this bounce. This is not the type of volume we usually encounter in a true downtrend reversal.

I am still hesitant to short the indexes. Markets have not yet worked off the oversold positions, and it's always risky to enter short on during the bottom half of the oversold extreme. However, if the markets continue to merely drift higher on insubstantial volume, I will be more likely to go short via QID and SDS.

Partial Profits in Commodity Stocks

Yesterday I mentioned that I entered three commodity related stocks as bounce setups. I've taken partial profits in X and ACI. I am still holding USO.

To update you on the SKF trade, I have taken partial profits on 3/4 of the position, and am letting the last 100 shares "ride".



Members of the Trade Report had access to my thoughts on this "rubber band" setup the night before I ended up making the trades.

Quickie Trade Update

I used this morning's weakness to make a few commodity entries, this time on the long side. For instance, I bought X at $137.10. I also bought more SKF at $116.50, taking a partial profit at $120. I still have a good sized position in SKF.

More details later today.

Trade Entry: SKF

I bought 200 shares of SKF at $114.26 earlier this morning. Watched it go up above $120 (and thought about exiting) only to drop back down to $116.

I had no expectation of buying SKF today, and as Trade Report subscribers know, it is not on my weekly watchlist. I just could not believe how oversold the ETF is (or how overbought finacials are) and had to enter. I expect a pullback in financials (which could setup a long entry), which obviously would cause SKF to rise, since it is short financials.

Quick Trade Update

I was stopped out of CF for a loss and took profits in ILMN, JOYG (covered short), X (covered short), ACI (covered short) and APA (covered short).

Trade Entry: CF

I bought 200 shares of CF at $152.86. This is a trend pullback setup. The stock has been a consistent buy on pullbacks. My stop is under the 50 day moving average, with a target at old highs.

While I am bearish on commodities in general and see a lot of topping patterns forming, ag related stocks have been holding up well.



Trade Report:

View samples of last week's Trade Reports. Today's entry was mentionedas a setup in last night's report. For more info, click here.

Sample Reports:

Thursday Report, Wednesday Report, Tuesday Report, Monday Report

Short Entry: COH

This morning I went short 200 shares COH at $28.10. Poor OBV and overbought stochastic reading during what looks to be a short covering rally make this entry attractive. The stock seems to be failing at the 20 day MA. I will place my stop above the recent highs (above $29), with an initial target in the $24-25 range.



Trade Report:
You have seen me trade on this blog with amazing results. Now you can subscribe to my own personal trading journal, the MS Trade Report. This is the exact same journal I use to formulate my trading plan and execute trades.

The MS Trade Report features:

1. Weekly watchlist

I scan thousands of charts on a weekly basis in search of only the best setups. Most of my trades come form the weekly watchlist. For those without the time to sift through thousands of stocks, this list is a life saver.

2. Daily market notes and analysis

Analysis of the major market indexes and ETFs using my own propietary indicators that analyze price, volume, breadth, pivot points and market extremes.

3. Sector and industry analysis

Daily scans, filters and analysis of market sectors and industries. I provide an easy way to find out what's hot and what's not.

4. Trade setups and charts for the upcoming trading day

Daily charts and setups of stocks on my watchlist. You will have a bird's eye view of what I am looking for before I make a trade.

5. Strategy and Trader Education

I provide general tips on trading, setups, risk and trade management, along with important lessons I have learned as a swing trader. These unique ideas do not always form to conventional market wisdom, and are keys to my trading success.

For $24.95 per month, you will receive 4-6 reports per week. My goal is to do everything in my power to offer a high quality service at an affordable cost.

Sample Reports:

Thursday Report, Wednesday Report, Tuesday Report, Monday Report

Trade Report Subscripton Details

You have seen me trade on this blog with amazing results. Now you can subscribe to my own personal trading journal, the MS Trade Report. This is the exact same journal I use to formulate my trading plan and execute trades.

The MS Trade Report features:

1. Weekly watchlist

I scan thousands of charts on a weekly basis in search of only the best setups. Most of my trades come form the weekly watchlist. For those without the time to sift through thousands of stocks, this list is a life saver.

2. Daily market notes and analysis

Analysis of the major market indexes and ETFs using my own propietary indicators that analyze price, volume, breadth, pivot points and market extremes.

3. Sector and industry analysis

Daily scans, filters and analysis of market sectors and industries. I provide an easy way to find out what's hot and what's not.

4. Trade setups and charts for the upcoming trading day

Daily charts and setups of stocks on my watchlist. You will have a bird's eye view of what I am looking for before I make a trade.

5. Strategy and Trader Education

I provide general tips on trading, setups, risk and trade management, along with important lessons I have learned as a swing trader. These unique ideas do not always form to conventional market wisdom, and are keys to my trading success.

For $24.95 per month, you will receive 4-6 reports per week. My goal is to do everything in my power to offer a high quality service at an affordable cost.

Sample Reports:

Thursday Report, Wednesday Report, Tuesday Report, Monday Report

OT: Best Poker Blogs?

This is completely off topic, but I'm betting that more than a few of my readers are avid poker players. I'm looking for a few good poker blogs and sites to read that focus on strategy. Suggestions can be emailed at SinghJD1@aol.com or left in comments.

Thanks!

Trade Update:

I exited my commodity shorts at the close yesterday and will use strength to re-establish short positions. I am also looking to short weak sectors that have bounced with the market.

I also exited a few of my long bounce plays, like UYG (financials) at the close for some tidy gains. However, I am still holding the indexes (QLD and SSO).

Trade Report Update:
I will have information on subscribing to the Trade Report this weekend, along with the final free report. If you haven't already, you can view previous reports:

Monday, Tuesday, Wednesday and Thursday editions.

Thursday Morning Trade Report

Trade Report:

In the free Thursday edition of the Trade Report, I discuss:

Market notes and QLD trade

Today's best and worst sectors expose a trading myth

The gameplan

Charts with entry points

Wednesday Report

Tuesday Report

Monday Report

The Line

I could not have imagined the QLD trade working better than it has. I took partial profits at $72.88 today (entered at $67.88, as noted in the free trial of the Trade Report) for a $1250 gain (+7.3%). I've moved my stop on the remaining position up to my entry point, and have had thoughts about moving it up to $70.

The key level is the $78-79 range. That is the first major area of resistance for this bounce to bump up against. This level has been important over the past year. Notice on the chart below how price moves along this line. The April breakout did not mount this level until it pulled back first.

The "line" is where I will likely reverse from long to short. It's a great short entry, where a logical stop could be placed either just above the "line" or above the 50 day MA. This assumes volume patterns play out. If I see true accumulation, I doubt I'll short.

GLD Entry and Trade Report

In the Monday morning edition of the Trade Report, I mentioned that I was bullish on the gold sector and was waiting for a pullback. A few readers wanted to know at what levels I would consider entering.

Let's take a look at the GLD chart. When looking for support and resistance levels, I want them to jump out at me. The first thing that jumps out at me is the two failed attempts to really past $94, followed by the current gap up over that level. This is where I define the new support level. If we get a nice orderly pullback into the $94-95 range, I will enter. However, if the pullback is on a large bar and many of the gold related stocks are declining on heavy volume, I will skip the trade.



Trade Report:

In the free Wednesday edition of the Trade Report, I discuss:

My QLD entry, this crazy market and relative strength

A few recent positions, X, ILMN and JOYG

Bearish engulfing and flag setups

The Weekly Watchlist

Diversification by way of setups.

Tuesday Report

Monday Report

The New Edition of the Trade Report (July 16)

In the free Wednesday edition of the Trade Report, I discuss:

My QLD entry, this crazy market and relative strength

A few recent positions, X, ILMN and JOYG

Bearish engulfing and flag setups

The Weekly Watchlist

Diversification by way of setups.

Tuesday Report

Monday Report

Yes guys, I do know the difference between "addition" and "edition" (this is for those who receive the report by e-mail).

Quick Trade Update: QLD and Commodity Shorts

I took partial profits in a few of my commodity related shorts and entered QLD this morning. I mentioned QLD in last night's trade report. As noted in the report, the Nasdaq has recently held up better than the S&P 500.







Recent free trade reports:

July 15

July 14

July 15th Trade Report

Today's edition of the Trade Report details the following:

Relative strength of SPY vs Q
Today's leading sectors; precious metals lead the way
Potential bear flag breakdowns
Risk management challenge

http://docs.google.com/View?docid=d5z8q8w_1f8gj6bd2

If you missed the Monday edition, be prepared for chart overload.

RBN Exit

I exited my position in RBN at $51.50 (entry on Friday at $47.46) for a $1010 gain (+9.2%).

I would have liked to see a pullback to the breakout point in order to build my position, but I'm not going to complain too much with a 9 percent one day gain. I will look to re-enter on a pullback.



Trading Report
If you haven't already, take a peek at the first issue of the my new Trading Report. I'll have another one available before the market open tomorrow morning.

The Market Speculator Trade Report for Monday, July, 14, 2008

Here is the first free issue of the Market Speculator Trading Report. It includes my watchlists and game plan for the week, including market, sector and individual stock analysis.

http://docs.google.com/View?docid=d5z8q8w_0hswspwfm

Trade Report Update

I plan to have the first free Market Speculator Trade Report ready by Sunday night or Monday morning before the market open. If you haven't already done so, email me at SinghJD1@aol.com and title it "Trading Report" to receive your free trial.

Thanks to all that have requested the report. The response has been overwhelming.

Breakout Play: RBN

Don't tell RBN that the market has been in a downtrend. Beautiful earnings breakout play. I entered today with a small position and will likely enter again on a pullback to the breakout point ($45-46).

Anatomy of a Trade: WYNN

I shorted 500 shares of WYNN 8 days ago at $85.03 based on a "dirty bear flag" setup. While technically not a bear flag, the stock had broken support on was pulling back up to the resistance point. Volume distribution pattern was bearish, meaning heavy down days with low volume up days.



That same day the stock closed at $79.26. While I was planning a swing trade with my target around $70, the one day drop was too good to pass up. This is where I have evolved as a trader. In the past, the greed factor would have caused me to fear losing my profits and I would have exited with a $2500 gain. To combat this urge, I now allow myself to exit in stages. I know some traders frown on this, but I understand my own psychology, plus feel that locking in profits and managing trade exits is a great strategy.

I took partial profits by exiting half my position at $80.10 for a $1232 gain. I moved my stop to the short entry level to lock in the profit. The rest of the trade was what I like to think of as a free trade. I am bascially guaranteed making $1232 on the trade, but could make much more.

Today my target was hit, so I exited the remaining positon at $70.14 for another $2490 gain. What would have been $2500 if I had given in to my impulses turned into a $3722 trade.

The WYNN trade is why I often preach about trade management. There are three major elements that make a good trader: stock picking, risk and trade management. It's not that difficult to find good trades. However, making the most of those trades is what seperates the "men from the boys".

Odd and Ins:

I will be starting a trading report service shortly. For a free week, e-mail me at SinghJD1@aol.com and title it "Trading Report"

Rob Hanna does some of the best market analysis around. He's one of the few bloggers I read everyday.

Trading Report Service

Later this month I plan to offer a detailed nightly trading report for $24.95 per month. My goal is to do everything in my power to offer a high quality service at an affordable cost. For those who don't want to pay, rest assure that nothing will change on this site.

The nightly report will include the following:

My Market Notes and Trading Bias
My Watchlist for the coming day
Charts, Charts and more Charts
Trading Strategy and Setups

In a nutshell, you will see my daily trading plan directly from my personal journal.

I will offer the trading report free for one week. Anybody interested can get on my mailing list now. E-mail me at SinghJD1@aol.com and title it "Trading Report"

Today's Trade Entries

As noted this morning, I went short coal, natural gas and steel stocks this morning. Here are the trades:

Short 200 shares of ACI at $65.24 (closed at $62.23).

Short 100 shares of APA at $123.37 (closed at 116.96).

Short 100 shares of X at $163.56 (158.17)

Short 200 shares of ZEUS at $59.67 (closed at $56.96)

My strategy was to short on today's strength stocks within these sectors that had broke down below the 50 day moving averages. I stayed away from stocks still above the 50 day MA. That's why, in the coal sector, I picked ACI over ANR. ANR is still above teh 50 day MA.

As you can probably guess, stops are placed above the 50 day moving average. Take a look at the charts below and you will notice similar patterns in all of the shorted stocks.



Yes, I am still holding on to SSO. To the commenter who thinks I should have been stopped out----my stop has not been hit. I don't like to give away my exact stop for fear of too many placing it in the exact same place I did.

Quickie Trade Update

I used the bounce in commodities this morning to get short coal, natural gas and steel stocks. I also exited my long ag play (MON), which I did not have time to update yesterday. I was using extreme, overextended weakness to play a quick bounce. I am still long the SPY, via SSO. I'll have an update for you later today.

A Short on the Bounce

If we get a bounce, as I have been setting up for, the market will take some crappy stocks with it. Once these stocks near resistance levels, that's when I will switch from my short term long bias and establish more shorts. This chart of WYNN is a good example of what I am looking for.

Why Do You Like DUG

Here is an e-mail I received today:

MS,
Why do you like DUG so much? It looks to me like you are trying to pick a top in oils, just like you are trying to pick a bottom in SSO. Don't fight the trend man. SSO is going lower and DUG is too.

Before I get to the DUG trade, let me reiterate that I am not picking a bottom in the S&P 500. I am only playing for a bounce while using tightly monitored risk management. If I'm wrong, I'll lose a little and move on. If I'm right, I'll make a nice chunk of change.

Here's why I like DUG:

1. Nice looking bottoming pattern.
2. RSI breaking out.
3. Excellent volume pattern during the bottoming formation.
4. Good reward to risk ratio.

Trading Plan and Clarification

Trading Plan:

My watchlist is small this week. Probably as small as it has been all year. However, I may take some of the biggest position sizes I have taken in quite some time (while still managing risk appropriately). Here is the list:

I am monitoring leveraged index long ETFs such as SSO, DDM and QLD. While I am already long the S&P via SSO, I may add even more to the position.

I am monitoring high flying commodity stocks as shorts on a bounce. Sectors of interest include coal, steel, ag and energy. I went long DUG on Friday, which is a leveraged energy short.

I am monitoring financials and may short stocks such as MS, LEH and GS on strength. I went short LEH on Friday, but only took a small position as there is still more room to bounce.

That's basically it for the watchlist. I almost feel like I haven't done enough work, but this is really all that interests me right now, and I feel strongly about my current market thesis.

Clarification:

I have received many e-mails about my recent comments with regards to the expected bounce. A few seem to think I am predicting a market reversal. If I've lead any of you to think that is my market thesis, let me make myself clear. I am only positioning myself for a market bounce. I am not predicting the end of the downtrend. In fact, if we do get a bounce and it nears resistance, I may establish short positions in the indexes.

Position Update and Lesson Learned

I am still holding my SSO position. I bought at $59.96 and it closed at $59.66. Although today did suck, remember that the lows in the S&P still have not been pierced. I am still playing the bounce until my tight stop is hit.



I am still holding PBR as well. The stock is sitting right at moving average support. We'll see if it holds.

Today's WYNN trade is looking good. I went short at $85.03 and the stock closed at $79.26. I covered half my position at $80.10.

I am still holding TRLG, which is holding up quite nicely in the midst of market turmoil.



I was stopped out of EWZ at $87.44 (entry at $90.06).

The lesson to take away from this position update is to understand how important it is to manage positions and control risk. If I were to take the 5 positions above and assume I had closed out all of them today, I would have three losses and two wins. However, in this shakey and volatile market I have close to a $1600 profit.

My number one rule is to manage risk by not only setting percentage stops, but making sure than stops are set in logical places by paying attention to price pivots and other support levels.

Trade: WYNN Short

I went short WYNN today at $85.03. I only took a small position because I could a move up to the 20 day moving average. I would likely take a full position at that level.

It's Time

Things are looking ugly and the sentiment seems to be quite negative out there. I bought SSO at $59.96 and PBR at $70.15.

Note to anybody playing a short term bounce. You must be willing to take a small loss. I do not make these types of trades without a low risk stop on place.

After the Bounce: What's in Store for the S&P

As noted at the end of last week, I have positioned myself for a bounce. However, these plays are short term and I will use the bounce to deploy a number of short play. Here is the plan for the S&P. This chart annotes SDS, the inverse S&P short ETF. Looking at the S&P from an inverted perspective, via SDS, it's obvious that the bears are in control and strategic shorting is the best way to play this market.