Wednesday, August 26, 2009

Is DE (John Deere) a Short Setup?

A Trade Report member sent me an email about DE. Here is the e-mail and my response

I think it is great time to short "DE"? RSI, OBV and MACD are all bearish...plus, the Durable good is bad..

While the price pattern is not bearish, I agree in that RSI is showing a slight negative divergence and the stock is overbought. Resistance at $47-48 gives us an easy to manage trade, with a stop just obove that level. Teh $42.50 pivot area gives us an easy targt. Nice reward to risk.

However, keep in mind there is also a loose cup and handle formation and we could see a breakout at resistance. As long as you manage the trade properly and are willing to take a small loss, the trade is acceptable even with that concern.


Short Setup Negated: BCSI

For the time being, the short setup in BCSI is negated. The stock broke out over moving average resistance today.

Tuesday, August 25, 2009

Short Setup: BCSI

The chart says it all. Post a comment if you have any questions.

Monday, August 24, 2009

M. Martin--Contact Me

M. Martin. Please contact me from an e-mail address different that you used to sign up via paypal.

Monday Game Plan and Free Trade Report

To see the report with charts, click here

August 24, 2009

Market Notes:

In the law there is a term called "de novo", which means to consider a matter anew. It's commonly used when an appeals court reviews a lower court decision. The appeals court can review the case with a fresh pair of eyes.

I like to think of my weekend review of the markets as a "de novo" review. I throw out my previous analysis and biases, and start from scratch. Let's do that with the market.

On the short term chart, SPY has broke out over recent highs on decent volume. This looks to be a good breakout-pullback setup. While I entered on breakout Friday, I'd like to add more on a dip.

My previous bearish take has been invalidated, as the dip turned out to be a pullback rather than start of a deeper pullback. This is surprising, as last Monday and Tuesday were very bearish moves on strong volume. If we were stubborn here, we'd hold onto the past and say to ourselves, "the market has to go down". We cant play that game.

However, note that if the recent highs are pierced to the down side (especially on a close), that would invalidate the breakout and the "failed breakout" setup would emerge.




Now let's look at the longer term 1 year chart. We see a really nice looking bottom pattern that's take a year to form. We are now near a major resistance level, the gap down zone in the $105-110 range. This will be a good area to take some short positions.




Game Plan:

Buy the dips. Look to get short on a rally into the $105-110 zone.

Trade Tracker:

I entered SPY on the breakout. As I noted on Thursday, we were in a trading range and a break in either direction would clue is in on how to position ourselves. A good strategy when waiting for a level to break is to place a buy entry at that level. I had buy entires placed at the bottom of the range for a short trade and the top of the range for a long trade.

I entered 500 shares of SSO at $31.80 , and 200 shares of SPY at $102.

I was stopped out of my SDS position. I am still short LMT, AMZN, POT and VPRT. Note that while SPY is breaking out to recent highs, my short positions are not. They still could get taken up with the market, but this does tell me that these were good short positions.

Focus List:

The easy trade right now is to just focus on the indexes. You can gain volatility by trading the leveraged ETFs.

SSO, DDM

The only non-index trade I am looking to make tomorrow is LUV. It looks like it may be done pulling back after a strong uptrend. The moving averages are about to cross and the trade is easy to manage with a stop placed at the pivot low.




Shorts: Focus list stocks BCSI, AAP and SNDA

Disclaimer: All information and opinions expressed in this report are to be used for entertainment purposes only. The author of this report is not an investment adviser and does not give buy, sell or hold recommendations. Trading stocks is a risky undertaking, and due diligence is required before making a trade. Consult an investment professional before making a trade. The information in this report is not verified and may be incorrect. The author of this report may or may not hold a position in stocks mentioned in this report.

Friday, August 21, 2009

Apple is a Tough Read

If it were any other stock, I'd take a stab at shorting AAPL right here, right now. Technically, it shows signs of losing steam and is a good "pioneer short trade."

We see negative divergences in both RSI and Stochastics. Price is making new highs while the two indicators are not. On top of that, volume has been declining as price floats up to new highs, rather than decisively showing strong price breakouts and accumulation.

I love this setup. Not only does it offer a good edge, it also offers a good reward to risk ratio. You can set a stop just above the highs and place a target at support.

So why am I hesitant? One, the market has been resiliant and bucking many technical signals. Also, AAPL has been doing the same.

I'll probably spend the rest of the day thinking long and hard about shoring AAPL. I'll update you if I pull the trigger.

SPY Breakout

Nice looking breakout on the SPY chart. I will look to buy a dip today. If by chance the breakout fails at close, I will reverse and get short.

Thursday, August 20, 2009

Part-time Trader Series (tip 2): Have a Plan

This is the second in a series of tips for the part-time trader who trades around a full-time job.

As a part-time trader, time management is as vital to success as picking stocks or managing my portfolio. Over the years I have developed tricks to streamline what used to take me up to 4 hours a night, down to about 45 minutes
.

How many hours have you wasted agonizing over a trade you have just made? You place a trade, get back to work, look up at your monitor and watch every tick the stock makes. You try to get back to work, but you can't get the trade out of your mind. You don't know what to do. Should I sell now the stock has ticked up for a small profit? Should I exit now that it's gone the other direction?

The easiest way to combat this problem is to have a plan before entering every trade. In tip 1, we developing a weekly focus list which you fine tune on a daily basis. Every night you should review your focus list and mark each stock with an entry level, stop and target. Accompanied by these numbers should be comments on the setup and risk analysis.

By doing this, you make post-trade decision making a snap. The plan is there so you have no need to sweat as the trade develops. This type of preparation will not only make trading easier, you'll get more work done at your day job!

Tip 1

CX Chart

CX has a great looking chart that shows strong accumulation (volume pattern) and is breaking out to highs. The stock is extended, so I will wait for a pullback for entry.

AIG Chart

Nice price and volume pattern.

Sunday, August 16, 2009

Lots to Like About Brazil

Brazil is one of my favorite groups or "sectors" right now. Lots of great looking stocks. TMX, CIB and TEO are three I will look to enter on pullback:

Friday, August 14, 2009

Broken Trendline: PALM

I like PALM as a short setup on a bounce. Would have liked to see more volume on the break, but still would offer good risk/reward.

Wednesday, August 12, 2009

5 Great Short Setups

The following short setups all feature one of my favorite short setups: consolidation post downtrend featuring a negative volume pattern (distribution). A continuation of downtrend is expected.

VCLK, RS, SNDA, AMAG, ATK


Tuesday, August 11, 2009

Position Update

GRMN (long), POT (short), SDS, AAPL (short), DRYS (long), AMZN (short), LMT (short), VPRT (short)

VPRT Showing Signs of Cracking

Notice the negative volume pattern during recent consolidation period.

Wednesday, August 05, 2009

Today's Trade: DRYS

1000 shares DRYS at $6.60. DRYS is a focus list stock from the Trade Report I send nightly to subscribers.

Setup: Breakout-pullback. The stock broke out over the 50 day moving average and has consolidated on low volume.

Trade Management: DRYS offers a good risk ratio and trade management. A stop can be placed under the 50 day moving average. I am taking a pilot positions here, and will add more if it dips closer to the moving average. Ideally I will take profits at the top of the breakout bar ($7), and let the rest "ride" by moving stop up to entry.

Concerns: Overall market is overbought. If the market pulls back, it could take DRYS with it.

Tuesday, August 04, 2009

Quickie Game Plan

The market's very extended. The low risk trade right now is to short with a tight, logical stop. Aside from RIMM, and possibly DRYS tomorrow, I am not looking to get long.

My current short positions are SPY via SDS, AAPL, LMT and AMZN (pair trade with RIMM)

Market Trend Change on the Long Term Chart

The easiest way to watch the intermediate to long term trend in the market is to simply watch the 200 day moving average. During the down trend, it sloped downward and acted as resistance. That resistance recently broke, and the slope has now turned flat and looks poised to turn up.

The market is extended, so it's tough to get long here. However, a pullback would provide a great long opportunity.


RIMM Breakout and Pair Trade

Thus far the "pair trade" I outlined yesterday and entered on Friday is a success, as RIMM broke out in a big way today and AMZN (short) hangs out under the "failed breakout" resistance level.

I took a partial profit in RIMM today and moved my stop up to entry level to lock in gains.




Monday, August 03, 2009

Pair Trade: RIMM and AMZN

On Friday I went short AMZN and long RIMM. This is a "pair trade" trade using the folling strategy:

1- enter one stock long and one stock short from similar fields.

2- the short stock should exhibit a very bearish pattern, while the long stock a very bullish pattern.

The idea behind this trade is that if the market goes up or down significantly, it will likely take both stocks and you break even or have a slight gain or loss. However, if there is not a major market move, the stocks will move according to their patterns. This could give back significant profits in two trades that end up working out.


RIMM is consolidating post breakout of 50 day moving average. AMZN is a "failed breakout" setup.