Breakout-Pullback Setup: CSH

CSH has been trending nicely. It recently broke out and has now pulled back to support.

FCX and PCU: Great Long and Short Setups

PCU and FCX are on fire. Technically, they look great on a pullback to support for long entry. However, they are very extended. Take a look at the distance from the 50 day moving average. I think we are due for a snap back. I will likely short on more strength.

SKX Ready For Pullback

I took a short position today in SKX. The stock is extended and today's indecisive price movement on high volume leads me to believe a pullback is in order.

Short Setup: FUQI

I pointed to FUQI as a short when it was around $30. I took the trade, which would have been successful had I used a wider stop. It's now broke down below the 50 day moving average and is showing distribution in the volume pattern. I will short on a pullback to the moving average, as long as strength is not on strong volume. The setup here is moving average breakdown off a topping pattern.

Market Notes and Trade Update

Market Notes and Trade Updates:
SPY broke out over the resistance area we have been watching. As noted in the Report, I had a buy entry in place at $108.40. I entered at that level with a stop placed under the resistance level. Also, I was stopped out of the SPY short at $108.70 for a small loss.

Though I am long due to the breakout to recent highs, I can't say I am confident with this trade. RSI and OBV still show a negative divergence, stochastics are oversold, and the overall volume pattern still shows distrubution. If the breakout level fails, I will reverse course and short again

























I was stopped out of the GOOG short yesterday. I am still holding X and STEC shorts. STEC still looks terrible and remains a great position. X is nearing stop level.

I am also still holding SRS and SKF. With regards to SKF, I have done something I rarely do---I moved my stop. The positive RSI and OBV divergences, along with oversold conditions that looks due for a bouce are so strong that I have decided to stick with it.

This is something I rarely do. If a member asked for advice, I would mention the positives but tell them how important it is to stick with stops. If in this trade, the decision is a tough call that you will have to make. If you can't stomach the possibility of a bigger than normal loss, get out.

STEC Short Entry: Time to Take Profits?

Is it time to take profits in the STEC short? Entry was made back on September 24th at $30.75., so we are looking at a 15-20 percent gain.

My general approach to exits is to set a target based on support/resistance levels and take a partial profit at that level. As you can see from the chart, a consolidation zone is in the $22-25 range. Thus, I took profits yesterday around $26.

After taking profits, I move my stop to entry to "lock in" the initial profit. This allows me to stick with the trade if it continues to drop, without worrying about giving back too much. If price reaches the 200 day moving average, I'll take full profits.

SPY Chart

Is the Gold Breakout for Real?

Gold ETF GLD recently broke out over $100, an area that has provided major "round number resistance" the past two times GLD tried to breakout.

When a "major" ETF or market leader breaks out over a number like $100 after basing around that area for a significant amount of time, I consider it an automatic buy. Thus, I'll be entering GLD (or one of the leveraged gold ETFs) on a pullback.

However, there is a concern that could lead to a "failed breakout". Notice that RSI on the 3 year weekly chart shows a negative divergence. On a strong breakout, we want to see RSI breaking out to new highs along with price. Here, we see that RSI was much stronger back in early 2008, the first time GLD attempted to break $100.

Because of this I will not take a big position. I'll take an average size position on a pullback to around $101-102, with my stop under $100. If the breakout does fail, I'll be ready to reverse course and short GLD. Failed breakouts often lead to big gains as short entries.

Speculative GOOG Short

While GOOG is on the bullish focus list and I am high on the setup on pullback, it is very overbought. The two period RSI is off the charts extreme. I took a small speculative short position.

My stop is at $526. Target is $510. This gives me 2:1 risk ratio.

Keep in mind that GOOG's earnings announcement is October 15.

Is FUQI Ready for a Fall?

Momentum stocks usually give ample warning before taking the inevitable fall. Is FUQI showing signs?

The X Short Trade

On Friday I pointed to the X short setup, if X was to pullback to the 50 day moving average. We got that yesterday. As noted to Trade Report members yesterday, I took the short entry, with a stop just above the moving average.

This is a variation of the breakdown-pullback short setup.

Anatomy of a Successful SPY Trade - Moving Average Oversold Bounce Setup

This setup was given to Trade Report subscribers. SPY was marked as a "bounce trade" setup on Friday as it neared the 50 day moving average and became short term oversold using stochastics as the oversold indicator. I entered Monday morning on confirmation.

The stop was set under the 50 day moving average, with an initial target of $106--giving 3:1 reward to ratio.

The stock is now near resistance. Notice the distributive volume pattern. This suggests failure at resistance. Entry in the $106-108 range offers a decent short setup.



Note: I used SSO (leveraged SPY ETF) as my trading vehicle, but am using SPY as the example since more people trade with SPY.

Moving Average Breakdown in U.S. Steel (X)

X has broke down below the 50 day moving average and looks good for short entry on a pullback or weak bounce.

Thursday Plan and Trade Report

Here is the the detailed report I sent to subscribers last night:

Market Notes:

As price consolidates, the volume pattern is getting more and more ominous. Today's volume has turned me from neutral to slightly bearish on the market. I am more inclined to take on short positions on the focus list.

Those looking to take a low risk setup long on the SPY got the chance that was talked about last night, as price dipped below $105. If entered at $105 with at stop at $103.50 and target at $108, that's a 2:1 reward to risk ratio. I did not take the trade, but it was there for those who don't mind taking a small loss with the opportunity of 2:1 risk ratio.

Trade Tracker:

I am still holding AMZN, BIDU and STEC short, along with bearish positions SKF and SRS. I am holding APOL long.

Setups:

Watchlist stocks from yesterday are still being watched: FSLR, IEX and gold stocks. Bearish stock STEC.

BIDU, a stock I am currently short and have already taken partial profits on, still looks vulnerable. Notice that, while volume hasn't reached upmove levels, it has steadily increased on the pullback. A pullback to price and moving average support would not surprise me. Stop levels are tricky, but since the target is at $360, even a stop near $410 would give 1.5:1 risk.

Bird flu play SVA has been a tough entry post breakout, but gives us a decent support level now for which to place a stop. Entry here at $8.20, with a stop at $7.20 and target at pivot high of $11-12 gives a nice 3:1 risk ratio.

This setup is problematic because the bottom of the breakout bar is $7 and moving average is $6.76. If the stop is loosened to $6.50, the risk ratio would be closer to 2:1. Not as good but gives more latitude to stay in the trade.