Tuesday

First of all, if you haven't already, take the time to watch the two videos below-they are the forest and the big picture.

As for the trees, we are in a top and a top of some consequence. TOPS ARE ALWAYS VOLATILE. That means that we may know the ultimate direction, but the day to day, hour to hour action can change very quickly, especially now that institutional money has their short positions in place. I suspect they started putting them together last October, which is ironic because October ends more bear markets than any other month.

Now is the time to keep those stops wide, to build positions, not establish them all at once. I posted a lot of individual stock short picks tonight because being short has it's advantages like being able to use your profits before you close your trade, unlike being long. However, the short ETFs we have ben buying are not real shorts therefore they do not have that advantage, but they do have the advantage of establish broad market coverage without being overly sensitive to stock specific news. They also "can" return more than you expect in a trending market. In a sideways market they are bloodsucking killers.

Whatever shorts you choose, I do recommend you look at the list of ETFs (ultra/3x short) that I listed in a post below. Those shorts are the foundation of all that I am doing for my clients that I advise. We are at approximately 50% capacity, with 25% of the portfolio reserved in cash. By the time the SPY breaks below $104.50, we want to be 100% short (with the exception of the 25% in cash for opportunities in swing trading-the rest is a trend trade).

I can not stress enough RISK MANAGEMENT!


HERE ARE SOME RESOURCES:

POSITION SIZING VIDEO

THE 2% RULE

POSITION SIZING 2

Know these like the back of your hand. You can also divide up the 2% by the number of positions you intend to trade (8 positions into 2%= 1/4% loss per trade). However, now is not the time to place tight stops, they need to be either REALLY tight and you can take another crack at the trade or they need to be wide, there's too much volatility and that is why I gave you so many limit trades.

3C right now is all over the place in the midterm, except some negative divergences on the 1-min chart suggesting early weakness which could build is some key levels are taken out, or if the powers that be spin the news in a bearish light.

We'll see, but now is not the time to be fooled by any strength in the market. There will be no new Bull market.

If you have questions, email me directly at BT46n2@gmail.com

**For all of our new members, the date on the trade spreadsheet (to the right at the top, current one says June, but May is useful too) is the date the idea was listed. If the notes do not say "Limit trade" then all trades are for execution on the open at market price. The stops are suggestions, you can modify them for your own style.

LIMIT ORDERS

And lots of them, they'll keep you out of trouble for the most part. This list, although it is long, it highly correlated -be careful not to choose two stocks in the same industry. There's not a lot of longs there and that's because there's not a lot of great looking long setups right now.

You should also have some stocks from our core position in Ultra and 3X ETFs. The list for those ETFs is in a post below.

Let me know if you have any questions and above all, DO NOT forget to properly position size. If you don't understand what I mean then go to Trade-Guild.net and on the left side under "RESOURCES AND CONCEPTS" read, "The 2% rule" and "position sizing". If you aren't going to practice risk management there's not much I can do for you in the long run.

Test of FIX for real time WOWS email list

If you read this post on WOWS, but did not recieve it over email (Google Group Mailing list) -

PLEASE

LET Brandt know!

DavidDT
on behalf of Brandt who is missing in too much Birthday action for third day in a row :)

P.S.  Keep in mind - spreadsheet is NOT mailed out - you still need to visit WOWS, Brandt is trying to figure out how to assure delivery without sacrifising intergity of subscription mechanism (whichever one he uses :)

A New Secular Bear Market

Perhaps one of the most far reaching secular bear markets that the broad averages have ever seen?

Looking at the charts, understanding what has changed in the world, in the USA and in Technical Analysis and what hasn't, it seems more likely now than ever that this could come to pass and it could come to pass a lot faster than we appreciate.

With huge, historic shifts in the markets, many people will lose everything, but wealth is not destroyed when the markets "lose" money, it's simply transferred from the hands of the many to the hands of the few. I hope that we are prepared and well positioned to be "the few", but it will not be an easy or comfortable ride.

If you find that you agree with my analysis and even if you don't, now more than ever is the time to be battening down your Risk Management planning and your financial planning.

Click on the videos to enlarge them and please don't forget to rate them at YouTube. Thanks.

ENTRIES AND SWING TRADING

This quick post applies to both, whether you are a swing, trend/position trader. Knowing when to get back in the market with your highest probabilities is essential to successful trades. The reason we haven't gone full in short is because we don't have any confirmation of a real reversal yet. This chart will help you understand when to get back in.

No trends go straight up or down, and a little tidbit, did you know that there are usually more up-days in  bear market than down days? Above we have a downtrend marked by the red arrow, the upswing, bounce or pullback that we have seen the last 3 days is a correction, at least as it is now. The two red boxes show candles with higher lows and higher highs, those are the only candles we are concerned with in trying to determine when to get back in short on the downtrend. If it is a higher high but not a higher low, disregard it, same for a lower high and higher low-they must have both higher highs and higher lows. The last candle to make that higher high/higher low is our signal candle. When price, on an intraday basis (for most traders) breaks below the low of the last candle to make a higher high, higher low, you want to resume your position or get into the market at that point (the candle with the white arrow).

To figure out your risk and position sizing, you will use a stop above the high of the same candle. If you position size correctly (with the exception of a large a.m. gap) you can control your risk at 1 or 2% of portfolio or less if you like. The idea is the downtrend has resumed, if it stops out that means it has made a higher high and the bounce is still in effect. So as of now, we would look to add to shorts on a move below today's low at $108.78, our stop would be above today's high at $110.80, although I'd give it a little more room, maybe $110.94.

This works in uptrends as well just reverse the rules.

Things Aren't Always What They Seem

In the market, things are rarely what they seem; everything is a deception. From level II to earnings reports, interviews, the pundits, it's all deception.

Today seemed like an incredibly strong day and a huge victory for the bulls. The fact is, Geithner's expedition was what the market and the insiders needed to push this thing higher. Since there was so much distribution yesterday, I assume they sold out of the long position and today was all about selling short. Why? The candlestick that is deceptively bullish and the percentage gain as well. Here's some of the proof of that-

A quick reminder on the lost art of volume. Any move up should see volume move up as well, it shows that traders are aggressive and they are bidding prices up. Therefore the most bullish of price/volume relationships is price up/volume up. Can you guess what the most bearish is? You might say price down and volume up, but actually you'd be wrong. The most bearish price/volume relationship is rising prices and falling volume. This shows traders are not aggressively pursuing prices and there's most likely an element of temporary manipulation which drives prices higher. This is why I have this custom scan to look at each of the major averages when we have a day like this. First I have my 5%+ Gainers; you'll see we had 928 of the NYSE stocks close up 5% or greater, but all on falling volume-BEARISH. Then we had 499 close up with volume up-BULLISH. However, we are looking for the dominant relationship, it could be by 30-50%, today nearly 100%; the dominant relationship was extremely bearish.

We do the same for the averages. In the NYSE we had 3946 stocks close up on falling volume which is nearly double the 2042 that closed up on rising volume, again the dominant relationship was extremely bearish. In the Dow that bearish dominance was nearly 5:1! The NASDAQ 100 was 6:1. Remember, I said 50% would qualify as dominant, here we have 600%! The S&P was nearly 4:1 so today was a big deception.

It's always good to look at the market's breadth, here's an indicator on the QQQQ that like MACD, should rise with price

Above is today's QQQQ 15-min Advance/Decline Histogram-again, rising prices should see more stocks rising, instead we see fewer stocks advancing into the close

Here's the 5 min SPY-the white arrows show divergences-where the arrow end you should see the result of the divergence-a reversal. White=positive divergences, red= negative divergences. the blue line is a very long version of 3C. You can see today we saw no positive divergence, again suggesting this was a manipulative move, there appears to be no accumulation whatsoever.

Here's the 1 min 3C chart, while it did rise with prices, it formed no positive divergence and when compared to lower prices a few days ago, both 3c indicators are significantly lower-this is bearish.

Again, the white arrows show positive divergences or accumulation. Note today was a fairly spectacular negative divergence which tends to confirm my suspicions, today we saw a lot of short selling into the rally.

Another 15-min 3C chart used for confirmation, again, 3C does follow price, but the only divergence created is a negative divergence as 3C moves down from much lower prices several days ago and especially into the close. This could very well be a false breakout.

Finally the 3rd version of 3C 15 -min. Again, today saw distribution or short selling into higher prices.

As I have said, we can only make decisions with the information we have at hand, but I do not recall seeing any failed divergences on these charts, just some that take longer than others for a multitude of reasons.

For those of you who have started a short position, if you want to hedge the shorts against any further upside, which I do not find likely based on what we are seeing and holding over a 3 day weekend, you can always buy something like FAS. If the market goes down your shorts hedge the FAS position until you sell it. If the market goes up, the FAS position hedges your shorts, , eventually we will add at the reversal and you'll have a quick profitable trade and a better position on your shorts.

If you are not already short, I do not recommend this course of action. Any short positions being put together should be at 50% or less of the intended final position. We may add a little before, but the trigger to go all in will be a break on the SPY of $104.50

For that reason, I will not be positing any new trades tonight, I do not trust this market to go up in any consistent manner that is worth the risk. We also don't want to add any shorts until  we have a reversal.

If you have specific questions, email me at BT46n2@gmail.com

Update

Look for a move below $108.70 on the SPY, that would be a decent area to add. In the area we are in now, it's also a good ares, but up here the position should be smaller, then under the support level it can be a bit bigger. We are trying to end today (if the market cooperates) with 50% of our position in place.

This may be it

it looks like the market has finally broken down as the charts pointed to, but I think we get one last bounce maybe to 109.70-109.80 on the SPY. Possibly a new high as a false breakout, but that is the least likely.

Opening Gap

There are small almost indistinguishable positive 1 min divergences, the only one that really stands out is in the QQQQ 

This would be enough to rise to the gap we are seeing this am, if I had any longs left I would be using the gap to sell into. Instead I'll be selling short into the gap, but again in small pieces, perhaps 15% (initial short positions taken yesterday at 25% on our intended position)

Here's the more dominant 5-min chart. Granted it could change to a bullish divergence if the 1-min carries far enough, but at this point it does not look likely and we make decisions based on the information we have and the probabilities at that time.

So we are not concerned with this gap up and expect to see it dissipate by early afternoon. If anything changes I'll do my best to keep you up to date.

A Few Charts-Back on the Short side

Last night I warned that this market could turn very quickly,
"I would continue to hold the longs. I WOULD NOT ADD to them. Remember, this is a correction, not a bull market move. Smart money is selling into it and soon you too should be selling in pieces, taking some profits off the table. Do not get greedy and hold too long. We should see the reversal in 3C, but I do not know if they did the same as we did and set up a larger core short position, if they did, then the change in the uptrend could come very quickly."


Today at 2:07 we sold all of our longs at an additional profit and started short positions. I intend to add to those shorts, but at specific levels and when 3C suggests it. Below $104.50 this time I doubt very much will be a shakeout, i think it will be the break of a Broadening top, at that point we want to be pretty close to fully loaded. Remember, markets fall faster then they rise.


We started with Short leveraged ETFs, we may add individual stocks if I believe the return in those stocks will be greater than the ETF's.


Here are a few of the charts of some of the ETFs I mentioned today. Click on the charts for a larger view. All have very positive divergences, as I mentioned, we are long term bearish and were short term bullish for the bounce only.

Now it's about correctly putting these positions together. We have reason to suspect downside so we started the position. As the market moves in our favor and the signals get stronger we'll continue to add. This is part of our risk management, not add everything at once as the market can be very unpredictable at a top like this.


The nice thing about the shorts is we will be entering into a trending trade, there's a lot less to do. Not to try to up sell you, but it would be very helpful for you to have my Trend Channel Custom indicator which is only available on TeleChart or StockFinder. 

This system adjusts to each individual stock and takes arbitrary opinion out of the equation. With my Trend Channel (which received an award) lets you catch the meat of the trend and get out before the lateral volatility (opportunity cost). Other methods are too easy to be shaken out and arbitrary decisions could have left you with a gain of 10% rather than 50+%


If you want to take a look at the charting software, click the links below. I am an affiliate so i would appreciate you letting them know Trade guild sent you. In addition, this is the only two platforms that will run my 3C indicator which you see above.






I'll add the positions in the post below to the spread sheet and be on the look out for any other interesting trades. This should have been a good week for most of you, I appreciate the emails and I'm glad to hear that so many of you are doing so well. Just keep the risk management in the forefront and you should be fine in any weather.


One last note, I'd like to create a library of common technical indicator, show you their faults, how Wall Street uses them against you and how you can use them to turn the tables, so send your suggestions of your favorite indicators and we'll get that library up for you. any other requests, let me know.

Here are the candidates

These are the positions we picked up in the last few minutes-they were all bought at approximately 25% of out full intended position, maybe a bit less.

There are two I think look good for tomorrow, those are:

SSG > $17.53
SMN > $43.02

The ones that we just purchased-(remember these are ultra or 3x short ETFs so you are buying, but the net effect is you are short the underlying index or issue):

FAZ- 3X leveraged gives us exposure to financials
TWM 2X leveraged gives us broad market exposure in one of the more volatile averages
SRS 2x leveraged, not a big position here, but some exposure to real estate
EDZ 3X leveraged exposure to emerging markets which should be hit hard in a global fall
EEV 2x leverage on emerging markets through Proshares instead of Direxion-this and EDZ will              be treated as one position
FXP 2x leveraged against China-a little correlated, but they should suffer in a global crisis
ERY 3x leveraged short on Energy-less economic activity, less demand for oil

You can see with the exception of the emerging markets, none of the positions are too correlated. Also these are baby steps although I do believe the next break of $104.50 (SPY) will be the real deal.

I hope you made some nice profits the last few days, it may not be over, but the situation changed too fast as I warned might be possible because of smart money's averaged price being lower because of the shakeout yesterday. This means the accumulation at $112 was averaged lower and as I said, "They may not need to go that high".

A little Bear Buying

OK, I think you can go ahead and take on some Ultrashort/Direxion 3x Bear ETF's-they should be on the 2 lists, I'll add more.

UYG, SKF, QID, TWM, TZA, SRS, BGZ are a few examples-still do not take on more then 25% of your full intended position, have a stop that is a bit wide, even if you have to take on less shares and position size so that your stop getting hit will not risk either more than 2% per position or divide the number of positions you intend to have into the 2% to figure out how many shares you can buy.

*UPDATE
Here are the leveraged shorts you can buy that look decent, be careful not to over/cross correlate positions

TZA
TWM
SKF
SRS
QID
BGZ
EDZ
TYP
EEV
FXP
ERY
FAZ
PSQ
DXD
SSG
SMN

Short?

It's really too early to tell if this is just going to be a mediocre day in a larger trend or the end of the bounce. In any case, we are buying FAZ in a very small portion if it crosses $115.85. I'll post more soon, this is just to get your toes wet, especially if you didn't already buy a long term short position over the last few weeks.

These two charts are the reason we are taking profits now, it may change later as we have positive charts on the longer time frames, but the 5 min deteriorated rapidly as I said it might last night. with a profit we are being safe than sorry.

Take Profits!

The charts are starting to fall apart, I'd be taking a majority of profits right now. We may see strength later and add them back, but I would at least get out my original investment and let the profits ride or get totally out. The charts have fallen apart very fast as I warned they might do.

Later today could be different, but for now, I'd close the longs. Keep an eye on both sites, things could move fast.

See Trade Guild

I just posted 2 charts, 1 suggesting a pullback-we (my client) are taking some off the table and intend to buy at lower prices as the 5 min chart is still positive suggesting this is what I said last night, early weakness that may fill the gap.

This is also an opportunity to go long, but wait for the crossover system I described this a.m. to give you the signal with RSI > 50 or if you use 3C, just watch for the positive divergence and start buying, but check that the 5-min 3C is still positive first.

A Way to Play

If you're nimble, and you can watch the trade, I have a way you might be able to participate in the market right now. This is for all the new members who haven't been with us and gotten in on the bigger picture, which you will shortly. Basically I've said that if you are long since yesterday when the market moved above $105 on the SPY (first it broke below and when it went over $105 in the early a.m. that was our signal to buy longs or Ultra ETFs) I don't think it's a great idea to be adding right now, you pretty much should have a position in place and be ready to start selling into the rally.

I also posted a chart last night that showed a negative 1-min divergence which is interpreted as early weakness in the market-despite the gap. The day before we had a positive divergence meaning early strength and we had a huge gap down, so it didn't make a lot of sense, but we saw the market rebound very quickly off the open"early strength"

So does that mean that today's gap is going to pullback, be filled, maybe even pullback even lower? I'm not sure because there was a lot of different activity toward the close, short covering, non-institutional money buying, institutional money distributing (selling to regular Joes like you and I). Being that smart money needs higher prices and a spectacular move to suck money off the sidelines, I think maybe they will support the gap, but if they don't you may want to buy early weakness.

Here's a setup, but you have to be watching and nimble. If this market goes on a tear to the upside as I believe they would like, then we'll see nice strength so use a 1-min chart of the SPY, add a 22 (blue) and 50 (yellow) simple moving average to price. Also add a 22 period Wilder's RSI. You can stay long or buy long as long as the 22 is above the 50 ma and your stop should be a break below the 50 ma, or a cross down of the 22 below the 50 ma. You'll also want RSI to be above the midpoint (50) to confirm you are not getting whipsawed as moving average systems commonly due.

Many times the market opens at the low and closes at the high, so there's no pullback, that's why I'd say buy 50% of an Ultralong ETF or 3x leveraged ETF. I gave a few examples in last night's post and there are more on the spreadsheets.

So you have a position if this doesn't pullback, if it does, you add the other 50% of your intended position size. Be sure that you have a risk management plan with a current stop at $107.25 on the SPY (This is your market signal despite the vehicle you use to trade) and that a stop out does not risk more than 2% of your portfolio. This is all on Trade Guild under "Resources and Concepts"-"Position Sizing" and "The 2% Rule".

As long as the short average is above the long and RSI is above 50, you should be able to ride the intraday trend, especially if it is strong. Follow the system though. Now get to it, there's not much time.

Using the signal above and trading FAS, you would have made 7% from 2-4 pm

A few charts

At this point we should see a lot of buying as this is our downtrend reversal point

This 1 min chart suggests early weakness, but every other chart is positive, so the weakness should be short lived, but for new members, it may offer an opportunity to get long. As I've said, 2 of the Ultra/3x ETFs is enough exposure, 1 should be market representative (QLD, UWM, etc) and the other financial (SKF/FAS). Don't panic if we see early weakness, you know now that it is likely, but also likely short in duration.

Congratulations

I received several emails today from members that held on through the plunge and bought at the lows, it was brave and goes against natural instincts, but I think we have a sense of what is happening in this market, although every time you get too confident you get knocked down on your rear end.

The analysis has not changed. I do not see anything of consequence suggesting that this market will not go higher. IF everything that I've seen in 3C over the last week or so is correct, then we have their number.

I read a few places today, "The Bulls got brave", etc. This has nothing to do with the bulls, this was an orchestrated effort by smart money, look at the gap down alone and our analysis that those levels would be taken out to the downside an then we'd get a reversal. Smart money built a position quietly, now they are openly creating volume and breakouts, they are trying to encourage higher prices so they can unload their inventory at a profit.

The market is often about sentiment, this time it was strategic developments.

There could be some early weakness tomorrow as the 1 min 3C charts have gone negative, everything else is positive so unless you are trying to catch every intraday swing, I don't think it matters much. I would continue to hold the longs. I WOULD NOT ADD to them. Remember, this is a correction, not a bull market move. Smart money is selling into it and soon you too should be selling in pieces, taking some profits off the table. Do not get greedy and hold too long. We should see the reversal in 3C, but I do not know if they did the same as we did and set up a larger core short position, if they did, then the change in the uptrend could come very quickly. If they will be building that short position, we will have plenty of time. the point is, hold for now, but if you start accumulating nice profits, take them-this is not  trend, it's a correction.

My guess is that we see resistance around $110-$111-they accumulated up there, but the huge sell-off on the break of $105 allowed them to average their cost down so they don't need $110. However, if $110-$111 is taken out, then we could really see a fast move up and I would definitely be taking profits off the table and leaving a small position in place.

Tomorrow will tell us a lot about where we want to start selling the longs and where we want to add to our core shorts. At $110 (SPY), I should be able to see the laggard stocks and those will be our targets to short, plus the leveraged short ETFs.

For now, be patient and NEVER let a winning trade turn into a loser. You'll have a lot of picks in the coming days, but it's too early now to start targeting shorts.

We want to behave as Wall Street does and sell our accumulated longs into higher prices, if you have a large enough position and can do it 25% at a time without commissions eating profits, then that is what I'd do. I'll let you know when. Don't panic if you see early weakness tomorrow.

Areas of interest on the SPY:

$109.40 area, $110, $111.50 $115.20 and any whole numbers like $112. Each time one of these is broken to the upside, it will cause shorts to cover, which creates an imbalance in supply/demand and leads to higher prices.

A final word of caution, making money is addictive, so much so that people are reluctant to let go of the stocks that made them the money and we find reasons to hold-DON'T! The new normal on Wall Street is Fear-we saw it this morning. Do you have any idea how many people dumped positions when they should have been buying and how many are still sitting on the sidelines? Those people will be buyers if the rally continues to advance for a day or two more, the more spectacular, the more that will be drawn in, but they will buy the top, we'll be the ones selling to them. This site is not called Wolf on Wall Street for nothing.

Hopefully you are finding a new perspective, one that takes you out of the flock of sheep and makes you a wolf in the market. Those who emailed me today with the gains they made, you are the wolves.

As always, email me with any questions or suggestions you have.

Patience and A Steady, Steeled Hand.....

Market volatility is always crazy at tops, this is why I tell most of my students to leave the top and bottom 10-20% alone and go for the 80 % in the middle of a trend, these are just too volatile for most people.

So you must be feeling anxious, don't. We are where we are and we've taken the positions we've taken. If you have been at WOWS for awhile you should have some core shorts that will hedge any downside break of our long poitions, but let me remind you of last night's post on T.G

"As for tomorrow, we have negative divergences in the 1-5 min charts, this suggests continued downside. Considering the accumulation zone, I suspect prices are heading lower to test $107.30, if that fails, then  possibly as low as $105.25. There could even be a test below $105.25 and we could still maintain a bullish perspective for the short term. However, this is a huge gamble to take, at least if you are not long term short and hedged as many of our Wolf on Wall Street members are."


So $107.30 seems to be history, to take out $105 they'll need to go down to $104.75 to hit the majority of limits, so while down there why not take out February's $104.56-I wouldn't think it would be wise from thier perspective if they intend to shoot this market back up, but they know more than do I. 


In any case, I do believe this is another false breakout/Shakeout. You may want to freestyle this one a bit and dump some of the planning and take on some 2 or 3x leveraged long ETF's-they are on both lists. The trick is timing, if we break $105 then any move above $105 intrday, you'll want to go long right in that area, maybe a little higher. The idea is that all the weak longs are shaken out and the shorts are trapped in a squeeze. so that's plan A.


Plan B is, "This breakdown is for real", which it may be but I have a hard time believeing smart money would accumulate at higher levels and then just let all that inventory go at a loss, if it were not for that reason, I'd be telling you to load up 100% short right now. So I'm doing what I tell you to do, trust your indicators, ignore your emotions and make rational decisions based on the evidence you have right now, that is the very best you can do. Second guessing at this point is out if pure fear and fear is not objective and it's also not good for you in the markets like it is in life. The market's count on the human fight or flight mechanism and use fear to make money, so this is one place it won't serve you well.


Back to plan B-a break below $104 and most likely the worm has turned. Remember that you should have risk management plans/stops in place before you enter the trade, also remember that stops are to be executed on closing numbers only, not intraday swings. So you have an entire day to see what will happen and my money is on "False breakdown" and a rally after that, maybe right off the open.


I'll be updating in both places today after 12.


By the way "sell in MAy and go away-" Sell at the end of April and buy back at the end of may 7 of 10 of the last years, May is up.

Patience

As I have said many times before, your only edge over wall street is that you DON'T have to trade, you can sit it out and be patient and that is what we are going to do tonight. There's no point in posting trades when we have 24 decent trades from yesterday, many of which haven't triggered yet. I feel fairly confident that the $107 level on the SPY will be taken out, maybe lower, but I also feel these are to set up short squeezes so for the moment we are going to be patient and see how this plays out in the a.m.

We have plenty of leveraged ETFs and long trades on the list should this market show resilience, but we will wait for confirmation first. This is for many people the hardest part of trading, sitting still, but it is also your greatest advantage, tomorrow will be an exercise in patience. If the market comes our way, I will post the trades that should be added, the limit orders are all still the same.

Hang in there, the fog will list soon.

In the meantime, if you have any questions, as always, feel free to email me and I'll answer ASAP.

Edge?

Right now? No, we don't have a strong edge which means that you should pullback your position size and be diligent with your risk management. This market is very volatile which is tropical of tops, but it "seems" like we still have some upside owed to us by the market. As I pointed out last night, the positive 10 minute chart doesn't need to take place the next day, it could be a few days.

Nevertheless, we did have some decent trades today, one made nearly 19.5% in a day. We had some that lost money around 4-5% and some that gained the same. We had several that did not trigger on their limit orders, they are still very much viable trades.

Now is not the time to swing for the fences, that may change in a matter of minutes tomorrow, but right now it seems as if we will see continuation of the downside that started at 1 pm-I (remember to read Trade-Guild updates-the reversal was posted there for all to see). i have a feeling that we may see at least one more support level shaken out, but there's a chance that we see the $105 SPY area shaken out, which becomes very dangerous as this could cascade out of control under that level, which is great for our shorts, but not so good for any longs.

Tonight I will list several trades that seem to fit with the analysis and show strong probabilities if i can find them, you must understand though that 65% of the gravitational pull on any stock is first and foremost "market direction", which also means that most people spend way too much time looking at stocks when they should be studying the market and the industry groups which are the second most powerful determinant in a stocks direction.

Check back in a bit, this will take awhile -and also remember that today's trades are not dead, even ones at a loss right now. This is why I advocated last night for wide initial stops with fewer shares.

Keep An Eye Out For Those Updates

I updated Trade Guild today at 12:51 with this,

"Be prepared for an intraday pullback, it should be coming any minute as the 1 min 3C charts have gone negative.

My Bad

I just posted and promptly removed a post called "Huge opening gap down". My chart was scrolled back several days, it is no where near as bad as I thought then, and very much in line with what I said in last night's post under the last 3 charts. so if you received that post in the email or saw it, please disregard it as i have removed it from the site.

Getting started

Friday the S&P/SPY was technically called a one-day key reversal. In Candlestick vernacular it would be called a piercing pattern, for all intents and purposes they are the same thing, a reversal pattern. Remember, reversal patterns need to be confirmed with follow through and it's not unusual for the market to close on Monday in the same direction as FRiday.

The S&P 500 saw increasing volume. The Dow did not qualify for a true piercing pattern, but did dee rising price and volume-bullish. The NASDAQ 100 qualified for piercing status but volumr fell off slightly-which is s bearish P/V relationship, but it wasn't a huge difference. Same story for the NASDAQ Composite. I prefer all 3 or 4 majors confirm together, it's a more solid foundation especially at a critical moment like a market reversal.

The SPY/S&P may have outperformed due to financials strength. XLF put in a full strength bullish engulfing pattern-stronger than a piercing pattern, but again volume fell off. But is it enough to look at the dailt volume itself and make judgements? Not always. It's obvious on these charts and the XLF chart that volume fell off into the rallies, it picked up at the deline bottoms and at the lows of the day, which ordinarily would be bearish to me, but in this case, knowing and seeing what we have seen, I think we are seeing accumulation-now out in the open, on the dips. So perhaps the daily P/V relationship isn't as meaningful as usual. The other observation would be the fact that they are now accumulating in the full view of the public, which as I mentioned last week suggests that they are ready to take this market higher and then we get reversal days in the majors. The strength in financials would also explain the relative strength in the S&P as it is more heavily weighted with financials then any of the others.

So if you are not in already how do you play this? OR if you are in, how do you play this. At this point nearly every chart I see has a positive divergence suggesting upside in the near term, so what to pick? I told you last week to use the Ultra/3x bull ETFs and to have broad market exposure through an index and exposure in financials, if you have that, then you should be fine. I like the ETFs in this situation because they are not as sensitive to individual news events and they can be heavily leveraged.

I think continued upside early in the week is a strong possibility, but do we want to use the ETFs or the individual stocks? MAPP is a strong looking chart, it has a bullish engulfing candle, rising volume, huge spikes near the close when Wall Street trades and 3C q-min suggests early upside Monday. The target is about $17.00 so that is about a 22% gain, not bad. Using the same target criteria, but this time using FAS (1 3x leveraged long on financials), I come up with 21%-the same for all intents and purposes. The only real differences (besides the 1-day target on most ETFs-which can work to your advantage occasionally) and the market specific news, would be the volume. FAS is averaging about 85,901,100 shares a day over the last 50 days. Whereas MAPP is averaging about 153,00 shares over the last 50 days. So you have to consider how big you are trading, the spread and slippage. Also I consider what market they trade in, MAPP trades over the NASDAQ-and so long as you are not using level II (unless you know every player on there and what their tricks are), I have no problems with the NASDAQ. FAS is trading on the NYSE-not my favorite exchange. Why? First because I've seen significant profits erode because I couldn't sell my profitable SKF position because the Specialist had not opened the SKF market (and it was a fast moving market that morning). Also there is the discretionary opening price which is chosen by the specialist, whereas issues trading on the NASDAQ have their opening price dictated by actual supply/demand. Does this so far sway me one way or the other? No. I point out these issues because your trading is different than mine and maybe these issues will sway you. I also have a general disgust with the NYSE, many day traders won't trade the NYSE at all due to ongoing corruption issues, at least in their opinions. These issues could include things like front-running-”Oh but times are different?” yes they are, but some things aren't.

When considering shorts, which we will be back to adding shortly, you must consider the fact that the inverse ETFs do not put money in your account that you can use as they become more profitable-you need to close them like any other long to gain access to the gains, whereas a true short on a stock will put money in your account and allow you to use it without closing the position, read my article on Trade Guild “Making More Than 100% in a Short” and you'll understand.

OK, now that you understand those issues and you know what ETFs I recommended, lets take a look at individual stocks and what I'm going to do is look at Friday's gain for all 228 Industry groups through Morningstar and choose 5 of the top performers.

Copper +5.44%

Steel and Iron +5.29%

Industrial Metal and Minerals +5.19%

REIT/Hotel/Motel (condominium...-just an inside joke) +5.06%

Aluminum +4.51%

Problem? If you have read WOWS for any amount of time exceeding 3 days you will know that I always say not to “over-diversify” as it kills returns, but more importantly not to trade any two individual issues (unless you split them as if they were 1 position) in closely correlated industries. With the exception of the REIT, we are heavily correlated so I'm choosing Industrial Metals and Minerals because there is a larger pool of securities to choose from-this is 1 group. Group 2 will be REITS, based on financials strength on Friday, I'm choosing Financial Diversified Investment for Group #3 because they are in the top 10 best performers for Friday and there are 441 securities to chose from (and yes I will look at every chart, now you know why I charge $50 a month). Group #4 will come from one of my scans, “Stocks closing up on rising volume by 5% or better” and Group 5 will be a scan that looks for stocks between $5 and $20 and have a BETA in the top 10% of the market. I'll also weed-out stocks trading less than 200,000 shares a day. These are stocks that have the highest probability of making large gains.

While I'm not going to go through my analysis for every stock, I do want you to learn, not just get stock picks. So I looked at Groups #5 “High Beta-Scan”. I took out of the watchlist anything that traded less than 200k shares Friday. I sorted the remaining 215 stocks by Beta and the top of my list was VNDA with a BETA of 7.45, which means typically or historically might be more accurate, if the broad market measured by the SP-500 were to advance 1%, VNDA would advance 7.45%. It has a high relative price movement. I looked at the chart, it traded over 600k shares on Friday-and not on big volume, more like average. It also saw a capitulation-like event on April 29^th on a huge gap down and closed down 8.84% that day on volume of 3,137,100, about a 6x volume surge. This tells me that most weak hands have been shaken out of this stock. On May 5^th a huge hammer created a second shakeout as it violated all nearby support, remaining holders are in there and prickly. The gap down on Friday re-tested the low but stayed above the low by about 2%, which is a successful retest, I don't think it needed to be shaken out anymore like the rest of the market considering recent events.....

I'm going out to dinner real quick, I'll be back with the rest of tonight's analysis and ideas, but there's something to chew on....

Ok, so Here's our charts of VNDA (click the chart for a larger view to read the notes)

Here are the support levels and capitulation I mentioned.

My Trend Channel I use for objective stops also identifies reversals in trends based on a stock's recent behavior

Long-term 1-day 3C chows accumulation at the retest of the May low

The 60 min 3C chart shows confirmation of the successful retest and accumulation

More confirmation on the 15 min chart with a different version of 3C

This one minute chart shows how reliable divergences are in calling reversals, you can see the distribution at the top in red leading to a downside move and in green accumulation that has started an upside move. Based on this chart I'd guess VNDA will show strength right our of the gate Monday so if you are interested, you may want to get in at the open with a market order.

So there's some of what I look at. VNDA seems to be a pretty nice setup, but you need to move quickly and take the early market price. You may want to scale into the position as we often do, you may pick up some shares at better levels, but there should also be a point in which the position is filled out as the trade moves in your favor. Off the top of my head, I might call that level $8.01, but be prepared for an intraday attempt to shakeout buyers at the whole number. Personally if that were to happen, based upon the evidence, I would hold through that sake out as it may add more fuel to the fire when the stock advances again above $8.00 on a mini short squeeze

The 3C charts for the market are suggesting morning weakness, that may be the time to purchase. However, do not let it close lower on you without exiting the position, at least partially.

The rest of the trades will be posted on the spread sheet, just click the link on the right of the post called "May List" There are more ETF ideas on the list below that at the very bottom of the spreadsheet.


*NOTE-REMEMBER, ALL LIMIT ORDERS ARE ON AN INTRADAY BASIS, ALL STOPS ARE ON A CLOSING BASIS.

THE OUTLOOK FOR TOMORROW BY THE CHARTS:

HERE THE SPY 1 MIN IS SHOWING WHAT APPEARS TO BE EARLY WEAKNESS, MAYBE AN ATTEMPTED SHAKEOUT THROUGH A GAP LOWER, BUT.... 

THE 5 MIN 3C CHART CLEARLY SHOWS STRENGTH, SO I'D THINK ANY EARLY WEAKNESS SHOULD REBOUND FAIRLY QUICKLY

HERE'S THE DIA 10 MIN 3C CHART, THERE IS A BIT OF A TWIGHLIGHT ZONE BETWEEN THE 5 MIN AND 10 MIN CHARTS AS THE 1-5 ARE USUALLY MARKET MAKERS/SPECIALISTS, POSITIONING AND THE 10MIN IS THE SHORTEST TIMEFRAME TO SEE INSTITUTIONAL ACTIVITY. THEREFORE WE COULD HAVE ALL POSITIVE CHARTS AND A CLOSE LOWER ON A DAY LIKE MONDAY, BUT ULTIMATELY WITH IN A DAY OR TWO, WE GET THE MOVE HIGHER. I DON'T SEE THAT AS BEING AN ISSUE TOMORROW FOR SEVERAL REASONS, ONE MONDAYS TEND TO REPEAT FRIDAYS AND TWO, TO SELL THEIR ACCUMULATED INVENTORY, THEY NEED THIS RALLY TO LLOK VERY REAL, VERY CONVINCING AFTER THE BEAT DOWN THE MARKET TOOK OVER THE LAST 6 OR 7 DAYS AND BEFORE THAT. I SUSPECT THE CHANGE IN CHARACTER I MENTIONED AND DISPLAYED CHARTS OF THAT OCCURED LAST WEEK HAS SOMETHING TO DO WITH SOME IMPENDING ANNOUNCEMENT ABOUT THE 5-MIN CIRCUIT BREAKER NEWS, I FEEL SOMETHING NEWS WORTHY IS COMING SOON THAT WILL ENCOURAGE THE BULLS, BUT THEY (THE NEWSMAKERS) KNOW SOMETHING THE REST OF US DON'T AND THAT IS WHY THERE'S A NEED FOR THE CIRCUIT BREAKERS. REMEMBER, WE VIEW THIS BOUNCE AS A TACTICAL PLAY ONLY AND OUR STRATEGIC OUTLOOK IS SOLIDLY BEARISH. IN FACT WE INTEND TO USE THIS BOUNCE TO FIRM UP OUR POSITION SHORTS. BE CAREFUL NOT TO FALL INTO THE NEWS TRAP-WHATEVER IT IS, WHATEVER THIS RALLY BRINGS, WILL BE CONVINCING!


For our new members, we have a lot recently, please, please, please-read everything on Trade-guild.net regarding risk management, "Position sizing", "The 2% Rule/Video" etc. You NEVER want to take more then a 2% loss on any position and if you trade multiple positions you want to divide them up so that any losses do not exceed 2%. Don't make your initial stops too tight, don't move your stop away from the winning trade in a losing situation and don't hesitate to execute the stop on a CLOSING BASIS. Also, I never out more than 15% of my portfolio in any one position and often less-that's the only way to protect against gaps. Keep your risk management solid and you will make money, falter even once and you could lose a lot.  Always RISK MANAGEMENT FIRST, ALWAYS!


HAVE A GREAT WEEK

Be Ready, Be Brave, Be Smart

As usual, check tonight's extensive post at Trade Guild.net, it will give you the confidence you will need. If you did what I mentioned last night and accumulated positions in the Ultra longs and 3X Bull ETFs you did the right thing today, so long as you followed risk management plans. Tomorrow, if we break below $105, I'd add maybe 25% when prices move back above $105. If we don't make it that low, then you'll want to do one of two things, (first you may want to take any profits off the table in shorts or some any way for the time), you will either want to add a little on lower prices, and then add the rest as we break above the trend channel reversal point at $110 on the SPY as of now. Like I said in the TG post, if the market moves lower, so will the trend channel and our level at which we have a reversal (which is at $110 now). This is why it is very beneficial to you to have these indicators for yourself on a realtime basis. I have written them for both TeleChart and Stockfinder, the links to each are at the top of this site on tabs. If you sign up, tell them Trade Guild sent you, email me and Ill set you up with the code.

So the idea is we want to have accumulated at lower prices (that should have happened today) and that represent half of our intended position and then we want to add the rest upon confirmation of the reversal. To draw in buyers, Wall Street will have to make this rally look really, REALLY convincing, that means it will rocket up and traders will have this sinking feeling that they were left behind. So that is why I suggested being in early. I suggests adding at the reversal to mitigate risk. We add as they trade moves in our favor. If for some reason all of this analysis is wrong and you'll know that if price moves significantly below $105 then you'll ant to be out quickly. I saw this because the stop/limit orders are sure to be piled up below $105, it will only take a move to $104.75 to hit 90% of them and they don't want to take this market that far down if they need to turn around and take it back up, they just need to hit the stops under or at $1o5.

By the charts look and feel, I think they don't need the $105 shake out, I think they are close to being ready now and Friday makes a good day to put in a strong rally.

If you have core shorts, it's still ok to hold them, although we did take some off the table in larger positions, we will add them back later. Either way you should be in good shape if you do have the core shorts, a failed rally and you are hedged with the shorts. A good rally and you will gain on the longs and only have temporary drawdown on the shorts as the longs have hedged them and the outlook for the long term is down to new lows so that just makes the long trade an extra bit of profit and another chance to load up the shorts at better pricing.

Tomorrow is going to be a key day, you will want to watch the market as this rally could come Friday and it could blow through $110 in minutes.

Look for updates-subscribe to email updates at Trade-Guild or just check. I'll probably post something pre-market, but the trades are the same ones I've had listed, the ETF's that are 2-3x leveraged and you only need 2-3. I'd choose a good 3X financial and something leveraged on the Q's or Russell, so you have financial and broad market exposure. There's no need for a bunch of positions on this trade.

As always, email me with any questions and happy profit hunting. DON'T FORGET YOUR RISK MANAGEMENT PLAN!!!!!!

$109.41 was the shakeout level

Pre-market we have already hit it.

Use the long ETFs I gave you Sunday on, I'd consider strongly accumulating half a position under or around $109.41, and the rest either as we move lower, but in smaller bits the lower we go, or the other 50% when we pass $112 or 112.90 for the very cautious. YOU MUST use risk management-and position sizing, so get calculating-QUICKLY!

A Lesson in What Smart Money Can Do

YOU MUST READ AND LOOK AT THE CHARTS AND THEIR ANNOTATIONS AT TRADE GUILD TONIGHT, HERE'S THE POST


http://www.trade-guild.net/2010/05/today-smart-money-took-drastic-action.html


Something rather amazing happened today and if you look at the charts and understand divergence analysis or my 3C indicator, you will see with your own eyes that smart money has been pulling this market down the last few days, even though it originally appeared that they had the intent of a bump up in price along the order that we anticipated.

SOMETHING CHANGED and probably over the weekend. Smart money pushed the market lower and between 11:30 and 2:30 today-which includes a significant portion of the lows, they accumulated en massse . I do not think I have ever seen such an impressive shift in the longer 3C charts (15-60 minutes) so quickly and so obviously, it was very distinct and confirmed on all 3 major averages and all 3 independently written 3C indicators. You will be surprised to see that the accumulation occurred during light volume, except for a spike or two, but that is exactly why accumulation is so difficult to see, they don't show their hand and say "We Are Buying!" as that would drive up price, instead accumulation almost always happens on low volatility and low volume as we saw during the period we are interested in.

This chart is just for you, I did not post it at Trade Guild, but you can see at the lows of the day, 3C 1-min went into a huge upside divergence-positive accumulation-Amazing

You can see where price was heading lower before 12 pm today and 3C (blue) was already in motion higher and peaked with a leading divergence around 12:30. As prices climbed, their accumulation activity waned. They were in for the cheap shares, which may indicate that the move, while possibly fast to the upside (so you may want to get long exposure soon) may not carry further then our targets around $116.00 (SPY)

So what does this mean? It means that as of now, it seems that either they were covering a lot of shorts and or buying. Of course the two actions are one in the same, either way the intention would be to be ready for a move higher. This move could be as short lived and reverse as quickly as it did today in two hours, or we could see the pendulum swing hard in the other direction.

This is a trick time, in technical analysis all we can see is what they are doing, we don't know why and won't until it doesn't matter anymore so there's no point in trying to reason the actions taken this week and especially today. I was shocked to see what I saw as I went from chart to chart and confirmed with all 3 versions of 3C.

So there are many possibilities, I tend to be skeptical and a bit paranoid which is good for a trader so I'm concerned that they will make an effort to move this market below the two closest support levels at $109.41 and $105 on the SPY (add a zero to see the levels for the S&P-500).

So we have the trades that are most useful right now-those would be the longs, ultra and 3x leveraged long ETFs I've listed the past few days. Those are the trading vehicles I'd use for the time being. The question is when to buy. A break below either support level would be a gift and you'd be a buyer as soon as prices rose back above those levels. Or they could have all the inventory they need now and take prices up now with an obvious Doji reversal signal it is what most traders are expecting anyway, which helps them mark-up prices.

You'll have to choose your plan. You could, if you haven't already, accumulate portions of your intended position so if there is a break below support you don't have huge exposure and you have dry powder to load up the truck. You could wait for a pullback or for a move up or you could sit this one out. I have a feeling you'll need to be nimble toward the top of the move.

In any case, choose your stops before you enter the trade, do not make them so tight that you are easily stopped out and make sure that you position size accordingly so that you don't risk more then 1-3% on any single trade or for more conservative traders, on the portfolio.

The bottom line is at some point, probably very soon (day/days) we will see a move up unless something drastic happens to shift sentiment again, which I can't see at this point with the level of planned accumulation.

As usual, if you have questions, please feel free to email me.

Battle Plan

Everyone needs a plan, here's a few ideas, but first read the analysis at Trade-Guild.net tonight.

If we see a breakout above $112.80/$113 on the SPY, then the longs I gave you the last two days are quite workable. There is a high chance of a false breakout below $112/$111.75. If that were to happen and then we see a move back above those levels, especially on volume, we have another workable long setup. You can sit in cash right now too, but we do have a strong 10 minute divergence, but it may be destroyed as the 1 and 5 minute divergences from yesterday were, remember I said this market is susceptible to news and news is what caused the breakdown today, however it seems that there are institutions with positions at higher levels and I'd think they'll want to see the market move up to unload them. 10 minute divergences are also stronger then 1-5 minute divergences and the 10 minute positive divergences have been strong today.

If we get a break of the hammer at $111.75 (SPY), you'll want to look at the shorts I listed in May-there are two lists, both to the right of this post and I'll add more once we see what is what-you are not going to miss the train with all the downside we have below.

The triangle that formed at the end of the day will be an upside breakout at $112.80-that is worth adding to longs or establishing partial positions which you add to as the market moves higher, but I never expected more then a few days of upside so these longs are quick trades. No matter what you do, you must follow the risk management rules. There's no excuse (other then a bad gap ) to lose more then 2% of your portfolio on any bad trade. If you are losing more then that, you need to email me and we need to work out a risk management plan.

Ultimately, most of you should be holding core short positions, remember the longs were just for a bounce trade. So in any case, you should be somewhat hedged. If the longs work out , you'll make money and set up great shorts, if they don't you'll be hedged, you'll close them and the shorts will be profitable. Just review all the trade options I laid out and be ready to execute them on a break either way. I can see adding to shorts below $111.50 on the SPY.

Bottom line, with the information we have right now, I still expect upside, intraday there's a lot of false moves so follow your risk management plan, but don't jump out of positions that have no reason to be out of if they haven't hit your stop levels (don't react to emotions). In other words a downside breakout of support is a high probability and a move up after that is also a high probability, you don't want to sell at the low unless your risk management plan dictates that in the position sizing you choose.

To me a gap down means nothing, just as the gap up today meant nothing except (as I pointed out in my posts) it was an opportunity to sell some longs at a profit. The market will do everything to fool you and scare you out of trades, don't fall for it. Volume is always a good indication of how real the move is. I'll try to update in the morning on TG and again in the afternoon. Whatever happens, think risk management and remember, the longs are tactical, the shorts are strategic as I believe ultimately this market is going much lower.

Finally, CASH IS A POSITION, if you are not feeling good about these longs and want to wait for the shorts to hit, then be in some cash.

Email me with any specific questions or and especially if your risk management plan is costing you more then 1-2% of your portfolio on any failed trades. Be sure to look for my updates on TG, and check WOWS too if something serious breaks I'll be updating here.

ADDING A COUPLE ULTRA/3X LONG

THE MARKET IS SET TO GAP UP, I'D SAY IF YOU ARE ESTABLISHING A NEW POSITION, PICK UP 50% OR SO OF THE INTENDED SIZE ON THE OPEN, WAIT AND SEE IF THERE'S AN EARLY MORNING PULLBACK AND THEN ADD THE OTHER 50 AFTER THE PULLBACK MAKES IT'S FIRST HIGHER HIGH/HIGHER LOW ON A 1-MIN CHART. HERE ARE 3 ADDITIONAL LONGS YOU MAY WANT TO LOOK AT. DO NOT LET THE GAP UP DISSUADE YOU FROM ENTERING THE MARKET. IF YOU ARE PRETTY MUCH SET WITH YOUR POSITIONS, THEN MAYBE ONLY ADD ON THE PULLBACK SCENARIO.


TRY NOT TO OVER CORRELATE-FOR INSTANCE, YOU DON'T WANT TO BE IN BOTH THE RUSSELL AND THE QQQQ OR UYG AND SKF (BOTH FINANCIALS).


ERX
DRN
URTY
UWM

Yes, Bears Can Bounce

As usual, make sure you read tonight's Trade-Guild post. If you did what I said last night and followed the updates, you should be sitting on some decent long positions and should see at least a day if not two of additional upside. Today was really just a reversal day-my note on TG about the support level being hit gave you a great opportunity to add at even better prices.

For now we will not be adding to shorts, there's no point as long as we have a bounce because we can get better pricing at higher levels, but I imagine before the week is out, we will be adding to shorts and you will hopefully have made a nice little profit in the long trades we re in now-IT's not too late to get in! There should be early weakness that can be used to enter the trades. Whatever happens, DO NOT LET A WINNING TRADE TURN INTO A LOSS!

The fact that the SEC will be coming out with a report in the next few days about "Circuit Breakers" on trading platforms (meaning if a stock drops by 10% in 5 minutes, trading will be halted in that issue for 5 minutes) is probably what is propelling this market higher, however it underscores a fear that the SEC has about the waterfall sell-off that 3C predicted last week and that was just the start. I think the SEC has some information about the direction of this market and is putting panic plans in place, which is great for our short positions, it means we ARE on the right side of the market.

DO NOT BE COMPLACENT with these long trades, Europe is falling apart and it won't take much to spook the US markets, news can change things fast, but for now we seem to be ok.

I see numerous long trades, they all look like the market, since they are sensitive to individual news items, I choose the Ultra and 3x ETFs in last night's post as your long trading vehicles, I see no reason to change that plan as I don't see any particular stock outperforming these leveraged ETFs. So, keep an eye on Trade Guild, do not panic and sell too soon, unless the market spooks badly on news, even a gap down in the a.m. should not run you out of your long trade-I expect we may see just that.

If you have TeleChart of StockFinder, you can use my TrendChanel for stops. If you don't have the platforms, please visit Trade-Guild and use my links as I'm an affiliate and it wont cost you a dime more. I'm more then happy to share my custom indicators with you. You can also use the StockFinder and TeleChart tabs at the top of WOWS.

Hang in there, we are on track, don't let emotions govern your decisions.

Can Bears Really Bounce?

YES! And we are about to see one bounce. See tonight's post at Trade Guild. I expect the $116 level of the SPY to be tested and it should fail, news could derail this of course but as far as what we know now, it looks like a day maybe two of upside coming. Watch the volume, it should stay low. You can trade around this a little pretty easily using an Ultra Long like QLD, UWM, UDOW, DDM, FAS, EDC, TNA, MWL, BGU, or SOXL.

I would not let go of short personally, but rather hedge with these Ultra or 3x long positions for a day or two. Any gift -10% I'd take. This way you are hedged to some degree, you get to add to shorts at a higher level and then when we go back down you've made profit on the long trade (quickie) as well as the higher -add-to shorts. IT's a pretty nice opportunity and I don't see anything on the charts to suggest this is anything more then an attempt to fill the gap and maybe kiss the bear flag good bye-which is typical.

I'd say go for it, but treat this trade as any other and make sure your risk management schedule, position sizing, etc are all in place, do not try to hedge an entire portfolio and I wouldn't trade more then two of these. REMEMBER, THIS IS JUST A PLAY ON A SHORT BOUNCE-unless something develops from there which I doubt.

I'm not putting these on the spread sheet as they are so short.

Have a great week.

THIS MARKET IS LOOKING WORSE EVERYDAY

Because of the above, I'm accelerating some of the trades from yesterday and putting a few at market and a few closer to trigger levels. I have also added a lot of ETF's that are Ultras, you'll want to look at those and have some exposure to them in different industries, ETFs have some advantages-like they are not as news sensitive as a stock and the Ultras have the advantage of leverage. However, an Ultrashort which you buy is not the same as a true short. A true short wil add money to your account as it becomes profitable and a portion of that money can be used right away to finance or add to other trades, this can not be done with a long position.

The stops are a bit further so in risk management that means you need to take on less shares-Read at TG about position sizing and the 2% rule. You can always add to the trade later so for now, get exposure but don't swing for the fences. Also look back at the last list, the trades listed in late may are also worth considering.

Risk management is the name of the game right now, even if this market moves higher for a short period we can still make a lot of money but you must follow the rules. If you have ant trade or portfolio specific questions, be sure to email me. I want to see you make money and if I can answer a question and help you do that then by all means, send me the email and I'll answer ASAP.

Do not correlate positions, do not put more than 15% in any one trade and for now do not take full positions but 50% or so of your intended position and make sure you position size so your risk on a failed trade is under 2%. Also do not over diversify, for most people's portfolios 6-8 positions will give you all the exposure you need. As a rule of thumb, $10k =3 positions, $20k maybe up to 5 positions, $100k 6-8 positions. If you are over that level I can help you diversify without over diversifying which kills returns, it's a wall street myth designed to increase brokers commissions . THERE IS NO SAFE TRADE, WHENEVER YOUR MONEY IS IN THE MARKET IT IS AT RISK SO MAKE THE MOST OF IT!!!

CHECK TRADE-GUILD INTRADAY FOR UPDATES ON THE MARKET