ZSL

OK, one stock pick last night and a horrible one it was. I don't know yet what's going on with Gold and Silver, but ZSL turned out to be a whopper of a loser today. Hopefully you did not buy it today as it gapped and opened below the stop out level-that hopefully was enough to keep you out.

Here's the 3C charts showing accumulation yesterday, click on the chart for a larger view.


10 min 3c


5 min


1 min

All of the charts yesterday lined up and suggested a high probability move up. Here are the charts for today, which unbelievably, show even more accumulation. However, it may seem a bit illogical, but if smart money knows a move to the upside is in the making (because they have accumulated the position and will drive it higher), then it makes sense that they would want to accumulate at lower prices. It also makes sense because the move today broke a strong support level which would lead to a lot of selling, making it easier for them to buy cheap-(more supply than demand=lower prices) and it would bring in the short sellers. Any subsequent move up would cause the short sellers to be squeezed and they'd be forced to cover their positions which would add more fuel to the upside move. In essence this could be a false breakdown, the charts below (today's) seem to fit well with this theory.


10 min today


15min


30 min
Note how all the positive divergences (accumulation) occurred near the close when institutional money trades. All three charts today exhibit this behavior.


5 min today

Finally the 5-min chart above shows a formation that is typical of a bottom and possibly in the beginning stages of a move up. There could be one more intraday shakeout, but I think the probabilities of that are low. If you are in ZSL or if you are not and you can watch the intraday chart, then a higher high , above $32.25 would trigger a probable move to the upside and you'd either hold or jump into the position at that point. Should ZSL make a lower low as demonstrated on the chart above (click on the chart for a larger view), then I would exit the position, either partially if you think it could be a final shakeout or more likely totally out. You can always re-enter if the scenario I laid out above comes to pass.

Based on the 3C charts, which have been very accurate, even calling today's market nearly perfect as it has for nearly everyday the last month, I'd guess we saw a major shakeout/False downside breakout, but that is opinion and you must make your decisions based on the information you have now. Watch the price levels. I WOULD NOT set an intraday stop order, if you will stop out intraday, set an alert and manually stop out. Never show the market maker/Specialist your hand.

Check back later tonight for tomorrows ideas/analysis and read Trade Guild later for further analysis.

Looks like Rain

OR a gap down, but at this point it means nothing, the futures and premarket trading are notorious for misdirection. So far my ananlysis stands from last night, we should see some early strength and then..., it's hard to say because the longer 3C timefrmames have deteriorated so much in a day that the best they can do is simply confirm price action, which is to say that they give no indication of a reversal, except that they are deteriorating.

Watch the $116 level on the SPY, if we see the market make it up that high, then I would consider adding or initiating a small short position in any of the trades from 5/2 on the April/May list at the bottom.

Remember, 50+% of the move in your individualt position will be gravitational pull from the market or put another way, "A rising tide lifts all boats". Maybe 35% will be the pull of your stock's sector and the actual stock itself has the least influence over the move. Imagine that! Most people spend all their time looking at stocks when they should be looking at the market and the industry groups for a successful trade.

In any case, even a day down does not show a turnaround to the downside unless it's a big day down on big volume. As I mentioned, I think the most probable outcome is a bear flag and there are a series of up and down days in that pattern so keep that in mind.

Right now, ZSL Long is the only trade I see ad like at these levels.

Remember $116 to $116.50 will be an important level. If you want to know which way the market is likely to close today, (use intraday 3C charts if you have them-if not and you want them, click on the TeleChart/StockFinder links at Trade-Guild and sign up and email me, I'll send the formula to you) or watch for a morning trading range to develop. If this happens up until 11 am-but could form earlier, then watch for the breakout of that range. If we see a breakout to the upside, chances are the market will close up-to the down side, vice versa.

Today is mostly a portfolio/trade management day and information gathering. If you held your shorts from last week when I said "Load up" below the $118.20 level, you just need to be patient and wait. If you are trying to trade around and let them go, then you have a little more work in initiating at the right spot and we'll try to find that spot.

Longs right now should pretty much be confined to 1-2 day trades and limit order trades-make the stock prove itself before you leap. PATIENCE is an individual trader's greatest edge over institutional money-try to be patient.