These will be on the new list shortly, but for now you may want to bookmark this page, it takes time to find these, capture and post them and I need to make a new list for Fed/March, my priority is getting the ideas out to you. I also strongly suggest you set price alerts. If you don't use TeleChart or a charting platform that supports alerts, try
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Here are a few short side trades that I've found and I want to share with you. Each trader is different so my suggestions for stops and entries are not written in stone, just my thoughts. You need to make them your own in a way you are comfortable with. PLEASE look at your risk before reward and make sure you set up proper risk management and position sizing EVERY TIME. It only takes 1 bad trade and some of the world's greatest traders have taken down their hedge funds because they let their risk management lapse for even one single trade. No one is immune so protect your portfolio and trade like a true professional and use risk management every time. If you have questions on risk management, PLEASE let me know and I'll do what I can to help you find a strategy that fits you personally. Making money in the market should never be about swinging for the fences, but racking up singles, doubles and the occasional HUGE winner.
On that note, here are some ideas, I will continue to present more. Remember, you get paid to take risks, but there's a big difference between trading and gambling. Always loo for the edge and the high probability low risk trades.
AAPL-Where AAPL goes, most likely the NASDAQ 100 follows because of AAPL's extraordinary weighting on the NASDAQ 100 which is near 20% (for the exact number you can Pay the NASDAQ Corp. $10,000 for their weighting system-you see how the market is rigged in favor of institutional money?)
Here AAPL interacts with the 50-day moving average (simple) in red; it has acted as support and resistance and because AAPL is such a heavily traded stock, technicians cause the 50-day average to be a self-fulfilling reality. Note currently the 50-day is acting as support as AAPL, much like the NASDAQ 100 has broken down out of a bearish ascending wedge, but not before a false upside breakout (head fake) to trap longs and create selling pressure as the price falls and the longs are forced to add supply to the market by selling, creating a snowball effect to the downside. MACD is negative, and the bounce has a gap resistance area, "if" this is not filled, it will be a VERY bearish breakaway gap and AAPL will likely break the 50-day average soon. At that point volume will swell as the stops are lined up below the 50-day as are the short limit orders. Volume has been horrible,
Here on a 3C 60 min chart ( a very substantial timeframe for 3C) we see a negative divergence or distribution. Note where it was the worst... Right at the false breakout from the wedge which we expected to happen in the Q's and many other stocks and averages. This is how technical analysis is used against technicians who refuse to adapt to the new realities of the market. A false breakout usually reverse quickly and snowballs in the opposite direction as we see here, the false breakout and the longs forced to sell at a loss and provide more supply then demand is what creates this scenario and it's why it's so common in a market where volume has diminished exponentially. I added
Worden's proprietary MoneyStream in the bottom window, it's not as sensitive as 3C, but it does provide us with good confirmation of 3C's findings. Here you can see the gap in prices just above where we are, that's the gap I mentioned above. Watch for it to be filled or not, it will have a material effect on prices either way.
This is a 3-day version of my proprietary Trend Channel I use to determine changes in trend and stops. The red square is a stop area from the Trend Channel. The red trendline is where I would seriously consider adding AAPL as a short, although it can be shorted now, probabilities are higher below the trendline which has provided support.
BAC-You saw the earlier post on the banks, I said in a 5-part video series back in 2007 on the bubble that was building that this will not be over until the banks and others take their lumps. You can only kick the can so far down the road before you must finally address the underlying problems and this weekend, BAC and others started admitting to the nature and seriousness of the problem.
This 5-day chart shows BAC price in green and the S&P-500 in red so you can compare BAC's performance to the market, it has been abysmal.
robo-signing/fraudclosure scandal. I assume that's why the accumulation started, but as you can see we now have a negative divergence and it appears smart money has been moving out, this weekend we get a taste why. 3C can't tell us why smart money is doing what it is doing, it can just help us see what they are doing, later we find out why, but as they say, "Do you want to be right or make money?"
The BAC 60 min 3C chart shows a negative divergence of some consequence.
In the larger red square we see an area of gap resistance, again if this is not filled, it will become a downside breakaway gap which is very bearish, it's also a good area to place a stop for traders looking at the bigger picture. Your risk shouldn't change, it's a matter of position sizing. The small red trendline is a tighter stop for someone maybe taking a swing trade on BAC (short as all of these are). The smaller white line is the swing entry (below the line is where you'd enter), the thicker white trendline is a higher probability entry, you lose a few % points, but get a higher probability trade. No entry is better then the other, it just depends on your trading style, tolerance for risk, etc. You can enter here if you wanted, you need to make these trades your own if you like them and in that manner you will find higher success rates and less worry and fear which cloud judgement. The best judgment you will have is before the trade, as they also say, "everyone has a fight plan until they are hit with the first punch". Consider that first punch before you enter the trade.
BIDU-a momentum favorite and high flyer which is heavily leveraged. A move down could be explosive.
This is a 1 day chart "Swing Entry"-the red trendline acts as a stop, below the white trendline is the entry. If BIDU makes a higher high, and higher low, then these stops and entries will have to be adjusted, just email me and I'll help you determine the levels.
Here is a large gap resistance level in BIDU for traders with a longer term perspective, again if this is not filled, it'll be considered a breakaway gap which is exceptionally bearish. By the way, over the years, I have found gap resistance and support is some of the best resistance and support you will find.
BIDU daily 3C showing a negative divergence right before it dropped.
BIDU 15 min chart, excellent for swing moves also showing two negative divergences.
DB-Lots of Euro-zone exposure here and the situation in the euro zone is getting bad.
This weekly chart clearly shows even the recent rally failed to make a higher high, meaning DB is still in a technical downtrend. 5-day charts are indispensable and often show you much that a daily chart will not. the more you see, the better.
Here's a closer look at DB with a daily chart, again note the very common bearish ascending wedge that DID break the upside resistance trendline, but not the major trend. This breakout could serve as a false move-bull trap which as I explained, reverses quickly and falls far and fast. The yellow box shows where the wedge has broken down,, below the red trendline we may see that snowball downside move.
DB's 60 min 3C chart showing the negative divergence at the top of the ascending wedge before it broke down suggesting a lot of institutional distribution and a great area for them to do so as it was above the long term trendline.
DB 2-day chart and the stop in red and entry below the white trendline. I like this set up, although you should be comfortable and always make these your own trades. I merely show what I think are good set ups, but if they don't work for you, cause you to worry, then thy are no good. It must work for you, it must be a trade that you can sleep well with and make rationale decisions when things get dicey.
FCX-I've been watching this one for several months looking for the set up. Being a commodity it didn't make a lot of sense that it would fall, but seeing how correlated the market is and how much margin is applied to commodities, now it makes more sense.
This doesn't look like the text book H&S top, but it functions the same way, there are many different variations and looking for the textbook pattern will cause you to miss many good trades. Believe me, what you see in a book is one of a thousand H&S tops, in real life each has its own character. Again, the red trendline (short one) is an area that I like as a stop and below either of the white trendlines is the entry. The lower white trendline will have a higher probability, but I like either, it's a matter of your preference.
FCX's daily 3C chart and TSV chart both showing negative divergences into the top.
Here I've applied my Trend Channel to a 2-day chart, which has worked well with FCX in the past. Again, the red area is a stop and below the white line is a "swing-like trade" entry. The yellow line below in the bottom window shows ADX turning down from over 50- showing the uptrend has likely reversed.
GDX-Gold miners. Remember not to "over-correlate" your trades, you don't want to be short GLD and GDX UNLESS you treat the two trades as 1 for risk management's purposes. This is all explained in the risk management link that's always there for you at the top right of this site.
Here GDX, much like GLD itself, is in a complex top pattern. Again, the thick and shorter red trendline is a stop area, the two white trendlines present possible entries into GDX. Either one will work, again it's a matter of preference. Also as I said before, you could enter the trade now, these are just ideas for you to chew over and get some knowledge as to different techniques in entering a trade. The pattern-implied target here is at least $42 and would probably swing even lower as we have talked about the market's pendulum effect in over reacting.
GDX 30 min 3C showing the recent rally in a negative divergence. Also note the positive divergence at the white arrow and price lows. THIS IS HOW THE MARKET WORKS, they accumulate a position at lows and then sell INTO higher prices, not on the way down.
GDX's weekly Trend Channel as it is volatile. This TC setting has worked well and I suggest to continue to use it. The red trendline around $60 is the TC stop, the white arrow is an area that I think makes for a good entry as it s broken. However, looking at the star candle formed Friday and the negative divergence, a trader could go short here and now with a stop just above Friday's highs. This is just a way for me to show you there are many different ways to enter these trades, you can always email me for help in determining a set up that may work for you as we have all kinds of different traders here at WOWS.
MCD- a trade we've been short as I think companies that have a multinational presence will not fare well in the future as MCD has not fared well the last several months. KO, DIS, PG are a few examples of others.
The daily 3C negative divergence at the top and now again on this flag-like upside correction. Note the bottom window shows MoneyStream confirmation as well.
MCD 60 min 3C chart again showing the bounce/correction with a negative divergence. Distribution seems to have started, it may end soon. For an immediate trade, the gap around $76.50-ish would make for a decent stop on a probing trade.
MCD's long term Trend Channel for investors looking at the BIG picture. This setting has held up well and the red box shows the stop area. The bottom window shows ADX suggesting the uptrend is over as it turns down from +40 levels, but the daily chart has already confirmed that. Remember that MCD is a prime target for margin squeezes and lowered EPS/guidance as their input costs increase dramatically and their exposure world-wide to very weak economies should also provide a significant drag to earnings.
The MCD daily chart top, and correction. A Move below support at the red arrow should start the next leg down. This is a prime reason why looking at a 5-day chart can help reveal the true trend in the stock.
NEM-a Gold miner-remember what I cautioned about trade correlation, GDX and NEM are too closely correlated to be treated as 2 separate trades for risk management's sake. You can still short them both, but they need to be treated as 1 trade to avoid the risks associated with positions too closely correlated.
This is a weekly chart, remember that I have said many times that triangle such as this descending triangle which is already inherently bearish, often act as tops when they are this large, they are not consolidations, they are too large. Note the breakdown from the triangle and the subsequent move back into it, this is why stops initially should be wide so you are not stopped out f an otherwise good trade. TOPS ARE ALWAYS VOLATILE and in this low volume and extremely manipulated environment, that is twice as important. We may not like having to have such wide stops, but we must adapt to the market and this is one way of doing so, certainly not the only way, but one way. Note the volume on the breakdown-this is no joke, there's a serious looking problem here.
A daily chart of NEM shows where the support is coming from in the triangle (follow the red arrow), note the volume on the breakdown. What happened here is traders saw the breakdown, went short and when price moved back into the triangle, they thought it was a failed pattern. Books have taught us to go long in this situation of a failed pattern, but it was mere manipulation and 3C helps us see that. The large volume on the recent break below support are those longs selling at a loss. This is why WE MUST adapt, it can be uncomfortable, but if you want to keep up with the true nature of the market, we must accept it for what it is, not what it used to be or what we wish it still were. All the books that you learned technical analysis with no longer apply and we have to relearn and adapt unless we want to continuously become like the longs who lost their shirt in this trade. Because this is still happening so frequently, I can say, traders have NOT adapted, we MUST. The red box above $60 is an area where I would place a stop, few traders will be fooled again on another similar set up.
NEM daily 3C chart shows the triangle as a top with distribution through the 3C negative divergence. TSV confirms in the bottom window.
NEM's Trend Channel on a weekly chart. For longer term investors/traders, these are the stops and limit order short entries (red and white trendlines respectively). ADX has turned down and the uptrend seems to be solidly confirmed as over.
RIMM-another favorite mom trade and higher beta , higher margin trade. A break in this one is dangerous as it is a market bellwether. Whether you trade it or not, you should have it on a list of stocks to watch as they represent the market as bellwethers like GOOG, AAPL, etc.
We are pretty far from breaking the trendline, but not far from a possible trade set up. The first white box (on the left) shows a doji reversal, the second box shows a bear flag-like correction which eventually should end in a leg lower.
The 30 min 3C chart shows us the top with a negative divergence or distribution into higher pries. Since the 3C action has been ugly going into a leading negative divergence. A trade could be entered in this area with a stop above the recent highs just above $70. We never want stops at whole numbers like $70, instead choose $70.47 where the human mind does not tend to gravitate toward. This is one reason the Trend Channel is so useful. Also note the positive divergences leading to the distribution, this is what I mean by the distribution cycle. Institutions pick up shares on the cheap and SELL INTO the rally. By the time the top is reached, they are usually out of that position and may have already gone short.
A SWING set up for RIMM, as usual, the red trendline is the stop, below the white is the entry. This is a tighter trade for those who like these kinds of trades. I'm trying to illustrate as many different ways as I can to enter trades based on your tolerance and preferences. I don't want to just hand out fish, but rather show you what I've learned so you may apply it as well.
XLF-I've notes recently that this one has not been acting well and this weekend may give us a clue as to why. Remember smart money knows about these things weeks, months and sometimes years before we do. That's why we follow smart money and not the news articles which smart money has already discounted some time ago.
XLF showing that bearish ascending wedge we've seen everywhere the last few weeks. At the red box is the gap resistance, if not filled, very bearish. The top of the zone also makes for a good stop in an initial stop on a new trade.
XLF showing an hourly , very negative 3C divergence. You can see where institutions started selling, way before the top. To get higher prices for their shares, they must feed them out lowly, if they dumped all at once, they'd get a very bad average sale price. This is why accumulation and distribution take some time and why we use 3C in many different timeframes to try to determine when these events start and end.
As I said, I'll be adding more trades, I will get them in the trade list, but it's more important for me for you to see as many of these as I can show you so you understand the premise. I'll add long trades as I find them, but we may be very close to a major downside event and I want you to have ideas you have some time to look at and question if you need to.
I'm always here at the other end of an email. Remember there are no dumb questions, only dumb people for saying such things. Everyone is at a different level and has a different style, so please do not be afraid to ask any questions. i may not have the answer every time, but I'll do my best to find it for you if I don't.
Have a great trading week and please be careful and apply your risk management diligently. Now, lets go out there and take some money from the sheep!
