Thursday, May 2, 2013

Tactical

As you can see we are getting a bit of a pullback, the 1 min 3C charts are negative so the pullback is no surprise, however it can be used to enter positions (these are for what will likely be a quick trade-perhaps even intraday, we have to let the market tell us so keep Regulation "T" Day-Trading Rules in mind as well as your broker's) like leveraged long ETFs,  for example, UPRO (SPY 3x long), URTY (IWM 3x long), UDOW (Dow-30 3x long) and TQQQ (QQQ 3x long), although the Q's are my least favorite.

I prefer the IWM and may add to the call position if we get a decent enough pullback making it worth it.

I think GOOG for a bounce is another decent one, but it would need to pull back more than I think it will.

Also FAS (3x long Financials)  long if it will pull back a bit, it is not as important for ETFs as it is for options (Calls). I would not short volatility. I also do not like Tech long for this bounce, it doesn't look as good to me and this may show up a little further down the line, but I don't like it.

Silver and Gold whether options or leveraged ETFs look good "IF" they fill the gap, so probably not soon.

I would try to keep it simple and stick with the IWM or SPY and maybe FAS/Financials and keep in mind the increasing volatility which not only means increased ATR's (larger daily moves), but more up/down days and less trend, although SPX $1600 is a big, fat centennial number worth shooting for.

Keep dry powder in mind (spare portfolio capacity-money on the sidelines) as our big picture strategic move is to add to/initiate short positions in to price strength and underlying 3C weakness, this is the longer term, Primary trade and I don't like leverage for these. In fact not even ETFs although they can be useful for initial reversals, I'd prefer having a short equity position, remember the advantages, "How to Make More Than 100% in a Short" , but you need a true equity short, not a short ETF.

We will probably have some time to confirm and decide where we might want to start or add to trades so try to be patient.

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