TRADES FOR MONDAY ARE UP

The market didn't just have a down day Friday it had something it hasn't had for weeks now, a truly DECISIVE day in which volume was huge and the chart patterns were altered significantly-could it be quadruple witching? The Health Care Debacle? Etc,etc,etc..... It doesn't matter.  Volume/Price relationships were Volume UP and Price down which indicates panics sellers. On Wednesday last week I posted an article about the market's coming reversal-there were so many signs and signals that I said, if we don't see a reversal, we'll need to re-think technical analysis. Here's the post:

The Forest Through the Trees

As for trades from last week, many are still viable so look at those as well, especially FCX and CAR, it's not too late for those shorts. I'd advise giving yourself some room on the stops, maybe more then what I suggested-turn-around tops can be volatile, but I think we are in for a trend down. If you have my Trend Channel Indicator-now's the time to use it for stops to lock in profits, if you are unsure of the correct settings for your position, email me.

Remember what I said last week because you can use it in the future, "The market's initial reaction to Fed statements is almost always the wrong reaction and it usually reverses within a few days" and that is exactly what we saw last week. It applies to major government announcements as well, but more so to Fed policy statements.

As usual, any questions, please email me. Remember, unless you are getting slaughtered, stops are on the close, not intraday and never post them with a limit order, keep them in your head.

If your portfolio is significant;y long, email me, there are a few positions you can jump into to hedge it out for a bit until you can clean it up.

Have a great week.

Latest Trades List

Remember to scroll down to the bottom of the list.

Going Into the Close

Forget the price, it's the % based move. GOOG and AAPL are both looking like good shorts here.

NEW TRADES ARE UP

THERE ARE A LOT OF SHORT TRADES, MANY ARE POSITION OR TREND TRADES. BE SURE TO CHECK FOR LIMIT ORDERS IN THE NOTES. ANY LONGS UNDER $5 THAT OFFER GIFTS, CONSIDER TAKING PARTIAL OR FULL PROFITS ON.

READ TRADE-GUILD FOR AN UPDATE ON THE MARKET, WE ARE AT UNPRECEDENTED LEVELS OF OVERBOUGHT IN MANY INDICATORS AND DISTRIBUTION IS HEAVY. THIS I BELIEVE IS THE FED EFFECT I'VE MENTIONED THIS WEEK.

Get The Most Out of Your Experience

Thank you for joining us here at Wolf on Wall Street. I want to share with you some ideas and concepts that have stood the test of time and proven to be a formula for success.

First about the Trade List at W.O.W.S., you can find it under "Trade Ideas/Stock Lists" on the right sidebar and usually the top link will say something like "latest trades" or "most recent list", click on that and in the article window a spread sheet will open, scroll down to the bottom, and those are the latest trade ideas color coded by date. If the Date is March 15th, these are trades for execution on the morning of March 16th. We execute all trades at market on the open, unless there is a limit order mentioned in the notes section for each trade to the right on the spreadsheet-it is important you read these notes.

The stops I put on the list are suggestions, but feel free to adjust them to your own needs. I try to offer you the most probable and timely trades that the market is offering. "That the market is offering" is important because there is no one particular tactic taken here, I adjust trading styles to meet market conditions. If we are near the end of a rally, then you'll see "the cats and dogs" trades which are cheap stocks under $5 that tend to see big 1-2 day moves. We see this occur just before a major bull move reverses. When the market is beginning to trend, you'll see trending trades, sometimes position or swing trades,long or short trades, stocks, ETFs or commodity based positions, it just depends on what is working in the market at that time. I try to make clear what that is in my posts and notes.

Now as to success and building wealth. I use a lot of custom indicators because I believe to make money in the market is to see what others have missed, however there is no indicator that will make you more money then a good risk management plan.

Here is what I suggest. You can take the aggressive approach and limit each trade to a target loss of 2% of portfolio if all goes wrong-this can not account for gaps and for this reason I suggest never putting more then 15% of portfolio equity into any one trade or any number of trades that are highly correlated.

The 2% Rule is simple, you have a $100,000 portfolio, 2% risk money =$2,000. That is the max. you will lose under this plan-not accounting for gaps. So if a trade is bought at $5.00 and the stop is $4, you have $1 of risk per share. Divide $2,000 (your 2%) by $1 (risk) and you can buy 2000 shares. 2000 x $5.00=$10,000 and is below our 15% maximum investment of portfolio-$15,000 and you are fine. This is an aggressive approach to risk management.

A less aggressive approach is to decide how many positions you are comfortable having open at any point in time. Lets assume it is 8, so you divide your $100,000 portfolio by 8 and get $15,000 (which works out perfect for our 15% rule). You then figure out 2% of $15,000 (risk per position) and you get $300 risk money.  Our same example trade, $5 entry and $4 stop with risk of $1 per share is used to divide the $300 and you get 300 shares or $1500 which is significantly less then our position limit of $15,000, unless you adjust your stop to say $.25 rather then a dollar, then you get 1200 x $5=$6,000 position size-still below. It would take a stop at $4.90 (which may or may not be a good stop level, depending on the trade) to take full advantage of the position size limit ($300 / $.10 risk=3000 shares x $5=$15,000). This method of deploying the 2% rule is less aggressive and better suited to those that like to diversify with more then a few positions.

On diversification, I DO NOT like to overly diversify. A $100,000 portfolio for me should have 8 positions. This allows you to get into enough long/shorts and different sectors. Higher limit portfolios I'd add a little more, but probably never much more then 12 "core positions" not including the crazy money trades that are very small. Over-diversification kills returns.

At the same time, I offer a lot of trades certain nights and people can't choose, they feel overwhelmed and wish I just put 1 or 2, but think of it like this-"look at the trades that your portfolio doesn't have industry exposure to only and chose from those". Having 6 positions and 3 of them closely correlated is not good risk management, you have half of your portfolio in basically one position.

Finally, pull the trigger. If you are practicing risk management and you are FOLLOWING THROUGH meaning stopping out (always on the close unless your position is melting down), then you have nothing to fear, get in there and trade, but do not falter on your risk management, if you have to stop out, then do it; you can always get back in.

Quickly on stops-chose them when you are objective and the time when you are most objective is before you enter the trade. Do not make them too tight for an initial position,  and never move them unless you are moving them in the direction of a successful trade.

If you have questions, email me any time. Thanks for joining us.

Brandt@Trade-Guild.net

Intraday Update

MFE can be bought here with  stop below $40.96
NCT is close to a trigger, I think the limit can be brought down to $3.03
BEE triggered and there's a new stop

THE FED U-TURN

As you may have heard me say, typically a few days after a FED announcement, the market does a U-turn. We want to lay a little low right now. There are a ton of bullish descending Wedges setting up in all of the Ultrashort ETF's-Bearish for the market, but we need confirmation first.

Tonight I threw out some Ultra ETFs and several are currency which tend to trend very well, so they are longer term trends-look at them with 5 day charts.

When we get a reversal, which I still strongly believe we'll get, we have a lot of potential targets that look very high probability.

Make sure you read the notes tonight and see if they are limit trades.

SCON

SCON has some fairly bullish attributes and is in a volatility squeeze. I'd say it makes a move tomorrow or the next day and probabilities are up. This can really move and is highly speculative but a decent long if you have some crazy cash.

FOMC Thursday

I have received a few emails about the location of the list of trades, on the right in a grey box it says "Trade Ideas/Stock Lists"; just click on the link "latest trades" and it will bring up a spread sheet, scroll to the bottom of the spread sheet and that is where you will find the newest trades. Next Spread sheet I will try to modify it so the newest trades are on top.

Today we had a bunch of swing trades that didn't get triggered, I picked Swing trades because of the market's volatility and probable top. The cats and dogs trades were waning. I'll throw some up tonight, but -as I posted at Trade-Guild.net tonight, the FOMC meeting is tomorrow, they likely will not move rates unless it is the overnight lending rate to further discourage the continuation of the dollar carry trade. Other then that, the market will be acutely attuned to every word and nuance, the tone of voice and facial expressions in trying to divine when interest rates are likely to rise. This is the reason we saw the volatility in the market that we saw today.

So keep your stops in place, exercise them when needed, keep the new positions at smaller sizes and don't forget that CASH is a position and one in which you will not sustain any losses, at least until the fog lifts. Remember this the first reaction to FOMC announcements is almost always the wrong reaction and reversed in a matter of days!


The new ideas will be up in about an hour.

Lesson Learned

Last night's list is performing horribly today, but for those of you who have been at this site for more then a few weeks may have noticed something different about the list, it was packed full of limit order trades only; this is because these trades were swing trade setups and we are still technically (may change at the close) in an uptrend, but as you know, I'm expecting a downside reversal. If you followed instructions and read the notes, hopefully you didn't get into any of these trades that bombed.

POINT IS-Read the notes! Use the Stops! I rarely use limit order trades, but if you see them, there's a good reason for it and today is proof positive of that reason. All of the trades except for one that were for market execution are either profitable or have offered profits as high as +6% on the day. So if you followed the notes, you shouldn't have been in any losing trades except potentially one.

On another note-Read the most current post at Trade-Guild on XLF, I'll add more later, but this will explain the situation, where we are at and how we'll move forward. Before I could even finish the post, the 1-min 3C chart was right on and we saw a break or resistance. If the 30 minute chart continue to develop, then we need to be very cautious indeed.

TRADES FOR MARCH 15, 2010 ARE UP

You'll notice quite a few longs on the list, be sure to check the notes; if they are red, then they are limit orders, if any trades DO NOT specifically say "Limit order" then they can be executed on the open at market.

The long trades are mostly swing trade setups, but keep a watch on the shorts on the last weeks for of lists, they are still good and the market seems to be turning, but the long swing trades are in good setup positions.

If you have questions, feel free to email. Again I mention, go to Trade-Guild and sign up for emails of the posts or you can do it here:

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