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

A TRADE FOR ALL SEASONS

WEDNESDAY WAS THE FIRST DAY IN NEARLY 3 WEEKS THAT I HAD THE MARKET DIRECTION WRONG, EVERY OTHER DAY 3C CALLED IT EXACTLY. I STILL SEE A NEGATIVE DIVERGENCE AND I'M STILL STICKING WITH DOWNSIDE TOMORROW, I HAVE TO TRUST MY INDICATOR EVEN IF IT'S WRONG ONCE IN AWHILE.

GIVEN THE UNCERTAINTY SURROUNDING THE VOLATILITY OF A TOP, TONIGHT I LISTED A LOT OF LIMIT ORDER TRADES THAT HAVE THE ADVANTAGE OF PUTTING YOU IN THE TRADE AT A HIGH PROBABILITY/LOW RISK SCENARIO. THERE ARE TRADES FOR IF THE MARKET GOES UP AND IF THE MARKET GOES DOWN. THERE ARE A FEW THAT ARE READY TO BE TRADED TOMORROW MORNING AT THE MARKET OPEN AND WE TRADE THOSE AT MARKET PRICE.

I THINK THIS IS THE BEST ANSWER FOR NOW.

PLEASE READ AND REVIEW THE PLAN FOR ZSL AS THAT TRADE STILL APPEARS TO BE UNDER CONSIDERABLE DISTRIBUTION. BECAUSE A TRADE DOESN'T WORK OUT THE FIRST TIME IT DOESN'T MEAN YOU ABANDON IT.

SHOULD YOU HAVE QUESTIONS, EMAIL ME AND BE CAREFUL WITH CORRELATION, THE FIRST 6 OR SO TRADES ARE ALL IN THE SAME INDUSTRY.

GOOD LUCK AND DONT FORGET TO CHECKOUT TRADE GUILD'S CONSIDERABLE ANALYSIS TONIGHT.

Limbo?

The 3C charts have taken a turn for the worse, but that does not preclude the possibility of a bear flag which means later in the week we may see upside, but tomorrow will say a lot. Until then, I'm hesitant to post any new trades as this market could swing like a pendulum and move down quickly, despite my original feeling that we would see a bear flag consolidation.

The list of April/May  has a number of shorts, the same shorts I'd post tonight if I felt we would see downside or a continuation of the downtrend.  So look at the 26 ideas, specifically the shorts and make sure you are not in any two trades that are closely correlated. At this point we will give up a few points to put the probabilities on our side, which right now, we have none other then to say tomorrow appears to be a down day at this point.

Should the SPY break the $114.80 level you may want to add 1/4 of your intended short position choosing from the trades of May 2nd on the above mentioned/linked lost. Forget the stops for now, I'll update them if the scenario plays out. A break of $113.65 and you will want to be at least 50% short so you will add. Should we close higher then today's close of $115.81, you'll want to close 1/2 of the positions you took at this point. Should the market break $112.50, you will want to be all in, but always consider your risk management rules. Even at that point you don't want to swing for the fences, we'll swing for the fences below $111.25 on the SPY.

As for the ZSL trade, as I mentioned, I believe it may be a false move. In the previous post I told you how to handle it.

At this point, 3C is not showing anything more then the probability of downside Wednesday, it is not showing any particular probabilities beyond a close lower which could be only marginal.

As the market's movement account for more than 60% of your stocks probable move, you can see we don't have a strong position yet unless the above support levels break. Until we have a strong edge, it is irresponsible of me to post trades that I can not definitively say "You have an edge".

Part of your ability to make money in the market, is know when to hold, fold or walk away-as the song goes. Your only real edge over smart money is your ability to sit and lie in wait, whereas they are forced to trade everyday. Right now, we are going to use that edge until the picture becomes more clear.

Watch those support levels and add judiciously, in similar fashion to the example I gave above.

Tomorrow if we see continued deterioration in 3C, the bear flag scenario becomes less likely and I will list additional short trades. Right now the list I mentioned has some of the better trades that I would be pushing for now.

Be patient and don't hesitate to email me with any specific questions. My contact info is on the site under "Email Me". Don't be misled, we have a huge opportunity and taking advantage of that does not mean that you must always be doing something. Sometimes the best thing to do and the hardest thing to do is nothing at all.

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.

ZSL

Please read the commentary and check out the charts at Trade Guild.net. Right now we are seeing substantial weakness in the inner breadth of the market, despite today's huge advance. I can not see anything further then early strength tomorrow, at least until I can do an intraday update to see what has changed. I would take advantage of the early strength to take any profits you might have or partial profits on long positions. Right now we are in the middle of the balance beam and it is difficult to say which way the market is heading.

WE WANT TO TRADE ONLY WHEN THE ODDS ARE ON OUR SIDE!!!

Right now, we have a slight advantage, but not what I'd call "The odds on our side".

The only trade that I see right now that I would feel good about going long first thing in the morning at market would be ZSL (Ultrashort Silver), I think it will see upside in the next day or two and I would and have bought it.

Check out the shorts posted on the April MAy list toward the very bottom, those are the trades we want to start looking at, maybe even start building positions maybe 15% at a time right now.

Overall, the path of least resistance is down and I wrote last week that we would see what we saw today-very bullish behavior that would make you question the wisdom of your shorts. Do NOT stare at the trees, see the forest. The odds and the profits will be on the downside.

If you have questions, feel free to email me. Any limit orders not triggered are still active trades.

There's a new post at T.G

Please read the post at http://www.trade-guild.net/ this a.m.

This is not a post to hedge my opinion, it's to prepare you for anything that can happen so give it a read, stick to your plan and we'll always follow the path of least resistance and greatest returns.

Good Trading this week!!

Looking For a Rally

A short lived rally and chances are excellent we'll see a bear-flag which will set up numerous second chance positions or add-to's. It's your choice whether to cover here and try to reestablish at higher prices, this market is so volatile we are just holding and will ride out any drawdown.

However, you can also take partial profits, hedge with longs, and use option strategies. I feel we'll get at least a few days of downside relief, possibly close to a week, but we'll have to see what 3C says at that point. I would NOT be chasing shorts at the moment, but all the shorts posted in May will be the same target shorts that we'll lean heavily into upon the end of this bounce.

For a few quick upside trades, see tonight's list. As we approach what I believe will be a downside reversal, I'll post the best positioned shorts or inverse ETFs. See Tonight's post at Trade-Guild for the general analysis for this upcoming week.

Remember, these are quick longs for the most part-if you get a gift, take it and be cautious with the position size considering the market's recent behavior and susceptibility to overnight news.

The two last trades may be less speculative, more solid, but the others have a higher rate of return if they pop. Honestly, I'd prefer to sit and wait this out, but sometimes you need to hedge the market and these trades may do it. I saw very few, really almost no high quality long positions that are for trends. The market will be setup for amazing shorts if we can get a good 3-4 day bounce so keep your powder dry, don't swing for the fences right now. And email me if you have questions.