7 years ago
Wednesday, August 11, 2010
Keep GOOG on Your Radar
GOOG may find support, there are some positive divergences. You may recall me saying this is one stock that has a chance of a counter trend move in a falling market. If you are interested in GOOG, risk:reward relationship is pretty good at these levels for a long purchase. For swing trades I would consider a stop of $489.40 and for a position trade, a stop of $475-$479.
SPY $109
I don't know if we break SPY $109 by the close, if you have intraday charts, watch the volume if it slips under. A close below $109 would be devastating on a one day move and probably would lead to another big sell-off tomorrow. Keep an eye on it.
A Quick Synopsis...
Remember I said the initial reaction to the Fed is almost always reversed? What was the reaction at 2:16 p.m. yesterday? For those who can't watch the market all day long, it was a huge surge in buying, the market still closed down but the initial reaction pared the losses significantly. And today, the reversal of that as is commonly the case. I can't remember the last time this little observation didn't hold true.
Do not under-estimate the seriousness of today's break down from the ascending wedge, where we sit-at the top of a right shoulder, thus far would make today synonymous with approximately 5/21/2008. You should back up the charts and look at that time period so you can see how the market reacted in the "Great Sell-off"-a 50% decline in the market. That way when you see a 4 or 5 day rally/bounce you will have historical context to put it in and not be scared out of a good short trade.
The break of $110 (area) is significant, lets see if it holds, if not today, then very soon. The $109 level should be next support, if that fails we have officially reversed the trend, although that appears to be a foregone conclusion. Once the trend is reversed, it will force traders, trend followers to close out longs, thereby adding more supply to the market/lower prices. It has been my plan to be 75% short on the break of the head and shoulders-on the SPY it would have been at $104-ish, but we have a new low to take out from July that is at the $101 area. I never want to be fully short, I always want some cash to play bear market bounces and to hedge if need be. Even in a sure thing, I would never put all of my eggs in one basket.
The implications of this failure are severe. I would think, eventually we will see new lows. Tonight I will publish my expectations for the long range and you can see how you feel about what I present and begin your tactical planning from there. If you didn't get in today, you didn't miss the bus, there's a lot of opportunity here. Still risk management is essential, having the ability to go short this market is essential and if anyone has questions or fears let me know. After all, markets fall faster then they rise and this one I believe will fall further. For many who have been members for awhile, you know my long term perspective and this is about what we have been expecting and waiting out in many cases.
Today is much more important then the averages will reveal.
Do not under-estimate the seriousness of today's break down from the ascending wedge, where we sit-at the top of a right shoulder, thus far would make today synonymous with approximately 5/21/2008. You should back up the charts and look at that time period so you can see how the market reacted in the "Great Sell-off"-a 50% decline in the market. That way when you see a 4 or 5 day rally/bounce you will have historical context to put it in and not be scared out of a good short trade.
The break of $110 (area) is significant, lets see if it holds, if not today, then very soon. The $109 level should be next support, if that fails we have officially reversed the trend, although that appears to be a foregone conclusion. Once the trend is reversed, it will force traders, trend followers to close out longs, thereby adding more supply to the market/lower prices. It has been my plan to be 75% short on the break of the head and shoulders-on the SPY it would have been at $104-ish, but we have a new low to take out from July that is at the $101 area. I never want to be fully short, I always want some cash to play bear market bounces and to hedge if need be. Even in a sure thing, I would never put all of my eggs in one basket.
The implications of this failure are severe. I would think, eventually we will see new lows. Tonight I will publish my expectations for the long range and you can see how you feel about what I present and begin your tactical planning from there. If you didn't get in today, you didn't miss the bus, there's a lot of opportunity here. Still risk management is essential, having the ability to go short this market is essential and if anyone has questions or fears let me know. After all, markets fall faster then they rise and this one I believe will fall further. For many who have been members for awhile, you know my long term perspective and this is about what we have been expecting and waiting out in many cases.
Today is much more important then the averages will reveal.
The market should bounce here
This divergence is 1-min but it's showing up all the way to 10-min so it should be a decent bounce. It may present an opportunity to get into some short, or inverse ETFS at better pricing.
MO
MO is still in good shorting position. You may want to consider it and have a stop at closing new highs initially. Here's the 3C chart showing distribution.
Did you set your alerts?
I've been answering emails this am, but there are some of the stocks on our list that have triggered.
SPY looks set for a bounce so this enables you to get in to any of these short positions at better pricing.
Here re some that triggered
CCRT
ANF
FBN
FNSR
GS
MCGC
WLT
AAPL
Remember that there re typically as many if not more closes up then down even in a downtrend, just the closes down are more significant, so you may enter a position today and see the market up tomorrow, this is not in and of itself any cause for concern, it's typical bear market price action, but it also allows you to enter shorts at better pricing. That being said, the last few serious downtrends saw 1-3 days down big and then several days close up but not make much progress so I can't say that tomorrow you will see an up day. One way to handle this is to phase into your positions, this is not the same as dollar cost averaging a loser, this is a pre-planned entry on a presumably winning position.
Also I would consider adding some of the long inverse ETFs to the mix-they can be found on June 3rd of the June watchlist, they will give you more leverage, however real shorts have advantages that we will discuss tonight so I like to use a blend.
If you think you missed the boat on any of these, let me remind you that at this position of the last Head and Shoulders top we saw a 50% decline in the market, on average stocks will have declined a lot more then the market so this is just the start if it is as I said I believed last night.
SPY looks set for a bounce so this enables you to get in to any of these short positions at better pricing.
Here re some that triggered
CCRT
ANF
FBN
FNSR
GS
MCGC
WLT
AAPL
Remember that there re typically as many if not more closes up then down even in a downtrend, just the closes down are more significant, so you may enter a position today and see the market up tomorrow, this is not in and of itself any cause for concern, it's typical bear market price action, but it also allows you to enter shorts at better pricing. That being said, the last few serious downtrends saw 1-3 days down big and then several days close up but not make much progress so I can't say that tomorrow you will see an up day. One way to handle this is to phase into your positions, this is not the same as dollar cost averaging a loser, this is a pre-planned entry on a presumably winning position.
Also I would consider adding some of the long inverse ETFs to the mix-they can be found on June 3rd of the June watchlist, they will give you more leverage, however real shorts have advantages that we will discuss tonight so I like to use a blend.
If you think you missed the boat on any of these, let me remind you that at this position of the last Head and Shoulders top we saw a 50% decline in the market, on average stocks will have declined a lot more then the market so this is just the start if it is as I said I believed last night.
