Breakout Alert! Now What...

What a day Friday was. You could tell from even before the market opened the bulls would not be denied. And did they ever deliver...

If you went short on Thursday, you were licking your wounds on Friday. A painful message to anyone who tries to step in front of a high speed train. Which is exactly the feeling that the permabears had yesterday. This is the same message that applies to those who try to pick a bottom during a downtrend. Don't try to be a hero - if the trend is up, find stocks that are going up and go long. I mean, it's so simple, even a caveman can do it ;-)

My countertrend trades are usually limited to very short time frames and the risk is managed very closely. I will usually bail out of a countertrend trade if I feel it is not moving in my direction. But when the path of least resistance is in a certain direction (up or down) - I just follow the trend. That's where the money is. I don't try to be a hero and catch the top or bottom - I usually leave that to two kinds of people: 1) those who are MUCH smarter than me and understand Macroeconomic conditions so well that they 'just know' when the top or bottom is in, and 2) gamblers.

The action last week was very encouraging. The previous week the $SPY closed with a doji, and last week, we closed higher on higher volume. The weekly chart shows we still have some room before we reach significant resistance around the 200MA around 120. The daily shows we are comfortably above the 200MA, but I have posted some resistance zones on the daily chart.







What I would like to see happen is some consolidation/pullback to digest these gains and NOT go into earning season overbought. But of course, the market will decide what to do and it is our job to keep studying and adapting to price action.

I will make another post on this blog with my recommendations for some long entries.

Have a great weekend.

Trading radar Sep 24

Well - a one day pullback was all the excuse the bulls needed to drive this market back up. I think this says a lot about the emotional state of investors in this envrionment. The fear of being left out is apparently a strong motivational factor. This works both ways - during melt downs, as well as melt ups (which is what we have right now).

Up or down, is does not really matter. I'll build my watchlist, and there are always opportunities to trade. It is important to not be driven by emotion - stick to your plan and do not feel like 'You have to trade' otherwise you'll be left out.

Some stocks I'll be watching today are:

TIBX
ARMH
REDF
COCO
DECK

Needless to say, my bias is to the long side today. I am also going to be looking for strength in semis.

Good luck today and happy Friday!

Trading radar Sep 23

Good mornng.

Lots of weakness in the premarket and hopefully we get a meaningful pullback in the next day or two. I am watching the following stocks for entry:

NUAN
BBBY
TIVO
VRTX
LEAP
FNSR

I'll also be focusing on the following ETF's (and underlying stocks) for additional weakness:

SMH, XHB, XLE and XLF.

I will also be looing for long entries in EURUSD and GBPUSD.

Good luck with your trading.

Trading radar Sep 20

Good morning.

The following stocks are on my radar today:

ROVI
CHTP
AMTD
G
LEN
IP
TIN
MMR

Still long WLL from Friday, I may take some profits this am.

Good luck.

Trading radar Sep 17

With today being Quad-Witching expiration day, I am not sure how aggressive I'll be.

The folloing stocks are on my trading radar today:

RIMM
ORCL
ALKS
CCME
DNDN

Also the stocks mentioned in yesterday's blog entry: TEN, WLL, DLR and TRW.

Good luck with your trading.

Potential opportunities

This rally is overbought and I think due for a correction. Whether we get correction or not in the immediate future is yet to be determined. Every small dip is being met by overzealous buyers, and at some point I believe we will have to correct and give this market a chance to digest these recent impressive gains.


My trading involves preparation and reacting to the market as it unfolds. I am not in the business of predicting how or when prices will move. Rather, I wait for confirmation and react to what I think the market is telling me.


Should the market correct in the next couple sessions, I believe there will be opportunities to go short, as well as building a watchlist of stocks that will move even higher. There are some very impressive looking charts out there - but they just look so darned extended! Some stocks that I like right now for long opportunities are:

Here are some sectors that I believe look ripe for a correction:

USO (Crude Oil):

XHB (Homebuilders):

XLE (Energy):

Evolution

Hi Everyone...

It's been over 1 year since my last post on this blog. My, time does fly...If you are new to the blog, welcome. I hope you will find some of the past entries useful and interesting. It is my goal to revive this blog and post my thoughts and analysis about the markets in general.

A lot has happened during this year. The sky has not fallen as many predicted. We had one of the most powerful rallies in the stock market in generations and the market in general is still attracting many traders/investors. We had the 'flash crash' (may it never be repeated). I traveled to Europe quite a bit. Bought a house in Tampa where I currently live and work. I am now running a fund that was established by close acquintances and my goal is to grow and manage this fund successfully.

Evolution. This describes how my trading style has evolved over time, and how I have studied my trading history, techniques, risk tolerance, and every aspect of my trading career to continuously evolve and adapt to the ever-changing market conditions. I have been able to expand and diversify my trading to include Forex (mainly GBPUSD and EURUSD), futures (TF, GC, CL, YM and NQ), and going back to my roots - stocks.

I feel most comfortable trading stocks due to the fact they can be more predictable than futures and/or Forex. I find that my scalping techniques work more effectively with active stocks. Additionally, I feel a lot more comfortable holding stocks over a period of more than one day in the current environment (something I did not do during 2008-2009).

Furthermore, my trading analysis on Forex has been very rewarding and accurate on larger timeframes (1H and 4H charts). This obviously requires more risk, but provides better rewards overall. However, I still will scalp the GBP and EUR on occassion.

Of all the evolution and adaptations I have made over the year, my trading style and 'signals' have remained constant. I have however stopped trading the ES emini. I have found it to be too erratic (not to mention stressful) to trade successfully over a long period of time. And quite honestly, I am doing quite well concentrating my efforts on high probability/low risk trades in different markets.

I hope to post more setups and charts on my blog, and I certainly hope to post more of my trades on twitter. I encourage feedback and would welcome any comments on the site or my setups.

Stay tuned for charts and setups. We are currently overbought and hovering just below a significant resistance area. I bought some SPXU yesterday and was good for a quick scalp of 30c before the market moved higher again. Still holding a portion with a stop below yesterday's low.