Reminder: Harlan is available to chat with Members, comments are found below each post.
Over the weekend we said:
Friday’s action is encouraging BUT we are not out of the woods just yet. The only reason we say that is because of the little pink channel lines as shown on the index charts below. One could say we are still in the little PINK Pullback Off Highs (POH) b wave channel that’s building itself out.
We also said:
The micro charts say its a good possibility that we need to pullback to get a running start IF we are going to go higher into year end as shown below in the NASDAQ comp. chart. The SPX chart looks similar too.
And here we are doing exactly that.
Could it be? Could we stall out at the thick blue mini support lines (NASDAQ comp)? Sure anything is possible. IF so? Then this little red C wave would have stalled and truncated.
In the S&P 500 chart notations from over the weekend we said we’d talk about the triangles on Monday.
First lets look at the little triangle in pink below. As you can see it broke to the downside. However the clues to that were there in advance because one of the ways one measures what way its POTENTIALLY going to break is to look at the widest part of the triangle (where it starts). For me, then what I do is count to four as in four zig zags. So lets look at the little pink triangle in a zoomed in view and do that.
See where the triangle starts (That is key- Where it starts.)? At a high and works its way lower for the red one.
Now that we’ve done that lets take a look at the current BIG triangle (remember in charting bigger is better ala bigger the base bigger the break- same deal)
See where it starts? It starts at the lows of October and works higher for the red one. See the 1234 counts? Keep in mind I’m not saying its going to the red four I just lay it out as a potentiality so as to not get emotionally freaked out should something like that occur (but even it it did it would set up trades for us so who cares, why? because its big trend channel support that’s why).
Gee, when you layout downside possibilities of what COULD happen (doesn’t mean its going to) and what are the possibilities that can easily be turned into opportunities it kind of takes away the fear if you will.
Look at it this way, anytime you have a potentiality its just that, a potentiality. That’s is why you do not want to become emotionally attached to a particular outcome. I’d rather be prepared for the worst and expect the best at all times then to be a deer in a headlight in the event something were to occur.
Game Plan For The Week Of December 12 thru 16
Keep in mind this week is options expiration. If they really want to kill the short sellers who WERE attached to the perma bear outcome vs. letting the market confirm that thinking then Wednesday thru Friday are going to be the days to do it. After all we are also in the "Paint The Tape" Window Dress for the year mode so that is also something that is going for the bull cause here into year end. We’ll see, we’re not jumping to any conclusions here we’re just throwing out a potentiality. All that aside there is a lot of positive short term structure out there (a bit overbought but nonetheless) and very little negative daily chart perspective structure out there.
So we’ll use market weakness in issues with chart structure that we can work with and continue to nibble on the long side. Our long side watch list has a slew of NEW names that COULD participate should we go on a run here sometime between now and the Holidays. Another theme that we all need to continue to be aware of is that of a Jack be nimble Jack be quick type of market that can spin on a dime in both directions so be aware of that. Things could get rather fast the next week or two. Don’t worry about it just watch the chart structure and not the news. That’s another reason we’ve had the success we’ve had through one of the most difficult times we’ve seen in years.
12-12 And today we do the hardest thing any trader can do. Which is nothing but watch. I say its the hardest because hot money emotional types who have no patience have a very very very hard time doing nothing.
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BIG PICTURE BULLISH AND BEARISH COUNTS
We’ve moved this conversation to the newsletter achieve in the paid subscriber site and anytime we need to update it we’ll do so and send out an update to it. Believe us it ought to come into play next year.
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SHORT SIDE WATCH LIST
12-5 This is a WATCH LIST and we stress WATCH. DO NOT SHORT ANY OF THESE NAMES JUST YET.
GMCR
NEW NAME TO WATCH and we stress watch
12-7 Could easily bounce back up towards the upper red line and 50-day on a continued Santa rally. At that point, we’ll want to take a serious look at a short-sell position.
12-6 Given this could just be a pullback in the markets to relieve the overbought nature of things before one more potentially ENDING push higher into year end we’ll just watch this issue to see if it too could get one more final push. Then we get serious on the short side.
LNKD
NEW NAME TO WATCH and we stress watch
12-12 Speaking of newer issues, we’ve got a theme going on currently and this is Wall Street’s RUSH RUSH RUSH to get a bunch of IPO’s out the door before first of the year. Two fold in my book. One is the Investment banking fees they NEED to make they’re numbers and two is because they know that come early next year when we move into a really crappy market environment they will not be able to get those deals done (and boy would the VC guys scream about not getting they’re exit!). Gotta sell peanuts while the circus is in town right? And that folks is your "Let’s play name that game" for the day and it is a game, a game to take YOU’RE money.
12-11 Rallying up to the 50 day? Or shall we say into the secondary offering so as to allow insiders who are selling to get the most bang for their buck all the while the little guy gets taken to the cleaners when all said and done. Case in point, have you seen FIO lately?
When and IF the time comes to short this name, odds favor there will not be any stock available for shorting, or at least not too much mind you. But then again if the secondary hits and all the insiders and big boys are out and all that stock is in the little guys hands? There is going to be a ton of stock available for shorting. We’ll see. If not it’s deep deep in the money puts will have to be the play. Time will tell in the meantime let’s watch this issue.
We haven’t looked when the 2ndary is due or if it even has already taken place yet just so you know. Anyone got a date? If so email it. Thanks in advance for that because now we know we’ll get 50 emails on it, not that we mind it’s just we probably won’t be able to respond to all of them back.
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LONG SIDE WATCH LIST
"Only The Best And Forget The Rest "
"We Trade What We SEE, NOT What We Think, Hear Or Fear "
12-11 Our whole game plan from here on out till year end is to pick and choose on the long side names that we don’t have to chase that have chart structure we can work with. All from a hit and run trading standpoint.
There are 11 names on this list. Personally there is no way we are going to be able to do everyone of them. We’ll pick off a few here and there but we wont be able to do them all, unless we were to launch a new service called a basket case or a three musketeers all for one and one for all service where it’s an automatic buy ’em all like a HFT (High Frequency Trading) fund does and turn around and flip out of them an hour later. Interesting idea to explore, we’ll give it that.
Next week we want to focus upon the new names on the list more so than the current ones. Keep in mind that this list is expanding and the only reason it’s expanding is because that is what we are seeing. THIS IS HOW THE MARKET TALKS TO US. Not some guy on TV who runs a mutual fund saying we think this we think that blah blah blah. There is an old saying that comes to mind for us here and that is:
We don’t care what you think, tell us what you know.
Applied? What we know is that these are all issues with positive chart pattern structure being built, simple as that.
JOY
NEW NAME
12-12 No problems here as with most all on this list as they are still in Pullback Off Highs (POH) mode.
12-11 Gee one could say off the Oct. highs this issue is sporting a cup and in the handle pattern. Support is the lower Green line. As long as it holds that line all is well and in a trend channel what’s not to like.
APA
NEW NAME
CXO
NEW NAME
VMW
NEW NAME
12-11 With all of the above notice how they all have those little pink POH bullish trend channels much like the indexes do? All for one and one for all has been the theme this year. Market busts higher odds favor these all do. Much like we saw Friday where we opened and everything was up a bit but the market got stronger and everything took off like a rocket? Same deal here. It’s also why we want to nibble (sometimes you just gotta "Be There" in advance) vs chasing a gap up if we were to get one sometime next week, assuming we bust higher that is.
HITK
NEW NAME
12-12 That 36 level gets my attention. Its not only uptrend support its also the 50 day average. Speaking of the 50 day average? As you scroll thru this watch list you can see a lot of names are pulling back to it. Nothing wrong with that I tell ya, its actually quite positive.
12-11 Ask yourself, What is the overall trend of this stock. bottom line its in a clearly defined uptrend that has pulled back off highs (POH) to near the 50 day average. What’s not to like.
CAT
NEW NAME
RHT
AKAM
SNDK
CVLT
FFIV
12-11 As you can see with every one of the above names all have that Pullback Off Highs (POH) look to them for the most part. Albeit not as deep or long in time duration as we’d like but none the less the structure is building. We’ll take it a step at a time and pick one off here and there.
REMEMBER from here on out thru year end everything is just a trade. hit and run, get in get out and pay yourself along the way not to mention Christmas if that is a tradition in your family.
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CURRENT POSITIONS
"Let Your Stocks Tell You What To Do By The Action They Exhibit"
NOT YOUR EMOTIONS!
LONG SIDE POSITIONS
ATHN (We are long 250 shares of this at 59.53 as of 12-9-11)
12-11 Looking good. Let’s just get through the first few hours of next week.
Gosh as for a stop loss? One could use any break of the 50-day average on a closing basis or just a break. BUT beware of the trade bots out there who have a habit of popping stops for stop orders that are showing on the books of broker dealers. When you place an order on the books, a physical order you are showing your hand and everyone can see it , everyone is the market makers and the high frequency trade robots so be aware of that.
Us? We adhere to trade size risk management and we could take a 20% loss on the issue and the impact to our portfolio would be about 1% to the whole. That’s one way around the trade bot search and destroy popping of stops for ya. Just saying if food for thought.
NUS (We are long 250 shares of this at 46.42 as of 11-28-11)
12-8 Still looking good. Pulling back nicely toward trend channel support — a move into the low 50’s and we’ll look to lock in our gains.
12-1 Looking ok here. A break below the C (red line) and we have to walk away.
