Thursday, January 20, 2011

Support Buying Talk

The best support buys are the ones in which multiple stocks within the same sector hit at the same time.  This makes the success rate go up exponentially compared to a singular stock hitting support.    Gold a good example today as three of the major stocks in the sector all hit support and bounced today.  We think this will be a short term bottom in gold.

ABX BVN AEM  all hit major support today.

What a base

We're long SHLD in our long term account (1/5 starter from 75.2 which we unfortunately never added to) and we like how it's looking.  The pattern is still wide and ideally needs more time but with today's momentum it might not wait too long.   Great base that breaks out at 79.

Just last night we wrote in our newsletter: 

"Our Long Term account still holds 1/5 BRCM SHLD.   We thought about selling them today and buying them further down but it's a small starter position and we're just going to sit.  If things get ugly we'll probably will add (and post it in newsletter when we do)." 
 SHLD very difficult to trade short-term and we prefer to put on a small longer term position as long as pattern is valid and just sit.    

Wednesday, January 19, 2011

Market Talk

Two notes:  as tweeted this AM sold out of SLW BRCM swing longs in trading account.  Trading account now all cash.

As we wrote here yesterday and for our readers last night -- we simply do not have any good set-ups right now which usually is a great indication that we're in for some choppy action.   If market is resting we should get longs in a few days.  If market is topping we'll start to see shorts soon.  But for now it's a good time to relax and let the others fight it out.

A big part of trading successfully is simply knowing when to step on the pedal and be aggressive, and also when to stop, get out of the car and go for coffee. 

Tuesday, January 18, 2011

Market Talk

On the bullish side we've had six triggers today from our newsletter and all are green and gave a good trading opportunity  (in that they all gave at the very minimum 2 x risk/reward).  

As extended as this market is we will only stop looking long when we see two things happen:

1) broad sector/breadth sell-off instead of rotation
2) support buying stops working as dip buyers stop showing up.

However, one note on the cautious side:   our best set-ups, one's we have been stalking for many days on the newsletter, all triggered today (MELI CAT ATI CRS CMI AGU).    We don't have that many good set-ups left and what this often indicates is that the market is heading towards increased volatility.   Because of this we'll only be swinging partials on any trades initiated today and only the ones that give us a comfortable cushion.
Update: we ended up swinging no positions from any trades that were initiated today (even though ATI CRS were decent candidates we opted to just cash it in and raise cash)  and only have left partials on SLW BRCM in our trading account from last week.    (BRCM SHLD in LT account).