Wednesday, February 23, 2011


Real panic in the trannies today as the oil rally finally caused some real selling in the sector.  In fact we can't remember the last time we saw so much blood in this sector.    Support at 89 finally stemmed the bleeding.

This chart belongs front and center of your screens -- 89 now is big, symbolic level.  Don't underestimate the importance of the trannies for market health.

Support Trades still working

We have been wanting these alerts since last week when Ags started selling off and they have been in our newsletter for days.    Big reversals on ALL our support trades that triggered today.   We were involved in all of these and tweeted the Ag buys (and CMI which we included in the basket) right at the bottom today in stocktwits.   We sold all of them for profit but not as much as we would have liked, but we did get a bit of revenge with XME as we got back in after the SPX headfake lower (while Trannies held -- as we tweeted real-time, that was bullish).

These are all the triggered alerts from the HCPG newsletter last night.  Arrows represent alerts. Epic reversal in the Ags.

A few were overshoots (we have a whole strategy around support trades and when they only grind instead of panic move down, we go to overshoot mode).  If you don't know what we're talking about read about it here:  Overshoot strategy

Don't confuse buying support with buying a falling knife.  Our best trades over the years have come not from breakouts, not from shorting breakdowns, but from buying support.  

All of today's lows in the following now represent "line in sand" areas, also keep eye on today's low on XLF (50SMA) and IYT (89 support).  

AGU our alert was 86.5-87 -- perfect.

CF 127.2-128 overshot as panic completely took over -- incredible reversal.  The most consistent strategy we have in our arsenal is to buy when others are panicking (not news nor earnings though!) as a whole oversold sector hits support. 

MOS we liked 77.5-78, overshot to trend-line.

POT 164.7-165 was our area to watch.

Wrote in newsletter last night to look for reversal on CMI in the 98 zone on gap fill.

Trend line bounce.  69 was 50SMA but we wrote in newsletter last night that we liked 68 more for overshoot.

Tuesday, February 22, 2011

Tells and EMA talk

These wide range days are often very good for forming "line in sand" lows and highs on key stocks.   Let's take a look at two on our screen:

FCX held 50 today -- keep this important stock on screen as tell to see if it can hold 50 in the next few days.   Next support 48.

AAPL sliced right through trend-line but bounced on the 50SMA.   First touch since September/2010.  If the 50SMA fails, next support is 325.

 Daytrader Talk:  very classic move here as SPY gapped down, bounced hard until it hit the 20EMA.    Market lost momentum and down it was again -- very good risk/ reward short strategy on descending EMA (and for longs of course ascending EMA)  if stock has travelled a good distance to hit it (and as such is extended).   Entry would be against EMA with stop on high above.   If you want to go long then wait until EMA flattens out and stock overtakes EMA but never buy against descending EMA. 

Monday, February 21, 2011

All eyes

All eyes are on silver futures right now (spot trading up 5%) and tomorrow all eyes will be on silver stocks.   Insane move up and continuation on the breakout over 31.  If you're not already involved: at these levels in our opinion there is no good risk/reward trade anymore.   If you want in long, wait for consolidation/base/pullback.  If you want to short....wait for what you perceive to be a blow off top reversal, then get in with stop above.  We have no interest on the short side -  there are easier trades out there than to short this panicked freight train. 

Crude futures up 6%.  Notice how the previous geo-politcal ramp (Egypt) was given back all back (on WTI, not Brent).   However, we think this one will have more sticking power aas Libya is one of the top ten exporters of crude in the world.   Imagine what will happen if this middle east storm spreads to the big leagues, i.e. Saudi Arabia.