Easy Tape

The current market is one of the "easy tape". Whatever one puts on (as long as its long) goes up - technicals work like magic and stocks do exactly what they're supposed to. We all look like geniuses. Don't get complacent -- this type of tape never lasts.

Don't be the happy little pig lulled and fattened up by the "kind" farmer (mother market) before your throat is slit one morning and you're on someone's plate served as sausage.

We were telling ourselves this morning how we're hitting the ball out of the park with every trade, like we can do no wrong, and how buying every dip is working like magic. Right after we said that there was a moment of silence -- we've been here many times before in our 13 years of trading and often it comes right before a change -- when suddenly stuff doesn't work, and stocks don't obey one's playbook. Don't be complacent. The gig is on full-play right now -- enjoy it, play it hard, but be on alert for the possibility of a change into a less benign trading environment.

And on that cautionary note, happy holidays to our readers, and we'll see you here next week.

HCPG

Holiday Trading

Holiday trading can sometimes be so predictable as traders run third-tier names (i.e. AIG) and small-cap Momentum names.

This is the reason we had AONE 20.5 in our newsletter all week on break-out watch:

This is what a benign market looks like

ALL our triggers from this week -- as you can see, great continuation:


AAPL 197 on trend-line break


AKS 21.2 on trend-line break


APC 63.2 on trend-line break


BCSI 28 was our best trade this week:



CNQ 70 was channel break-out





GLD 105 was a support buy (we tweeted it our buy live at 105.4 yesterday)




GNK was a support buy with alert at 20.7 (didn't quite make it) on the 200 SMA


HGSI 29.5 worked well


Our only short, HIG 23, which didn't work:



RS 45 on resistance break




SPW 55.8 on trend-line break





XLE 57.2 long on trend-line break

XOM talk

XOM acts heavy but as long as the trend-line holds the long is valid. Relatively safe trade considering how close stock is to support:

Technically rewarding market

This is a perfectly benign market where stocks bounce where they should bounce and obey technical rules -- enjoy it and play it as hard as you can for however long it lasts.

Even though we're primarily day-traders our entries are based on daily charts. What we've been telling our day-trader subscriber base is to try at least holding partial positions as swings as the follow-through lately has been excellent.

Here's another example of a perfect bounce on support:



Here's another example of a perfect trading opportunity -- we "tweeted" on this when it happened on Monday:

GMCR buyers defend the 50 SMA




Close up -- awesome!




We're closing shop now for the week (holding long $GLD $AU $SLB $CNQ $APC $SPY). Happy holidays to all of you from the three of us at HCPG-- we'll see you next week.

Oil Power

Three energy stocks from our newsletter last night breaking out:

Market needs the fins

The market will not successfully break-out without the financials participating. This divergence is a bit worrisome and we won't get aggressively long until the financials firm up.

Chart talk

Volume is going to be aneamic but chances are the market is going to try to break-out tomorrow.



Steel acts great -- we highlighted AKS MTL yesterday, here's one more -- RS 45.

Starter positions for longer term accts

We dipped our toes in three stocks this morning for our longer term accts. Theme was gold and Ags.

We bought YONG at 7.16, GLD at 105.4, and AU at 39.7. YONG is very small position which we will probably not add on but GLD we will happily add at 104.5 and 100. AU we will add on at 39. Here are the charts:

Metal Strength

While gold is pulling back sharply other metals are at recent highs. Steel particularly is hot right now -- these are from last night's newsletters but still look good for near-term future.

Energy stocks trend-lines/50 SMA

We have literally a dozen charts like this one -- very bullish on a break above (over 100.5 on closing basis) but until then stay neutral.

AAPL talk

AAPL smashed through the 197 trend-line/50 SMA (in our newsletter last night) but stopped short of 200 resistance. Any basing over the 50 SMA and under 200 SMA would be bullish.

GDX through trend-line

GDX through trend-line and heading towards the 200 SMA. If we can reach that area quickly in oversold status we will be swing long GDX at 41.5

BVN trend-line 29

Still a bit away but we love this for a long support:

Oversold sector going into trend-line/200 SMA near 29 on BVN. The faster BVN gets there the higher the chance of success.

Ag-Chem support

Ag-Chem stocks are slowly coming into very nice support zones. Our favorite is the following:

Charts

A lot of oil charts have similar set-ups -- basing under the trend-line/50 SMA. We'd be buyers of a high-volume break-out of the sector:



AAPL we'd be long at support near 185 or on a break-out through the trend-line.

Free Newsletter for Dec 21

We discuss some notes on swing trading support and have a decent amount of stocks for the week.

Free newsletter for the holidays.

E-mail us at info AT highchartpatterns DOT com

Gold talk

GDX today bounced on the trend-line. We hope it's temporary and that there will be a test of the 200 SMA/daily support near 41-41.5.




We would also love a pull-back to GLD from 104-100.

Natural Gas

Natural Gas is like the wild, wild West of energy and investing in it can be tricky. We prefer to invest in natural gas companies than the commodity or heaven forbid, the ETF (UNG).

Here is a handy chart that tells the tale well comparing an ETF invested in natural gas companies (FCG) to natural gas futures (pink line) and the contango-suffering natural gas future ETF UNG (purple line).

We don't want to chase price up at this point and are waiting for a pull-back to get into some natural gas companies (LINE PXD FST EOG SWN APC, etc). We are admittedly late to this party (ok, very late -- our focus has been oil and not natural gas) but we would be interested in buying pull-backs to support in this sector. Some would argue that the divergence between the commodity and the stocks at this point illustrates that one should sell the stocks and buy the futures but we'd rather take our chance with buying the stocks on support.

SPY test

Today we finally had the 50 SMA/bottom of channel test that we've written about -- this is the level that has to hold for the bulls.

Considering the number of sectors considerably off their highs the S&P 500 (think financials and energy to start) this resilience is impressive.

Swing Candidates

Here are three trend-line break-out stocks we're watching.

Trading Talk

We are aggressive momentum traders when a market is coming off a bottom, or one which we feel still has a lot of room for upside.

However in a market which has rallied as much as this one we prefer to wait for a pull-back to support before entering instead of buying new highs.

Momentum trading is more active for us as one alert after another goes off. Support buying on the other hand means one has a lot more time on one's hand (sometimes the more difficult of the two) and has be patient and wait for the trade to pull-back to one's target entry point.

These are the type of set-ups we've had in the newsletter the last few weeks and the type of set-ups we will be looking for in the near future. As an additional note -- support buying lends itself more to swing-trading than day-trading and going forward we're going to have selections such as these as swing trades.

Deeply oversold stock in a bull market, falling into support, is often one of the most successful swing set-ups:

Arrow points to the buy point featured in the newsletter:

AAPL

From a short-term perspective AAPL looks vulnerable with first real support at the 185 area. We'd be buyers of the 185 support for a trade.



From a longer-term perspective we wouldn't touch AAPL long until the trend-line is broken to the upside:

Fumes

We're not smart enough to be anticipatory traders -- we are nothing but your classic trend-traders. The current trend is up meaning every day we look to buy break-outs and support longs. But at the same time we look at the following chart and understand what the bears see and the potential for the pull-back. We will trade long for as long as the good times last but at the same time we'll be more careful going forward with buying support.

The 1 year chart looks vulnerable:



The short-term chart shows the market stuck in a channel between SPY 112-109 -- note how the 50 SMA has caught up to the bottom of the channel.