New Positions

Update: out of all positions April 27


Our day-trade account time-frame is pretty short these days since we're seeing failures in extended set-ups. But we're starting to fill up our swing account with starter positions in commodity stocks (still under 25% invested).

Here is what we bought today (posted real-time on our Twitter acct:

We think AEM will break 62 soon and want to be long in front of that (61.34):



SWN is flattening the 50SMA and we think it will break through soon (41.88):
(Update: as posted, sold partial SWN 42.85 in front of the 200SMA and the rest at 43 at the 200SMA -- we didn't expect the stock to move this fast today)







APA might take a while but like this base forming under 109 and we bought today in anticipation (107.28):




As posted, sold a few APA 109.05 into the run today -- we were hoping it would wait but instead it broke out with light volume and we wanted to take partials off.


POT held on the 200SMA and now is basing under trend-line. We started a position today in anticipation of a break-out (108.43):





We're also looking to leg into some VALE ATPG next week if we get any type of pull-back. These are intial entries into longer-term positions which we plan to hold for a while -- very differnt from what we've been doing in our day-trade account lately which average time spent in a stock has averaged to be less than 2 hrs.

Triggers

Incredible tape/strength in the market today -- we had three triggers, all break-out, and all worked nicely.


ICE we had alert 115, but noted to watch for base and break 114.




FST 28 minor spot, worked.




SHLD 111.5 big spot, worked well.

Back to a stock pickers market

It seems that the era of the "easy tape" is over for now and we're back to a stock-pickers market. This means that traders will actually have to do some homework and work at it a bit more to be able to make the income.

We had two shorts, one long support, and one long break-out trigger today from the newsletter -- having shorts and longs trigger is also another clear sign that going forward one has to pay attention to levels with more scrutiny. They all worked -- a good sign that market acting as it should technically.

We knew there would be some trade around VALE 32 -- nice short base on it today and thus far working for day-trade.



UTX break-out 75 on our newsletter last night.



LULU short 41.66 worked well for a trade.



RGLD was listed as a buy at 46.5 -- very nice quick bounce there as it hit our alert

Bulls owned the market today

One of the first signs of a true change in sentiment is simply this: support fails to hold. Today was a fantastic day for buying support as can be seen by the following (we had a number of these in our newsletter last night). Don't get excited on the dark side yet until this type of sentiment shifts and support becomes meaningless. At same time note that our focus has shifted to buying the pull-back rather than buying the break-out.

























The HCPG member who sends out the newsletter has had a catastrophic crash in the main computer. Newsletter won't be sent out until late tonight.

Daytrade Talk; support

An example of how we trade:

POT 104.5 we added alert in newsletter last night to watch for bounce on the 104.5 200SMA spot.




The best support trades are when the stock hits the alert extended away from the EMA. Buy reversal with stop under and take off first partial (usually 1/3 or 1/4 for us) back into the EMA to lock in some profits. Usually good for at least a 2-3 Risk/Reward trade.

Market Talk

For long-only portfolio managers today's market set-back might be bad news but for active traders such as ourselves it was a wonderful shake-up of volatility. We wrote in our newsletter last night, "What's keeping us sane in this insane market is simply not thinking about it too much, making jokes, and trading the set-ups. That's it." The frustration was audible.

Even though we shorted today (FCX through trend-line whose chart we posted on our account and some fun with SPY) we also traded long on support (GG AEM CNQ SU) and will be looking at long support set-ups for next week.

Bullish sentiment as strong as the one we have been swimming in does not die this easily (AAPL closed down 0.54%!) and for now we believe support long trades will work well and that will be our focus-- until proven otherwise.

For the first time in a while we'll be looking forward to writing the newsletter this weekend. Thanks Goldman!

As an aside we couldn't agree more with Reformed Broker's Post

"Spare me the Outrage"

.

Cynical? Yes. But alas so is the reality of Wall St.

Ag talk

Ferts have been stinking up the joint for a while but today looks like bottoming action. For you value type dudes entries here with stops close to today's lows offers a good risk-reward trade.

Note how the price action has been pricing in today's downgrades for weeks. Never ceases to amaze us how irrelevant analysts have become. We wrote a while back on the RIMM break-out that the least successful break-outs occur due to upgrades (best are earnings), and most likely it holds that the most successful bottoms are on analyst downgrades.

MOS held the 200SMA





CF again held the 200SMA




AGU found footing on the 100 SMA

EMA strategy for buying support

Here are the charts we posted real-time on the GMCR trade. It wasn't a big win but it's a decent strategy we use for buying support and it was fun discussing it real-time (and was satisfying seeing traders make some money in it).

Most traders are aware of buying dips on trending stocks in the  stock market on the 20EMA/5 minute chart. We do that all the time and it works very well. One less common strategy  is to look for stocks that have bottomed, make higher lows, flatten under the EMA, and then buy through the EMA with stop under the higher low. Let's take a closer look at the charts we posted today.

The first chart is one we noticed on GMCR weakness on the daily chart. Stock was hugging the trend-line again and we were looking to see whether it would get downward pressure.



Stock broke through the trend-line but bounced right on top of a mini-support right under it. In a market as strong as this one our main focus has been long, be it break-outs or support longs, so we were interested.



Here's a closer look of the support right under the trend-line. Typical head-fake under trend-line shaking out weak holders.



Stock made higher low which was good -- next step was to base under the EMA and stop it from trending down. Flatten the EMA and through was what we were looking for.



We got the start of the move through the EMA and as we posted real-time, we started buying.



After that the point is to adjust the stop, always just below the EMA or if you want to make sure not to get head-faked, then a closing candle under the EMA.







As we posted when GMCR was at 96, we took off all the day-trade size but left on a small swing trade with stop above entry over 95.2. This is a "house money" trade that we'll keep on with little risk in case stock wants higher in the next few days.

Again, not a big trade, but a close, real-time, look at how to use the 20EMA to help buy support.

Pattern Discussion

We first started posting the GOOG pattern on April 10, on chart.ly:



This was the chart:



And this is today:


One of our favorite patterns is the break of the symmetrical triangle. And what's the best action right before? Stock bases in the upper range right below the trend-line. This gives the added strength to the pattern of a stock jumping from a mini-base within the triangle pattern and the added safety of using the base as a stop if the break-out fails. Keep that detail in mind next time you are looking for a triangle break-out.

Triggers

The better the base from which a stock breaks out the longer our holding time. However, ff a stock breaks out from extended level then we either go in for a day-trade pop or we look to short the failure, again for a quick daytrade.

Yesterday we had break-out triggers on AA AIG but we also had a list of short candidates on break-out failures:

AA was a traditional break-out alert at 14.8-14.85



AIG was good for a fast trade with our alert from last night at 35.6-35.7



We wrote that more experienced traders could look to short break-out failures on the following:

APC 75 reversed at the alert number



CNQ 80 reversed at the alert number



HAL 32 went through the alert near the open but reversed at R1



NEM 54 break-out failure



Why did we add a list of break-out failure candidates? Because most of the time if we can't find too many good break-out set-ups in our scans then the market often is in need of rest or will chop around.