Our positions

Update:

1.Sold partials on the VMW for just under a point on the breakout test (if we go under we often take some off into target of breakout alert).   We now have our stop around breakeven on a move below 88.

2. SWN keeps threatening to stop us out but at the last second moves up and away from our stop.  A move through 35.5 today would make us exit.

Everything else looking healthy: we're green in VMW GD ATPG NBL and down 0-1% in SWN SOHU MON.   The more extended the market the less "Cowboyish" we are with trades and the tighter our stops.

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Update II:

at 3:50 PM on Friday. Booked the rest of VMW for 1 point gain; bailed on SWN for 20 cent loss and took partials across the board for gains (GD ATPG NBL) and losses (MON SOHU) on this market rip as we're feeling uneasy due to how extended market has become.  Still long partials in GD ATPG MON NBL SOHU. 

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We're swing long 7 positions now (5 of them we bought lower from selling earlier this week and 2 new ones).

 We sold SWN earlier this week near 38 and bought it back on the 50SMA bounce under 35.9.   SWN testing 50SMA right now and we might bail on this for 30-40 cent loss on a close under 50SMA.

 MON we sold near 63 and picked it up again near 61 on bounce on 20SMA-- has support at 60.5.  Close below that would likely take us out.

 ATPG we sold near 16.5 resistance on Tuesday and picked up again for 4% lower -- we like how its basing under 16.5 resistance and are just going to sit on this for a while.   Our "bail" point would be a loss of the 50SMA.

 GD we sold over 69 and picked back up aournd 1% lower -- we like this for a break-out of 70.

 NBL we sold Tuesday at the open near 87 and picked up again today at 81.76 just above the 50SMA.  If it loses the 50SMA and then 80 support on a closing basis we'd probably take the loss.

 SOHU small swing here on today's dip at 77.5 in anticipation of 79 break-out.  Smaller size than previous positions because support far away.   We'll play this one by ear as there is no real support nearby.

 Same thing for VMW.  We picked this one up today at 88.07 in anticipation of 89 break-out.  Again though, smaller than all the other positions (save SOHU, same size) because no real support nearby.   Another one we'll go by feel for stop.

We're less aggressive than last time we put on swings (12 positions, all bigger) as commodities are still weak and we feel more confirmation is needed before we put on more size.

Market Talk

Market decent action today in almost every non-commodity sector.  We bought back 3 positions that we sold yesterday, all for lower prices but all still above support.   Bought MON on 20SMA bounce and in anticipation of 64 breakout, bought back ATPG (support farther away there - 50SMA) in anticipation of 16.5 breakout, and GD in anticipation of 70 breakout.   Natty is the only commodity acting well -- gold, silver, coal, ag stocks, and oil all were weak on the day.  We'd like to buy back our commodity sells from yesterday (including CLF OXY APA NBL which are all significantly lower from our sales) but want to be more patient on these and wait for tests of support. 

We'll be going through all our favorite commodity stocks and will list all of our support alerts in tonight's newsletter. 

Market Talk

A lot of investors/swing traders talk about how utterly wrong it is to try to pick tops and bottoms.   Well, we do it all the time.  And well -- we've picked short-term tops and bottoms correctly many times in real-time in the last year we've been on Twitter, and archived for our subscribers in the last 4 1/2 years of the HCPG newsletter.    It really isn't that hard if you know what to look for.    Yesterday we sold all our swings (12 positions including many commodities that have gotten hammered since) near the highs of the day (again, all real-time) after 3 weeks of being long. 

Operative word though is short-term.  We're not into picking long-term bottoms/tops, which we think is significantly more difficult.  Everything we do is based around the short-term, meaning 2-5 day time-frame (or 2-5% in price).     

We've taken it easy today, as is our custom on the first day after sentiment change.   We like to get active on day 2-3 when decent support candidates pop up but on day 1 there's usually not much to do, for our style of trading anyway.

The only support trade that triggered today from last night's newsletter was OXY on 91 support -- we tried it since risk was so low.   Entry was around 91.03 with stop at 90.87 (it's our typical support trade strategy of getting in on reversal on alert with stop under -- many posts in blog on this subject).     First partial is always against the 20EMA/5 min chart.  Stop for rest is on the higher low trend-line or break-even.    First partial profit was for 37 cent profit (not much but risk was only 16 cents).  Holding rest to see if we can get through the 20EMA as trade now is risk-free with stop at our entry price. 

Top Talk

We posted on Twitter yesterday that we had started a new set of swings, "almost every set-up in newsletter that hasn't triggered".  

Subscribers knew that this meant we went long stocks that had been on our alert list for days:  MON DHR NBL CSX STT AIG on top of swings initiated weeks ago CLF UPL OXY ATPG.    We knew market was already extended but what gave us confidence to initiate the positions was what we wrote at the end of the newsletter:

We strongly believe that we won't hit any significant intermediate top (not talking short-term 1-2 day pullback) until we lose most of our triggers.  In our experience tops have often come into play when a lot of our alerts trigger and then fail on the same day.   All we want at this point is for them at least to trigger as that would put us into the green on all our positions (since all the swings are in anticipation/under the alerts).




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In extended markets the safest trade is TO the breakout, not after.    As we posted this AM we sold all our old swings near the open,  sold partials of new swings into the open, and were finally all out of everything before 10AM.    All green, all nicely profitable.

We're all cash now in all accounts.     As to the market we think we're heading in for some horizontal movement.  We have very few alerts left and a some basing and filling would do wonders for new setups. 

It's too early to tell yet but today could be a day that we described last night in which breakouts trigger and fail on same day, representative of an intermediate top.

Usual suspects, support, breakout, and other trading talk

We like focusing on a small number of stocks in a few sectors.  We have basically been trading the same stocks for over a decade -- this means that we know the sectors and stocks very well.  This helps us trade them well on support and resistance.      Let's look at some numbers.    We've done two set of big trades in the last 3 weeks.  The first one was from our November 16 newsletter which was a list of support alerts.  This means we were buying the blood into support.

From our support long alerts that TRIGGERED ( of course not counting ones that never hit our alerts like APA 104 or BTU 55 which would have been oh-so-sweet) from our newsletter for November 16:

SPY is up 4.6% from the bottom of that day on November 16 to today.

Our support longs that triggered are up the following amounts:

WLT 23 %
SLV 17%
XME 14%
X 11%
CNQ 10%
GDX 8%
WFC 7%
RIG 7%
GLD 6%
MOS 6%
DE 5%
MON 4.65%
DO -1%


Versus SPY up 4.6% from the bottom tick of November 16


The second big trade was not support but breakout; it came in late November in which we told our subscribers that we were buying in anticipation of alerts included in the newsletter.   We bought significantly below the following spots: CLF 72, UPL 49, OXY 89, BTU 60, APA 111, and UPS 70  because we had conviction that they would all break.   One by one every single one broke out.

As we've written repeatedly over the last 4 years in our newsletters and in this blog -- the safest trade is not the breakout but the trade to a magnet area known as the target.    We have never had a target trade not reach its target.   Sometimes it takes longer than we think (SMH 29 took the longest, 3 months) but they do reach their targets.    What happens after the target is reached (i.e. now a break-out) is more complicated.   Breakouts often fail, support often falters, but primary targets, in our decade of trading, are always reached.   


The big caveat of course is knowing what is a viable target.    Basically, the more clear the target the better.  Crowded trades are awful if you only get in when they trigger -- they often play games and stop people out or are sold.  But the numbers are hit.   Let's say stock HCPG is trading at 48 with a very clear breakout level at 50.  Everyone on your stream at Stocktwits is talking about the big juicy HCPG breakout at 50 and it's obviously a very crowded trade.  If it's a benign tape, and it's a great breakout level in that it has based on the daily and is not extended, and it's a stock you know well (and trust, we don't do this on small-caps for example or any financial save GS), then do not wait for 50 to come,  buy it at 48 with conviction that 50 will at least be hit. Once this happens we have 2 points cushion for any possible choppiness/games or failure.   The chances of the stock going to the target area are MUCH higher than having the chances of the breakout actually working.  

All that being said, it sounds easy but it's not -- many traders see target trades that simply are not there, or are too weak a magnet.  After our target trade posts we always get questions like "I'm thinking of buying this stock as it has a target at so and so."  We look up the stock and see a higher resistance level but no clear target.  Thus the chance of it working are much lower than any type of target trade that we would enter.  A good target trade spot basically is on every active trader's screen.
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p.s.  and yes, within 3 weeks we nailed both the support and the breakout.  :-)    As we've said in the past, in easy tapes, we're all geniuses.  But it still feels good!

Update

We sold the VALE swing, took some off into the ATPG rip but keeping some, and keeping OXY CLF for possible continuation (we already had our targets met as they both broke out).  The only stock that hasn't broken out yet is UPL which we've been long since last week.

Long into the weekend  four stocks: OXY CLF ATPG UPL.    

We've sold a lot into this rally (BTU APA UPS SWN VALE out completely and small partials left  in OXY CLF ATPG UPL) and are now back to mostly cash waiting for fresh set-ups.   It's been a rewarding week and we're heading out early for the weekend.   Have a great one.

Goal reached

We started our swings two weeks ago all based on a run to OIH 136 which represents daily resistance, weekly 200SMA, and monthly 50SMA.  Well, we're here now and we have completely sold out of some of our commodity positions (APA BTU SWN )  but are still holding what's left of our CLF OXY UPL ATPG commodity positions.  The only one we don't have a comfortable cushion on is ATPG with 14.56 average.   We'll take the loss there on any close/move under 14.41 (200 SMA which it has repeatedly bounced off of).  We'll also be swinging VALE from 33 on a good close, an alert from last night's newsletter.

This whole plan which at some point consisted of having 10 swing positions (a lot for traders who are used to daytrading) was based simply on the target trade strategy.  It gave us conviction to hold through all the chop of the recent days.  

A few weeks ago we noticed a crop of commodity charts with excellent charts and exact targets. We wrote about these target alerts repeatedly in the newsletter (and which, happily for us, many of our subscribers also got into) of for example APA 111, OXY 89 (and then when it worked quickly, we held for secondary target of 91), CLF 72, BTU 60.   All were hit and we sold into it but held onto a last little bit in case of continuation (which we got and finally sold last of APA BTU today). 

Our targets in UPL (49) CLF (72) OXY (secondary target 91) still have not been hit and we're happy to sit in what's left of our positions and wait for these to also break-out.   Thanks to the early swings we have no multiple point cushions and stops above our entry points.

So now what?   We'd like to chop around OIH 136 for a while and digest the gains.  If that occurs a fresh new crop of set-ups will emerge and we'll start the game all over again.  But for now, we're laying off the gas pedal and chilling.   Of course market could keep on ripping higher but for us the edge for trades for new entries has now dulled.

Update on our positions

As our blog readers know (and as we have posted in our stocktwits account) we bought many positions last week, mostly (but not all) commodities,  in anticipation of break-outs.   Over this period we already had OXY BTU APA UPS  hit our break-out triggers.    We took a lot off today but didn't completely sell out of any position.  We have however raise our stops on all the swings.   As we've been repeatedly discussing in our newsletter in the last few weeks the best strategy right now is anticipating break-outs: buying on dips with stocks with clear targets and selling at least partials into targets and holding rest for possible continuation.

Next big resistance on our screen (for us anyway who are almost fully in commodity stocks) is OIH 136.  

 

 As we posted we were sellers into the rip to 1206 resistance.   Any basing now around this area would be bullish.

As our readers know we always take profits into resistance when the market travels from support into resistance in one day -- as opposed to starting the day close to resistance in which we would look for breakout of resistance and add into the break rather than sell into the area.

Cross Currents

The market is bobbing up and down right now according to 3 pieces of news:  China inflation-taming tactics, Euro-zone credit crisis contagion, and possible intensification of North Korea situation.       The charts also show some ambivalence and we expect the waters to be choppy for a while.   As you'll see in the following charts there are valid arguments to be had for both the bears and bulls. 

The IWM falls in the bull category as it is near its highs and basing under major resistance.  Basing here and running higher into year end is definitely a possibility.

One of the biggest red flags in the market right now is the IYR.   We drew this trend-line 2 weeks ago -- IYR sat on it, broke it, fell down hard, then found support on the 100SMA and rallied to the 50SMA.   Definitely not out of danger here as it could easily reverse back and break the 100SMA.   If you want to short  focus on this sector.

OIH has a weekly resistance level at 136 that we think will ultimately be touched in the intermediate future.  Before that happens though we expect some choppiness, including the possibility of the break of the trend-line and 20SMA.  Technically a close under 126 would be the daily stop for oil and gas swings.   

A test of the 50SMA on the SPY would not be surprising.

On the bullish side of the equation the USD has rallied hard on the escalation of  Europe's credit crisis and is now heading into resistance.  If the USD weakens expect our commodity selections to jump.   Of course if the situation in Spain worsens expect the USD to keep rallying putting pressure on all commodities.

The champion of the bear case is the XLF which is showing horrible price-action.   There is some support at 14.2 -- watch that as tell.  The XLF price-action is a very good argument for keeping long swings small. 

IYT on the other hand shows good health as Trannies are near their highs (we're long UPS).

All updates on our positions including recommended places for stops and adds are included in the newsletter for our subscribers.

Our positions

We came into today long CLF APA BTU SWN UPL OXY ATPG and initiated a position in UPS this morning.   We're basically long everything in anticipation of a breakout.  We have some decent profit cushions now and can withstand some chopping around.  Crude very nice move today which gives us conviction to hold over the holidays. 

We have stocks in the following sector Oil & Gas, Natural Gas producers, Coal, Iron Ore, and Transportation.

Beauty

Fantastic pattern as stock is poised to run to 72 and break-out.   Unless market suddenly weakens on Monday we'll be anticipating this breakout.

WLT Trigger

  On our radar yesterday with very bullish action.  As we tweeted yesterday:

After noticing the bullish action yesterday we put it in our newsletter last night with 100 alert.  Today ir ripped through:

Watch the rest of the coal sector, big standouts today,  to follow the same path. 

Triggered Support Alerts

Here are all the support alerts that triggered today from our newsletter alerts.   The arrow represents the support long buy point.   14 trades triggered, 10 closed above, 4 closed below and many offered excellent day-trading opportunities.      Take a look at the daily charts and look at the patterns we look for when scanning for support alerts for our newsletter.

Some did not set-up intraday and we passed but for the most part we caught a good chunk of these alerts for a busy but good trading day.    

Overshoot strategy, Post 6 Daytrader Talk

One of our favorite support buying strategies is the overshoot.   In our newsletter we had AGU 79 support for overshoot back into the 50SMA.

When a stock goes through an important ascending SMA (50SMA one of the most important next to the most important 200SMA) look for a secondary spot on daily.  The trade is to buy on the reversal on secondary support for a trade back into the 50SMA.    Therefore, buy reversal 79 for a trade back into 80.5.

AGU set-up well this morning as it fulfilled our support buying condition of spiking down to support without base and away from the 20EMA.    It made a low on 78.55 and reversed back up -- entry was 79 with stop on low of day (78.54).   This gives you a 46 cent stop.  The first target of a support trade is always a move back to the 20EMA (most often on the 5 min timeframe), in this case 79.8.  First partial is for 80 cents profit, almost 2-1 so far. 

Note the series of higher lows -- exactly what you want to see.   Second partials (again tweeted) was just over 80.2 on the spike up away from the EMA, now for 1.2 point profit on 46 cent stop, almost 3-1 risk reward.   The stop is constantly moving up with trend-line and EMA.   At this point a move below 79.6 would make us close the last 1/3 of our position and a move through over 80.5 would make us exit our last 1/3 partial.

This is one of our bread and butter trades around support.

Precious Metal Trendlines

Monthly charts -- we'd be buyers of first test of trend-line on both the gold ETF and the gold miners ETF.

Shorter time frame on daily support at 58 for a short term rade.   Longer time frame trend-line support for longer trade hold.

 

 SLV more extended from trend-line as it recently played catch-up towards the historical gold-silver ratio mean.    Again, we'd be buyers of trend-line (and shorter time frame of 24.5).