A Trade A Day

I’m anticipating more downside movement, but I came across a couple of long opportunities that I think are worth a look.

There’s not a lot for me on either side of the market. Any long trades I have are being closely monitored for the faintest sign of weakness. Shorts are being held for a bit longer.

Not much else going on. I am predominately sitting on my hands. VRUS and FSLR have setup nicely.

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I have to say that I am as pessimistic as they get about this market. There have been some spectacular drops(CSC comes to mind) that have made some lucky trader a lot of money. I welcome this consolidation we’re seeing in the major indexes. The Bears could use a rest. The shorts I am looking at are just starting to consolidate. I’d like to see a few more days of sideways or tepid up movement before selling resumes. Here are a few stocks that I will be trading should they move lower.

DIS is trading close to a 52 week low. I expect the symmetrical triangle will resolve to the downside.

Here’s another stock close to a 52 week low. I really like the descending triangle. I’d like it to rest a few more days.

Another stock getting sent to a 52 week low. SYY is also in need of some rest.

There are those aberrations. Those stocks that could care less about overall market direction. Those stocks that are poised to move higher. As a trader, I’m prepared to take what the market gives. It has been very challenging, personally, to swallow my emotions on a daily basis. I have a bias for shorts, but there are some beautiful long setups that I cannot ignore. Here are two:

Jaso is resting close to a 52 week high. I like it past the 77 area.

I wish I had caught this one intraday on 1/7. It’s a bit of a speculative play considering that the move on the 7th and 8th was a little overblown, but I’m slapping this one on my watchlist to see how it behaves over 29.

See you tomorrow!

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Hola Amigos,

Time to get back in the saddle. It’s been a few days since I’ve written. I’ve been recovering from a cold, but I need to get going. Over the past few weeks, quite a bit has happened in the market. I’m pretty disappointed in myself because a ton of opportunity has passed.

I have always taken some time off around Christmas to do a review of my accomplishments and to plan for next year. That means giving up trading for a few weeks to focus on family, what I’m doing, and where I’m going.

Unfortunately for me, I missed a significant break in the market. I had a handful of setups that I flat missed because I wasn’t around. Oh, well. It’s hard to not to beat myself up, but complaining won’t make any money.

Let’s look at where we are and review some ideas for the weeks ahead. Let’s check the overall market.

Taking a look at the weekly chart of the Dow Jones Industrial, we can clearly see a neckline break. The down trend is confirmed in the weekly chart several other indexes:

The NASDAQ:

The S&P 500:

So, it’s apparent to me that we’re in a downtrend, and if it’s apparent to me that means it’s time to go the other way. I’m too late to the game to catch the initial downside breaks. I’m going to have to catch some points off consolidation. I’m also going to be selectivley going long, but let me make a special disclaimer. My historical winning percentage is much lower when going against the trend and I always trade smaller. Let’s take a look at a few ideas:

Who wants to take a shot at this high flier? I am anticipating a drop here. FSLR has show some resilience in the current downtrend. This consolidation may just be a pause before a move higher. But if FSLR breaks below 208 I’ll be pouncing on it.

I’m more positive on EDU than I have in the past. I think this triangle is going to resolve to the upside, but considering that it is symmetrical and the general direction of the market, it could go either way.

I like the weekly pattern and I like BZP’s daily base on base. Anything to do with oil and gas has my attention. Combined with a tradeable pattern and I’m in there.

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Back from vacation, I was scratching my head this morning thinking about where the money’s going to be made in 2008. Taking a look at the weekly chart of the Dow, the pattern forming is ominous.

I see the Dow a shoulder and a neckline break from sub 13000 for 2008. So, I’m going to be seriously looking at short candidates this year as long as the current head and shoulder formation holds.

I am also reminded of an article at stocktradingtogo.com. entitled 13 Great Ways to Invest in Oil Without Buying Barrels. Oil has made some impressive gains in 2007. Crude is up 60% for this year and Blain outlined multiple profitable plays. If you subscribe to the philosophy that what goes up must go higher than I think there are a few trades worthy of consideration in this sector.

Let’s take a look at crude as it stands today.

After a major cup and handle style correction that began in 2006, crude oil has had it’s first correction after breaking out in September of 07. Oil can’t run up forever without causing serious problems for the US and World economy, but I think crude can go 20 or 30 more dollars before us pleebs take notice.

If you don’t want to trade crude futures (and I don’t blame you), here are a few individual stock trades for you.

USO is an etf that tracks the price of oil. So, you won’t be able to get the leverage of a futures contract, but at least you’ll be able to sleep at night.

XOM is a bit of a slow mover, but the ascending triangle is unmistakable.

CVX is in the same ascending triangle pattern as XOM.

Of course, the post wouldn’t be complete without a short candidate. As I mentioned at the beginning of this post the Dow’s current price pattern looks like shorts may be the way to go in 2008. CLB has topped out and is correcting in the form of a bear flag. I like it under the 115 area.

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Let’s see if I can put some 1-2-3’s to work.

Here are 5 stocks flashing the 1-2-3 setup. Entry is intraday. You’ll have to check with your broker to see if there are shares available to short.

1. MAR

MR could end up being a bear trap as today’s action may have already trapped some. I’ll be ready to go either way.

2. PL

3. SVU

4. IM

5. LTD

Good Luck!

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