"The Trend is Your Friend...

...Until it ENDS!"

Hey Gang:

As you will note by my last post, I had been somewhat bearish on the market. The trend signals were also pointing bearish, and the economic indicators were also bearish. With that in mind, and my QID and DOG charts seemingly bouncing I got in two trades. On Wednesday, I got out.

One of my trading rules is to exit any trade that falls below, and stays below support for two (2) consecutive days. That happened on Wednesday. Here are the charts:

DOG

QID
For me, it is okay to be wrong, but never okay to second guess if the market will do what you expected it to. In this case, I expected the market to go down (and UP on my Bearish ETF's), it did not, so I abandoned the positions for small losses and have moved on.

So now what? Well, we are coming into Earnings Season, always a tricky time to play stocks especially over Earnings. So if I can get into some plays that I see reaching a peak BEFORE earnings, I may play them. I have some of my favorite trades that are still overbought from when I was taken out in March (look at BHP, CLF and DVN...), so i need to be patient for a pullback before I can think about getting in. HUM which was a previous suggestion by a member is doing well. I did get into a small position on GRMN, which I saw as bouncing at the bottom of a very high Ascending Channel which made the reward/risk ratio pretty juicy:

I'll let you know if I have any other trades i am looking at playing when I come across them.

Happy Trading!

Come Into My Trading Room

Hey Everyone:

Keith Volz has asked me to post the charts for the recent plays I made, and I am happy to do so. The charts should be pretty self-explanatory. I do this with ALL my charts, I set my BUY target area (or "bounce" area), as well as my "Target Price," which is one of my decision points to either take profits at resistance, or sell a Covered Call. By putting these right on the charts, it is very easy to see where I am in my trades. Reviewing them takes all of 2-5 seconds.

You'll notice that my plays usually are entered when the stock is at support and my MACD and STO are at their very bottom (or as close to them as possible). I normally DO NOT WAIT for 3 Green Arrows as I find that while it may be more "convincing," it is also less profitable. By playing earlier (when the MACD and STO begin to head up) I am buying at a lower price and therefore have less risk if I just play the 3 Green Arrows.

If I see a severe bounce, I may nibble a bit to test the waters, then wait for a pullback and buy more shares near support. The nibble gets me into the trade and if it soars from there, at least I have something. If it pulls back to support, I buy more because the Stop-Loss is the same (1% Swing, 3% Trend below recent support), but my entry price is lower, exposing me to less risk if the stock falls.

BHP
CLF
GRMN
PCL
PICO
SWK
Calling a Bottom

I also got into a small position of SBUX today. Now, from the looks of the chart, you may ask, "why would he buy a downtrending stock?" The simple reason is, "I believe it hit bottom." Here is the chart:You'll notice it hit this level twice before and bounced. It has bounced again and I got in a small position. I really don't know how high this could go over the following months. I suspect maybe those horizontal resistance levels may come into play, or even some Fibonnacci lines too if I draw them. Anyway, my reward/risk ratio seems pretty good, so we'll see how it plays out.

By the way, I bought SBUX back on 9/12/06 when it bounced making a Higher High and a Higher Low. That trade worked out very well! Needless to say, after exiting that trade (after 2 Covered Calls), I have waited patiently for it to come back to me. Maybe it has? Or maybe not?

Finally, let's revisit HUM:
The stock has definitely made a bounce here (making a Higher high) and I would consider getting in. You see a couple of Price Targets, make sure your portfolio positioning is reasonable (I never expose more than 1% of downside in any one stock), and go for it (not a recommendation to buy).

Happy Trading!

Some "Boring" suggestions (wink)

Contrary to the title of this post, Jeff Boring sent me some ideas for this week. Now, I am no soothesayer so I can't predict what will happen, but let's at least look at some possibilities. Remember, we want to try to follow the prevailing trend of the overall market. "A rising tide lifts ALL boats (and drops them too on a falling tide!)"

Jeff noticed that the Insurance industry seemed to be making a move and gave some stock suggestions. I'll post the charts and give my personal thoughts (which you may or may not agree with) as to what I see. I am never judgemental about someone, especially with what they are looking at, but I certainly will give what would be my analysis of the same.

Here they are: AGP, HLEX, HUM, and UNH (Click on the chart to enlarge, then use the "Back" icon on your browser to return to the Blog)

AGPNow, while AGP seems to be hitting support, and the MACD and STO are favorable for an upturn, the stock has made a lower, low, and the 30DMA and 100DMA are falling, which is Bearish. The 200DMA is flat which is Neutral. I, for one would not play this yet, but may look at a BEARISH play if it makes a lower high, then begins to fall.


HLEXDefinitely a WATCH LIST stock IMHO (In My Humble Opinion). It has reached the top of its channel and the MACD and STO indicate a fall back to support here is possible. If it falls back to both above the lower channel support and above the downward Purple diagonal resistance line, I am buying on the bounce and selling Covered Calls at the top. This could be starting a long term uptrend. Notice the operative word "could."


HUMDefinitely watch this stock. It hit resistance in its channel at the Median Line and has fallen back a bit. The STO and MACD may still have some downside, but it looks like the stock has found support above the red dotted line (Old support). If we get a little bounce, you see where my targets are. Not sure if the Reward/Risk is worth it here, but certainly worth doing some more investigation on your own.


UNHAgain, a stock to keep an eye on. This is CLASSIC INVESTools Method...3 Green Arrows on an uptrending stock with good volume. Resistance is the Median Line in the channel and you could see my price targets.

Don't forget your Stop-Loss entries whenever you place and execute a BUY order. As soon as the trade is placed, you should IMMEDIATELY enter your Stop-Loss (you should ALWAYS know where that is BEFORE you place your buy order).

Be sure to give us some more ideas we can all share.

Happy Trading!