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Jeff Pierce
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I’m a swing trader of momentum stocks with a holding period of anywhere from a few hours to a few months. I run a number of screens to locate the strongest/weakest stocks out there, using technical analysis to determine my entries and exits. Trying to calculate the intrinsic value of stocks in... More
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  • SHOT ACROSS THE BOW? 0 comments
    Apr 18, 2013 2:10 PM

    By All About Trends

    In a past life I spent some time in the U.S Coast Guard in Florida assigned to catching drug runners. When we would see a Miami vice type cigarette racer that would not stop when hailed to stop that was when we'd give them a reason to stop and listen to reason by firing a shot across to the bow in order for them to "Get The Message" if you know what I mean. There's a good possibility that yesterday was a shot across the bow to PAY ATTENTION going forward.

    IF they didn't stop? Well the boat got sunk. Don't get your boat sunk folks pay attention.

    Make no mistake yesterday in the indexes and in many names it was a fall off the face of the cliff in the form of a shot across the bow. It reminds us a a phrase we heard once that seems fitting:

    "God Sends Thunderbolts" and thunderbolts are meant to wake people up.

    You can't say over the past few weeks we haven't been making you aware of this coming. This is what happens when people are convinced we're never going down, the Fed has your back, the pundits crow about DOW 18,000 and other absurd numbers. It's called complacency and it's called conditioning. You see when markets have been doing what they've been doing the last few weeks people tend to get conditioned to believe the markets are never going down until? Well a day like yesterday comes along and wipes out roughly 7 weeks worth of head way on the NASDAQ Comp and 5 weeks of headway in the SPX. SHAKE AND BAKE BABY! (MMM, LNKD and PRLB).

    Now you know why we've been sitting stacked in cash for a long time. We're more interested in protecting the bulk of our portfolio vs. chasing buses because a pundit says sky's the limit. Never listen to targets as they mess you up because people tend to become emotionally attached to them then? Well a day like yesterday comes along and shakes them up mentally. Listen to the markets because a picture is worth a thousand words as they say.

    Yesterday we said:

    "n the short term? Well at some point we are going to tag those trend channel support levels. We'll see if the get defended or not. I suspect they will initially at least. BUT (and this is the REALLY REALLY REALLY IMPORTANT PART)."

    IF a bounce takes place at trend channel support and IF IF IF that bounce fails? WATCH OUT.

    Those who are long? That is your what to watch out for.

    4-16 Bold and bright enough script for you all? GOOD! We hope you all get the importance of the boldfaced red print above.

    "Those who short stocks and are opportunists that are willing to expand horizons (When you are green you grow when you are ripe you rot) and do whatever it takes regardless of what the market throws at you to achieve YOUR goals? Well that is the what to watch for."

    What exactly do we mean by a bounce that fails? Let's take a look at a few examples of first shots across the bow shall we. Let's start with the NASDAQ comp from Sept 2012.

    (click to enlarge)

    Next up is another name we recently highlighted - PSX

    (click to enlarge)

    In the coming days we'll be featuring a lot of past examples of what we are talking about, don't miss it. In addition to that? WE HAVE A TON OF NAMES SETTING UP SHORT SELL PATTERNS Such as those above. We'll be adding them to the short sell watch list every day!

    This is how the market talks to us. Now what if you can't short -- you can always buy options via our Fun Money service and control the equivalent ofshares of stocks as you trade in tandem with our stock service.

    Our game plan for the week is:

    WATCH THE BOUNCE and start to CONSIDER positioning in names with structure on the short side.

    Those of you who like inverse index ETF's? Watch the indexes, IF a double top back to the scene of the crime retest occurs from here (which is another potentiality) or a bear channel develops (think just when the masses who are retail investors by the way think it's safe to get back into the water watch out) then that is the time to hedge your longterm portfolio or even to take advantage of short side opportunities as they present themselves.

    In the meantime here are your current index charts with another potentiality as we move out in time shown in red boxes along with a little Fibonacci treat for you advanced chartists.

    (click to enlarge)

    (click to enlarge)

    To learn more about All About Trends sign up for our free 15-day no obligation trial.

    Themes: $SPX, $COMPQ, PSX
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