All About Trends'  Instablog

When one looks at the current trend off the November lows a few things stand out -- namely the pullbacks in terms of the duration, the depth and the percentages they've pulled back.

Take a look at the daily charts below of the NASDAQ Comp and the SPX. They pretty much tell the story within the current trend.

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So you see? Overall within the current trend any sell off ought to be a welcome sign for using to get long on.

When we look through let's say the names in our newsletter this weekend and look at the February through March pullback in the indexes we noticed the bios for the most part took the lead higher opposite the markets while other names quietly consolidated and yes even some names bit the dust really hard. The thought that comes to mind overall with regards to individual issues is?

"It's A Market Of Stocks" with something for everyone long and short alike. Which is also another way of saying money stays in the markets but rotates around. Think out of these and into those.

That said, those names that have run the most could easily lag at the least or go into a correction in the next pullback with some other yet to be defined theme moving higher to pick up the slack. After all look at DDD and SSYS in the February through March pullback. Those two names were all the rage and then? POW to the downside. While at the same time the bios did the opposite -- they took off and asserted a form of leadership.

Our game plan is to see how the market opens next week after the opening dust settles and take things one step at a time. We do like the recent action in the bios last week, what we didn't like is the amount of point moves most made in the blink of an eye on Friday. A day or two of backtesting or pulling back would be fine by us for potential going long purposes.

Take AMGN for example.

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From a trade what you see perspective? We see an issue that is in a clearly defined uptrend pulling back off highs above the 50 day average plain and simple. THAT is the main reason we issued a Trade Trigger email alert to our subscribers last week -- both a stock trade and an options trade. So far so good on both!

And...we've added 3 other bio stocks to our watch list. We just need to see them continue to pull back to a low risk buy point like AMGN did and then we'll likely issue trade alerts on them as well.

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Disclosure: I am long AMGN.

When looking at the indexes, it's clear the market is:

Still sitting at trend channel resistance and still overbought. A few down days would do a world of good as it would set up a slew of names on the long side we can trade.

Check out the 60 minute charts of the NASDAQ Comp and SPX for a moment.

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See those little pink lines? Notice that they all broke to the downside which led to a pullback and to relieve some overbought conditions? That's what mode we are in right now. Sitting back and allowing the market to come to us. In so doing it will set up a lot of names on the long side.

How long and deep a pullback it is going to be another question, remember markets consolidate by going down or sideways to relieve overbought conditions.

What's strong here today? BIOS! We talked about this sector a few days ago in the form of being used to keep the drive alive and we MAY be seeing just that.

BIIG, CELG, ALXN all are up about 3 points plus each today, and yes even AMGN is up.

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And that is the backdrop we are in here- Buying in an extended market.

Look, We're all for going long individual issues with chart pattern structure we can work with but we're having a hard time with is buying stocks in an extremely extended market (and from a lot of emails we are getting a lot of you are too) where the music can stop at any moment especially considering we are wedged up against trend channel resistance.

So what are we going to do about it? Continue to be patient and look for quality stocks that have pulled back to areas of support.

That said, take a look at NOW:

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Here we have a stock in a confirmed uptrend that's simply pulled back to multiple areas of support (green uptrend channel, blue prior consolidation, 50-day nearby as well).

A break above the pink line triggers a long side trade.

AMGN is another good example.

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We issued a Trade Trigger emial alert on this one as it's breaking above the pink pullback off highs line.

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Disclosure: I am long AMGN.

Success in the stock market is all about managing your trades and your expectations surrounding those trades. Below are 3 examples of trades we closed for our subscribers and our methodology of why we did what we did.

NQ (We were long 500 shares at $8.04)

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GLUU (We were long 500 shares at $2.61)

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When all is said and done we walked away with a gain of $395 or 9.8% in NQ and $270 or 21% in GLUU! Between the two of them it was a gain of $665.

Why focus on $665 in gains? Because gains like that each week is $2,660 per month which is $31,990 per year.

On a $100,000 account, that's a 32% return all while never being more than 50% invested as we rarely if ever get to that level of being invested.

On a $50,000 account, it's a 63.8% return

Even if you earned $665 every TWO weeks, that's $1,330 per month and on a $100,000 account it's a 15.9% annual return and a 32% return on a $50,000 account!

Why not hold them for more gains? Because in today's market, we'd rather go for what's in our hand vs. playing "Let's Make A Deal" and risking our gains for a potential flop prize behind door number 2.

We happen to like both companies and that MAY be the problem -- becoming attached to the company and not the stock. As Bill O'Neil says:

"A company is only as good as its stock."

Think about that statement. Now apply that to AAPL. Sure, great company, great cash flow and all the other great fundamentals under the surface, but what about the stock overall? After every low the stock gets a bounce but that bounce fizzles and lower lows soon follow. We took a shot at it on a retest of the lows in the 425 range and that retest of lows failed plain and simple.

AAPL (We were long 20 shares at $426.87)

Rocky says AWESOME! Awesome? How can Rocky Balboa say "awesome" when we took a $35 loss? Simple, because at All About Trends we practice what Rocky preaches and that is:

"Sometimes it ain't about how hard you hit, it's about how hard you can get hit and keep moving forward. How much you can take and keep moving forward because that's how winning is done!"

That said we took some punches with AAPL for a while when it fell apart. At the 385 zone, we were down 42 points or $840. We never sell a damaged issue after it's fallen. We always wait for a bounce. We faced our fears during that time and managed our fear of loss while in the zone loss zone only for us to bend like a willow tree and wait for the bounce no matter how uncomfortable that felt. Sure enough this issue bounced and our $840 loss turned into a final loss of just $35.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.