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$PKT -- all we ask is 10% a week. 22.16 to $24.52 -- a gain of more than 10% or just under $1,000 -- http://on.fb.me/KBgol5. Jul 24, 2012
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$MLNX -- Bought as it pulled back to support. This morning we sold for a gain of 30.73 points or +48% -- http://on.fb.me/KBgol5. Jul 19, 2012
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$Ebay -- Use the downside spikes to buy names that are setting up nicely without violating support levels -- http://on.fb.me/KBgol5 Jul 17, 2012
Posts by Themes
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A Bounce May Be Imminent
What we want you to notice are a few things:
1. The Full Stochastic on each index are deep in oversold territory, so is the RSI (relative strength). A bounce is imminent.
2. Look how far each index has ran off the march lows. Honestly, it looks like a line out of a Bon Jovi Song called Lost Highway. "I don't know where I'm going but I sure know where I've been."
How much more do you want? After such a historical run to expect more without a intermediate term correction is just plain greed. And you know what? The market knows this too. We've talked recently about how this recent bout of selling may be the first shot across the bow of a deeper, more prolonged correction. We'll find out soon enough if that is going to be the case. The way we will find out is to see what happens with a rally attempt. Should we hit some short term resistance levels as shown in the 60 minute charts below and fail? Then that will be all we need to know.
While on the subject of the lost highway, we don't need to know where we are going either, we just need to trade what we see not think hear or fear all based upon what the charts are saying. That's what's allowed us to side step the carnage and not chase over extended momentum stocks that everyone just had to have all the while the market obliged with sure we'll let you have it -- in more ways than one.
Moving on to the OTC composite
In Summary:
There is a good possibility that what we've just seen is the first shot across the bow. This is what the big picture charts show. But the shorter term frequency charts show the opposite -- that being watch for a bounce. It's what happens during that bounce from here on out that matters. What we saw yesterday though looks good for some sort of lift being on the way.
To learn more, sign up for our free newsletter at allabouttrends.net and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."
Disclosure: No positions
Today's Gains Are All About The VIX
The blue circles mark lows on the chart above, now look at the chart below. Notice how when the lows are put in on the S&P 500 above those lows correspond with highs in the VIX?
Pretty neat huh? In the short term we will soon be relieving some of this push down. Typically that happens in the form of a dead cat bounce, Elliot Wave ABC 3 waves up, snapback rally -- call it whatever you want. That's when we want to be on our toes for laying out short sells. Recently you've heard us rant and rave to not chase stocks on the long side and let them come to you. Well the same applies here too only it's on the short side. We won't be chasing shorts AFTER we've already fallen. We'll let them come to us and the only way they can come to us is in the form of some sort of bounce by the market.
In the coming days you'll be seeing a lot of educational articles dealing with what to consider doing with a bounce in the markets and how to profit from it when it stops bouncing via short sells.
To learn more, sign up for our free newsletter at allabouttrends.net and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."
First Thrust Down -- The Pattern To Profit From In A Correction
Last week's action should not come as any surprise to those who follow us closely. Since the beginning of the month we talked about being overbought, we talked about not chasing the market or stocks, we talked about not reacting when the drive by media was saying WOW the market is up it's time to buy.
We talked about following the leading stocks and how for weeks leading stocks were selling off – that’s important as it always forecasts how the rest of the market isn't far behind. We talked about listening to the market and what it was saying. Now you know why we say what we say all the time. And sure enough here we are!
The chart above shows that of being in the zone for a potential turn higher in the coming days. It's the quality of that bounce when we get one that we are most concerned with.
The reason we are concerned with any bounce in the market is because of the damage that was done to the shorter term frequency charts as shown below. When this sell off started it blew through multiple support levels like a hot knife through butter. This is what happens when the masses are "All In". It's also what happens when sales increases matter again, err rather lack of sales increases over the last 6-9 months vs. the "Better Than Expected" buzz word we've seen during the most recent past earnings seasons this bear market rally.
There is a good possibility that what we've just seen is the first shot across the bow. It's what happens during all rallies from here on out. We are on the lookout for high quality short sell patterns over the coming weeks and will be spending a lot of time showing you the ropes of those patterns. If you are long only they are a great tool for knowing when to get out. If you are a true opportunist with no allegiance to any one side of the market then they ought to lead the way for profits on the short side of the market.
That said, the First Thrusts Down pattern is the ideal short-sell pattern to be aware of to profit as the market continues its correction.
A few recent examples are below:
That break of the pink line was good for a 10% pop on the short side. Folks 10% is an average annual rate of return in the stock market over the last 100 years -- all in 4 days!
That pink line was all you needed to know.
Next let's take a look at another issue in the gold sector that also bit the dust recently.
We suspect those major trendline break (green lines on the chart above) types are going to start showing up all over the place in the coming weeks.
To learn more, sign up for our free newsletter at www.allabouttrends.net and receive our free report – “How To Outperform 90% Of Wall Street With Just $500 A Week.”
Disclosure: No positions