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Full-time trader specializing in intraday scalps in small-cap and mid-cap stocks using technical analysis and macro trends. My portfolio generally consists of 10% swing trades and cash in between scalps. Partner and live trader at Visit us and trade with the BULLS.
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  • Keep Riding the FED Rally

    Can’t fight the FED.

    Despite the employment figures and overall stagnant consumer confidence numbers, the equity market continues its relentless march up.  Traders actually liked the bad news now that the odds of QE2 becoming a reality has increased – So, everyone is continuing to trade the story – the Fed won’t dare let the market drop (don’t worry about that dollar thing).

    It’s not just the individuals and hedge funds who are participating in this rally.  Thanks to the Fed’s endless  T-bill buying and money printing, all the big players (ie. Goldman Sachs (GS 152.66 ↑1.03%))  are flush with cash and able to put riskier asset trades (POMO at work) on their books.  It will be interesting to see if a battle breaks out between Fed intervention and earnings numbers over the next few weeks.  If earnings are not so rosy, the Fed will have to work even harder to promote the illusion of happiness. Elections are just a month away ;)

    It’s hard to say where we’ll go, but let’s just play what’s give us, shall we?  The trend is still up, so I’m looking for long setups for Monday.  Shorts will present themselves if the market turns, but I’m focusing on the kool-aid train… and I’m going to drink it up.

    Here are a few stocks I’m watching for swing long entries (I’ll post my scalps and momo watch list later this weekend on

    ISLN  (26.14 ↑3.98%) – this chart is hot… look at the history of consolidation, then move up.. we’re there again.  A move over horizontal resistance here with MACD positive cross will bring in more swing buyers.

    click to enlarge

    WYNN  (93.85 ↑5.14%) – inside rising wedge.  has energy.  would like to see a small pullback and then stay in the swing as long as bottom trendline of the wedge holds support.

    RVBD  (44.19 ↑2.24%) – Nice job holding $42.  An entry long above this horizontal support level sets up nicely for a swing with stop just under $42 and above SMA50.

    CAT  (80.37 ↑2.07%) – as long as it holds above $80, buyers will likely come in.  That would probably be the swing stop spot for short term traders..

    LFL  (29.74 ↑0.47%) – I’m going to wait for a move above $30 before considering this ascending triangle long.  Right now, it’s just chilling.

    JASO  (9.10 ↓-4.11%) over 9.5 would confirm continuation of swing long and possible entry. Stop just below.

    I’ll have a pile more later this weekend on

    Stay nimble.

    Disclosure: no positions
    Oct 09 11:10 PM | Link | Comment!
  • We Need Good Earnings

    Last night I anticipated the numbers this morning would not look too promising, resulting in a hard tumble at the open.. Well, I was partially right.  We did cascade down on strength in the dollar to the 1151 range on the SPX  (1158.06 ↓-0.17%). However, the numbers were not that bad. Let me rephrase that, they were horrible, BUT within or slightly better than expectations.  We have obviously become quite satisfied with merely staying out of the fire.  Even with the positive news, the market quickly gave up gains early this morning proving, yet again, that the dollar rules the show.  I’m actually happy to see earnings season so we’ll have other catalysts besides global currency depreciation / manipulation.

    Earlier today, I was discussing the issue of confidence and the overall economic picture with my dad.  Why doesn’t employment start rising?  Why are we stuck in a rut of no growth combined with increasing debt and decreasing optimism.

    The U.S. is trapped in a battle between political talking heads who are less interested in reinforcing the idea of confidence and instead, more interested in being elected.  We’re stuck because what else should we be? You would probably think your neighbor was crazy if he was buying all kinds of products and spending frivolously and behaved like he had no care in the world.  “What’s wrong with that guy?  Doesn’t he know that times are tough and our future is in jeopardy?” Our media and politicians don’t support the idea of confidence… they support pessimism, savings, and caution.  It makes for more engaging news stories and the best way to get elected is through fear.

    The signs of pessimism are everywhere.  Just turn on your TV.  The Democrats are destroying the country; Take back America; Republicans don’t support the middle class, etc. etc. Put the big events of the last few years together and the reason we’re stalling and not quickly coming out of this recession is obvious. Let’s not bury ourselves in monetary policy, TARP, Obama, etc.  Let’s look at what the hardworking individual have experienced…

    • An endless war in the Middle East with no clear victor, unsustainable costs, waning global support, and American lives lost.  No matter what your political stance, it’s emotionally draining.
    • Banking crisis – we don’t care about credit swaps, who caused what problem, Bernie Madoff, etc.  What we care about is the balance in our 401Ks… and those balances got destroyed.  We suddenly question something that was a stable aspect of American life – strong banking system and a savings plan that could help you live out your old age comfortably.
    • 911 – Proved the fragility of every human, country, and government.  We’re not invincible.
    • Political boxing matches – we never hear from the politicians that all is good or, more importantly, what will make it all good again. And when I say “make it all good”  I just mean that which will make us comfortable and secure again.  Remember that confidence is something you derive from not only your view on the world, but the perceived confidence of others.
    • Foreign competition – We have come to realize that the BRIC countries are quickly catching up to us in innovation, political might, and education.  That threatens our confidence, justly or not.

    The market finished down today. Why?  We had good news this morning – retailers showed some positive numbers and the jobless claims number was better than expected.  But, we were down.  Why? Confidence.

    Tomorrow is the big unemployment number.  If that doesn’t give you heartburn, then the thought of  the upcoming earnings season, and future FED intervention, will. We just don’t know and we are not about to do anything (spend our money) until we do.  Of course, we never know, but confidence overrides absolutes.

    Back in the 90s, we had a boom thanks to the Internet (.com boom).  But, if you really look at why the boom, you see that it was because we felt good about American innovations and all of the great ideas supporting the next big thing – the Internet.  We were confident in our ingenuity, our creativity and our product. We got to show the world and stick out our chest… that’s why we boomed… confidence.  It wasn’t based purely on reality (the bust that followed), but it was a time of great growth of the engine of pride and American unity around an idea.  We don’t have that today.  What is our next big thing?  What are we going to be excited about?  Or, are we just going to bicker amongst ourselves and have nightmares of China taking over the planet.  LOL. We don’t worry about stuff when all is hunky dory.

    So, here we are… holding on to that glimmer of hope that we’ll come out this recession and strive again.  I’m sure we will, but it’s going to take some time.  The first step is proving corporations are still in business.  The earnings season this time around will probably be one of the most important in recent memory.  Consumer confidence is slipping and time does not cure the current fear we live under.   With a good earnings season, there may be enough spark to get the consumer to spend a little money over the holidays.. that should ultimately turn into hiring.  All of our political battles have already screwed us from being the global leader in clean technology. That was supposed to be our next “Internet”.  We need these earnings numbers.

    Heading into Friday, it’s hard to say what to expect. I doubt the unemployment number will move much and we desperately need it to stay under 10% – it’s a psychological thing – just like the economy as a whole.  The government has artificially propped up the equities market over the last month and a 1/2 to buy us confidence tickets headed into earnings.  We need earnings to carry us through.

    See you tomorrow.

    Stay nimble.

    Oct 07 11:51 PM | Link | Comment!
  • Rocket Have More Fuel?

    Let's step back a little bit and see what happened in today's market.  Were we really up over 2% in the SPX today?  You gotta be kidding me.

    Ok, ok. It's not much of a surprise if you look at the macro picture.  A few obvious catalyst today, but is it enough to keep us going?

    • Japan - thanks, Japan.  The more and more countries attempting to devalue their currency, including the U.S., the more securities AND gold become more attractive.  The sell off in the dollar is out of control, in my opinion, but you gotta ride the wave and hop off the surf board before it crashes into the rocky shores.
    • POMO - We experienced a very strong POMO sell today. It was enough to help today's early run and give the big players plenty of cash to take on some risk trades.  And to that point, tomorrow we'll see some more POMO activity before what looks like a break for a week, or so.
    • ISM Non-Manufacturing Index - Good report today from the ISM Services report helped the momo and kept buyers in throughout the day. Nice uptick in chart below.
    • Technicals- There was clearly a short squeeze today as the SPX pushed strongly through 1150.  The last week has actually started to show some heavy bearish divergence on the SPX chart. This brought in a good number of shorts and also kept a lot of folks on the sidelines. When 1150 was taken out, the closet bulls came out to buy the move and the bears covered their shorts.

    All of these catalysts were well aligned today and pumped up just about every sector and commodity.  It feels like there is no end in site to this run.  Well, maybe there isn't.  But, we have to trade smart.  One up day, strong though it may have been, does not mean life is good.  A few thoughts to consider when measuring your risk this week.

    • After tomorrow's POMO, there will likely be less FED involvement through Friday.
    • Earnings season hasn't really kicked off yet.  There have been a few reports, but the bulk of the economic picture will come over the next few weeks.  In other words, this rally is not based on fundamentals - it's based on chasing a move, the dollar's demise, a few economic numbers, and Japan(today).  I don't plan to over expose myself to the long side until the earnings picture is clearer.  Translation - more intraday scalps and less swings.
    • Lots of data to come this week that could move the markets in either direction: The ADP National Employment Report, Initial Jobless Claims, Non-Farm Payrolls, and Unemployment Rate.

    My feeling is that we'll continue to see some strength tomorrow, but keep an eye on the dollar.  If it shows some strength, you will likely see some profit taking in the equities market.  It's hard to know what will happen later in the week.  It's clear that the market is fickle and will move on a whim.   Technically, 1150 is now support and we'll have to be cognizant of this level during our intraday trades. For now, I'm not willing to take too many trades to bed and am currently over 80% cash, but am loving the intraday activity.

    Stay nimble.

    Trade live with me at

    Disclosure: Long GLBL, FCX, SONC
    Tags: SPY, FED
    Oct 05 8:25 PM | Link | 2 Comments
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