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We focus on trading strategies that have historically given traders a significant edge when it comes to investing in the stock market. We have worked under and have been trained by some of the top investors of the past 25 years including WILLIAM O’NEIL(bestselling author and founder of... More
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  • Why Jim Cramer Is Wrong On Goldcorp (GG, GLD)


    When Jim Cramer stated that he has been recommending 10-20% of your portfolio should be in gold he also mentioned that the stock GG should not be down on a day like today(June 1).  We say of course it should be down.  In our mission to help investors and traders sort through all of the meaningless data and opinions that they listen to everyday and enter and exit into positions profitably, we felt this was a good opportunity to discuss where 90% of portfolio managers and individuals in the market get it wrong.


     

    GG is down on a day like today for a couple of very simple reasons and they are all based on understanding  the tools one should use to trade with over the short term, technicals.  Let's take a look at the chart of GG above.

    One can see GG had a big run followed by a heavy volume selloff through critcal support at the 50 day moving average level.  This was followed by a lower volume bounce off the next obvious area of potential support at the 100 day moving average level.   This bounce lasted 2 weeks and ended this run up 5 days in a row.

    Experienced traders know that stocks don't typically go up more than 5 days in a row without taking a breather and even if they do the longer they run, the more likely they are to get caught up at technical resistance levels.  We also saw one of our short term  trademark reversal patterns on May 31 where a stock hits and obvious resistance area, reverses off the new highs only to close at or below the open for the day creating a large reversal body on the chart. This is normally a red flag and we can point to countless examples where this has happened.  Once an area such as the 50 day moving average is breached and a bounce occurs it is very common for that old support to turn into a point of reference for further profit taking and selling pressure as well as a place where shorts add to their positions.  Odds favor this happening a majority of the time and this is what is going on here today.

    Remember, trading using fundamentals or opinions over the short term can lead to severe damage to your portfolios.  If you must use fundamentals or a story as a backdrop for your investing this is fine but please use the technicals (technical analysis) to tell you WHEN you should be buying and WHEN you should be selling.  This will supercharge your portfolios performance and let you understand why stocks behave the way they do on days like today.


    Thanks,

    www.globalchartanalysis.com
     


     


     


     


     


     

     


     


     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jun 01 3:32 PM | Link | Comment!
  • The Markets Big Test At The 50 Day MA (SPY, IWM, QQQQ, DIA)

    To View This Entire Report With Chart Click Here
     

    Market Confirmation: Market Uptrend Broken

    Short Term Action: Old support levels being tested in attempt to re-establish uptrend
     

    We are in day 3 of a bounce after surviving one of the ugliest weeks in the last year. Just like markets can’t go straight up without pulling back and refreshing itself, a market can’t go straight down without bouncing. It’s where we bounce and what the volume looks like that tells us what will most likely happen next.

    The market bounced last week at an obvious support level, the 100 day moving average, after slicing through a key support level earlier in the week. The volume was heavy on the downside and we are still seeing very anemic volume on the up days. This pattern almost always is very negative but if we can retake the 50 day moving average and hold it for a couple days then the bulls have the chance to regain the uptrend. What is important to us isn’t whether the bulls win or the bears win but that a tradable, predictable trend is established.

    Despite the fact we had 3 up days each day gapped higher and either sold off or traded sideways into the close.  The small and midcaps are showing the most strength which is good.

    Here is where the big test is for Tuesday right at the 50 day moving average. Breaking support levels is one thing but when old support levels as important as these turn into new resistance levels, this is where things can get ugly to the downside.

    S&P 500

     

    Dow 30

     

    NYSE

     

    NASDAQ

     

    Russell

     


     

    NEW SETUPS

    No new setups yet


     

     


     

    Mar 22 2:37 AM | Link | Comment!
  • Stocks To Trade For Thursday-MOS, EXPD, VRSN, AGU, C, HLF

    To View This Entire Report With Charts Click Here

    We continued the pullback on Wednesday that started on Tuesday and although the selloff wasn’t as sharp, the volume did continue to grow. This is the largest pullback since November where we had a false breakout to the upside. The big money laid into that breakout hard but the panic subsided and we found solid support at the 50 day moving average. We traded sideways for a couple weeks before being propelled once more to new highs.


    NASDAQ


    DOW

    SP500

    This type of action would be welcome but we do always have the possibility of a complete melt down like we called back in May of last year. We were out near the top before the bottom fell out and dropped nearly 20% in a short period of time. Most of our older trades have plenty of support and profit cushion to ride out pullbacks like that but the newer trades are always very susceptible to these whipsaws. This is why we will be pulling the plug when we see the first sign of weakness

     

    There were several late attempts to lift the market late in the day but these attempts all fell flat. We had a number of our open positions close the day with long tails telling us that they may have whipsawed out the weak hands and are ready to move higher but due to the heavy volume and how stretched this market has been, we aren’t willing to take any new trades here.
    MOS

    EXPD

    AGU

    VRSN

    C

    A couple new positions from last week actually rallied huge and are already up nicely. These are the type of trades to look for during these weak periods. The wheat does get separated from the chaff and we will see which stocks will be the big winners during the next rally.

    HLF

     

    CLR

    We had quite a few of our sturdy trades actually start to crack today. They started breaking loose from their tight ranges and through support and on higher volume. It could be some minor profit taking or it could be the start of something larger. We must watch closely.

     

    You also must ask yourself do you want to ride this out or do you want to lock in profits here. The downside for many of these can be 10-30%. Even though we have a number of names that are up 50% and others like VRX that are up 183% it’s a tough call. We have to base our decision on how many solid support levels each stock has and how far away they are.
    We would close the following stocks if they trade any lower: DE, TRW, ILMN, JDAS, VAR, SAM, SLH, HAS, POWI, SMTC
    CYD closed out trade today with a 61% gain

    NEW SETUPS
    No new setups for Thursday
    Market Confirmation: Market in intermediate term uptrend

    Short Term Action: We are still looking to buy on pullbacks but market is currently too stretched to buy here. We are currently letting our winners run and weeding out stocks that are stalling out or breaking support levels.

     

    Thanks,

    www.globalchartanalysis.com


    Feb 24 12:21 PM | Link | Comment!
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  • NVDA is still running and up 36% from our Oct 13 entry point. Could hit $18 area but will most likely take a breather there
    Dec 7, 2010
  • Liking our DIN setup from this morning. Will look to lock in a quick 2 points on 1/2 positions and move our stops to breakeven to let it run
    Dec 7, 2010
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