Stock pick for 02/06/2012
I like to write few words about market situation. I like to note that this is just technical view and I won't talk about econo0mic or world indecision etc. Please take a look on three weekly indices charts. First what we can see is that all are already on the move and those who follow me know that for trading plan I will use pattern (consolidation, rest) what will give me possibility for acceptable risk/reward possibility. First conclusion is that we must wait for patterns because those charts look like running train and it is dangerous to jump in when they are in full speed. But ok, there are many charts out here and very possible we will find some consolidations for individual action. That is correct and trading ideas will prove that. Point is that will like to explain risk. We can see that DIA is at previous high resistance area, SPY has some room for more upside action but we can see that SPY is already in resistance area. Resistance is not exactly price, it is area and SPY reached that area what we can see on the chart. Maybe will be some more upside, maybe not, maybe will explode without rest and no one can know that. But we can recognize risk and that is what is very important for us. The QQQ also can stop here (big resistance is $65 area) and $62.50 will be also good resistance area. Point is that charts are at resistance areas and they are strong. Pace is good and volume is good. At this moment I don't see reason to short those charts; also I don't see reason to take long trade. From risk view it will be best to sit and wait. But those are weekly charts and we could wait several weeks and I'm not sure that most traders have that patience. I hope that conclusion about high risk have sense to all. We have two options: one is to stay in cash and wait and another is to look for individual weak and strong charts in hope that we will took "own way" chart. But point is that we can't use full risk, and that is personal decision and I just like to remind that. My focus will be same, but again it will be with maximum 50% usual risk and in the live trading room I will be more focused on intraday setups because I think that right now intraday setups (5/15min) will give us smaller risk. It is very hard to email those ideas on time so please if you will take any swing possibilities don't take too much. I was trying at Friday with SPPI intraday setup what could turn in to swing and that is what I will try to find in the future. But I like to NOTE again that is important to use proper risk there. Stop will be smaller but setup will be more aggressive then setup based on daily or weekly charts. I really hope that my explanations are clear and if that is not true and if anyone feel that something isn't clear please feel free to contact me and I will be happy to give additional explanations.
Wish you all great trading week
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