MSTR

MSTR DAILY

MSTR WEEKLY


No doubt this is a dangerous stock to short, but I did let me explain why.
First lets look at a weekly chart. The main thing that jumps out at me is MACD, its crossed over in a big way and momentum should carry it lower. Just as it has in the past. Look at past instances when MACD was crossed over like it is now. I will be looking to cover when MACD nears the zero line. Also its 20 week (blue line) has acted as resistance. As it has in the past when the momentum was on the sell side.

Next lets look at the daily chart. I see a head and shoulder formation along with a diamond pattern, pretty negative stuff indeed.

I must say I would much rather own this equity, but I must adhere to what I see. My position size is small while Im short. This stock can gap up or down 20 bucks, so strict adherence to stops must be obeyed.

Weekly Revision

I took off my pair trade in UPS/FDX. I took my profit on the long side in UPS, exactly where my previous post showed. I am still short FDX though, but it is on a tight leash. Any move above last weeks high and I will probably cover. All in all the pair trade is profitable as of the close on Friday. If FDX continues to move lower then it will be even sweeter.
I also took off my pair trade in NVLS/XLNX. I took my profit on NVLS and I am still short XLNX.
A few other observations or stocks to take notice of. I normally have a core holding in TEVA but I sold when it went above $60 and its killing me. I always harp about what a great stock TEVA is (check previous posts) technically and fundamentally and I took myself completely out of it. Also another stock of note is CELG I will be looking to get back in to that on any good weakness.

Watching and waiting, FFIV, BCSI, RVBD, TCK, OTEX, LLL, HSP.

Current positions,
Short- XLNX, ALTR, ASML, GG, IWM, KSU, FDX.
LONG- DB, UUP, C

ALTR Semiconductor

ALTR WEEKLY

I wanted to post a chart of ALTR. I shorted ALTR on Thurs,Fri. This is a trade I will be patient with it. I will need to see a huge pop above the resistance line marked on the chart to make me cover and if I have to cover my loss will be negligible because of my entry points. Otherwise I will be sitting on my hands. I just dont see a lot of upside left in it. The risk/reward trade favors the short side.

Couple of moves

I went short BBBY again today. See prior post regarding BBBY analysis.
I also went long DB today. I am posting a weekly chart of DB.
Another pair trade I have on at the moment is long NVLS and short XLNX.

Pair Trade

UPS WEEKLY

UPS MONTHLY

FDX MONTHLY

FDX WEEKLY




I am currently long UPS and short FDX. I know sectors move unison, but I feel money will be flowing into undervalued assets and I believe UPS is undervalued compared to FDX. Plus I think UPS has more room to run on the upside. Here are their weekly and monthly charts. FDX is currently bumping up against long term moving averages, while UPS still has a bit to go before hitting its same long term moving average's.

NG

NG WEEKLY

I just wanted to point out this chart for my blog readers. Currently its testing it upper portion of its trend channel, so there is not much to do for me at the moment. As I see too much strength for me to short it. Therefore, I will be patiently waiting for a test of the lower channel to get long. Also, volume characteristics are correlating well with price during its current up trend.

XLNX

A took a smallish short position today. XLNX is in a nice up trend, so this trade is from watching the tape on it and it feels heavy. Im not looking for a big down move, but a buck or more will do for me.
The lateral blue lines on the posted daily chart are to illustrate the layers of resistance on the horizon for XLNX. I plan to short it at each level for a quick swing trade. Also I will get long at the 30 day moving average and sell at the lateral blue resistance lines.

What Can Brown Do For You

UPS DAILY

I went long UPS yesterday and the day before. Im looking for it to make new 52 week highs, at that point I plan on exiting most of the position.

Leaders and Strength

The market action this past week was pretty good. My longs clearly out performed my shorts, but I am more long than short about 70-30. Leaders acted very strong this past week, which should be a harbinger for higher highs in the coming weeks. I bought some NSC on Friday as a hedge against my KSU short.
Current holdings,
Longs AU,DOW,NSC,SYT
Shorts KSU,IWM,SA


I wanted post some names of leaders and strong stocks in this market, so here they are. I am looking to get long some of these names again.

FFIV
TEVA
WLT
CMP
CLF
TEVA
KOF
HSNI
PFF
SYT
RVBD
BCSI
CELG
LLL
RTN
NOC
BHP
OTEX

Miners and More

DOW 60 MINUTE CHART


I sold my GOLD long today way above my target, which was the 50 day, see prior post.
I had to sell it based on the larger trend, which is down based on my weekly MACD thesis. As I stated in a prior post any daily MACD cross over up while weekly MACD is crossed over down should be sold into strength. Therefore I had to adhere to my strategy.
I did add to AU yesterday as I believe this equity will also test its 50 day or higher. Most of the sector has already done so, this one will follow suit. AU tends to move last in the sector for some reason. Again the larger dominant trend must be recognized, so my entry yesterday is for a shorter time period.
I shorted XRT this will be on a tight leash.
I bought DOW today on a trend line break in my eyes. This is a short term trade.
I am still short KSU, but I did buy NSC a few days ago on the long side for a scalp. Sorry I did not have time to post it due to the little ones arrival. My post should be more regular again as things have got back to normal in the household.
I am watching FDX for non confirmation of its recent daily strength. As weekly MACD is crossed over down. Remember I keep it simple and stick to my strategy's and watch for non confirmations on a weekly time frame. I always try to be on the dominant side of the trend as most of my losers come when I forget this simple rule and know all weekly MACD's are crossed over down for the major indices at the moment. A side note IWM is non confirming its daily chart strength on a weekly time frame. I will be monitoring it closely.

Quick Update

Well, I added to my KSU short today, it hit my upper projection target where I wanted to short more, so I stuck to my strategy and we will see from here. I really like the set up. KSU hitting new 52 week highs during confirmed market correction. Talk about bull traps, just refer to my prior post regarding my initial analysis on KSU. I will now add even more if it starts to go in the direction I desire.
EEM looks poised to test $36.18 in the near future. I will be shorting EEM tomorrow, hopefully on some intra day bump up. The chart posted is for EEM

Conversations Regarding MACD.

UNP WEEKLY

I had a lengthy conversation on Friday with a young chap who happened to work at a hedge fund, while I was eating at a New York style pizza joint in Glasgow, Scotland. This was after a required meeting to gain my right to permanent residency in the U.K. The meeting was pure coincidence. He saw me looking at my charts while I was eating.
We got to talking about MACD. My point to him was while weekly MACD is currently crossed over down it was time to be short or in cash. He offered his views, but he was more of short term trader, scalper, day trader.
We looked at many charts while he tried to test my theory in a socratic manner. My theory to him was from a intermediate time frame and that while weekly MACD was crossed over down one should be short or in cash. Sometimes I am nimble will take a shorter term trade if conditions are right for me. Thus he pointed out that the market lately was not conducive to intermediate time frame trading, to which I concurred.
We then started looking at daily charts and comparing them to weekly charts in terms of MACD. Such as MACD can be crossed over up on a daily chart, but crossed over down on the weekly. My point was when this occurs they are short term long trades to the upside, but the larger more dominant trend will assert itself and the selling will pick up again, leading to lower prices.
One thing that I thing I think he walked away with at the very least was a new perspective regarding time frames.
We looked at many charts but the ones we focused on were the major indices and the rails. My focus was on the most recent bull from 03-07, as I think this is the most relevant for many reasons, but I will not labor this article with them at this time, because he did quiz me regarding decades of data and charts and why I think the most recent bull is the most relevant. If one looks at the SPY MACD history during the 03-07 bull market period, it was very predicative when to sell, get in cash or put on some hedges to protect your longs. As long as MACD is crossed over down the sell side was dominant and the daily MACD cross overs up are nothing more than counter trend rally's in the dominant time frame. Sometimes they even made new highs while weekly MACD was crossed over down and never crossed over up confirming the daily or weekly strength. Why not just be patient and wait for weekly MACD to cross over up then you know you are on the side of the dominant trade. The only caveat for buying on weekly MACD cross over down is you feel Mr. Market is mis pricing an equity or they are throwing the baby out with the bath water, this I can not argue against it. I just hope you have done your own DD.
Currently, for me I do have some longs for this attempt at recent highs, but I have spent most of my time strategically adding to short positions.
I also sold some of my miners that had nice gains, still have a few I am being patient with, but the leash is getting short.
One final thing is my wife is giving birth to our second child tomorrow, so I will update as I can, but for now I am adding to shorts at low risk points and the market will have to prove me wrong and take me out and that wont happen unless prices make new highs and weekly MACD confirms.

GOLD

I am already in this stock from when the daily MACD crossed over up. Those looking for a quick trade could enter this position anytime in the next day or two and expect it to test its 50 day. Which would be around a + $4 gain, as of this writing. Every other miner or PM stock has done so. Therefore I would expect this equity to do the same. Remember sectors move in unison. Plus GOLD is one of the stronger names in the group, but it is very volatile as well.

Switched

After reviewing charts over the weekend I decided to make a change to one of my positions. I closed out my UNP short for break even. I am now starting to build a short position in KSU instead. I entered part of my position this a.m. at $33.06. My other entry points are $33.85 and $34.20 or higher. My time frame for this trade is a few months.
Why the change of mind? If you look at all the other rails they have all breached their 90 days and KSU has not. Now KSU maybe the leader of this sector, but I doubt it. KSU may be in play for a take over, for all I know. However sectors move in unison and one stock in the sector will not be left unscathed, while the others get taken down.
How I see it is the others will bounce for a while before the whole sector gets taken down to test its 200 day and at this point KSU has the greatest risk reward potential for me based on my analysis.
I know this may seem counter intuitive but look at the volume recently in KSU. I believe the big money is exiting and shorting this. They are setting it up to play catch up with its sectors peers. Wall street must take prices higher to get people to buy, when they want to get rid of something. This is very different from retailers who must discount what they want to get rid of.
Also once price starts piercing its 20 week m.a. frequently, as it has been doing, its a tell tale sign that a significant move lower is on its way. Furthermore MACD must reset itself much closer to the zero line before the next up leg to new highs begin and MACD is still a substantial distance away from the zero line. If the past is prelude to the present price will try and move up to its recent highs and it may make new highs, marginally, but I don't think so this particular time. While all this action is transpiring in price, MACD should stay crossed over down and not cross over up, thus creating the divergence I am looking for that frequently happens in this sector right before a significant correction occurs.
I am posting daily charts for most the rails, so you can see how different the action in KSU has been compared to it's peers. The daily chart's show all the rails breaking their 90 day's (purple line)except for KSU. As I stated I do not believe this is the leader of the group, so it has a lot of catching up to do.

200 Day Moving Average

UUP DAILY

SPY DAILY

I thought I would point out some observations regarding 200 day moving averages. Of especial interest to me is what happens when price makes a first test of the 200 day, after putting in a bottom.
First lets look at SPY when it first tested its 200 day after bottoming in March 09. Notice how price broke through then moved down testing and finding support at the 200 day. During this time the 200 day was down sloping. Along the way price stayed above the downward sloping 200 day, allowing the 200 day to start its up sloping angle, signalling a trend change. If looking at charts making their bottoms during this time frame you can see how constant the pattern is.
I believe the same is true when price breaks down through the 200 day, it will break through and stay below for a few days, weeks. Then a thorough retest of the 200 day should occur and if the trend has changed then price should really never have multiple closes above the 200 day.
Currently the major indices are above their 200 day moving averages, but if they break this is what I will be watching.
However there are sectors, stocks where this is occurring now. One of the sectors is mining, so I think we will have a resolution as to whether the gold up trend is broke in a matter of weeks. On the other hand the dollar index has broke through its down sloping 200 day, so I will be watching for the subsequent testing of the 200 day which will occur for further clues regarding dollar strength and commodity weakness. Together this analysis should allow me to be on the right side of the market. If the dollar index holds it subsequent tests of its 200d and the miners can not get above their 200 days, well then it will be time to abandon the miners for me. As they are not a core holding for me. They are not something I like to hold for years.
Here are some other important indices,sectors below their 200 day worth monitoring, FEZ, any miners, banks.
Lastly, I do not think this market correction will be over until every important sector has tested its 200 day, so be patient on the long side for entry's and hold on to your shorts if they have not yet hit their 200 days, thats my plan and has been working. I am only long the miners because I am willing to pay to play to see if the dollar index has enough buying interest to change its trend and I tend to think not, but I am not married to that thesis and will jump ship if the above happens.

For the dollar index I substituted UUP and the yellow line on the charts is the 200 day.

UNP

I entered UNP on the short side yesterday at the close. I will add to it at the 50 day. My position size is small as general market conditions require at the moment. This also allows me to add to it if UNP nears its recent 52 week high and MACD is still crossed over down. This type of pattern in UNP occurs all the time or it did from 2006-2008. Until it quits working I will continue to trade it. My first target is the 200 day m.a. and then $55.50 area.

X Marks the Spot

I added to some miners on the long side. I bought GOLD yesterday at the close.
The premise for me buying GOLD is simple, MACD has crossed over. Normally I apply this simple signal to miners like GG and GDX, it has been a very reliable buy and sell signal for the past nine months.
I am posting the daily chart of GG. Notice the MACD pane and all the X's. They illustrate the price action after a MACD cross over. I am iffy whether will see new highs like past instances, but the pattern has a high probability of a nice pop to the upside. I do expect price to test the 50&90 day at the minimun for all the miners.
Also all the 60 minute charts of the miners have nice setups, which further validate's my thesis.
Full disclosure I am long AU,GDX,GOLD,IAG,GG.

Updating

IWM WEEKLY


IWM DAILY



Well I got stopped out of my DOW for a minimal loss. I kept it to a minimal because I knew the market was weak and kept my position size small and had little tolerance for weakness.
I did short IWM breaking the Jan 29 low. My target is now the 200d and 50 week m.a.. Any bounce to the $61-61.50 area I will add to my short position. Otherwise my targets are set.
UNP is on my watch list for shorting. Anything near $64 is where I will enter. I stared at early this week when price was a few cents away and I talked myself out of it. Lately I have been finding for me the hard decision's on entry's have been the right decision and the one's I enter without hesitation have been loser's. Therefore I will use that piece of information in my trading. Also longs are simply not working, which is another sign to stick on the short side until they quit working.
I have kept my AU options as they are leaps and time decay is not working against me at this point.

DOW

I bought DOW at its 90d m.a. this morning. I did not take a huge position because I feel like the overall trend in the market is weak. None the less DOW's daily chart is very nice, lets take a closer look.

Notice how volume is very strong at each successive higher high. The vertical blue lines in the price pane are just to illustrate where price was on those higher highs. The X's in the price pane are to show exactly what I see as far as volume is concerned and how price and volume are confirming each other and the X's in the MACD pane show a good entry points as far as momentum and timing are concerned.

The pattern keeps repeating itself and during the last higher high volume was strong again indicating no divergence to be wary of, as volume is a leading indicator. Therefore I took the trade and my stop will be placed below today's low. However I will need to see successive close below today's low for me to act on my stop.

A side note, I was asked why I alway's refer to the 90d s.m.a. in my charts. I feel its a moving average that is reliable in the intermediate time frame as far as acting as support or resistance and that time frame is my bread and butter as a trader. I will expand on moving average's and my philosophy regarding them in another post.

Laundry List of Longs

Here are bunch of stocks and my ideal entry points. Some are far away, but I have learned unthinkable prices often get tagged.

LFC, @ $52.00, which is where a up sloping 50 month m.a. reside's. Have a look at monthly chart to see what I mean.

CELG, between $53-51, this one is for more fundamental reasons, but it's charts are okay.

PBR, near $37 which is where a up sloping 50 month m.a. reside's. Have a look at monthly chart.

SYT, between $43-45.

IHS, near $47

VWO, near $35. I like the holdings of this ETF.

Weekly Wrap Up

A lot of action transpired during the week. However I did not have much to say throughout the week. Felt some pain on my mining stocks, but thankfully I was hedged with some shorts in names like IWM,CCI,ORCL. My largest long position is AU and I did not sell any last week, nor did I add to the position. AU's weekly chart is showing price is at decent area of longer term support where buyers have appeared in the past. Plus it very over sold, but we all know over sold can become even more over sold.
AU's long term trend seems to be intact still. I will be watching the $41 area as a key inflection point for the bounce that is on its way.

As for the general market there was considerable technical damage done. We must now repair that damage before a move higher ensues, in my opinion. I will be watching for accumulation and follow through.
There are particular patterns I am scanning for on the short side, if this market is toast, then they will start appearing everywhere and I will make them available on this site, when they occur. These patterns are highly reliable and predictable, in the past anyway.

I took a small long position in WBD at the 20 week m.a.(which is the blue line). I have been patiently waiting for a good entry point on WBD. My stop will be around the tail of the weekly chart candle stick.

Random Musing

I was pontificating the recent market action and thought I would post my musing.
Gold has been a leader in the market since Nov 08 when it bottomed before the indices did. Since then the two have pretty much moved in tandem, but gold usually bottoms and tops before the indices do. Recent action has gold topping well before the indices, as seen in the accompanying chart. When I say topping I do not mean bull market top, but rather profit taking, which is healthy action. Could it be something more sinister? Sure it could, but I think the action in the charts would pretty much telegraph that in plenty of time to prepare ourselves for such an event. Plus seasonality is on our side at the moment.
Now that gold has made a substantial correction and is in the process of bottoming in my opinion. I believe the indices are in catch up mode and once this process of catch up is completed the prevailing uptrend will resume. What level would I expect $SPX to hit for this process to have climaxed? I presume right around 1090-1100, but markets do like to test the extreme's and the weak. While the $SPX is testing or nearing the mentioned levels. I would expect gold to be shaping up the right side of its base in preparation for a move to new highs. Which in turn will give further indication it is safe to initiate positions on the long side again in the indices and individual stocks in other sectors. At the point gold and the miners are nearing new highs I will probably exit most (90%) of my gold plays and evaluate the current situation at that time.
In the accompanying chart when I say gold I am using the ETF proxy for gold which is GLD and is the solid back line. This chart just provides illustration of the price performance between GLD and $SPX.

AU

I bought a substantial amount of AU yesterday at its 10 month m.a.. The chart posted is a monthly view. For me this is great entry point and we will see how it play's out. I have been waiting patiently for price to test that moving average. Notice during the uptrend since Nov 08 to present anytime price hit the 10 month (green line), it was a pretty good time to enter and be patient. Also I notice how the 20 month m.a. (blue line) has just turned up in Nov 09, so this signals strength to me and that the current trend should have some more time and juice left in it.
I know the dollar chart looks problematic for precious metals at the moment. However the DXY is still below its 200 day m.a.. This dollar strength move should coincide perfectly with gold and miners hitting their respective low's as the dollar tops out at its 200 day. Anyhow there is no guarantee that this inverse relationship has to remain as it has been.
If this happens to be an incorrect assessment, then my entry on AU is at a low risk, high reward entry area and my losses should be minimal.
I will be watching it closely and intently.

RINO

Im not much of a momentum stock trader, but I think its worth mentioning that RINO filled its gap. I think if it shows strength for the next few days it will be worthy of a probe on the long side. My mental stop would be below $24.25, but price would need to stay below that level for a few days and show continued weakness. Coincidentally the 90 day s.m.a currently resides @ $24.59, therefore there should be plenty of support around my mentioned levels. Which is why my exit strategy will be based on action and not price. I will be monitoring intra day charts closely for clue's when price is around my mentioned levels.
As for an exit price $31.00 and higher seems to be a good point to take half of the probe position off and let the rest ride and set the stop after the first target is achieved.

NIHD

DAILY CHART

WEEKLY CHART

MONTHLY CHART

Posting daily, weekly and monthly charts for your perusal. I think the near term target is $47. $47 is where the 200 week moving average resides and the 50 month average is at that level as well. In my eye's this is a magnet trade.
If you look at the monthly chart there is not much resistance. The .382 Fib is at $40.73 after that I believe its clear shot to $47. I am just waiting for a decent pull back to the 30 day e.m.a or a stochastic's reading below 15. Hopefully price is around the 30 day or 50 day when this stochastic reading occurs. This will validate my entry and analysis.

MWW

Not the kind of leader I typically like to trade, but none the less it does have a well defined channel. I am not in it at the moment, but waiting for a test of the lower channel to initiate a position.

CLF, the one that got away for now

DAILY CHART

WEEKLY CHART


Every time I look at this chart, I am amazed that I have not entered it on the long side YET!! CLF is testing the upper part of its clearly defined channel on the daily chart, which is marked in orange.
Then if we have a look at its weekly chart there is a gap between $58.26 and $57.10 that it is gunning for and I believe it will make it there. I just hope it gives me one more chance to get in at the lower part of its daily trend channel before it hits that target.
Hopefully it will be around $49 when it tests the bottom part of its channel and if my target is achieved, then its a nice +10% gain, in what should be a short holding time, maybe a few weeks.

Profit taking on jobs data

Took my profit on BBBY at the open today. Nice 1 day trade. Not much more to say other than I will be monitoring it for entry's. I feel about it today as I did in yesterday's post.
Also took half my short trade off yesterday on ORCL at the 20 day s.m.a. (which is the blue line). I will be looking for $23.77 or lower to exit remaining position, or getting stopped out at my initial entry price.

Good Morning BBBY

A short post on a quick trade I took this a.m. I entered on the short side. I took this trade right at the open (something I rarely do), the chart posted is a weekly view.
Now maybe they (institution's) will be assessing the fundamental's on this stock and feel its worth more than it has been at its peaks during the past 7 years and will break it out.
However the chart show's a clear level which the seller's seem to be comfortable booking profit's at and feel it's fully valued.

GG, AU, IAG

Wanted to show a chart of GG. I really like the action at the bottom of it's trend channel. Also MACD has crossed over which has been a very reliable intermediate time frame signal for buying since 2009. AU has a very similar pattern developing as well. IAG is simply testing a its trend line and previous break out area. Actually the whole sector is behaving nicely and in unison, which is very positive.
I own GG, AU, IAG.

TEVA AGAIN

I have been harping on about TEVA for many months now. Look back to older posts on this blog and I have given numerous heads up as well on other blog's. I will be looking to take some off the table in the $60's. TEVA is and has been a core holding for me, so I take profits when warranted, this allows me to add to my position at strategic points.
I do believe it should be on any long term investor's watch list. However for those of you who are looking for a LONG TERM entry point, now is not that point. For the nimble traders it is very viable to play the current strength.
I will post a monthly chart once again. I must say that is one nice long term up trending channel, but it is near the top of its channel, plus MACD and RSI are nearing their respective overbought area's. I have highlighted the chart with buy and sell areas for the long term investor.
Adding to the position once you get in at your desired long term entry point is a discussion I will talk about later, but exponentially increases your gains.