Wednesday, June 5, 2013
06/05/13 The Quick And The Dead
The Nikkei closed at 15,627 on May 22. It closed at 13,015 last night. That's a -17% drop in two weeks. Ouch.
The DJIA closed at 15,409 on May 28. I'm not suggesting we see a 13-handle on the DJIA anytime soon, but we should prepare for that possibility by deciding ahead of time whether and where to place stops. What if a -10% decline then becomes a -20% decline? -40%? Having stops (actual or mental) in place is not unlike hazard insurance- they will hopefully never trigger, but they will prevent a calamitous event from wiping you out.
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Got Random Thoughts?
ReplyDeleteTuesday scores as a bit of a bummer. The market tried to rally but came right back in. The Quack and Ps lost over ½%. The Rusty was the big loser on the day-down over 1%. It was more indicative of what happened internally.
So far, the indices only appear to be pulling back. However, as I said in the MIM, they have to stop at some point.
Interest rate related areas such as Real Estate and Utilities continue to slide. What's concerning is that more and more sectors are beginning to lose steam--Foods, Energies, Telecom to name a few. Even previously stronger areas such as Biotech are beginning to lose some momentum.
Again, it is not the end of the world, and no, you can't even see it from here. However, I would be concerned if more and more sectors continue to weaken.
A few big up days would make a huge difference. It would turn the frown the other way around. Until/unless that happens, you might want to be a little cautious.
So what do we do? Even with the recent weakness, I still think the best bet is to err on the side of the longer-term uptrend. The big caveat is that you wait for entries. As I preach (see my sermons at www.thechurchoftrendfollowing.com), that, in and of itself, can often keep you out of new trouble. And, of course, honor your stops on existing positions just in case. I suppose it is okay to start eyeing a few shorts. Just don't get too aggressive unless the overall market doesn't turn back up soon.
Futures are weak pre-market.
Best of luck with your trading today!
Hard 8% stops saved my ass on big CEF and GDX trades this year. The Wizard was wrong Bob!
ReplyDeleteMUX near the 52wk low would have been a good move, but how does one know?
DeleteI have made a lot of $ on it over the years trading, but the buy and hope amount I have in my kids custodials hasn't been so kind.
DeleteBeggars can't be choosers. No telling, maybe it multiplies many times over.
DeleteMcewen is sure taking his sweet time to work his magic.
DeleteThankfully some of TOF's ideas saved my ass this year.
ReplyDeleteAXLL - Can it hang onto morning wood?
ReplyDeleteHopefully in about a week I'll be back into the swing of things.
ReplyDeleteLooking forward to the additional eyeballs.
Delete...and witty commentary!
Delete"witty"
DeleteAlways pushing the outer boundaries! ;)
http://www.youtube.com/watch?v=0evW6v69yF0
ReplyDeleteFMD - Now can I claim that yesterday's action was a bull trap?
ReplyDeleteNext we have to see if the lower trend line holds....
NSPH - Illini, holler if NSPH retests low $3 area again, in case we miss it.
AXLL - Doesn't this chart look like it could revisit $15 area? It really wouldn't surprise me one bit, considering how stupid market price action is.
ReplyDeleteBought a couple thousand FMD at 1.20
ReplyDelete$1.20 does seem to have taken on a certain allure.
DeleteNeeds to recover $1.22 else it goes lower, I guess.
Deletehence the small starter order. 6% discount to what I sold at yesterday
DeleteBring on the Sector 9 Prawns!
DeleteDamned aliens....
DeleteBrandt - "Will Silver continue its cycle of one-day wash outs, brief rallies, then big puke outs?"
ReplyDeleteGDXJ - Can this one hang onto $12.28?
ReplyDeleteCECO.....really need to just start buying it again on every dip below 3 and selling the pop above 3.10. Been waiting on 2.95 but we arent getting there much anymore.
ReplyDeleteWLT bouncing up nicely
ReplyDeleteXHB up on a down day.
ReplyDeleteXPP - Retesting the lower trend area again, low $40's coming?
ReplyDeleteYRCW - There's sub $18.50 area, send in them bull flag Prawns!
ReplyDeleteAs I have been expecting, a lower high on the S&P futures chart gave way to a lower low today:
ReplyDeletehttp://www.finviz.com/futures_charts.ashx?t=ES&p=h1
Now S&P is at the bottom of the declining channel, and so we should see a rally tomorrow.
KWK - $2.12 - Quick, throw in a few cans of cat food!
ReplyDelete1590 is the triangle target, right?
ReplyDeleteRBY - Going to $2.10?
ReplyDeletePAL - Ha, this one's green.
ReplyDeleteDecided to follow you guys out of my positions in Jan 2015 BTU and ANR calls, and instead rotated that money into Jan 2015 GDX calls. Gold already had a huge crash and then formed a double bottom afterwards, so technically it looks much better than coal...
ReplyDeleteDNDN - This one needs some cat food as well.
ReplyDeleteWhy isn't VIX spiking up??? S&P today broke below the previous 2-week low -- shouldn't that put some fear into the hearts of traders? The VXX calls I bought on May 22 are still a long way from doubling...
ReplyDeleteThose won't double until after you sell them.
DeleteBeige Book 14:00, SPX is all air between 1600 and 1614.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$NYMO&p=W&b=5&g=0&id=p90216375451
ReplyDeleteThis is going to show quite the oversold reading today. This is a good point to consider longs for at least a trade.
I added to my EGLE today. It has been acting strong in a down market and is down 25% from recent highs in the midst of a new uptrend.
Today is a very important day to keep an eye on what is holding up well. I would scan all of your charts to see which ones:
Delete(1) Are in what looks like a normal pullback from a new uptrend
and/or
(2) May have put in a bottom a couple of days ago but haven't made new lows today
and/or
(3) Significantly outperformed the market since the market peaked on 5/22.
If you think the market is going through a normal pullback then the ones that fit the bill above should do well in the subsequent rebound.
THe other thing to consider is those stocks that were previously in uptrends that have taken it on the chin and are showing RSI(7) readings of 15 or lower.
DeleteLogically we bounce off the 50 DMA as a lot of traders will put bids in here. That's why I think starting some positions here makes sense in case these lows hold.
DeleteHowever, I think the logical bounce point is just below previous all time highs (1,575). Possibly 1,550. That with a positive RSI divergence would be an ideal setup.
EGLE is on the Landry list. Good eye if it resumes the trend.
DeleteReally? Good stuff. I have about 15% in it. I loved the entry point from yesterday...right at the bottom of the gap up day and right at prior highs. Should do well if the market holds in ok.
DeleteLooked at the Chart today. Seems like a well defined trade with lots of potential upside and easy stop placement. Put a 1/2 position bid in at $4.32
DeleteRENN is another one that is holding up very well.
ReplyDeleteDANG as well. Looks like there may be some rotation into China.
Deleteyeah there's been rotation into China stocks for a while now. I mentioned this on Friday I think. Only issue is it's probably a bit long in the tooth.
Delete1614 Here is resistance.
ReplyDeleteAnother chart showing we could be getting close to a buy point:
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$NYMO&p=W&b=5&g=0&id=p90216375451
Definitely not a good day for CECO. I would be very careful adding here.
ReplyDeleteSeems like a replica of many of the past few days we have seen in it. What am I missing? I was looking to restart a position around 2.95.
Delete"Those won't double until after you sell them."
ReplyDeleteOK, folks -- hold onto your hats now. I just sold my calls at $4.85 (purchased them at $4.10), which means that S&P should fall apart now. :)
On a more realistic note, I figured that I should act on my own hunch (stated earlier today) that tomorrow should be an up date because S&P futures have touched the lower trendline today:
http://www.finviz.com/futures_charts.ashx?t=ES&p=h1
If they rise to the upper trendline tomorrow (around 1630), then I'll buy back those calls. Let's see if I can double my money faster by trading them rather than just holding them...
Straight to 1550, here we come!
DeleteI see you weren't kidding, CP. VXX shot up as soon as I sold my calls...
Delete"VXX shot up as soon as I sold"
DeleteGood trade David, you rode the trend.
AXLL - Somebody seems to like it.
ReplyDeleteBeige Book - Uninspiring, apparently.
ReplyDeleteTook FMD off at 1.21.
ReplyDeleteCC - What are the entries / stops for EGLE so i can compare with my own.
ReplyDeleteIt's not a service pick so there isn't an official entry/price target/stop, but it's on the list for anyone that wants to select it.
DeleteIn looking at it I would bet the entry for the service would be 5.70 and 7.70 price target where half of profit is taken. the risk is 1 to 1, so the stop would be 3.70.
I know the average trader is going to say WTF? $2? But look at that 5/16 bar where it moved just under $2 and you can see it can easily move $2 in a day up or down. You don't want to get stopped out on noise. $3.70 is also right at the previous breakout/gap up.
You can always front run it if the notion strikes. It depends on your method. If it were me and the market is moving up I'd look at $4.80 or so. Th idea is to eliminate as much overhead resistance as possible while not being a breakout trader since they are prone to failure.
Also, one of the hard things for me is the use of "discretion" when using the service as opposed to mechanically using it. See YRCW post from 2nd below.
DeleteMCK - Speaking of cat food, I bet these guys could help wipe out the Social Security funding problems by adding a little food flavoring technology to the government cheese.
ReplyDeleteIFF - This is another one, these guys could make a ton of money converting cat food into senior citizen delicacies and by massaging the textures a bit come very close to replicating Fillet Mignon.
DeleteXLU & IYR as oversold as it was last November. Could be good entry here.
ReplyDeleteSPXL here at 41.96
ReplyDeleteoff 42.30
DeleteWuss (stepping in for Mark here).
Deleteyeah...wanted to try totake it hard into the close for a buck gain....pussed out. Seems common form me today. No extra base hits.
DeleteWussed out on my CECO entry, Sold my FMD for .01 gain and short changed my SPXL. Ate some more losses in REDF and WLT. However, did clear all the MF's in the B&H yesterday at the close.
DeleteRe YRCW> At what price would Landry decide to stop out? Currently at 17.63, which is a -16% discount to the 21 trigger. A -16% stop seems pretty wide.
ReplyDeleteI mentioned it a few weeks ago...wouldn't be surprised there is some negative piece written about how the unions want full repayment of their concessions which knocks it down to sub $10.
DeleteOkay, Full disclosure. I F'ed up on this trade as it was an OGRe and I stupidly got on the wrong side of it. I'm supposed to use discretion and sometimes it's hard to tell if you should enter on a gap or just throw in the towel and move on. I should have waited to see what it was going to do and waited. So I ended up giving up a portion of my previous YRCW gains which was about 1.5% of the port.
DeleteThat said, the entry was 21.75, the price target was 26.75 and the stop was 16.75.
Why so wide you will ask?
This stock has a very high HV (historic volatility) of 140. The overall market is like 17 or thereabouts, so if you are on the right side it kills the market and if you are on the wrong side it kills your port, or at least costs you 1.5% before you say F it and bail.
Of course now that I took the loss it will turn around and jam to 26.75, which is how it always works. Position size is the key with high HV. The range is $5, so 2% of the port divided by $5 is the number of shares to buy.
And that, in a nutshell, is why this blog is still around. Full disclosure.
DeleteThe 'selective disclosures' on the other site is pure bull----. It takes a freaking suicide note to bring out the support team.
Losses are part of the game! Not every trade works out.
Added another chunk of FMD today at $1.20 into the close.
ReplyDeleteTA - Fell out of the flag today, could be a false breakout.
ReplyDeleteHave you guys given any thought to this one as an natty play, Shell to install NG refueling infrastructure at 100 locations.
CLNE is footing the bill for installing natty infrastructure in the Flying J network apparently, Shell has much deeper pockets for TA's project but Flying J might have a better footprint?
DeleteRES - Check it out, making a comeback?
ReplyDeleteAMNF all time high today. Energizer bunny. I think when we first found it the price was $0.75. Pays a $0.05 dividend which is 7% on initial price. Wow.
ReplyDeleteYep, that was definitely another good pick.
DeleteAPA - I'm a little surprised to see this one has moved out of the $70's given the Egyptian instabilities, has the situation improved or perhaps unimportant?
ReplyDeleteNSPH - Consolidating for a move to $5?
ReplyDeleteTCK - Sucked some blood today.
ReplyDeleteBC - Set for fun in the summer sun?
Last times we had low 30's or lower RSI(14) for NYMO and a NYMO of –100 was:
ReplyDelete8/8/11: 3 month return: 13.98% | 6 month return: 20.59% | 1 yr return: 25.26%
11/23/11: 3 month return: 17.36% | 6 month return: 13.52% | 1 yr return: 21.29%
5/18/12: 3 month return: 9.49% | 6 month return: 7.08% | 1 yr return: 28.74%
http://stockcharts.com/h-sc/ui?s=$NYMO&p=D&b=1&g=0&id=p38328658156
Two more:
Delete5/6/2010: 3 month return: -0.58% | 6 month return: 8.66% | 1 yr return: 18.8%
5/19/2010: 3 month return: -3.54% | 6 month return: 7.59% | 1 yr return: 20.5%
Is there any chance of finding out 1-, 2-, 3-, and 5-day returns?
DeleteWould you consider circumstances somewhat different between those examples and now, or steady as she goes?
DeleteCP> In general, human behavior is pretty repetitive. But you're right- it's a little different right now in that a 1 yr return of +20% would seem unreal.
Delete2nd - you could pull that from Yahoo Finance. I generally don't like to look for single day / few day moves because it's easy to get faked out.
DeleteCP - Not really. We still have people very skeptical saying Fed is behind everything. Sentiment has improved on the edges but I don't think people are overly bullish. Housing is improving and I think Europe and Japan are on the mend.
"it's easy to get faked out."
DeleteI'll repeat that 100 times and click my heals!
Perhaps we can obtain some clues from $SOX and $RUT for when it's time to dip our toes back in the water.
Delete5/6/10: 1day: -1.5% | 3day: +2.8% | 1 week: +2.6%
ReplyDelete5/19/10: 1day: -3.9% | 3day: -2.45% | 1 week: -4.22%
8/8/11: 1day: +4.74% | 3day: +4.75% | 1 week: +7.60%
11/23/11: 1day: -0.27% | 3day: +2.65% | 1 week: +7.33%
5/8/12: 1day: -0.67% | 3day: -0.76% | 1 week: -2.42%
Too much noise to read into these. The longer term returns are more reliable. Within 6 and 12 months all 5 scenarios saw significantly higher prices.
There you go! I may buy into an additional drop on Thursday, and hope for a gain by Monday.
DeleteEGLE - You may have caught a fish if it can hold onto $4.27 for a few days? $4.13 might be a sign things aren't moving in long's favor?
ReplyDeleteNice beginnings of a channel, higher weekly MACD, looks like 2nd bull flag formation out of C&H, EMA13 has moved up through EMA34, would've been better to have caught the Williams% moving up through -80?.....
http://stockcharts.com/h-sc/ui?s=EGLE&p=W&b=5&g=0&id=p80756309649
Pesky gap up on daily chart to contend with Williams% hasn't moved up through -80 yet but that might be the next move and you'd be paying more if it does?:
http://stockcharts.com/h-sc/ui?s=EGLE&p=D&b=5&g=0&id=p33735712863
you're on to me! ive been watching these for a while and the big up move a few weeks ago finally caught my attention. i read the comments from the conf call and i did some research to see that the big PE guys are setting up funds to take supply of ships off the market which coincides with the CEOs comments on the call. chart wise it's fairly simple: buy as near to the prior highs of $4.17 as possible, add if it drops into the gap zone. stop out on loss greater than 15%.
Deletewithout the move up a few weeks ago to put and end to the multi year down move, i wasn't interested as it could have just been another fakeout. obviously i'd like to buy at $2.00 but this setup is fairly low risk.
DeleteDoor Bell - It just occurred to me that ships coming off the market may be turned into scrap, and thus holding the steel industry at bay a bit?
DeleteThanks for filling in for me 2nd.
ReplyDeleteI'm still having a hard time with the 'instant financial analyses' but with time I'll get the hang of it.
DeleteStop BS'ing, 2nd, you're the undisputed King of instantaneous financial analysis! ;)
Deletehttp://stockcharts.com/h-sc/ui?s=TBT&p=D&b=5&g=0&id=p82242041665&a=303243534
ReplyDeleteThis was a good falling knife trade. I may have posted it earlier, I don't remember. I'm just going through my watch list for the first time in a couple of weeks and saw this.
I've seen a some other falling knife trades that didn't work. I still don't have a feel for it yet.
TBT may be looking a little toppy here. I probably should have sold covered calls against my position today. I was HOPING for a break through $70 first.
DeleteAGCO - Looks like IH&S formed on daily in May, Target would be $60 if it fruits but neckline does have slight negative slope. A return to retest previous lows would be a fantastic gift, IMO.
ReplyDeleteHa, the FED owns so much Treasury paper it's making it difficult for shorts to cover?
ReplyDeleteI show a few stocks on the AbvGl scan. Here's a link to the first one.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=DDD&p=D&b=5&g=0&id=p68667642509&a=305185987
The complete ticker list is below. This scan excludes a lot of stocks because of the SCTR value. Many tickers like GASS don't have a SCTR value in stockcharts so that leaves out some stocks.
DDD
ACT
AIZ
BIIB
IBB
RRD
EQT
FNP
HRB
HIG
LIFE
NYX
ZQK
SKS
KIE