The Wrap 10/26/11

{+++} It was another day where we got spun by news reports. The short side was looking good and it looked like the bears really had the bulls nervous when a report hit the news wires that China and Russia were planning to invest in a SPF (Special Purpose Fund) to help the European situation. Evidently this story was out early in the morning, (here’s the link), but the news wires all seemed to report on it around 1:30 PM, if you look at the chart that’s when the melt up started.

Anyway, the last remaining positions in FAZ & TZA were stopped (please see P&L nightly) and one daytrade short, GS, was stopped for a buck.

I added CREE and INFA as shorts mid day.

This market is completely rudderless now and it only seems to react one way or the other to headlines. This is the new normal for now. If you feel like you are getting spun, you are not alone, all the traders I talk to and work with daily are throwing there hands in the air. You can be the most gifted trader in the world, but its tough to fight a headline market sometimes. Anyway, this will pass, it always does.

Most charts still look bullish, but some look very vulnerable. Stocks like SODA, FSLR, RIMM, AMZN are breaking or broken.

Some of the oils and chemicals look good and the banks rallied back a bit today. SLB looks good and an old name that used to look good as short, LPS, broke out of a long term downtrend a few days ago on monster volume. It is now flagging and may be ready for a move higher in the days and weeks ahead. These names aren’t on our list, but I will watch them long.

I am adding one stock as a long tonight. I mentioned it in the Sunday video and the pattern looks good. Check P&L for entry and stop.



This goes out to you newer and salty veteran subscribers. I make my best efforts to always give you my exits. I do this on the chat room, via email and on Twitter, so you have three ways to get the alert. I never gave exits way back in the day because I thought people should be able to determine their own profits. After hundreds of emails over the last couple of years people asked me to let them know when I was selling, so I started the alerts.

What I realized was that many of you wanted and needed that guidance. You had lost money in the markets or you hated your brokers. Many wanted to “learn” how to trade. Picking stocks is 10% of success in the market, risk control and money management is so much more important.

So what’s my point?

Try and follow the P&L and try and allocate capital to each idea. The only time people get hammered is when they fail to do this. I know this doesn’t apply to all of you, as there are veteran traders out there that use this site for different reasons and you guys are on your own. Many take my entries and then do their own thing, that’s fine.

I email you exits because I am trying to teach an approach. Note that I always sell into strength, usually 1/3 positions on the way up. This cushions you and establishes a lower cost basis for you and helps protect you on the down days. Problem is, I see some people selling a “whole” position down 40 cents, when you should be selling your last small piece down 40 cents. Net net the trade was a winner, but if you held and didn’t sell in pieces on strength, the trade is a loser. I don’t want you to lose, I work to hard to make you money so try and follow me if you are new trader or new to the site.

Trading is good habits. If you follow this approach, you will condition your mind to always take partial profits. Trading is a business and many of you are now doing this full time.

My guess is (maybe I’m wrong)  that some people are going all in on one idea “hoping” that’s the big winner. That’s not risk control or money management. That could be the one that fails. And some aren’t taking partial profits on strength. It would save me so much time not to post exits, but I do it because that is the message I got a long time ago from subscribers, so I will continue to do so.

My subscribers include hedge funds, prop traders, day traders, swing traders, doctors, lawyers, investment advisers, students, retired guys and homemakers. They are in forty states and eight countries. It runs the gamut and I know everyone is different, but they all have one thing in common….they want to make money.

You guys know you can email me anytime and I always return emails, sometimes it just may take me a couple of days. Good luck trading.

Have  agreat night and I will see you guys in the morning. Oh, and your comments are always welcome, just shoot me an email.

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