Monday, August 18, 2008

The Bears Have A Big Opportunity in Front of Them - Will They Make the Most of It?

Good evening traders. Here are the indices and you can see that they are at some pretty critical levels if the bulls want to prevent a breakdown. If more selling comes into play tomorrow, then I think perhaps this bear market bounce could be over. But as I mentioned earlier, rarely has the market recently followed-through on what looked to be the likely outcome, so we'll see. If we do breakdown tomorrow, I will look to add to the shorts I have.

Dow and S&P 500
Nasdaq and Russell 2000

The XLF is also at a critical level technically and further selling could lead to a more serious pullback in this ETF. Oil - honestly, I have no clue. I am looking for a more serious bounce if the USO gets over its 9 day MA around $93.50.

USO and XLF

Here are the shorts I entered today (SKF was a long but is inverse). They have yet to break through some support (or resistance in the case of SKF) that is close by, so if further selling comes in and these areas are broken, then it may be a good point to add to these shorts.

SKF
PENN
ENER
All Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are some other shorts I am watching for tomorrow, although I probably won't look to add too many more if we do sell off further. I would rather be focused in on no more than four or five short positions and manage those closely. Feel free to ask about these if you have questions.

ALK, UAUA, AMR, ABFS
DKS, MELI, MNST, FLIR
FMC, TECUA, JASO, GU
All Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

I am also watching many financials if the XLF breaks down further - here are some to watch: EVR, WB, IBKR, FCSX, LM, LEH, SUSQ, OSBC, FITB, KEY, ZION, and AMG. The charts all look similar and breaks of the trendlines would be the signal to short.

As much as I would love to see further selling tomorrow, I have no feeling either way if we will get it. Volume is still very low and I doubt it gets higher until September gets here, so we could still just chop around for a few more weeks. If you decide to take any shorts, please remember to honor your stop losses and get out if the positions move against you. Although a breakdown looks more likely here, that doesn't mean it has to happen. We're still in an environment where getting too confident in your outlook can get you into trouble with the volatility we are seeing.

A trend would be nice here, even if it is down. Let's see if we get it tomorrow. Be careful and good luck Tuesday.

2 comments:

Gio said...

Good shorts. I'm adding them to my list: FLIR, UAUA (i have CAL), ZION (way up my list), MELI.

K, off to watch your vid.

=gio=

Mac said...

Thanks. FLIR just came up in my scans tonight. Looks like H&S to me. I saw ZION Friday but wanted to wait - it may be a little late now, but a lot of these look similar (WB, LEH) in terms of just about ready to break short-term support.

Casinos got hit big today.