Tuesday, May 17, 2011

Expecting a Bounce Attempt Soon, But Likely Just a Shorting Opportunity

Hi traders.   It's been a nasty few days on Wall Street which is something I discussed last Wednesday in this video.  I was able to play a few of the short setups mentioned in that video (OPEN, BEXP) but not as many as I had hoped.   I ended up being a day early on BIDU and passed on SOHU which I am still kicking myself over.  Shorting is always harder to do successfully than going long, but here is a quick look at how those setups have performed based on today's closing prices. 

SOHU 92.34 83.54 9.53%
OPEN 96.49 87.45 9.37%
GEOI 25.16 22.81 9.34%
LVS 44.1 41.33 6.28%
TDSC 38.88 36.46 6.22%
CHK 30.92 29.09 5.92%
BIDU 138.9 131.81 5.10%
DE 91.29 86.96 4.74%
PCLN 520.99 504.4 3.18%
WMB 30.84 29.89 3.08%
FCX 48.27 46.83 2.98%
APC 74.67 72.55 2.84%
LUFK 83 80.82 2.63%
BEXP 28.11 27.45 2.35%
NFLX 240.67 236.94 1.55%
BHP 95.07 93.85 1.28%
DECK 89.29 88.36 1.04%
RAX 41.32 41.12 0.48%
BK 28.34 28.41 -0.25%

At the current juncture, I am thinking we are dealing with a market that is likely too late to get short with, but not strong enough to go long with, and when you have those markets, the best move is to basically sit out.   I have one position right now (ACOM) but have either closed my short positions over the past few days or been stopped out of my other positions.   Going forward, I do expect the market to try to bounce here a bit, but I don't expect it to be a big deal.   Although the indices don't look quite as bad as you would expect, so many leaders have been hurt the past week or two (with many looking like they have put in topping patterns) that I expect any bounces we get to simply be shorting opportunities.   All of my signals in bearish territory and if you are not yet out of longer-term long positions, I would seriously consider getting out if the market does see a bounce soon.

In the short-term, I am not opposed to trying to play select stocks for a quick bounce with the market, but realize that if you play these, the odds of success are not great and therefore you must use tight stops and take profits quickly.  I've included a short video on a few potential setups, but again, only on short-term time frames.   If I play any of these, it won't be more than one or two.  Longer-term, I will be looking to short any bounces we see in the oil sector and the former bigger cap leaders that broke down recently.   Good luck Wednesday and the rest of this week.

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