Monday, May 9, 2011

Two Charts That Could Be Tells for This Market

If we get above Friday's highs on the S&P and Nasdaq, I will respect the action and stop looking for shorts.   I was stopped out of shorts in NFLX and BIDU today for small losses of around 2.5%, which basically cancelled out the nice action in CYOU (which I am long).

Two charts are really key for me now - both oil related (see below).  I've seen this story a bunch of times before (selling off on heavy volume and recovering on putrid volume) but the damage recently was worse than the previous selloffs followed by quick recoveries so I think the action here will be an important tell for the overall market.

I continue to look for some shorts here and see some candidates, but after getting stopped today, I will likely be a little more patient and wait for some downside confirmation.  There weren't a lot of nice stocks in my scans tonight so I am hesitant on the long side.  
Earnings names to watch tomorrow - RAX and OPNT to the downside, SLH, FTK, and CPE to the upside.  

Lesson for the day - going against your rules can hurt.   I sold ACOM on Friday for a 13% gain.  It did not give me a sell signal (which for me is a break of the 9 day MA) but I wanted to raise some cash in light of what looked like a very weak market and so I broke my rule and sold it early.   Today it was up 6% and perhaps can move higher from here.   That's what I get for breaking my rule and not showing patience.   I guess I deserve it.

 All Charts from Telechart, Courtesy of Worden Brothers, Inc.

Good luck Tuesday.


Anonymous said...

Re ACOM, no one ever lost money taking a profit.

Agreed re oil, have been watching carefully.

Played MCP and WTW today, fun.

Anonymous said...

hi mac
buy n hold is ... certain pain. u r swing trader.

for friday DH, maybe it will perform what it did in the past 2 months, continues the rally but stop at there first and confuse us. the next day a breakthru day with DO gap-up.

for discipline, i will not hold longs (etf/mini dow) overnite.