Sunday, August 21, 2011

A Look at the Week Ahead - 8/21/11

Hi traders - no video this weekend since I was gone most of the past three days on a family trip and also because we're kind of in "no man's land" here in terms of short-term trading.   Intraday action was very poor Friday and the market looks like it wants to at least test (or break) the recent lows.   However, we're getting oversold again and it is always impossible to predict what will happen when key levels are tested.  A breakdown would not surprise me, but a hard selloff Monday morning to suck in any last bears out there followed by a hard reversal back on Tuesday would also not surprise me.   It's that type of market.

Going into this past week, there were a lot of setups and I discussed many in the weekend video.  Although Monday and Tuesday were difficult, it did turn out to be a great week to short stocks.   I made nice money on RAX and could have made real nice money on PDS (which I shorted Monday but got stopped out of on Wednesday).   I also shorted CNX right before it announced news that popped it 10% after-hours which caused me to cover.   All of the other coal stocks were hit big this week but I got unlucky with that one.  The chart below shows the charts discussed last week as potential shorts and ALL show a gain over the past five days.

 
Since we just had a week where there ended up being a lot of nice setups, I don't have much hope for this week being as "easy".   Short-term, I really don't know.  Longer-term, the best case scenario for the bulls in my opinion is for the Nasdaq to chop around between 2300 and 2550 for another month or two and hopefully let some of the damage done from July 27 on rectify itself in the form of better charts.   That's the best case, so I am in no one expecting an important bottom to be put in anywhere in this area.   If we break the lows, all bets are off, including for a reversal back up to occur.   I do believe the best gameplan overall remains to short bounces as they come, be very careful with any long setups, and if you don't see a real edge out there, just stay in cash.

I am getting back to work this week (my real job, not trading) so I don't know how much trading or twittering I will be doing, but the end of the summer season is always thin and tricky, so watch yourself.   We've entered past weeks with better setups - this week there aren't many.   Good luck.

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