After Market Close Apr. 7, 2010
Broken?
Is the up trend broken? Well, it looks that way, but I think that the first break isn't too much to be worried about. Especially with good breadth.
DJIA: The Dow sure does look broken.
Summary:
When I look at a down market where the Naz is away from it's trend line and the Russell seems untouched, I have to think that there's no real concern about this market. Sure, they can sell it down 5% if they get the back up about something, but when the Advance/Decline line is not very negative and the broader indices are holding well on down days, we have to think that the dip should be bought.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Long 50% AZO at 158.27, stop at 171.34
Long 25% LUV at 12.04, stop at 12.87
Long 50% HSY at 37.96, stop at 42.43
Long 50% XTO at 47.17, stop at 47.17
Long 50% HAR at 44.09, stop at 46.34
Long 25% ORN at 18.44, stop at 17.41
Long 50% CFN at 25.61, stop at 24.57
Short 25% RBA at 21.22, stop at 22.11
Long 25% AXCM at 18.27, stop at 17.51
Watch List:
MOT: Short 25% on a print of 6.93, stop at 7.54 -OR-
MOT: Buy 25% on a print of 7.54, stop at 6.93
NYT: Short 25% on a print of 10.74, stop at 11.61
AMLN: Buy 25% on a print of 23.73, stop at 21.83
Changes in Current Positions:
No changes to current positions.
*30 Minute Trading Rule:
In order to prevent whipsaws, we use a 30 minute trading rule. This means that, as a general rule, we are going to "sit on our hands" during the first 30 minutes of trading, this includes the lifting of stops during this 30 minute period as well. Additionally, if after the first 30 minutes of trading the range of the stock pick is within the stop and buy/short boundaries presented, the trade recommendation is valid. If the stock's range is outside of the buy/short and stop boundary, the trade recommendation is VOID. E.g. if the recommendation is "Buy a print of 10.25, with a stop of 9.95," and the stock trades up to 10.50 during the first 30 minutes, we would pass on the trade. Similarly, if that stock were to trade down to 9.90 before 10:26, the trade would also be void.
In addition, due to Market Makers, programmers, and market miscreants targeting our stops, a long pick must trade at a stop or below for a full 5 minute bar before actually triggering the stop. For a short pick, the stop must trade at or above the stop for a full five minutes before triggering a stop. This should have the effect of reducing the risk of 'gunning for our stops', though it will subject us to more technical risk. At this point, we believe it is a worthwhile trade off.
There is no 30mn rule on limit orders, but if price gaps out of the buy/stop range the trade is void.
Rule on stops: As a general rule for the model portfolio, we will lift all stops on existing positions for the first 30 minutes of trading. As a practical matter, subscribers may wish to leave their stops in place if they expect to be incommunicado or unavailable during that time to monitor positions.
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