No replies to this topic

[TTHQ Staff]

After Market Close May 17, 2010

Reversal?

We were looking for a rally today and technically we got it. Is that the low? Probably not, but we probably have more upside. I was particularly struck by the depth of the weakness before the turn. I would have sworn we would have opened well and held strength all day.

DJIA: Interesting stick on the Dow.

SPX: The S&P touched support and bounced smartly. Bullish.

NDX: The Naz bounced smartly too, but above support.

RUT: The Russell was also down then up. Nice bounce just above support.

HUI: The Miners were down on the day, but support held.

DJUSHB: The Home Builders nearly broke down. Nice comeback.

XLV: The Health care stocks are just in their down trend.

DJT: The Trannies were down on the day. Not enough come back.

RTH: Retailers: Hang in there, baby!!

XBD: The brokers bounced smartly right off support. That's Bullish, though I'd have preferred a positive close.

DFT: Dupont Fabros was all over the map. Looking interesting.

BLUD: Immucor is acting better than we'd like.

CHD: Church and Dwight bounced smartly. We don't like that.

SNDA: Shanda broke and we're short.

CPKI: Ca. 'Za Kitch is just teasing us.

CVO: Cenveo just looks good to me.

DNB: Dunn and Bradstreet was up a bit and I think it has more upside.

Summary:

I'm bullish in here but I'm also very careful. The trend is down. Sentiment is not uniformly constructive. Breadth is rotten. The pattern does not look like a completed correction. All of this suggests caution, but by the same token a lot of issues look pretty good. I'm thinking that we bounce tomorrow and maybe Wednesday. Then we see.

Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team


Current Positions:

Long 25% DFT at 23.23, stop at 21.51

Short 25% BLUD at 20.79, stop at 21.91

Short 25% CHD at 65.94, stop at 70.62

Short 25% SNDA at 42.37, stop at 45.76

Watch List:

CPKI: Short 25% on a print of 19.27, stop at 20.94

CVO: Buy 25% on a print of 8.27, stop at 7.54

DNB: Buy 50% on a print of 76.53, stop at 74.54

Changes in Current Positions:

We are now 25% short SNDA at 42.37





*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 10:18, 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.


Past Performance is not a guarantee of future returns.



Trading is risky. Trading entails unique risks, so get with your broker and do your homework before you take any trades based upon this or any model, newsletter, or trading service. Never trade with money that is necessary to your near- or long-term financial well-being.

None of the ChartSmarts™ Newsletters should be construed as a solicitation to buy or sell any security or commodity. We aren't your advisor and we aren't your broker. Any decisions you make are yours alone.

Though we do keep a hypothetical valued account track record, none of the performance referred to should be construed to be that of an actual account. Performance is not based upon back testing, and it does not represent an actual trading account unless explicitly stated. From time to time, we'll be trading the same ideas that we're discussing here. We make every effort to insure that we and our associates not "front-run" subscribers, or to otherwise affect the price of securities that we hold or discuss. Be aware that sometimes we, or our clients, family, or associates, will hold the same securities that we discuss in ChartSmarts. Occasionally, our trading actions may not be the same as those discussed in ChartSmarts, for a variety of reasons. We will never attempt to manipulate the price of any stock for any reason. ChartSmarts (the "Newsletter') is protected by federal and international copyright laws. Equity Guardian Group, LLC., publisher of the Newsletter and owner of all rights therein, retains all proprietary rights to the Newsletter. Equity Guardian Group, LLC. hereby grants you, as a subscriber, the limited right and license to this issue. All recipients must receive the Newsletter directly from ChartSmarts.com. The Newsletter may not be forwarded or copied without the prior written permission of Equity Guardian Group, LLC.