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> ChartSmarts for Thursday, By Mark Young & The ChartSmarts Team
TTHQ Staff
post Apr 22 2011, 08:35 AM
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Joined: 20-August 03
From: Cincinnati, OH
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After Market Close April 20, 2011

What a Rally!

I'm absolutely flummoxed. I was certainly open to a bit of rally, but in this context, this rally is something else. I don't remember a time that a market has gone to a confirmed sell, with tons of Bulls and then reversed and rallied as they did today. The power of liquidity...

DOW: The Dow as just plain up huge.

SPX: The S&P was also up big and is up more tonight.

NDX: The Naz gapped up huge and extended. Wow!

RUT: The Russell had a good day and that bodes well.

HUI: The Miners put in a lack-luster day. Nothing too bad, though.

BKX: The Banks are just plain weak. Not Bullish.

DJT: The Trannies are dogging it too. Warning.

RTH: Retailers had a major romp today. That's Bullish, I think, but it's an odd stick.

LPSN: LivePerson remains on trend and looks good.

CELG: Celgene is looking a bit iffy, though Bullish for now.

VPRT: VistaPrint had a nice day. Good gap up and right on trend. Snug the stop.

ONXX: I think that Onyx could do right by us after all.

EXEL: Exelixis remained in pattern and acted fairly well. This one should work out.

RMBS: Rambus was up big. Nice day.

WAG: Walgreens was up some more today.

CPWM: Cost Plus was up and looks higher. We're long.

GRMN: Garmin was up and now looks higher.

CAB: Cabela's had a huge day. Alas, we didn't get filled.

HNR: Harvest was up a bit but no break out or down.

ADS: Alliance Data Nearly got us in but gapped above our entry.


Interestingly, we are still on a Sell. It's not necessary for us to go to a Buy for the market to rally, but soon we're going to. I'm not trusting the rally, however, and feel as though it's manipulated. If I'm right, we could have another hard down draft shortly. We'll have to see. Play the patterns for now.

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

Current Positions:

LPSN: long 50% at 11.63, stop at 12.77

CELG: long 25% at 55.67, stop at 55.11

VPRT: long 50% at 49.47, stop at 52.17

ONXX: short 25% at 33.37, stop at 35.11

EXEL: long 25% at 11.87, stop at 11.03

RMBS: long 50% at 19.87, stop at 19.26

WAG: long 50% at 41.54, stop at 40.86

CPWM: long 25% ar 11.02, stop at 9.97

Watch List:

Buy 50% GRMN on a print of 34.37, stop at 33.03

Buy 25% HNR on a print of 15.44, stop at 13.94

Changes in Current Positions:

Move the stop up on CELG to 55.11

Move the stop up on VPRT to 52.17

Move the stop up on RMBS to 19.26

Move the stop up on WAG to 40.86

We are now 25% long CPWM at 11.02

*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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