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> ChartSmarts for Tuesday, 6/14/11, By Mark Young & The ChartSmarts Team
TTHQ Staff
post Jun 14 2011, 01:39 PM
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After Market Close June 13, 2011
Bottoming?

The market appears to be bottoming, but it may well require a true selling climax to launch a good rally. It's anyone's guess at this point. The good news is that we're brining in more and more Bears and there is more and more hedging. The bad news is that we're not seeing much sign of a rally as yet.

DOW: The Dow basically put in a doji. Is that a sign of a reversal? Boy, I'm not confident of that.

SPX: The S&P was about flat too. More weakness to come? If it's violent, it might set up a better low.

NDX: The Naz at least stopped falling.

RUT: The Russell continued weak. Not a great sign.

HUI: The Miners were also weak. I'm thinking 491 is the target. Then we start higher again.

 BKX: The Banks tried to break back into the channel. They need to break it up.

 RTH: Retailers were about flat. Nothing to get excited about here.

 WFT: Weatherford was down hard. That's what we like to see. Snug the stop.

 TIVO: Tivo was off but it's holding pretty well.

 FAX: Aberdeen was dead even. I think it can rally here.

 CIG: I still like CIG as a long.

 ATLS: Atlas Energy was off but I still like the pattern.

 APL: Another Atlas, Pipeline, this time, broke down and looks lower.

 WAC: Walter I M looks like it can move. If it breaks up, let's try a long.

 PACB: Pacific Biosciences of Ca looks higher to my eye.

 DLTR: Dollar Tree is in pattern and looking higher.


Summary:

The market is about due for an A-B-C correction, higher. It could be quite sharp. We know that some of our better bottom spotters are going off. Others aren't so close to Buys. Still, it's enough to look for a rally at any time from here or lower. We're snugging the stop on our short and we're looking at more longs.

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


Current Positions:


WFT: short 25% at 20.17, stop at 18.76

TIVO: long 25% at 10.02, stop at 9.47

FAX: long 50% at 7.24, stop at 7.07

Watch List:

Buy 25% CIG on a print of 20.26, stop at 18.64

Buy 25% ATLS on a print of 25.03, stop at 22.22

Short 25% APL on a print of 31.72, stop at 34.84

Buy 25% WAC on a print of 18.61, stop at 17.11

Buy 25% PACB on a print of 11.91, stop at 10.93

Buy 50% DLTR on a print of 63.28, stop at 60.87
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Changes in Current Positions:

Move the stop down on WFT to 18.76






*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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