After Market Close April 13, 2011

Sickly

The market managed a rally today, but it was a sickly one at best. Actually, this is starting to disturb me. The Seasonal Cycle turned negative today. Also, our best trend indicator is flashing a marginal Sell. Cumulative breadth is near a Sell too.
DOW: The Dow eked out a gain.

SPX: The S&P couldn't muster much of a rally off support, but resistance killed it. Bearish.

NDX: The Naz breadth was better than most. That's a Bullish sign.

RUT: The Russell mounted a rally but it's not a great stick.

HUI: The Miners were off. I'm thinking the could be a buy here.

 BKX: The Banks were down pretty hard today. Bearish.

 RTH: Retailers managed a rally, but that stick...ew!

 WTFC: Wintrust is gone...for a nice profit.

 LPSN: Liveperson had a big day. Winning!

 CELG: Celgene was up and is acting well.

 VPRT: VistaPrint was up nicely. In the nick of time, too.

 NWBI: Northwest is gone. I'm not liking it, either. It's probably a short now.

 ONXX: Onyx put in an interesting stick. Alas, I don't like interesting sticks on my shorts.

 GRMN: Garmin was up and down, but nothing we can work with.

 EXEL: Exelixis was down, but came back, but that stick is funky.

 RMBS: Rambus looks primed to bust out.

 ADTN: Adtran was all over the place and fortunately, we're not in and never were.

FE: Firstenergy was up nicely in a sloppy market. Big divvy and good lookin' stock.

CPWM: Cost Plus was up nicely and looks like a potential bust out too.

CAB: Cabelas is likely to make a run after this consolidation. They are the premier outdoor equipment dealer and it's spring.


Summary:

Things are starting to look pretty ugly here. The good news is that with the MACD cross over, we have a "Best Fade" Buy. A rally is likely within the next several days. If we can generate some pessimism, we'll likely come on hard. If not, it may be a feeble bounce.

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


Current Positions:

LPSN: long 50% at 11.63, stop at 12.62

CELG: long 25% at 55.67, stop at 54.52

VPRT: long 50% at 49.47, stop at 51.33

ONXX: short 25% at 33.37, stop at 35.33

Watch List:

Buy 50% GRMN on a print of 34.63, stop at 33.03

Buy 25% EXEL on a print of 11.87, stop at 10.74

Buy 50% RMBS on a print of 19.87, stop at 19.03

Buy 25% FE on a print of 37.97, stop at 35.93

Buy 25% CPWM on a print of 11.02, stop at 9.97

Buy 25% CAB on a print of 26.13, stop at 24.04

Changes in Current Positions:

We are stopped out of WTFC (+6%)

We are stopped out of NWBI at 12.22 (2.8%)

Move the stop up on ONXX to 35.33


*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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