After Market Close April 17, 2007 |
Caution Time
We have been unambiguously Bullish on the market, even as we felt that individual shorts were a good call. We've been rewarded for this stance and it looks like we will continue to be. We're at a very interesting juncture. Clearly the trend is up. Clearly the sentiment suggests that the Bull has a long way yet to go. But also clearly, there are signs of trouble brewing. The market is strangely thin. Breadth was negative yesterday. This shows up in the indices and our holdings as well. Care is warranted.
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DJIA: The Dow made it to new highs but it didn't do it with aplomb. |
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SPX: The S&P was up, but the futures are off a couple. |
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NDX: The Naz didn't do very well yesterday and looks weaker this morning. |
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RUT: The Russell was down almost all day and that's an early warning sign. |
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HUI: The Miners are holding up. A little touch and go, but the dollar is weak and that could be what they need. |
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OI: Owens Ill has been a great holding but that stick looks decidedly negative. The pattern looks like our stop might be hit before new strength. |
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KG: King Pharm was sloppy too. |
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BONT: Bon Ton was up, but it couldn't hold a lot of that strength and to my eye, it's just a bit of profit taking. |
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PGTI: PGT tried to rally and failed. That's Bearish. |
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EVC: Entravision is either setting up for a sharp rally, or we're going to be stopped. |
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PLCE: Children's Place continues to grind lower. This one should hit our target. |
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BSG: Bisys got us at 10:00. No surprise there. |
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AOB: American Oriental rocks steady for us. |
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ARGN: Amerigon put in one ugly stick. This ain't good. Still hopeful, but I'm not so optimistic. |
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GNTX: Gentex put in a scary stick, but overall, it's acting pretty good. |
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SHW: I'm with the Chartist. Sherwin could go either way. Let's play it that way. |
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SUNW: Sun Micro is strong, unsurprisingly to me. I still like it, though early weakness should keep us out today. We hold Sun in our managed accounts. |
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CAG: Conagra gave back gains, but still held above the wedge. Maybe early, but maybe not. I like this one. |
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ASD: American Standard looks mighty iffy, but for risk control we're going to hold off putting it in the model portfolio. Still looking more Bearish than Bullish to me. |
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SMTC: Semtech looks Bullish. |
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OSUR: Orasure looks like a dandy set up again. |
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Summary:
I'm Bullish longer term, but near term I'm a bit Bearish. The options data are funky and that makes me skittish during Op-Ex week. One thing we ought to keep our eye on is the sentiment on any possible decline. If the Bullishness rises, we might have more trouble ahead. Otherwise, I think we look both ways and just honor our stops.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
Current Positions:
Long 50% OI at 24.09, stop at 26.53
Long 50% KG at 18.94, stop at 20.19
Short 50% BONT at 55.21, stop at 53.38. Target is 47.83
Short 50% PGTI at 12.31, stop at 12.31. Target is 10.91
Long 50% EVC at 9.29, stop at 9.86
Short 50% PLCE at 53.94, stop at 51.61
Long 50% AOB at 9.97, stop at 10.56
Long 50% ARGN at 12.44, stop at 11.83
Long 50% GNTX at 16.54 stop at 16.03
Watch List:
SHW: Buy 50% on a print of 66.34, stop at 64.07 -OR-
SHW: Short 50% on a print of 64.07 with the stop at 66.34
SUNW: Buy 50% on a print of 5.97, stop at 5.73. No 30' rule.
CAG: Buy 50% on a print of 25.47, stop at 24.44
SMTC: Buy 50% on a print of 13.89, stop at 13.33
OSUR: Buy 50% on a print of 7.72, stop at 7.38
Changes in Current Positions:
Move the stop down on PLCE to 51.61
We are stopped out of BSG at 12.05
Move the stop up on AOB to 10.56
We are now 50% long GNTX at 16.54
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*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 boundry, 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 stop 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 10:00, the trade would also be void.
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:
Effective immediately, 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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