He Shoots…He Scores!
As a trader,
there is nothing quite as rewarding as totally nailing a market
reversal. In the past few
days, those of you trading with me were scaling into
short positions and reaching full positions before the downturn this
morning. Let’s pat
ourselves on the back and laugh our way to the bank.
We were able to recognize that the
“herd mentality” was once again at work, bidding technology up to
ridiculous levels. We do not go short or long based on
valuation, however. Valuation is not for us to determine, that is the
market’s job, and the
market is the ultimate price arbiter. Our job is to recognize
the bigger trends at work and to identify when a sub-trend is acting
against that bigger trend. Although the market may ultimately go higher
in the next few weeks due to the rate cut hysteria we are witnessing,
we cannot deny that the
larger trend is still downward. As such, we will be ready
to scale back into full-sized short positions when the time is warranted.
I am not a Bear, and I am not a Bull. I am a trading machine. I am
a money-making machine. I am here to make you forget everything you are
told and everything you
read and to urge you to trust your own instincts and your
own analysis.
Today, our long and
short positions went 100% in our favor. Our technology short
positions
(
CIEN |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
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News |
PowerRating),
(
BRCD |
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Chart |
News |
PowerRating),
(
FCEL |
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Chart |
News |
PowerRating),
(
AMCC |
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Chart |
News |
PowerRating),
(
CMVT |
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Chart |
News |
PowerRating),
(
PMCS |
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Chart |
News |
PowerRating), and
(
QQQ |
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Chart |
News |
PowerRating) went hugely in
our favor. In addition, to make us feel REALLY good, our long call for
drug stocks was
impeccable, as
(
MRK |
Quote |
Chart |
News |
PowerRating) gained nearly 3 points today. I am flat all
positions as of the close today.
The Nasdaq Composite 60-minute chart
has begun a retracement from its failure (that’s
right, failure) to break out of its expanding volatility triangle.
Seems like all of those
trendlines we were shown on CNBC that the Nasdaq had “broken
out” from didn’t really matter after all.
As seen above, the next possible area
of support is the window (a) which represents
the recent gap open on January 17. Any area in this window may serve
as support on additional retracement.
Aftermarket, it appears JDSU is
trading slightly higher from its closing price
after it reported Q4 earnings.
I am going to play it very close to
the vest up until the FOMC meeting as I believe
the bulk of our trade insofar as fading the current rally has already
been realized. There is
going to be a lot of chop and noise before the January
30 meeting and I don’t feel like exposing myself to it. Once we can
gauge the market’s reaction to the FOMC meeting, we will be in a better
position to determine
short-term direction.
Shorts: Continuation
shorts possible on all technology stocks and “chosen ones.”
Focus on fibers and storage if the market does not react favorably
to JDSU’s earnings.
Semiconductors also took big hits today.
Longs: Drugs may continue to rally.
Focus on MRK.
Congratulations. If you made the
trade, take your family or significant other
out to dinner tonight and celebrate.
Have a great night.
Goran