Going Out On A Limb
Well, I am going out on a limb here,
but I think that today will be the day to begin the new leg down in the markets,
with a retest of the July lows certainly on the agenda. Yes, it may be a bumpy
ride, but the fact of the matter is that contrary to what all these so-called
“Wall Street Experts” keep spewing, the economy is not getting better
(witness Retail Same-Store Sales), profitability is not improving, and
valuations, as much as traders ignore them, ARE important. They always have
been, but unfortunately, the last three years valuations have been cast aside.
Historically speaking, bottoms are put in when the average P/E is 7.6 with a
dividend yield of 8.3%. Even a casual observer knows that we are not even close
to these levels currently. Sure, a surge in profitability will justify these
levels, but c’mon, how the hell is that going to happen?
So, that being said, I am looking to establish some longer-term short
positions. Given how fickle the market is, however, I am going to scale into
them slowly. The whipsaw action does not justify going 100% at this point.
Naturally, from an HVT standpoint, trading
intraday will improve dramatically if we begin to sell off hard. The last few
days have been frustrating, money has been made, but only if you were extremely
picky and avoided scalping the afternoon sessions.
Staying with the HVT theme for a moment, given how big the “gap”
down in the futures appears to be, opening reversals on the underlying stocks
will be a good call on the opening. After that, make sure that you place trades
that are in the direction of the trend on the one-minute chart of the futures
and the stocks you are trading. The current market environment shows no mercy
when you shoot from the hip or buck the trend.
Intraday Setups:
Shorts:
(
AEE |
Quote |
Chart |
News |
PowerRating),
(
AYE |
Quote |
Chart |
News |
PowerRating),
(
BAC |
Quote |
Chart |
News |
PowerRating),
(
EDS |
Quote |
Chart |
News |
PowerRating),
(
EMR |
Quote |
Chart |
News |
PowerRating),
(
ESV |
Quote |
Chart |
News |
PowerRating),
(
GM |
Quote |
Chart |
News |
PowerRating),
(
HAL |
Quote |
Chart |
News |
PowerRating),
(
NBR |
Quote |
Chart |
News |
PowerRating),
(
THC |
Quote |
Chart |
News |
PowerRating)
The above setups are not designed to be long term, i.e., more than one day,
although if the market were to sell off hard, you may consider that. So view
these as trades that may serve up 60 cent to $1 gains with stop losses of 20-30
cents. They were derived by looking 15- and 60-minute charts.
Longer term you need to focus on the following sectors as being the most
vulnerable:
Housing, Technology, Mortgage Lenders and Retailers
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 909 | *936-35* |
| *902-03* | 929 |
| 895 | 920.75 |
| 893 | 912 |
| 889 | *903-05* |
| 868-75 | 900 |
| 865 | 898 |
| 846 |
Look for the S&Ps to be choppy in the 868-875 zone.
SOX: 310, 296, 292, *282*, 272, 265, 230
As always, feel free to send me your comments and
questions. See you in TradersWire.