This Week’s Battle Plan

Last week I pointed out five stocks to you that looked good to me.
(
MHO |
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PowerRating),
(
EXPE |
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PowerRating)
and
(
CURE |
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PowerRating) were in first-stage pullbacks from our Pullbacks
From Highs list.
(
ACTN |
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PowerRating) and
(
MGAM |
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PowerRating) were intermediate-term
breakouts that failed, but then reversed to resume their overall trend. Had you
bought all five stocks Monday morning, you would have been nicely ahead by Wednesday’s
close. In fact, you were an incredible five-for-five as all your positions were
profitable! Now, you could say that I’m some type of genius (although I’m sure
you’d get an argument from some people). Or you could dig a little bit deeper
and see that I simply picked five good trending stocks off pullbacks at the same
time the market rose over 220 points. This rise came off of multiple CVR signals
found on our Market
Bias page…an event that many times precedes large one- to four-day stock market
moves. The reality is that the market lifted most uptrending stocks those
three days, including the five that made me look so smart.

Markets move stocks, rarely vice versa. Predict the market’s direction
and you will have a healthy head start to predicting a stock’s direction. Now
since we looked at Monday-Wednesday of last week, let’s also look at Thursday
and Friday. Wednesday night we had a CVR 3 sell signal from our Market
Bias page. On Thursday, we got another CVR sell signal (CVR 2), plus we had
key reversal days on the very important SOX and XBD (both made short-term swing
highs and closed below their opening). Those of you who subscribe to my nightly
service saw four CVR sell signals, a fairly rare, but large-edge event. Also,
combined with all these signals was the fact that the VIX was trading near
levels that preceded some previous healthy sell-offs (see late August and early
January). When you put all these pieces together, you are given a good solid
downward bias for the upcoming one to four days. And on Friday, that bias played itself
out as the Nasdaq lost nearly 3%. And this bias gave one the confidence to be on
the short side of both the market and stocks. Had you done this (and based on
the conversations Friday on our TradersWire
Interactive chat, I strongly suspect many of you did), there is a good chance
that the stocks you shorted were profitable for the day. Because as I said,
markets nearly always move stocks, not vice-versa.

Improving Your Results Even Further

No matter how much time you put into selecting stocks to trade, you will improve
your results even further by timing your stock entries with the market’s likely
direction. Each night, look at the Market
Bias page and Mark
Boucher’s Int-Term Timing Models. They will give you a good edge. Are they
perfect? Hell no! But they give you a good feel as to which side of the market
to be on and more importantly, they have stood the test of time. It doesn’t
matter if you trade five times a day or once a quarter. These indicators will
help your stock selections. Here
is a lesson you can read to further your understanding of the CVR signals.

1. PayPal, the first internet IPO in nearly a year, got priced Friday at
13, gapped open to 15.41 and closed at 20.09. This is good, solid new-issue
action and likely an inkling of what’s to come.

2. M+A activity is supposedly heating up. I was told on Wednesday that
there are five to six fairly large merger deals in the works. If this is true, it is
another sign that activity is picking up.

3. Industrial Commodities — look at copper
(
HGH2 |
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PowerRating) and lumber
(
LBH2 |
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PowerRating)
prices. No recession here. Enough said.

In summary, this week I’m entering the market short from Thursday (March
futures) and will look to lock in profits Tuesday (or Wednesday if the
sell-off continues). Longer-term I remain bullish, especially if the capital
markets start heating up.

One-Hour Live Seminar

Kevin Haggerty and I will conduct a free one-hour live-audio seminar Tuesday,
Feb. 26, at 5:00 pm ET. We’ll teach you how to trade more effectively using the
information found throughout the day (and after the close) on our TradersWire.
This is the first audio seminar Kevin and I have done together in more than two years, and we expect to cover
a lot of ground. Look for the registration link that
will be placed later in the week on our What’s
New at TM page in order to lock in your spot.

Dave Landry

If you get a chance, pick up the latest issue of Stocks and Commodities
that just hit the newsstands. Rumor has it that Dave Landry is the featured
trader interviewed this month. (Congratulations, Dave!)

Have a Great Week Trading (and keep an eye on our IPO
section for more upcoming new issues)!