Another Look at the Pound and Other Ramblings

The Pound is creepin' back up after a brief sell off and this time it might just break out of 1.66 resistance area that has held it back. I have previously posted that I think the pound will see 1.75 if it breaks out of the 1.66-1.67 range. Here's a daily chart of the GBP/USD with the TLT Trender v2 indicator applied and some annotations:The Pound break-out theory fits in with my overall outlook for the markets right now. For the next several months, I believe that the dollar will fall against the euro and the pound, oil will rise, and U.S. equities will continue to rise. This has been the pattern lately and I believe it will continue for a little while, unless some major change takes place (i.e. a major shock to the markets). We're probably still in a secular bear market and this move is most likely just a big bear rally that will crash hard later when things get ugly again (maybe if/or when China melts down).

For now though, there is a lot of optimism in the markets and I'll stay with my opinions stated above as long as the markets keep shruggin off bad news. Just my 2 cents.

Have a great weekend.

TLT

AAPL Revisited

I was speaking to my brother-in-law about Apple this weekend--a stock that we have both recently traded but are now out of--and he commented on how he'd like to get back into it at some point. This got me to thinking...how would I get back into it? Well, I've put together a little scenario/trading plan and if it works out as planned (which it often doesn't), I'll take the trade. Here's a chart with some annotations indicating my various buy, stop and profit target levels:Ideally, I'd like to buy in the $138-140 zone and take my profit at $160. This is just a range trade, the sort of trade that Apple has been offering up lately between breakouts to new highs. A good hard stop will be essential for this trade because I'll be buying a pullback and the problem with pullbacks is that sometimes they turn into reversals...which could easily happen given the run that Apple has had lately. My stop will be at $133.

So to recap:

• Long @ $138-140
• Stop @ $133
• Profit Target @ $160

This trade could provide a 22 point profit for a 5 point risk, assuming you get in at $138. That would be slightly over a 4:1 risk to reward ratio, which is certainly acceptable. What if the trade goes in my favor but it doesn't quite hit the profit target? I'll move the stop to break even once it gets halfway to my target.

There's the plan, now we just have to wait and see what happens. Always "plan the trade and trade the plan."

TLT

Weekly Wisdom Quote

"Markets always go to extremes and so do most individual stocks. They go higher or lower than they should based on fundamentals because human emotions are not bound by reason."

Dick Davis
The Dick Davis Dividend

Another Good Week For Stocks

We saw a great run this week with the equities as the S&P broke out into new highs and the Dow crossed the 9,000 mark. Will it keep up this pace? Who knows, but for now I'm in it. My TLT Trender v2 system is still giving a green buy signal so I'm staying long. We are in overbought territory on the stoch, so be careful entering new longs.

Here's a daily chart of the S&P with the TLT Trender v2 indicator applied and some annotations:
Have a great weekend!

TLT

Weekly Wisdom Quote

"You never know when the markets will do what you think they are supposed to to do. Many times, like God, the market does not deny, it just delays."

Larry Williams

Out of ERY

I bailed out of my ERY position, which is the 3X Directional Energy Bear ETF. Recent price action indicates that oil may be heading back up soon so I got out. Maybe it was a mistake but I didn't feel good about holding this position anymore. We'll see how it turns out.

TLT

Required Reading For Today

If you read anything at all today, make sure to check out these 2 articles:

1. ETF Update from A Dash of Insight
2. Goldman Sachs About To Report "Lofty Returns"

The ETF Update is truly a gem...those guys at A Dash are always posting quality material that is well worth the time it takes to read.

Markets are up a little today, although I'm not too comfortable with equities right now. Oil looks like it wants to fall more, the dollar looks like it's about to pick up strength, and I'm seeing a lot of bearish patterns forming in individual stocks and sector efts. All this combined tells me that I need to be careful! It could be the perfect time to buy, or it could be a great time to short. Pivotal situations like this offer up substantial risk and they take away my edge because I need established trends to make money and the trends that are out there right now are rolling over in new directions.

Good luck and make sure to manage risks carefully.

TLT

Shorted Energy Through ERY

I bought ERY yesterday afternoon, which is the 3X Energy Bear Fund. The daily chart looks very bullish (see below) and oil just registered a sell short signal on the TLT Trender v2 system on the 4 hour chart. Here's the TLT v2 chart:Here's the actual chart that I saved from yesterday after I put the trade on:I actually put the position on right at the close of yesterday's market, which worked out well today since ERY was up a little over 7% today. As always, this trade could be a dud, which is why I save a chart showing my entry and my pre-determined stop loss for each trade. Saving these charts also provide a nice record of each trade, which helps for going back and analyzing past winning and losing trades.

We'll see how this one goes.

TLT

Evaluating The Overall Market: And Determining Where To Put Money To Work

I like to keep tabs on the various sectors of the S&P. To do this, I have taken the advice of Dr. Brett Steenbarger and created a couple of watch lists that include the 10 different sectors of the S&P. I have a real time watchlist through my broker and I also use Stockcharts.com's candleglance feature. This allows me to bookmark a page that consists of 10 charts for the symbols that I enter (the 10 sectors of the S&P in this case). For those of you that are not familiar with it, here's what it looks like and here's the link to the candleglance page shown below:
This allows me to stay in tune with what sectors are doing well and which ones are not just by "glancing" at the charts on the page. As you can see from the above picture, energy is looking pretty rough right now (just broke the neckline of a head and shoulders as prices are hitting new recent lows). I like to glance at the stochastics also to see which sectors are overbought, oversold, and neutral.

Doing this helps me filter out various trades that I'm considering making. If a stock that I'm considering is in a sector that's not doing so well, or is heavily overbought, I will probably pass up that trade and look for somehting else.

Just some food for thought. Make sure and check out the candleglance feature over at stockcharts.com, it is a very valuable, yet free, tool.

TLT

A Few Stocks To Watch

I'm sitting on a little bit of cash right now, which is fortunate because the stock market pulled back a little on Thursday...potentially offering up some good trades. I'll be looking to put some of that cash to work and here are some stocks that I'll be watching and trading if I see a good setup. Also, I updated my watch list ticker at the top of the site, so there are some fresh stocks up there that are worth checking out.

Here are the charts:

CAST
CERN

NVEC
PEGA
QCORVMED
Have a great 4th of July weekend!

TLT

Out of OSK for a 39% Profit

Osk gapped up roughly 28% this morning on an upgrade and some news about a military contract. I bought this stock on June 17th after posting about it being a stock worth watching on June 10th.

Here's the chart:The gap up went right through my first profit target that was set at $18...my second target was $23 but I decided to bail out. Why? Well, I don't like holding onto a stock that just registered a massive one day gain like it did today. It might continue to go up, but, it might also sell off and close the gap...which I do not want to ride out.

Had this stock slowly krept up to my profit target, I would have only sold half my position, but I once heard that you should take quick "windfall" profits when they appear. Note that tajubg "windfall" profits is different than taking profits in general quickly...as quick profit taking in general is not a good strategy for trading. Unexpected "windfall" profits are a small gift that are occasionally given by the trading gods and they should be realized (in my opinion that is).

TLT