Trader MD

Putting the blog on hold for now, Thanks for your support.

2008-09-27T11:56:00.001-07:00

My apologies to all the readers who've supported this blog. I should have come to this decision a bit sooner. I've tried to hold off in the attempt to resume blogging at some point. I feel that about a month ago my ability to blog has gone down hill. It's a combination of less time, more focus on trading setups and a fairly busy personal/work life.

At the present time, I'm simply unable to put in the effort and set aside the time to blog consistently.

I will still be trading on a regular basis. The markets have definitely been more difficult over the last 2 months. I feel like I've navigated them fairly well. Most of the accounts I manage are at or near all time highs. Had I gone through a similar trading environment even as little as 6 months ago, I doubt I would have been able to say the same.

I've learned a lot about trading through blogging and definitely appreciate the time put in by other bloggers. You never really realize how much time and effort is put into blogging until you attempt to do so yourself.

In the future event that I will be able to resume blogging, I'll be sure and get the word out.

Thanks to all of you for your support on this blog and thanks to Jamie, HCPG, Brian Shannon and Jason Leavitt, among many others, for helping me become the trader I am.

I wish you all the best of luck!

Key to Success: Patience

2008-09-04T23:01:00.000-07:00

Patience? What?! The market was down several percentage points across the board and you're talking about patience?

Yep. I've kind of realized over the last few weeks that I simply don't have the time to post every trade I make anymore. I've had some pretty solid trades (maybe some overconfidence played a part in today's early entry?) and in the past (before residency started), I would usually put together my daily posts right after the market closed or in the final hour of trading. But now, blogging isn't really that high on my priority list as far as importance or in things I have time to do. That being said I still do want to and do enjoy posting material my readers will actually be able to make use of instead of seeing trade example after trade example. Besides, Jamie already does a great job of that :)

While I'm at it, hopefully this recent leg down in the market hasn't really surprised anyone. The $VIX chart I posted last week gave me some indication the market wanted to head lower relatively soon and a lot of the leader stock charts I was looking at (i.e. RIMM, which has made a fantastic short recently; AAPL, etc). If that wasn't enough to convince you, then Tuesday's price action should have been another clue. When the market gaps up to the point where the Dow is up nearly 250+ points, only to end in the red... is just about as bearish as you can get.

So anyhow, back to patience and how it deals with the market action from today.

Let me start by saying I was fairly patient waiting for a setup to trigger, just not patient enough.

I've been watching the XLF for the last week or so waiting for a short entry (via going long on the SKF) and this morning I jumped the gun. I entered before I normally would have and as a result I was stopped out. At that point I called it a day because I had broken a trading rule.

Now here's what I was watching and waiting to setup:

Now this is what I did:

And this is what I should have done:

So despite being patient, and carefully stalking which trades I wanted to enter... to put it in baseball terms: I swung too early. I didn't wait for the pitch that I had planned for. As a result, not only did I get stopped out of this trade, but I also lost out on what could have been a potentially huge day.

Now I'm not even saying I would have captured the entire move. I know for a fact I would not have. As you can see by the first image in this post, that my initial target was around the 21.30 area, which correlates to about 117 on the SKF.

Patience as a trader is very important. Even with developing a watch list or having a few select trade ideas, you are constantly given the chance to enter those trades at any time. The key is having the patience to wait for the right setup. Waiting for the right setup minimizes your risk, maximizes your reward and gives you the highest probability for success. I clearly didn't do that today.

And now that we've had a huge down move, the key going forward will be having the patience to wait for the next setup :)

Hope that helps. Any feed back on this new 'feature' would be appreciated. If so I have ideas for other "Keys to Success."

$VIX: Bullish Wedge - Does the market want to head lower?

2008-08-25T23:58:00.000-07:00

In conjunction to taking a look at the index charts, I'll also take a look at the $VIX. To me, its clearly forming a bullish wedge and today's move just solidifies that opinion. (I had drawn in the wedge shape over the weekend).

1260 will be a very important level for the S&Ps to hold.

IWM: Median Line failure, RIMM: Base & Break, Base & Break down / Descending Triangle / Median Line failure, and an Inside Bar reversal.

2008-08-25T23:55:00.000-07:00

Here's a 30 day x 15 minute view of the Russell 2000 ETF, the IWM.

This chart shows the Median line failure on the IWM. I traded it as a long with the TWM.

Here's the 30 day view of RIMM x 15 minute bars. You'll see the fairly nice channel it's formed over that time period. Once I have a well defined channel, one of the things I like to pay attention to is how it responds to movements with in the channel.

The blue circles are a good illustration of that. While to the blind eye or those charts that aren't using channels, RIMM may have appeared to be treading sideways in a range between 125-135. Taking a closer look at the chart it shows how RIMM fails at each subsequent channel line (first the outer upper limit or the 100% line, then the 75% and 50%).

You'll also notice that when RIMM breaks the downtrend line I have starting at 135 from the peak on August 11th through the peak on August 15th, that it fails to even challenge the recent highs of 135 and instead pauses at 134. There's also a bit of negative divergence there (not highlighted on the chart).

** Side note: has anyone else noticed my overshoot theory (with other technical patterns, etc)?

So now taking all that information above, I throw even more details at you :) I apologize if this seems a little crazy, but in sake of time constraints I've used the same chart to illustrate how you can follow one stock that can setup again and again. Being familiar with how a stock trades, and what support / resistance levels it may respect definitely help.

My only real regret is not letting todays trade run a bit more, or taking a partial and letting the rest run.

Apple: Channel Breakdown, Negative Divergence

2008-08-17T16:27:00.000-07:00

It's been a while since I've posted. I think this is just about the longest I've had in between posts. Part of it is that I don't want to put up posts just to have something posted. I'd like to have some real value behind the content, which could actually serve as an example and demonstrate something useful.

Posting will probably remain a bit slow until the Olympics are over. I'm also trying to get more reading done (both medical and trading related).

Anyhow, here's a channel breakdown example on Apple.

We'll start by taking a look at the daily chart.

Here's a 20 day view of apple with 15 minute bars. Notice how there's a trend acceleration (light blue channel) inside a primary trend or channel (purple channel). From my previous posts on channels, you'll notice how the channel lines tend to serve as support/resistance.

Finally, here's a 5-6 day view of that same chart. I've zoomed in to try and identify what I was seeing take place over the last week or so before I took a short entry.

Most of the annotations are on the chart and I hope it didn't get too cluttered. I wanted to try and point out as many things as possible as I felt there was quite a bit going on.

I think AAPL can put in a bit more downside here, and I may be looking to reshort on a low volume pull back higher.

2 Failed Base & Breakdowns: Mastercard (MA) & Visa (V)

2008-08-10T18:41:00.000-07:00

Here are 2 failed trades in Mastercard & Visa. Both really looked like they wanted to break down and acted like they were consolidating for that break down so I setup my orders to get short. Buyers then stepped in after the break down and after tightening stops on both of them I got stopped out. Funny thing is, if I hadn't tightened my stops and just let the positions run, they would have closed out a bit to the plus side as they closed near the lows of the day.

Ah well :)

I probably should have just taken V short as it looked more bearish and less oversold on the daily chart. In addition, V's volume for the day was more bearish than MA.

CF Industries - Bear Flag & Resistance at 5 EMA

2008-08-05T20:00:00.000-07:00

Fairly tired today. Excuse the lack of annotations.

CF was on my short list from its daily chart. It's been one of the few Ag stocks that still hadn't broken down. Other Ag stocks gapped down and CF formed a bear flag of sorts right below the 5 EMA.

I exited before the fed announcement as I knew I wouldn't have time to watch it during the announcement and anything can happen on a fed announcement.

Brief Daily Schedule

2008-08-03T23:16:00.000-07:00

Fairly rigid daily schedule (M-F), which involves being productive as much of the time as possible.

(All times are PST.)
5:25-30 AM: Wake up. Begin reading through the days headlines, while listening to CNBC in the background. Sort gapper lists.
6:15 AM: Heat some breakfast + Tea.
6:30 AM: Market opens. Look for base & break trades, watch list triggers, scan through intraday and daily charts.
At some point between then at 8:15 AM get dressed and be ready to leave for work.
8:15 AM: leave for work.
8:30 AM: arrive @ work, briefly check on any open positions
8:30 AM - 12 noon: Clinic patients. It's ok to sneak in a few quotes, trades &/or order adjustments in between patients :)
12 noon - 1 PM: Usually entails driving back home to watch the market close and grabbing something for lunch.
1PM to 5-7 PM: More work. Usually involves following hospital patients.

(Then depending on what time I'm out of the hospital, I try and run one-two errand/chore type thing every day: Grocery shopping, dishes, laundry, cleaning up, pay bills, etc.)

7:30-8:30 PM: Gym, Shower.
8:30-9:15 PM: Fix and eat dinner.
9:15-11:30 PM: Usually a combination of making phone calls, checking up on what happened to the markets during the day, reviewing the intraday and daily charts for the indices, visiting a few sites on the blogroll and finally looking through about 200-300 charts for any setups that jump out at me.
11:30 PM: Sleep. :)

Entries and Exits: USO - Positive Divergence / Support, RBN - Ascending Triangle, RIMM - Symmetrical Triangle

2008-08-03T20:28:00.001-07:00

Oil, which has been one of the strongest trades and strongest markets over the last several months has recently pulled back pretty sharply. There was no news to suggest that this pullback was due to some major psychology shift in the market. As a result I was waiting for oil to setup as a bounce play in the highlighted yellow area.

I'm not one to pick bottoms, but IMO this was a very low risk setup based on the strength we had seen in crude, the fairly rapid (yet losing momentum) decline we had seen).

Ended up making a fairly nice profit, which probably would have been better if the oil market wasn't as volatile.

2 Charts show the setup on the daily and the trade on the intraday basis.

Here's RBN from when I entered it as it was breaking back above resistance. RBN was a stock I had been stalking as it had held up better than most other equity charts during the month of July. It initially broke out past resistance but ended up pulling back with the market.

(*edit*: oops, posted the wrong RBN chart - from a few weeks back ... it's now corrected).

Here's the trade on an intraday basis.

Here's RIMM which ended up forming a symmetrical triangle of sorts. I probably exited a bit early, but looking back and thanks to the nondirectional market, my exit was actually fairly good. My target initially was a run up to the 50 day moving average (~126), but it had already run half that distance (from 119) in a very short period of time so I decided to take profits.

quick updates: USO, RBN, RIMM, QLD

2008-08-01T05:48:00.000-07:00

My entry in USO on Tuesday was around 98.50. I exited some on Wednesday @ 99.50ish (Tuesday's afternoon high), some on Thursday morning in Premarket around 102, and I tried to let the rest run but was stopped out below 99.80.

I picked up RBN @ Tuesday's close around 50.85, closed 1/2 just below Wednesday's Pivot R2 (below 52.07), and tried to let the rest run but was stopped out below 51.20 just before Thursday's close.

On Thursday I picked up RIMM @ 119 and probably closed it a bit too soon @ 122.50. Oh well :)

As for QLD (ultra long Qs), I've been nibbling at a small position as we are in the process of forming a rounded bottom on the Q's. I'm looking to add to it on a solid close / backtest of 75.

Despite only spending about 2 hours of total market time in front of the trading desk a day (thanks to being on the West Coast), I've had a pretty solid July. It looks like all my planning and keeping positions on a tight leash during this month have worked out well. 1 Month doesn't mean much in the long run, butif this is any indication of trading while working, I'm definitely happy with it.

This weekend, I'll try and put together a bit about my daily schedule and what has worked for me during what has been a fairly crazy July. In essence, it comes down to taking fewer positions, keeping them on a tight leash and staying disciplined about the trades obviously and maybe just as important the daily routine.

I'll also be sure to post charts of my entries / exits so its a bit easier to visualize.

That's all the time I have for now.

Good luck out there.

Been too busy &/or tired to trade

2008-07-29T23:01:00.000-07:00

On Friday I was fairly busy and in the time I spent in front of the screens I didn't see much. I added some RIMM Aug 105 puts.

Had a fairly busy weekend and didn't get enough chart study in on sunday night before crashing. I ended up closing my RIMM Aug 105 puts for a slight profit as I didn't really like the way it was acting. My stop was a move over 120, but I figured it was better to close it.

Today was just as bad if not worse than yesterday in terms of being tired. So I ended up using this morning to catch up on sleep and I think I'm now good to go. Instead of looking for trades this morning and when I had time through out the day, I ended up scanning daily charts and I picked up some USO about midday and RBN at the close.

I think the market is looking good on the near to intermediate term here. The $COMPQ / $RUT look like they are putting in a higher low or cup and handle type bottom. The $NDX is putting in what looks like a rounded bottom, and the $SPX is putting in a higher low / tweezer type formation on that higher low. Of course none of these patterns have been 'validated' yet.

Sectors that appear to be looking good: Steel (aside from MTL), Solars (appear to be setting up to run again), and Rails.

Mixed Sectors: Agriculture (AGU looks to be putting in a bear flag, CF has maintained its symmetrical triangle and is looking like it wants to break out to the upside, TRA has held up fairly well), Chinese Internet Stocks (BIDU looks solid, where as SOHU/SINA look neutral/negative) and Coals (FDG WLT ACI MEE; CNX & FCL don't).

AGU Update & A few trade ideas

2008-07-25T00:17:00.000-07:00

I had a pretty busy day today. I got paged pretty early on and basically had to walk away from a short setup / day trade I was looking in on AGU and POT on top of the AGU puts I already had. Both had gapped up and started to form what appeared to be descending triangles. Needless to say they both basically collapsed minutes after I had to leave :)

I closed out my AGU puts at 2 different points in the day for a nice gain. There was nothing terribly technical behind the exits and my chart of AGU at the time of entry was already posted a few days back, so I'll post 2 ideas I'm keeping an eye on.

As always, manage your risk. No matter how good those 2 setups may look, they always have the potential to fail.

7/22 - QQQQ: Trendline break; 7/23 - COST - Coscto - Cup & Handle, AGU - Symmetrical Triangle Breakdown, POT - Symmetrical Triangle Breakdown

2008-07-23T22:50:00.000-07:00

Here's QQQQ from yesterday.

Costco from today. As Jamie pointed out, this could also be a 3 point pivot base & break.

I entered in on some puts when AGU broke down here @ the time of this screen shot.

The same goes with here and POT, yet I quickly realized they had earnings before the market open tomorrow and my goal was to manage the position since I was already in it and close it out by the end of the day, which is basically what I did (closed just before the end of the day).

As far as my GLD trade, I've been going back and analyzing it. It's been my only losing trade over the last 2 weeks. It's definitely good to have a bad trade every now (keeps you humble, disciplined) and then and heck maybe I've had a pretty lucky streak considering I'm basically away from the trading desk from 11 AM EST to 3 PM EST aside from a couple glances at the market / chance for a quick entry or quick exit every now and then (in between patients!).

Back to GLD. The one thing I failed to recognize on the GLD trade was that I didn't put in ample analysis in analzying the $USD which it basically trades off of. Even by looking at the euro (for example the FXE ETF), I would have seen the FXE was right up at resistance and my entry point on GLD was a poor choice. In addition my strong suit isn't pullback entries. They are usually a bit harder for me as stops aren't as clear cut and break outs/breaks down are just more of a clear defined area/number in which you can enter on.

As of now I'm nearly flat for swing trades, aside from the AGU (doesn't report earnings till august and will participate in any downside due to earnings reports from other Ag related names) puts I entered today. The Ag names still are looking techincally too strong (in compared to the other momentum names of late like coal, steel, energy stocks, etc). They look to be setting up for at least a flush out if not a retest of the 200 day MA.

Going with the theme of the Ag sector, here's another chart to keep an eye on. They report earnings July 29th, BMO.

quick update

2008-07-22T22:42:00.000-07:00

I caught a nice move in QLD today. I missed the C&H in Apple and I'm still holding my GLD position / giving it a bit more room.

I'll post the QLD trade sometime tomorrow (probably in the evening).

Not much last Friday or Today

2008-07-21T20:47:00.000-07:00

Took Friday pretty easy with options expiration. Had some scalps for some pocket change, but nothing really notable.

Today I didn't have a chance to do much and I knew I didn't really want to have any swing positions on ahead of Apple's earnings. Now I'm sure you're wondering why. Well we all know the economy is bad etc, but my main reasoning for being wary ahead of Apple's earnings was the fact that the rest of the tech horsemen have disappointed basically. RIMM started selling off a few weeks back after its earnings report. GOOG disappointed just last week and sold off considerably. AMZN doesn't look like its in good shape technically (although it hasn't reported yet), and a whole host of other companies like MSFT have disappointed as well.

AAPL is just one of those companies that impacts tech, the consumer, the entire stock market in general and is something to be wary of in a down trending bear market that still responds negatively to bad news.

That being said, I did pick up a small position in GLD today (which is little impacted by individual company earnings).

Here's the chart.

QQQQ: Tweezer Bottom / Higher Low; ACI - Head & Shoulders - daytraded via option puts!; and A Long (Short) idea in SMN

2008-07-17T22:03:00.000-07:00

Here's QQQQ from yesterday. I made this trade using the QLD & SSO, just like the day before. The ETFs definitely have their benefits in that they are a bit safer than a stock, especially when you can't be at a trading desk to watch each trade tick by tick.

Here's ACI just a little bit before I took my trade in it.

As you may recall, I mentioned ACI a few weeks back just as it was about to and in the process of breaking down from the ~67 area. I missed that trade and didn't enter a short in as it ran back up to the ~67/68 area and 50 day moving average on low volume. Anyhow, I had been stalking ACI for sometime and saw it was forming a head and shoulders pattern with increasing volume on the down days, and the 50 day moving average rolling over just above. Today I decided to enter in some puts shortly after it opened. I entered the puts in just above 61.

So why did I enter puts? Well there's a couple reasons.

In a stock as volatile and momentous as ACI, puts can really help define your downside risk. Since I purchased the puts, I can't lose more than what I purchased the puts for. In addition, Coal has been a very powerful momentum sector and the market is still fairly extended to the downside. ACI in theory could experience a sharp reversal or surge higher.

And while of course the initial chart shows my plan to start to close out my puts around the 50 area (near the 200 day moving average), I ended up closing them out about a half hour before the end of the day. ACI had dropped almost 7 points from my initial entry for a nice solid gain.

I used the August 50 puts to enter my trade.

I must say, part of the benefit of having a day job is that you don't watch a stock like this tick by tick and instead check in every 1-2 hrs. I ended up closing it out on my lunch break.

Here's a daily view of ACI at the end of the day.

Speaking of Coal & Material stocks, I think they put in some more downside here. the SMN (ultrashort materials -- basically its the double short ) has been looking pretty bullish lately. Here's the chart:

If that's an inverse H&S SMN is putting in, it definitely has the chance to reach $44. Keep an eye on those material stocks.

Trade posts coming later tonight & quick update for now

2008-07-17T06:16:00.000-07:00

Didn't have the time to post last night.

Traded the QLD / SSO again yesterday with some pretty good results. Swung a small portion of the QLD overnight which I've got a pretty tight stop on.

By the volume and the price action in the XLF over the last 2 days, it looks like we've put in at least a short term bottom. I can't say I'm 100% sure on that, but I'm pretty sure. Earnings reports will continue to be important to the market over the next few weeks -- especially those of the financial companies.

QQQQ - Nasdaq 100 - Intraday Double Bottom; Traded the SSO / QLD as day trades.

2008-07-15T21:52:00.001-07:00

Still not really comfortable holding anything as a swing trader overnight, but I before I headed out this morning I found a nice quick trade in the QLD and SSO based on the Q's (and SPY).

Below I've highlighted the Q's on an intraday 5 minute chart.

Normally I don't trade the index ETFs and prefer to trade stocks, but this was just too good to pass up.

We're headed into the 2nd half of options expiration week and with how crazy things have been the last month, I really wouldn't be surprised if things got even crazier over the next few days. I have no idea and no edge to which way the markets can turn. I feel that a lot of it will be dependent on the earnings reports, especially of those financial companies later this week. In particular I'm closely watching Merrill Lynch on Thursday after the bell (I would not at all be surprised if MER or other financial companies come out early with their earnings reports and announce capital raising &/or other measures at the time).

Until then I'll look for day trading opportunities or just sit back and observe.

If you are trading, be sure to keep the following quotes or charts on your screens at all times: FNM, FRE, LEH, MER, WM, WB, USO and the XLF.

** On a side note, I have to say during times like these it is definitely great to have a job / source of income that has nothing to do with the markets. It puts me in a mode/zone where I know I can wake up and not have to force any trades. I can just sit back and take what the market gives me. If I don't see any low risk opportunities or trades that I'm comfortable with, it's easy to just pass and focus on something else.

LDK - LDK Solar - Gapper / Cup & Handle; General market thoughts

2008-07-14T19:19:00.001-07:00

Here's LDK. The only day trade today and the first one in a while.

Now for some general market thoughts. The market has to be in a pretty sad state right now, or at least the bulls have to be. Despite the positive news behind Fannie Mae and Freddie Mac released on Sunday by the PPT (Plunge Protection Team), they were still unable to put together a sustainable rally... even for a day.

This goes along with what I posted last Thursday, in regards to the better than expected jobs report. If the market was really as oversold as the charts make them look, they would be hungry to rally on any type of good or bad news possible. That clearly isn't the case.

What I'll be focusing on this week and going forward is looking at some of the key economic reports and earnings coming out. In order to even begin to get bullish, I want to see a good reaction to a bad report.

And just some food for thought: The $VIX is creeping up... sure... but who's to say it's not creeping up for a break out? It'll be interesting to see how the $VIX reacts in between the 30-37.50 levels, especially compared to the markets. If the $VIX starts knocking on the 37.50 area and the market is still continuing to slide, the $VIX could very well break out.

Look for signs and evidence of a rally before you put your hard earned capital to work. I made my mistake and quickly learned from it last week when I tried to trade AAPL / BRCM to the upside.

Swing updates: Stopped out of AAPL & BRCM

2008-07-10T07:19:00.000-07:00

Didn't have a chance to post last night.

I was stopped out of AAPL below yesterday's opening range low (just below 179).

I was stopped out of BRCM below 27.80 (tuesday's low).

Just sitting back and watching the reaction to this mornings news this market doesn't feel like it wants to rally any time soon.

The jobs data came out and despite posting what I thought was a significantly better than expected number for this weeks job report, the futures had an initial reaction higher, and only sold off from there. You would think that for a market that's supposed to be "oversold" we'd have a much more positive and sustained reaction.

So now I'm flat and I most likely will be until at least early next week.

Charts: AAPL - Downtrendline break / Possible Cup & Handle; BRCM - Descending Triangle / Cup & Handle?; DUG - Annotated Chart

2008-07-08T23:23:00.000-07:00

First here's DUG as promised from last night.

I was comfortable closing out my position yesterday below the $30 level as I saw the 30.40-30.60 area being pretty decent resistance, along with the outer limit of the ~5 month long channel being in that area, and seeing how much of a move DUG has made in the last few days already.

Sure the volume has been great, maybe even fantastic, but I'd still love to see it put in a pause at this area before attempting to work its way higher. Since this was a swing trade, my entries and exits were based on the daily chart for the most part.

I also think that the market has put in at least what appears to be a short term bottom here as crude has started to crack (down >$10 in 2 days). While the $VIX is no where near the mid 30s like we'd all love to see, the fact that the safe haven known as crude is breaking down is a very positive sign for the markets and it goes beyond the price of gas at the pump.

I'll try and briefly explain. It goes along the logic of me looking for energy stocks to break down last week. The energy sector stocks were basically the next domino to fall. The materials stocks (XLB) had been breaking down and the other recent hot sectors had been falling as well (solars, then Ag, then coal). The next biggest safe haven / momentum play / sector with relative strength, after those names was the oil and natural gas energy plays.

Now taking that a step further, the only investment over the last several months that has been even stronger than the oil and natural gas names themselves is crude oil. Now that crude is no longer a "when in doubt buy crude oil" play and money is finally flowing out of crude, it can now be put to work in actual stocks.

Think about it another way: if you can simply just throw your money in crude oil and be relatively comfortable that you will make $$, then why would you bother trying to invest anywhere else?

Here's AAPL & BRCM, which I added as swings today. You'll notice that they have fairly similar charts. Both have held up relatively well with the recent downturn in the markets and both of them have potential cup and handle patterns.

If AAPL can validate the C&H, and the market / earnings / etc cooperate, AAPL has a chance of hitting its cup and handle target of $265. The same goes for BRCM and $43.

Even if that doesn't pan out I think AAPL can hit / retest resistance at $200 for a nice short trade and BRCM can reach the low to mid 30s.

DUG Update - Closed out DUG today

2008-07-08T00:44:00.000-07:00

Will post a chart tomorrow. Ended up closing out 1/2 of the remaining 1/4 at 29.20 and the other just below 30.00.

I think it can go higher over a longer time frame, but it's had quite a move over the last 3 days (~18% from trough to peak), and any stop loss at this point would be risking too much, considering how large the intra day swings can get.

I will be keeping an eye on it for the potential to re-establish a position on a low volume pullback, or some type of technical formation and break out.

I'll post some updated charts tomorrow.

Good luck out there.

DUG Update & Internet problems once again...

2008-07-06T20:15:00.000-07:00

Sigh looks like the building I'm living in wasn't really wired all that well.

When my internet was fixed in the first place, someone else's service got disconnected. I'm sure while I was out of town over the weekend, or sometime last week that person put in a call to get their service fixed... and now mine is all screwed up again.

Sigh. Hopefully this won't be a back and forth ordeal.

As far as DUG goes, I started partialling out at ~28.65 early Thursday morning. There was no real logic other than the fact that the trade was up >10% in less than 24 hours. At that point you have to start taking part of your position off, espescially in this market. I still have a small position (1/4 of what I had put on in the first place) left that I'm going to try and let it run higher.

DUG - Ultra Short Oil & Gas - Channel Median Line / Divergence / Support

2008-07-02T18:05:00.001-07:00

Here's DUG, which I had been looking to get into for the last few days.

I entered right after this mornings post on energy breaking down soon. Here's a screen shot from when I entered.

Take a few moments and look at it upon the time of entry.

Here's the annotated version after the close.

I think DUG can easily hit 29 or 30. The XLE still hasn't closed below the 50 day moving average and the DIG (the inverse of dug), has a bit more downside. Also, just as important, the $VIX hasn't really hit capitulation levels.

As I mentioned the other day, energy will be the last sector to really capitulate since its the strongest, and it's only began to break down.

All that being said, I'll be prepared to re-evaluate that line of thought on a daily basis and let the charts tell me what to do.

(I still have my entire position of DUG.)

I'll be happy to answer any questions, as this isn't exactly the most straight forward setup. Hopefully that wasn't too confusing.

Random Thought: Energy stocks will break down soon

2008-07-02T08:26:00.000-07:00

My logic?

We're basically putting in a negative divergence. Crude oil has made new highs or essentially stabilized around those highs, yet most energy and alternative energy plays have not.

Take a look at the drubbing solar stocks have been taking over the last few weeks. They are basically energy related plays.

Other alternative energy plays have began to break down as well. Wind stocks come to mind and of course, look at the coal stocks getting killed today.

Speaking of Coal stocks. As far as the daily charts go, these look like the 2 most promising short patterns.

Here's ACI (Box/Rectangle Pattern) & MEE (Double Top).

I have no position on either of these just yet, but will be looking for some type of a low volume kick back.