Trade Plan-(VRX, NFLX,SHOO,SPY,QQQQ,EUR/USD, IWM)
Posted on June 21, 2010 by trader21 in GLOBAL CHART ANALYSIS
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Like we mentioned in Sunday’s report the early morning gap higher into resistance was an extremely low probability buy point. The market almost went straight down after the open so those who bought just based on this emotional opening got clobbered. Believe me when I say we want to participate in a nice market rally but we have been doing this far too long to get suckered into a low probability buy point like we had today.
Normally when one opens at the highs of the day and closes at the lows we would say this is bearish action but in light of how stretched we still were to the upside and stretched up into resistance makes this just an ordinary pullback and not a very bearish day in our opinion. Another positive thing about Monday’s action was the volume was pretty light. This was one of the most predicatable trading days where everything played out like it was supposed to. Sure we could have put out some shorts but the reason we did not is because are so close to major support at the 200 day moving average on the major indices. The potential gains just weren’t worth the risks of a playing a small rally lower.
The Euro has hit against resistance and could pull this entire market down with us over the short term but I feel we could then continue the uptrend
EUR/USD
NASDAQ
S&P500
DOW
We did get a nice pop in one of our open positions. VRX is merging with BVF and they both closed the day higher. VRX was up as much as 10% before pulling back to close up only a couple percentage points. BVF which we don’t own closed up 14%.
VRX-We are up 45% on 1 entry and 36% on the other
One area to watch for continued weakness is the retail sector. They were weak across the board and even big time leader NFLX was off big
We still own retailer SHOO and will look to close out if trades much lower. We took profits along the way as it ran as much as 37% after our entry. It is still up 13% and our entry is near the 200 day moving average so we should be fine. We just never let a winning trade turn into a losing trade so our stop will be at least at breakeven.
Let’s see how well we hold support tomorrow and can better assess where we go next. The 50 and 200 day moving averages are about to meet which could lead to a big move one way or another. We think it will be higher into quarter end but will let the market lead us.
SETUPS
No new setups for Tuesday
Thanks,
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