Trading Plan for Tuesday- SBUX, VRX, MTW, MED, SHOO Trade Returns
Posted on May 3, 2010 by trader21 in EXPLOSIVE STOCK SETUPS(premium), GLOBAL CHART ANALYSIS
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Great day in the market if you were long! We still have 34 open positions and were happy to participate in Mondays rally but we are still very cautious taking on any new positions at these unstable levels. Most of the moves were reversals off Fridays ugly day and not really healthy setups. There were a couple of negative things to point out. First off, volume was lower again and secondly we couldn’t break above the top of Fridays range. We also see a very negative pattern on the charts of the major indices. If you take a look you can see a bearish engulfing pattern where Fridays range engulfs all of Mondays range. We also had heavy volume on Friday and lighter volume on this bounce. As always the market cheerleaders were out in full force and foaming at the mouth telling everyone to buy, buy, buy but only less savy investors jump in. We feel it could be a bear trap. What one needs to do is take a step back and analyze what this really could mean about market conditions.
This type of grinding or churning action is normally seen at the top of markets. To say the least, there is great uncertainty out there after a big run in the market so the natural thing to do is take profits. When everyone piles out it can get ugly fast.
The market may keep running but the risk of initiating new positios here is extremely high at these levels. We would rather miss a low quality small move then force an entry and get pummeled. We have been pointing out that if we do break down we will fall a long ways and the big moving stocks in the market will fall even more. We still see a very good chance of a 10-15% drop in the near future so we must be cautious until more solid bases are formed.
OPEN POSITIONS
VRX made another big move into new highs. Up another 4.98%
MED another new high
MTW up 6.5%
SBUX
SHOO-We are up 34%
NEW POSITIONS
Still no high quality entries at this point. Once you take emotion out of your buy decisions you can see it is wise to sit tight.
Thanks,
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