TPX - Gap and Retrace - Go Short

Symbol: TPX
[X] Entry
Duration: Short Term
Direction: Go Short

TPX is in the retail sector (home furnishings in particular) and their chart has set up for a good short term trade.

TPX took a big dive back in July of 05' leaving a large gap down area that stretches from $21.40 down to $19.56. Since that time we made lows way back at $9.62 and have worked our way all the way back up to the gap down area. A high was made at $21.62 at the end of November partially filling that gap. After backing off pretty hard, we have come right back up to retest that high on a non-stop, low volume move.

I took this stock short yesterday looking for a retest failure to setup. The stop out area is above those highs ($21.88 for me) and I believe the odds of stopping out prior to a failure and leg back down are pretty low. There's a decent chance that we come back down to test out the breakout area around $19 first and that's where I would look to reel this back in. More than a 2:1 reward to risk ratio at the closing price.

I'm not going to take a large chunk short because there has been chatter of this being a takeover candidate. In this market right now, shorting any given stock has that overnight risk due to the abundance of M&A activity that has taken place recently. With the deal makers all off enjoying the holidays though, that risk is low at least for another week or two which is likely as long or longer than I plan to be in this stock anyway.

SDS - Support - Go Long

Symbol: SDS
[X] Entry
Duration: Short to Intermediate Term
Direction: Go Long (Short the SPY 2x)

My focus is on the general market currently rather than individual stocks as we close out the year. My take is that the beginning of the year will be a tough go; especially given the push higher end of year. I've pointed out the QID recently as a way to go short the NDX by going long. The SDS is the same idea but for the SPX.
For those of you with IRA accounts that are nonmarginable (or other nonnmargined accounts for that matter), these newer instruments offer a simple way to go short the market.

SDS has had a long down trend that corresponds to the SPX having a long up trend. We are at a crossroads now and with the QQQQs showing us potential problems (it broke down recently), this lower volume back to resistance offers an opportunity to short the NYSE SPX as well. This vehicle is reasonably thin and moves in larger ticks so it's now something you can get out of in a hurry without suffering some tick loss so factor that in with respect to any size you carry if you choose to look at it for a trade. You want to be able to use limit orders here and name your price; not be pushed around and accept whatever you can get. Risk is new highs that come on volume. Reward is a retest of that $60 area and if the QQQQs break at the same time, it will be more.

XOM - Channel - Go Short

Symbol: XOM
[X] Entry
Duration: Intermediate Term
Direction: Go Short

XOM showed extreme selling pressure off the top at the middle of December and has now settled into range trading between $77.50 and $74.80. That large volume day of selling says that there are lots of folks stuck in losing positions above the channel high and they will likely want to sell into any strength. That is what contributes to resistance.
As a result, we can use that knowledge to understand where our risk is and we can short underneath that level with the stop on the other side. Short term support was found at the immediate lows in December but they are reasonably weak. Real support is back at the end of Novemember lows in the $72 area. That's the target for the trade. We'll have to evaluate how this stock sells off into that area to decide if the trade is finished at that point.

GLD - Retrace - Go Long

Symbol: GLD
[X] Entry or Additional Buying
Duration: Intermediate to Long Term
Direction: Go Long

GLD has retraced a good piece since our last good buying opportunity and looking at a daily chart, one could make the case that the retrace and retest of the breakout area has now successfully occurred.
I'm not certain on this count but I do believe that you have to be picking at these issues here with the idea of adding on further weakness and adding more if, over the next few weeks it proves that the intermediate term lows are indeed in again.

QID - Channel - Go Long

Symbol: QID
[X] Entry
Duration: Intermediate Term
Direction: Go Long (short the QQQQs)

The QID is another one of those interesting instruments they have been creating of late. This one is an inverse of the QQQQs and trades at 2x the QQQQs. Sometimes it is hard to see a topping pattern as easily as it is to see a bullish basing pattern so by looking at the QID, we are able to see the opposite of what the top stocks in the NASDAQ are doing as a group.

The first item of note is the long steady channel down trend that was in place for about 6 months. That was the NASDAQ 100 just steadily climbing since July. In October, we saw the QID start to base just like it has since the early part of November. It failed though and went lower and did so on a volume spike (see 11/06-08) but then notice how volume almost completely dried up (11/21 - 11/24). Then bang, a nice spike higher on a bigger volume (11/27) and since then a basing pattern that has now clearly broken the down trending channel.

Notice that almost all the up days since that change in character have come on increased volume compared to the down days. This issue is charging up for a breakout. When it comes, it likely a couple points to $56 and if volume is sufficient, then right on up to $58 in a heart beat. This is the source of my negativity on the market. Finally we have something to sink our teeth into rather than non-confirmations and anemic volume on the way up.

IYT - Breakout - Short

Symbol: IYT
[X] Entry
Duration: Intermediate Term
Direction: Go Short

The transportation index has shown a full failure now with yesterday witnessing a lower low on the intermediate term level. The swing point of $82.41 on 11/3 was violated and closed under yesterday which signals an eventual retest of the lows back at $74. The IYT is the tradeable Ishares ETF of the index which gives you broad access to all the components of the index rather than trying to pick one or two. It may be a reasonable alternative. You can start picking at this index between now and the end of this year building a bit of a position before next years trading begins. A bounce could take us as high as $84.50 now but that resistance bar at the lows of the last wedge (around the $83.50 area) probably stops any advance. This type of a chart is why I remain bearish on this market.

IAG - Reversal - Go Long

Symbol: IAG
[X] Entry
Duration: Intermediate Term
Direction: Go Long

IAG is in the metals sector and today showed a reversal pattern after a 10%+ decline over the past couple weeks. Volume tailed off today as we approach the congestion area from September/October period. This comes after a push back to the gap down area around $9.75 and appears to be simply a retrace to build greater momentum to re-attack that same area. The stop out area is below the $8.15 pivot low and with a close at $8.66 it's a good place to start adding.

BTU - Retrace - Go Long

Symbol: BTU
[X] Entry
Duration: Short to Intermediate Term
Direction: Go Long

BTU has seen its share prices come in a good 10% from the latest surge and that has brought it right back into a support zone center on the pivot point of 11/29/06.
This is a place where, if volume dries up while we test that small gap up area at $43.17, we should be able to take a position with close stop and see if we can catch a turn.

FNM - Retrace - Go Short

Symbol: FNM
[X] Entry
Duration: Short Term
Direction: Go Short

A little over a week ago I had pointed out FNM as a possible short. Things were looking good until they announced that they had cleaned their books and they gapped higher on that news the next morning. I had to cover at the time but have been monitoring it since. It appears that the news has faded and that the gap up is about to be retested thus creating the opportunity for another short on this puppy.

BVN - Retrace - Go Long

Symbol: BVN
[X] Entry
Duration: Intermediate Term
Direction: Go Long

BVN is in the metals sector and has built a very long base now over a broad 8 point channel. We are trading roughly in the middle of that channel now but good support seems to be just underneath the current price point.

This is not the place to load up on this as we could trade back to the $26.8 area fairly easily, but it might be a place to take a small stake, get it on the radar screen so you can watch it and add when the time is right. I like the way volume is drying up on the retrace suggesting that the sellers are not active at these lower price points.

BBI - Wedge - Go Long

Symbol: BBI
[X] Entry
Duration: Intermediate Term
Direction: Go Long

BBI trades in the retail sector and looked to be left for dead a year ago. Since then it has built a nice base and has began to come to life again.


What intrigues me about this chart is that a nice base over a long period of time has built out and there is really good support lying both at the current price point and back at the $4.5 area. This is a stock worth looking at since a break higher from here and it's clear sailing to that $7 area and probably brings the $8.5 target into view which is almost a double.

FDG - Retrace - Go Short

Symbol: FDG
[X] Entry
Duration: Short Term
Direction: Go Short

FDG is in the industrial metals space which has been picking up steam of late. Problem is, this stock has a huge resistance area to deal with that should create a tradeable short position as a result.


With prices having climbed all the way back to the scene of the crime and with volume not as spectacular as it was on the way down, you have to consider that the odds favor some milling around at best, but more likely a retest of that $20 area before we break back higher. Building a short position from the closing price back towards that $24 area is ideal.

HMY - Retrace - Go Long

Symbol: HMY
[X] Entry
Duration: Intermediate to Long Term
Direction: Go Long

HMY is a gold stock in the metals sector. It had a big run up and is working off that excess currently. The retrace is occurring on average volume and as we come back into the support area it looks to be a place to start a bit of buying.
My alarms went off on this issue on Friday as I'm monitoring several gold stocks as I look for entry levels to add back to my positions.

HITT & SMH - Retrace - Go Short

Symbol: HITT
[X] Entry
Duration: Short Term
Direction: Go Short

HITT is in the semi group and has shown a lower volume retrace back to the bottom of the gap down area. With the semi group looking to roll over, this looks like a relatively safe play using the $39+ area as a stop out. I would prefer an entry arond the $38 area or maybe even the $38.4 area and will not press to enter here. I do like the setup but there support at the MAs at the current price point. This is one of those that you start to build a position and average in for a bit rather than plunging.

An alternative is to simply short the SMH and avoid the individual risk on a single stock. That sector shows a large wedge/triangle formation has occurred over the past 6 months and that we are at the apex of the triangle now. If you take the highs of early this year and the lows of the summer, a fib retracement of .618 is the highs of this past October. Since then it has churned and looks to be rolling over.

GLD - Retrace - Go Long

Symbol: GLD
[X] Entry
Duration: Intermediate to Long Term
Direction: Go Long

GLD is the ETF tracking stock for the bullion. It got whacked today and that could carry for a bit as the dollar catches a bounce. If you look at the chart, that high volume breakout day on the the 1st of November looks to be the target of this fall. As it comes into that area, if volume dries up, that would be a good place to look to get long. That happens to coincide with the 200 and 50 day MAs.

FNM - Retrace - Go Short

Symbol: FNM
[X] Entry
Duration: Intermediate Term
Direction: Go Short

FNM is in the financial sector and was a good short some 6 months ago until it broke topside. Since then it has traded higher and higher until about the first week of Novemember when it topped out. . Since then, it has traded lower, gapping lower on 11/17. Yesterday, we tested that gap down area on lighter volume. In fact, this whole retrace has come on light volume. All of this suggests that this equity is going to, at a minimum, retest that sub $56 area and more likely, it will trade back to that $53 level before it makes a higher high than today.

So, my plan is to start a short position today and look to add on any strength putting my back against the wall around the $59 area.

ADVS - Reversal - Go Short

Symbol: ADVS
[X] Entry
Duration: Short Term
Direction: Go Short

ADVS is in the software sector and has a very interesting short term pattern. I've noted the volume and price points on the chart. Essentially, the stock should not trade much above yesterday's high if it is coming back in which is what the chart is telegraphing. It allows an entry with a define some out area on a chart that is saying it could drop to $34 in a heartbeat.

QQQQ - Reversal - Go Short

Symbol: QQQQ
[X] Entry
Duration: Intermediate Term
Direction: Go Short

The QQQQ is the ETF tracking stock for the NASDAQ. If you take a look a the trading over the past week, we can see that the volume flows are telling a tale of lower prices to come.
The problem is that of timing since the SPX broke to a higher high today and held it, we could have strength still brewing there but this looks like a classic setup to me ... a heavy push lower on volume, a light volume retrace followed by another heavy push lower on volume and now today, a retrace back to test the breakdown point but on dramatically lighter volume. It could take a little while for this to play out and we do have to protect this short position and likely trade around it, but it does appear that this is the sort of setup you look for in a trade and I would be amiss to ignore it despite the frustration with trying to short this market.

AMD - Trend Line Break - Go Short

Symbol: AMD
[X] Entry
Duration: Short Term
Direction: Go Short

AMD is in the tech sector and that sector is having some difficulty now. AMD broke through a low volume up trend that was retesting that gap down from above. The failure today suggests a retest of the low back in July is on the table. A short at today's close is a bit lower than desire in terms of risk/reward but the risk of a stop out looks very low at above $22 before we get the retest of the lows.