Jan 242013
 

AMZN was a recent short last quarter which hit the first target (bottom of the channel) for a 13% gain before bouncing and triggering a stop for those who did not book full profits (T2 was the final target).  Call this one more of a "gut" or instinctive entry than the usual trade entries that are based of pattern breakouts or bounces/pullbacks to resistance/support.  Therefore, only consider this trade (as any trade idea posted here) if it aligns with your own personal trading style & market bias.  As AMZN makes a new all time here today (bullish by just about any metric in the book), I am adding the stock as a short trade.

The first target will once again be the bottom of the yellow ascending channel while my preferred target at this time is T2 (and will very likely be extended if this trade begins to play out).  On the weekly chart below, I have added some more aggressive targets for longer-term swing or trend traders as well.  As listed on the daily chart below, a stop over 290.50 would provide a R/R (risk vs. reward ratio) of 5:1 for those targeting T2.  For more active traders preferring T1, consider a tighter stop using at least a 3:1 R/R ratio.  Daily & weekly charts below:

Jan 242013
 

NRP was added as a long setup a week ago but due to the overbought conditions, my preference was to see a pullback first before officially adding it as an active long trade.  However, I advised to trade it as you saw fit so for those that took it, NRP hit the first target on Tuesday, just a couple of trading sessions after the setup was posted.  Due to the fact that this trade no longer offers and objective entry until/unless we get a decent pullback (preferable to backtest the downtrend line), I am removing this setup (It was never an active trade so will be moved to the "Uncategorized" section vs. Completed Trades).  I plan to keep an eye on the stock for a future entry, especially if the KOL long setup triggers.

Jan 242013
 

WLT daily 6The WLT long setup has triggered the first entry (see previous post for preferred entry criteria) as it has taken out the bottom of the resistance zone.  An ideal stop for this lot would be not too far below (1% +/-) the orange downtrend, should WLT want to backtest that large falling wedge pattern.

Just remember when the market momentum is this strong yet the indexes, as well as most individual stocks, are this overbought, taking new long positions (and staying 100% long) is like a game of music chairs.  This market is so overextended that once the music stops, and it will, even if only for a few days, the ensuing pullback is likely to be sharp & possibly steep.  I would consider being very selective on new long positions at this point and consider reduced position sizing and/or trailing relatively tight stops.  Overbought can always get more overbought but the more the rubber band gets stretched, the harder it will snap back once the tide changes.  There is nothing wrong with taking these long setups as they trigger, just don't become complacent on your stops and/or consider booking some profits or scaling into some hedges (shorts) to reduce your net long exposure if you have not done so already.

Jan 242013
 

I know that shorting has been tough lately but I would be remiss not to mention that the $NDX looks like a very objective short entry at current levels.  I believe that a short here with a stop just above the recent highs offers a very good R/R.  As this is a broad market index, my preferred vehicle will be the QID (2x short $NDX).  QID will be added as a active short here at 27.80 with a stop below 27.38, which would be a loss of only 1 1/2% should this trade be stopped out. Price targets TBD soon and I will post both "correction" or shallow pullback targets for those who are longer-term bullish but looking for an oversold pullback trade, as well as longer-term swing targets as well.  Here are the updated QID daily bullish falling wedge and inverse head & shoulders pattern scenarios that I have been tracking, both of which are still in play so far.  Note: the QID trade will appear under the short setups and active short trades category, even though you would buy QID (go long), as it is an inverse (short) etf.

Jan 242013
 

ELLI dailyELLI will be added as an active short trade here at 24.35 as it has recently broken below this ascending triangle pattern.  An additional downside target might be added if/when prices break below T1 as that would be the trigger for a breakdown of a double-top pattern (21.30 would be the base of that pattern, giving a measured price target of about 12.00).  However, as the near-term market trend is still bullish for now, my preferred target at this time is T1 (21.30) which would provide a 12.5% gain if hit.

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