For the last several weeks I’ve been only partially engaged in the market which has not been very conducive to trading or initiating new longer-term trades (i.e.- investments). Although the trend was clearly up, the momentum has been waning (smaller gains) with the warning signs (divergences, extreme complacency, stock prices rising on low volume, etc..) continuing to build.
Yes, there have been quite a few nice trades closed out for quick profits (e.g.- RAX, HLF (twice), FB, ELLI) as well some very large profits, some in excess of 50%, as some of the longer-term long-side trades (e.g- NFLX, AMD, PT, HPQ, CS) that we entered last fall when most were either too afraid to go long or more interested in shorting due to the fiscal cliff, worries about Europe, declining stock prices, etc.. There has also been an increase in trades that have either been stopped out or exceeded the usual stop threshold (3:1 R/R or better to preferred target) as well due to the fact that I’ve given some more wiggle-room than usual to those trades with charts that still look constructive. Basically, trading hasn’t been easy over the last couple of months and January, for as strong a month as it was, was just one of those times that it was better to keep things light than to chase gains that many (myself included) did not see such a large move coming.
As I’ve only been partially engaged in trading lately, the trade ideas on the site are in need of updating. Over the remainder of the week, I plan to remove any stopped out trade as well as any other active trades or setups that no longer look to offer a very attractive R/R profile. As that may take a few days between my own trading, maintenance on the site, and other issues, I did want to share a list of some of my favorite short trades right now as I believe that a substantial correction is highly likely at this point. More so than just the quick “buying opportunity” pullback that even most bulls are expecting, I am seeing quite a few short setups that may be offering some nice longer-term (multi-month, 20-30%+ gain potential) swing trade entries. Most of these trade ideas are already listed as either short setups or active short trades on the site and there are a few new names listed below as well. I will do my best to post updated charts on these over the next few days but until then, the previous charts and notes on many of these trade ideas can be referenced via the “Posts By Symbol” drop-down box toward the top of the sidebar on the right hand side of the site. (TIP: After clicking on the drop-down box, type the first letter of the stock symbol that you wish to reference, e.g.- for NFLX type “N” to jump to all symbols starting with the letter N, then use your mouse wheel to scroll or drag the slider down to “NFLX”). Feel free to contact me if you are interested in any of these trades and as I will prioritize posting updated charts based on the inquires received on any of these stocks. Here is a list of some of the short trades that I believe are currently offering a very attractive R/R as swing short candidates:
LEN, HOV, CBK, SHW, VAL, NFLX, MA, V, EXPE, CRM, TASR, COL, CMCSA, HLF, NTRI, ALXN, LL, KBH, OCN
As always, DYODD (do your own due diligence) and never take a trade that does not fit your personal trading style, risk tolerance and objectives. Remember, I share these trade ideas, along with suggested stops, profit targets, etc.. for educational purposes only. Although I can’t always take every trade posted here, I do trade as many of the trade ideas as possible and do my best to share these trade ideas (as setups) before I establish (or exit) a position. Bottom line is that I would never post a trade idea that I wouldn’t personally take, although I don’t personally take every trade idea posted due to various reason (already invested or positioned to my desired market exposure level; I might decided to pass on a trade due to my current market bias or even lack-thereof at the time; etc….)
Finally, keep in mind that until we get some half-decent technical evidence to the contrary, the trend remains up for now and as such, shorts are counter-trend trades. Therefore, best to not get too aggressive on your short position sizes and/or your overall market exposure (e.g.-100% net short). There are still some attractive long trades on the site and focusing on a mix of the best looking long patterns combined with the most attractive looking short patterns should help lower your overall downside risk while maximizing your returns vs. a pure broad market long or short play (e.g. SPY or QID). The short trade ideas posted here don’t have to be used for a pure bearish play on the market. For example, a longer-term investor with a portfolio of longs with significant embedded gains (e,g.-tax liability if sold) could take some short positions as a hedge to an overall market decline, removing those hedges once the R/R on the long-side improves, such as after decent pullback/correction to support on the broad market.