RSSArchive for July, 2011

Stretched is an Understatement

July 8, 2011 at 9:19 am

To say the run of the past two weeks has made the market stretched to the upside is clearly a major understatement.  It’s been a face-ripping rally for anyone caught on the short side, while underinvested bulls gnash their teeth in nearly equal frustration.

It’s been a tricky environment in recent weeks, yes, but there is still opportunity if you search for it.  The momentum run has offered some nice day trades, even if it has left many stocks overbought on the daily charts.  Even a few days of rest would do wonders for those charts.

Speaking of rest, this market is poised for it, but will we get it?

The reaction to the jobs number this morning offered the perfect sell-the-news scenario as extremely overbought readings (no matter how you gauge it) left the market badly in need of some profit-taking, some lateral price action, or both.  While the result of the turn lower this morning remains to be seen, we do know this:  the buyers are finally standing aside to take a breather at the very least.

Thankfully, as short-term traders we don’t have to predict what’s going to come of this market in the next few days.  What matters is that we continue to work the charts and trade what’s right in front of us.

With that said, a pullback here for a few days or even some short-term trading range price action would help to establish some new patterns and bases from which to take multi-day plays, one way or the other.  That may not mean excitement for a few days (if we do get a rest), but it would certainly mean greater opportunity on the other side of it.  I, for one, am excited about that possibility.


Chart courtesy of TeleChart


Chart courtesy of TeleChart

Those who have walked away for the summer have already missed considerable movement, and yet the market promises more going forward. Are you ready for it?

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!

The Naked Truth About Your Trading

July 5, 2011 at 1:18 pm

If I asked you how your trading was last week, or actually even if I let you pick any other week of June, what would you tell me?  Something along the lines of:

“…well, last week wasn’t really a good week to do that because I had (this or that) going on…”

That would be a typical response, and it’s one I’ve been guilty of answering with in the past.  Excuses about your trading only delay the inevitable truth though, so they’re really not worth making.  The fact of the matter is that your performance last week is the naked truth about your trading.

Uncomfortable?  That’s what you’ll have to face if you want to get better.  Your call.

You’re going to have to confront reality, and take a “typical” week and see if the results are anywhere close to what you’re wanting.  If they aren’t, then your trading doesn’t look good naked and needs some help!

Your profitability as a trader is the bare naked truth about how you’re doing.  Get equipped if you need to in order to improve.  Get committed to cutting losses better or planning with greater precision.  Get inspired if that’s what you need to move beyond mediocrity.  But don’t sit there idle and expect your results to magically change.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!

FCX 7% in 3.5 Days, Time to Lighten Up

July 4, 2011 at 12:56 pm

Last Tuesday I pointed out FCX as not only a potential market tell (since copper has proven to be a leading indicator many times), but also as a breakout play through a trend line after holding key support.  That post was published as the stock threatened to break $50.

Fast-forward 3 1/2 trading sessions, and FCX now sits at $53.50, or 7% higher.  That’s a quick pop (which I hope you caught a piece of at the very least), so the fast money has been made.  While the stock looks great for an intermediate-term position play, for short-term traders it’s time to lighten up.

A pullback is going to come, so for those only interested in grabbing the initial move, this is it.  Ring the register and move on to the next play.

Here’s a look at FCX, showing the push through the descending trend line and a rally past the previous high from May 31.  Not bad for a freebie:


Chart courtesy of TeleChart

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!

Tricky Times

July 1, 2011 at 11:08 am

I’ll begin this post with a plain and simple statement that is always true, including now:  the market is tricky. It is never easy, and anyone who tells you it is easy is either lying or an ignoramus.

With that said, if you’ve struggled of late, you have company.  Traders of many timeframes have found these past several weeks to be quite challenging.  During the past 6 weeks, here are a few phases we’ve witnessed:

Swift move lower. June kicked off with total abandonment of stocks as the indexes shed several percentage points in the opening days of the month.  It was flat-out hard to get on board if you missed the initial turn.  It rewarded chasing.

Whippy trading range. Following the initial slide, the market settled into a trading range marked by volatile shifts of direction and frequent reversals.  It offered zero follow through.  Chasing rallies or selloffs resulted in immediate pain as prices turned on a dime to revert back to the other end of the range.  It rewarded fade trades.

Aggressive ascent. After a selloff and indecision, in recent days we’ve seen the market ramp relentlessly higher with upside gaps and rips inviting bulls off the sidelines while forcing bears to cover their shorts.  Again, chasing has been rewarded.

Chasing strength or weakness isn’t inherently wrong, and you can make fast money if you’re good at it.  Likewise, fade trading within ranges isn’t wrong either, so long as you know what you’re doing and you stick with your discipline.  But for the trend-following trader who prefers to see stocks run, base, then run again, this market has offered little for you.  It has been tougher sledding of late, regardless of whether you’re a bull or a bear, a momentum trader or a continuation player, a day trader or a swing trader.  It has been a mess, so if you’ve struggled, that’s part of the reason.

Here’s a look at SPY showing the three phases of the past 6 weeks:


Chart courtesy of TeleChart

Good News

There is good news.

First, from a technical standpoint we know that the further this rally carries, the more likely the March & June lows are to hold.  It just gives the market more breathing room for the next pullback (and we will see one).

Second, conditions are always changing.  Just as in recent weeks we’ve seen nonstop selling, complete indecision, and then aggressive buying, going forward we’ll see a variety of conditions as well.  That’s good, because it means at some point your ideal trading environment is going to arrive again.  But you’ve gotta be ready for it.  You can’t have your head down and be busy bemoaning the fact that you’ve missed a couple of moves.

Finally, this is a reminder to step up your game.  It’s an opportunity for growth – a wake-up call.  Missing out is only partly the market’s fault – the rest is in your hands.  Learn some new methods, learn to assess conditions better, and understand which strategies are best suited for the environment you’re facing.  Don’t be stagnant, or else you’re going to continue to find frustration anytime the market doesn’t cater to your current skills.  Build your skills and become a more complete trader.

Attitude Matters

At all times you can complain and look back and wish you had seen a move coming or had the courage to join the momentum crowd.  That’s always something you can choose to do, but honestly, it’s not going to help you.  That’s not a winning attitude.

But take heart if you’ve struggled lately.  Things will smooth out and when they do, you’ll have experienced a few more market moves to file away in the mental vault – ideally to serve you again later – and that means you’ll more readily identify opportunities you used to miss out on.

Stay on your toes, the market gives nothing away.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!