$RUT Head & Shoulders

In a post last week, I had discussed the  Head & Shoulders pattern developing in the Russell 2000. The chart below shows that the index fell below the neckline later in the week  

While it closed with a strong bounce on Friday, it failed to breech the neckline to the upside again. 

A move to the downside next week will confirm the head & shoulders bearish pattern. I will be keeping my eye on it. 



Watch Out for Bull Traps



Earnings are mixed overall but IBM's miss should affect movement is it represents a large component in the indices. Futures are up a bit this morning but I am very cautious on the long side here and expect this is just a morbid feline bounce. I suspect investors are likely to "sell the rips". Today's gap up does not put the indices into bullish territory and the market is still in a down-trend in a roll over pattern. I will take advantage of this little move to the upside to look for entries into short positions. 

I wouldn't get too excited about GOOG either. Although they beat on overall earnings, the mobile unit took a loss to the tune of of $3.3 Billion. 

While markets do favor the upside in the long run, corrections can hurt the shorter term trader. This is not the time to go long stocks. We are likely in a correction phase that will last a couple of weeks at least and long stocks work better in a bullish environment. I continue to favor a heavy cash position or a few shorts. I will also continue to add to my options account as the more "revert to mean" strategy works well in this environment.

Good luck all!


Distributive Environments are Tough For Longs

I have my bear suit fully on now.     


bearsuitaduleIt's tough to stay in longs in this kind of distributive environment. The indices are struggling to find support and the head and shoulders pattern in the RUT is confirming. I suspect we have a long way down. I continue to favor a heavy cash position or a few trades on the short side. The only two trades I am currently holding are TSL long and RAX short. 


My options account is doing well in this environment and I am leaning toward those trades rather trying to trade the trend in the chop. 

In other news...

... I have temporarily taken down my past performance page to get it accurate as there were some discrepancies. Stay tuned.


And... Good Luck everyone!



When $SPX Swings, I Don't Like to... ($RUT)

As I pointed out yesterday, with the post entitled Big Swings, the Fed inflated market over the past few years has become indicative of moments of large directional swings in the market. This kind of chop makes it very difficult to swing trend trade. I put on a couple of positions yesterday but I am in no hurry to add equity positions in this kind of market. Futures are down and I am leaning more bearish than bullish; I will not be surprised if we continue to see large swings. I did put on a bearish options spread in IWM and will likely put more of these types of trades on as they work well in a choppy environment.

I will be watching the RUT for the tell tale signs of market break down. The daily head and shoulders pattern in the RUT is looking ready . I favor remaining heavy cash and waiting to see how this plays out. 



Cash IS a Position!

I went to cash because delays cost less than losses. 



$IWM Head & Shoulders

Impressive distribution in small caps.




$MNKD Chart



$VECO chart

Next wave JHook setting up? Watching.



$GPS Chart


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