The Hit List is a look at our current swing trading positions. Stocks we are already in have “triggered”, while those we are considering for plays have not triggered. Click post title to view print-friendly link.
WFMI stopped, ILMN Target 1 hit & stop tightened, WX removed, MDVN added
Open Position Notes:
ILMN continued lower today, moving through Target 1 where I closed 1/2 my position for a solid 6.2% gain. I’ve tightened my stop again tonight for remaining shares, but overall am pleased with how this one is moving and it still has potential for further downside. So far, so good.
CBT turned slightly higher today, finishing right near the breakout zone on the daily chart. This is a slower mover but I still like the potential here, so I’m going to stick with my existing parameters on this trade for now while waiting for follow through.
Closed Positions:
WFMI has been sluggish to get going in my direction lately, reluctantly creeping down since it broke support. The lack of downside momentum has caused me to keep my stop somewhat tight, and today my adjusted stop was hit as this stock bounced. I’m now out of the trade for a 3.3% gain, and will stand aside while waiting for a new pattern to emerge in this one.
Jeff,
Can you explain the significance or lack thereof for the broke long term uptrends on the NAZ and SP? The DOW seems to be the only index that is still in an uptrend if I look at the trendlines you have on your broadcast charts. I know the indexes are all range bound now, but how much importance is placed on the fact of a broken uptrend prior to the short term trading ranges? I would think it is significant to break the trend and lead to the range ultimately breaking down instead of breaking out. I would appreciate your thoughts on this. Thank you! Jim
Hey Jim!
Good to see ya, hope it’s been a nice week so far for you. This is a really good question, I’ll be happy to tackle it.
My take on trend lines is that they mark the pace of a move. On the shorter timeframes, a break is extremely important. I primarily trade trend line breaks in fact. But on the longer timeframes, trend lines are a work in progress in most cases.
So let’s take the index uptrends which started back in March. The NAZ, for example, had a trend line touching lows in March, July, and early-Oct. That trend line was in fact broken in late-October as the market began to pull back a bit, but with November came more new highs with another dip being bought.
Was the broken trend line the end of the uptrend? No, it was simply the end of the pace of the uptrend. An uptrend is by definition higher highs and higher lows, which is still the case for the NAZ. So when I see a long-term trend line (several months or more) get broken, I am on my toes for a possible shift of trend, but the trend line break itself does not consummate the end of that trend. It is often a signal to start watching for a lower low or lower high to form (in the case of an uptrend), but essentially if more new highs are created after the trend line break, the uptrend is still alive and takes precedent over all else (including a clean trend line).
Currently, the NAZ is only 3 days removed from its most recent new high, yet it is range-bound within the 2140-2205 area on a closing basis. I’m viewing this channel (range) as one of 2 things: either a shift in direction if price falls sharply out of the range, or a base upon which another advance can build. Which one we see first is anyone’s guess, but that’s how I intend to play the next break.
Bottom line for me is that a long-term trend line is a guide, but often times not the be-all end-all for a trend, because major turning points are usually more of a process than an event. It could be we’re in that process now, I don’t know, but I generally don’t load the boat in plans for a reversal once a long-term trend line gets broken. It might simply mean a slower pace to the uptrend, which might continue.
Sorry this got pretty wordy, but does this help?
Another unrelated question….what is your opinion on the CRZO head and shoulders pattern? I have been shorting it every chance I get above 22+ and the chart looks like a typical run to the neckline prior to a new trend to the downside occurring. Your thoughts would be interesting to hear on this trade and the risk/reward possibilities. Thanks, Jim
For CRZO, it is still beneath the neckline, but I actually am looking at the $22.75 area as the neckline (twice resistance in August, support in early October, support in early November, resistance for the past 3 weeks). I do like the play so long as price is able to stay beneath that level. I’d be looking for moves down to test the September low and possibly the July low for an aggressive target if it gathers some downside momentum. That is one well-defined neckline though!
Hi Jeff,
Appreciate if guide.
Do you know any ticker if we like to trade current barrel of oil price ?
USO or other don’t move as barrel current price moves.
Thanks,
-Abdul
Hey there Abdul!
You might take a look at OIL, here’s the description for it:
The iPath Goldman Sachs Crude Oil Total Return Index ETN is a subindex of the Goldman Sachs Commodity Index. The Goldman Sachs Crude Oil Total Return Index reflects the returns that are potentially available through an unleveraged investment in the West Texas Intermediate (WTI) crude oil futures contract plus the Treasury Bill rate of interest that could be earned on funds committed to the trading of the underlying contracts.
It does not have the same daily volume as USO, but might be more of what you’re looking for.
Jeff,
Great replies on both of my questions….thank you. : ) Jim