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Bandit Broadcast for 11-15-2009

November 15, 2009 By Jeff White Filed Under: Videos

Good evening StockBandits!

With the major indexes moving sharply higher in the past couple weeks right from support zones, we saw them become short-term extended last week. The S&P 500 and DJIA each broke out to new recovery highs, and the NAZ approached its recovery high as well. Those with some inventory on hand certainly had reasons to book some profits, but they didn’t. Only one decline was seen, which came on Thursday, and it was quickly forgotten with a Friday rebound.

What we have now is a handful of index charts which have rallied and put in a brief rest. And as logical as it would be for some more meaningful rest to occur here, it could be that this market simply wants to move higher. Wide trading ranges have developed over the past 9 weeks with well-defined support and resistance zones, and that range could potentially serve as a base for another push higher – if the bulls want it badly enough.

On the other hand, the breakouts we saw last week have yet to be built upon. In fact, the S&P 500 has fallen back below they key 1100 area. It’s also a possibility that this trading range will persist, so we need to be on our toes in case that scenario unfolds as well.

It’s certainly an interesting spot, and this next week could be an important one for the short-term health of the market. The trends are still up, but the light volume we’ve seen lately is a wild card factor to be aware of. I’ll be setting up some if-then scenarios for trades this week in hopes of participating in the next move regardless of direction, but as always I will not attempt to force trades – only taking the setups as they come.

Tonight will be written format once again, but we’ll return to the video format tomorrow. I’m setting up some day trades and swing trades heading into Monday, so here’s what’s on my radar with my notes on the charts themselves.

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Chart courtesy of StockFinder

Day Trading Candidates:

Chart courtesy of StockFinder

Swing Trading Candidates:

Chart courtesy of StockFinder

Bullish Watch:

RL, CREE, FSYS, FCN, ADSK, WCN, RAI, NFLX, CHKP, MGA, MCK, HS, REV, GOL, FDX, DTV, RGLD, HBI, DISH, UIS, FOSL, MXB

Bearish Watch:

AONE, STEC, X, STT, MCO, UTHR, AMGN, WFMI, FUQI, APOL, LEAP, FLR, ARO, CLR, AKS, HOT, AAWW, EBAY, DV

The Hit List will be coming out soon with discussion on open positions and swing trade stops and targets, so be sure to watch for it.

Trade Like A Bandit!

Jeff

Trading Lesson 11-13-2009

November 13, 2009 By Jeff White Filed Under: Trading Lessons

Trading Lessons are a feature here in The Bandit Hideout where we take a look back at a trade and see what we can learn from it. It might occur weekly, or more or less often, and it may be written or video format.

It might have been a winner which paid us nicely, and we’ll want to know what it was about that play that worked so well for us. Or it might be a trade which performed poorly for us, thereby offering us another valuable lesson which we might can apply going forward.

Whatever it is, the aim is to use the old ‘hindsight is 20/20’ adage to our advantage. We can learn a lot from the past! There’s no reason to ignore it when it can help us improve as traders.

Trading Lesson for 11-13-2009:

This past week, I liked how MON was acting. The stock had been trending lower and after validating the $70 level as support in July and late-October, it has bounced back lazily to that area and failed to clear it. The bounce had also created a bit of a bearish wedge beneath that broken support level, setting up what I felt was a good potential play on the short side. It was a bearish pattern within a downtrend, which is exactly what I like to see. Here’s the chart I highlighted with the play:

Chart courtesy of StockFinder

I took the short entry on Tuesday as MON undercut the $68.70 level with the break of the rising trend line, but there was no follow through. The stock bounced back a bit to stabilize within its wedge pattern once again, but it did remain negative on the day.

Mid-afternoon, MON exploded higher, quickly reaching my stop loss level to take me out for a 2.6% loss. The loss itself wasn’t bad, as that’s a manageable amount which can easily be recovered. The unnerving part was how sharply the stock rallied, indicating not only had the direction changed with force, but that something fundamental was behind it.

Indeed it was, as the company had just reaffirmed their guidance for fiscal year 2010. With the new confidence that the company could perform well in the year to come, investors piled into the stock and took it quickly higher. Here’s a look at MON after the day’s trading:

Chart courtesy of StockFinder

Trading and holding stocks involves risk, and this MON trade highlights one of them, which is fundamental news from the company. It was not scheduled (they had earnings and their conference call a month prior). The inability to see it coming means it cannot be avoided, and it’s just one of those things that can occasionally happen. I did walk away being reminded of a couple of key lessons though.

First, it’s crucial to always have a stop in place – just in case. I never know when the landscape might suddenly change, so I always want my safety net in place in the event that things shift suddenly. In this case, I didn’t have much time at all to react, as the stock was sent flying and I was short. But my resting stop loss order was in place, and it eliminated the need to think quickly in the heat of the moment.

Second, sudden headlines are going to occur, and they may not always be negative. Just as in this case the news had an adverse effect on my position, down the line some other stock may have a very favorable reaction to unexpected news. It’s my view that over time, the headlines will even out, so while I was caught on the wrong side of this one, the next one might be an unexpected gift.

Getting taken out of a trade abruptly for a loss can be irritating, but it’s going to happen sometimes. Some stocks will work quickly, others will fail quickly. The key is to keep taking the good plays as they come, and let the law of large numbers work in my favor, trusting that technical analysis will do its job.

Trade Like A Bandit this week!

Jeff

Hit List 11-12-2009

November 12, 2009 By Jeff White Filed Under: Hit List

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.

TNB stopped, RTI 1st Target hit & stop tightened, JNPR stop tightened, HON added

Open Position Notes:

RTI turned sharply lower today with an excellent breakdown, taking it through my 1st Target where I booked 1/2 profits. The stock continued lower on heavy volume, and looks poised for follow through here. With this one having broken down and the potential which remains, I’ve tightened my stop tonight for remaining shares just in case it happens to rebound sharply as I don’t want to give back much. Otherwise, I’ve left it a few percent to fluctuate if needed while waiting for follow through in the coming days.

JNPR broke down today with some heavy selling for the first half of the day as the stock moved well beneath broken support. A partial rebound was seen in the afternoon though, bringing it up from its worst levels. Nonetheless, today’s high-volume breakdown is encouraging, so I’ve tightened my stop again tonight in expectation of follow through. If I don’t get it, my risk has effectively been removed with the breakeven stop I now have.

CVX pushed north of key resistance yesterday but light volume couldn’t produce follow through, and today’s market weakness allowed this one to slip a little deeper back into its recent trading range. The pattern is still overall bullish, but it appears this stock simply isn’t ready to run yet. I’m going to leave my stop as-is, because the risk here appears minimal and my stop was validated today as price came close but didn’t hit it. Perhaps it can shape up in the next few days, but if not my risk is defined.

Closed Positions:

TNB started out a little hesitant with an initial breakout failure, but the stock gained traction soon and ran nicely for me. It moved steadily through my 1st Target, and neared the 2nd Target before finally getting taken down a bit with the market weakness today. Last night I raised my stop for remaining shares just in case we saw a pullback kick in, and today that stop was triggered to take me out of this play for a solid 6% gain. The overall trend is still up in this stock, but it needs some rest at this point so I’m going to keep it on the radar in case it sets up again. Nice run though.

Bandit Broadcast for 11-12-2009

November 12, 2009 By Jeff White Filed Under: Videos

Good evening StockBandits!

Another attempt to push higher this morning ultimately tipped the scales a bit too far as the bulls decided to book some long-awaited profits. The bounce from the lows of just 8 sessions ago has brought the DJIA and S&P 500 each to new recovery highs, while the NAZ got to within just 11 points of its highs today. To say the market had become stretched to the upside in the near term would be an expression of modesty, as there simply has been no rest in the relentless advance. However, today’s reversal points to some exhaustion having set in over the short term, so perhaps we’ll finally see a little bit of a pullback.

It’s far too early at this point to gauge whether today’s decline is the start of something more meaningful, but it is a logical time to see the market back off from its highs after such a sharp run in recent days. The bulls still have uptrends in place across the board, so it’s going to take quite a bit to change that. One scenario which could develop here is that the short-term trading range could persist for a little while in the NAZ and S&P 500, particularly if some follow through on the downside is seen pretty soon. I’m not rooting for a selloff, but am glad the nonstop bounce has taken at least a breather for a day.

Tonight will be written format as that’s what works best for me, but we’ll return to the video format next week. I’m setting up some day trades and swing trades heading into Friday, so here’s what’s on my radar with my notes on the charts themselves.

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