Mar

26

Investing Systems Research Lab Blog for Week of March 28th, 2011

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Last week I said “…for the first time in a long, long time I actually see signs of promise among the charts of individual stocks, Many seem to be setting up for good swing trades.”.

So I always look through last weeks setups before I write a new post to see which filled and what they look like now.

If you have been keeping up with the posts, you probably notice “favored” patterns.

I want to show a couple examples of why I like this pattern and what it looks like when it evolves properly.

Here’s the chart of HAIN from last weeks post.

Here is how HAIN ended the week.

Wouldn’t it be great if they all did that? Seriously, out of all the setups, this one completed the pattern best. Notice it broke up through the downward-sloping trendline Monday on a green candle. It held above the breakout all week, then followed-through Friday on big volume. Some “breakout traders” may chase this up more, but I would sell into any opening gap.

Here’s another one that did what it was supposed to do, LAVA.

The setup from last week.

and the follow-through.

This one may actually break out and go further. Watch for a break above the highs on big volume, green candle, etc.

So that review was to prove a point. The trendline break on a nice, clean chart pattern is on the top of my list of things to look for.

So here are this weeks “stocks to watch”.

Keep in mind that the market is up against significant resistance and these type of trades work best in a strong market, obviously.

I find it most useful to build weekly watchlists and focus lists and monitor them closely during the day, looking for strength.

While I said last week that I was seeing a ton of setups, the market rise took me by surprise. With all the bad news out there it was very counterintuitive.

As the world spins out of control, the market shows amazing resilience and the invisible hand continues to bid up certain stocks.

As tempting as it is to short this thing starting any day, I don’t think I want to fight the tape just yet. I prefer to see it become “obvious” the market is going down and then pile on when the time is right.

Next week will indeed be interesting.

Join us each week, Monday-Wednesday-Friday at the market open as we watch the action.

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Mar

18

Investing Systems Research Lab Blog for Week of March 21st, 2011

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This week I decided to write this post on Friday night. With perfect weather the rest of the weekend , I plan to get some fresh air.

I also wanted to be sure I was available to watch the “super moon” rise over the ocean tomorrow evening.

Which brings me to the point that anything can happen between now and when the market opens Monday. I’m writing now on the assumption that things pretty much stay “on keel” and we don’t get another “news shock”. As you know, this weekend in particular there are a lot of potential “news items” that could rattle the market.

Last week I made the statement “There’s no question we are in the midst of a correction, so we want to be cautious.” It turned out to be a bit more tumultuous than I expected.

We had a huge gap down then rally day, and a huge gap up and fade day. This is exactly the type of price action that can chop you to pieces. Beware. Most stocks were untradeable because of the gaps and sheer volatility. Heck we even had a mini flash-crash intra-day based on a statement made on TV.

However on the bright side, for the first time in a long, long time I actually see signs of promise among the charts of individual stocks, Many seem to be setting up for good swing trades.

As you know we are 3 weeks into March and we have only published 2 Trade Plans in the Research Lab. When the market started rolling over last month and many of the stops were getting hit, we decided to tread cautiously. Our software actually identified a handfull of potential setups, but I didn’t have the confidence in the overall environment to publish them. Many were from the “charts to watch” here on the blog, so you can look back and see what transpired. As I mentioned last week, most would not have filled as we are looking to buy into strength.

I actually see a ton of potential trade setups this week and many of the charts have similar patterns.

If the market cooperates and stocks rally, here are some stocks I like. If some “EvEnT” or more bad news breaks over the weekend, all bets are off.

I almost feel like a kid in a candy store when I look over the charts. So many put in potential intermediate-term lows last week. I see a ton more that have a great place for a stop-loss. Right smack-dab at the lows of last week.

I have a bunch more I don’t have time to post here, but check the Trade Plans before the open Monday.

If the market finds any reason at all to rally, we don’t want to get left behind. We are on the lookout for trend-reversals in case things don’t turn out as bad as “they” would have you believe.

There’s a lot of Doom out there at the moment, and rightly so. But the potential exists that we saw “capitulation” selling last week and we might get a good bounce in some individual names.

We’ll have a better indication by Monday, so be sure to join us live in the Research lab at the opening bell.

Until then, enjoy the Super Moon.

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