Stops Suck, But Part of the Game


I talk to pro traders all day. After this week they all want to kick their dogs and punt their cats when they get home. This week has been rough, and it’s only Wednesday. Charts failed, so did traders.
Charts that looked so pretty ( I took bait) ended up failing miserably. That’s the game, they all look pretty until they don’t. Stops are key, they were hit today like  baby seals looking to milk their mama.
Employment is Friday, so I don’t see the planet getting aggressively
long (or short) in front of the number. The market however, has started to liquidate energy, materials and mining. The financials are the red headed step children that watch from the other room.  They will break lower or make their case soon. Such a toxic and regulated sector. Good luck if you are long financials. I am not implying lower prices even though I am long FAZ. I am green on the trade.
Momentum names like OPEN got hit, solar names like FSLR got sold, and oil, metals and materials went to the woodshed.
I still don’t think this is a disaster yet, I think it is a a correction, maybe I’m wrong. Stops are in.
We had a really bad ISM number today, oil inventories were higher (lol, crude has been running), while inventories increase, so it’s been a good run. Congrats to those who take advantage of that layup. Crude finally came down. Ouch, a two day sell off. I like oil stocks, semi conductors bore me to tears. Apple is always good. I am long Apple as of today at $351. My stop is $344.
The one thing that will crash this tweeked, over served punch bowl of a market…is a dollar crash. And that ain’t that crazy.
P.S. I like really long walks on the beach with Lynyrd Skynyrd blasting in the background. But I like volatility more.

Market Averages Down for A Third Day in A Row. Should You Be A Buyer Here? From Stock Twits.

The $SPY and the $QQQ are still above their rising 20dma. The truth is that the averages have always hidden more that they have revealed. Under the surface of seemingly normal consolidation, many of the recent momentum leaders were taken to the woodshed.
The selloff in momentum names started last week and accelerated over the past few days. As is often the case, the market averages followed. The benefit of any correction is that highlights the future leaders and they are usually the stocks that hold the best during down days.
Defensive plays continue to outperform. A quick look at the liquid ETFs making new 20-day high reveals bond funds of all types – UST, emerging market debt, muni bonds and corporate bonds.
Only two of the St50 stocks are in the green zone for the week: $GMCR and $SGI. Both released strong earnings reports and in this case the individual catalysts trumped the overall lack of risk appetite.
It is not unusual for a momentum stock to lose in three days what it gained in 3 weeks or more. When this happens, it always attracts buying interest which often leads to a short-term bounce. While such V-shaped bounces from previous zones of support might be good for 2-3% intraday trades, they are typically not sustainable in the longer-term perspective. The reason for that is strictly psychological. Those who froze and did not sell during the initial leg down are likely to do so if they are represented with another good enough opportunity.
The last 7-8 months have rewarded buying on weakness on a regular basis to a point it has become a favorite strategy of many. This time is not different. If you are a day trader and look to grab quick 2-3%, wide range days provide amazing opportunities. If you are a trend follower, you might be better off by sitting out the high volatility period and focusing on stocks that are making new 52-week highs while the indexes correct.
Posted by