Full Retreat Mode — $SPX
With the markets in full retreat mode, RSI (2) has fallen all the way to 16:
Makes me think about the possibility of doing some profit-taking towards the close today.
Counting with Doug: Financing a trip to Lake Tahoe solely with blackjack winnings?
GOOG cracks in the aftermarket
The warning sign that I worried about here has indeed materialized, as shares in Google (GOOG) tumbled 5% to near its 20 day moving average on what most consider the good news of beating its earnings estimates. This may turn out to be a garden variety “buy the rumor, sell the news” reaction, but it also might be an important warning signal that the long grind upward is nearing at least a temporary end. GOOG was trading at $565.44 a little past 5 PM Eastern Standard Time.
Pressing for a top? — $SPX
After another up day — six in a row — check out the RSI (2) way up there at 98.75. Looks like I will be bearish for at least another day! Maybe, eventually, it will be rewarded. . . .
Earnings season is upon us — (GOOG)
It’s earnings season in earnest again as various heavy hitters begin to report. So far, so good, obviously, but will the market eventually show signs of fatigue?
Lets watch Google, which reports tonight after the closing bell:
Currently pushing $600, GOOG would seem a safe bet, having broken out of that wedge pattern on Tuesday. I am super cautious on this one though, and wouldn’t at all be surprised to see disappointment in the actual news. Short term holders of this one should be ready to bail if the 20-day SMA at $560 doesn’t hold.
Short the market! — SPY
After five straight up days (and an RSI (2) over 98) I’ll try my hand at shorting the market on Tax Day by going short on 180 shares of SPY at $120.94. The biggest problem with this trade is that there is no well-defined stopping point to the melt-up on any recent charts, so expect this one to be a short-term trade if it doesn’t pan out:
A look at the Grand Canyon trade — LOPE
There’s not a whole lot to say about my move in and out of Grand Canyon Education, which was held over the weekend and produced more or less an instant profit on no discernable news without the usual mental anguish. Everyone wishes they could find trades like this all the time. The pity is, it just doesn’t work that way!
Entry was due to the bull-flag formation, but what about the decision to exit? I sold at $27.94, just about right at the purple trendline on the chart. Usually, I might be inclined to hang around to see if I can jump on trend, using trailing stops to protect gains.
However, I’m getting too bearish / scared to stick on the long side right now. As I write this the 2 day RSI on the S&P 500 is back over 92, and while that hasn’t mattered a bit since February 5th, eventually it will, so unless the overbought condition can be substantially worked off, looks like I’ll be looking for short plays for the next little while.
The smell of fertilizer — POT
Its been a month since I looked at Potash Corp. of somewhere up in Canada, and I got a chart request on it, so it is certainly time for an update.
On March 12th, I asked if the gap up at the open might portend the formation of a nice and profitable bullish cup-with-handle setup:
As it turned out, indeed it did:
The only problem was that there was no profit (but a sizable loss) to be had by trading the formation. This failed setup points out the virtue of patience, and how holding trading funds in reserve can be as important as trading them. When a cup-with-handle gets spotted, I think it often pays to wait until new highs are set to pull the trigger. On POT, that would mean a print over the $126 January highs for an aggressive (gambling) trader, or waiting for the March high at $128 to be taken out for a more conservative speculator (nice oxymoron, eh?).
That one didn’t pan out, but the bulls, as always, will find reason for optimism: look at the potential for an inverse head-and-shoulder pattern that is currently forming:
Dumped my LOPE for a nice profit!
Hi — came back from a short trip, and found this position hit its target for a nice (and quick) profit. Sold all 500 shares for $27.94 this AM, will try to break it down later.
Weekend in Tampa Bay
I am headed off to St. Petersburg and won’t be back until late Monday, so my next update will be early Tuesday morning. Have a great weekend!
Pulled the trigger on the LOPE!
Decided to put money on the line with the Grand Canyon Education (LOPE) trade, and to play the bull flag today. I purchased 500 shares at $25.76, and will see if it can hold the 20 day SMA; my initial stop level will be to get out at a close below $25.25. As or a target, a close at anything over $27.25 would produce a 3:1 risk ratio, but if this one proves right I would be inclined to let it run with trailing stops in place. Will keep you posted!
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