follow-through

Okay, so today I am no longer feeling so cool. We'll see what the rest
of this week brings.

wait for it...

Wow, looks like the easy recovery has ended. I feel good because I
played this one right. I pissed away a lot of money trying to bottom
fish on the way down, but finally got out before the real mess hit.

Then, everything I read said that there is usually a fake-out rally
before we attempt new lows. Plus, the bottom was too V-shaped to have
high success probability.

Now we have fallen below the 200d on the Nas, SPX, and NYSE. The day
just got uglier and uglier and ended at the lows on 25% increased
volume.

I bought QID last week and pressed my position on Thursday. I was a
little too early, but I didn't sell out after Friday's big run. In 2
days I went from being down 5% to up 1.5%. I also didn't go long
anything because we never got a confirmation day.

So, I am proud of myself... for now.

Oh, and I have small short positions in IGT and CEG now.

so maybe cramer was right?

I'm sure by now everyone has seen The Cramer Video

So after all that's happened now and how bad things are looking, I wonder if Cramer is somewhat vindicated?

All I know is I love this Cramer Mix by DJ FiniFinito from the Big Picture.

this must be the bottom

As a contrarian indicator, today may be the bottom as I lightened my
portfolio quite a bit and even opened a few small short positions. I
still have QLD and am leaving with a stop of 88.25, according to my
plan. I was 95% long last week after the follow through on Monday, but
decided to trim after IBD called the rally dead on Friday.

So, I used today's positive open to sell into strength, getting out of
many of my positions right at or around breakeven. Many were near the
high for the day, it turns out. For example, I sold ILF at 207.50 for
breakeven and it closed at 203.40

I do think this is a correction (5-10% down), rather than a bear market
(20%+ down), but I also realize that what I think the market might do is
irrelevant.

As the day went on, the market couldn't hold the strong open, even with
the liquidity boosts. I shorted a few stocks at the end of the day:

ZLC had an evening star formation.

RT Also did an evening star right on the 50d last week, a shooting star
yesterday, and today a bearish engulfing pattern.

EBAY had stalled. I used to be long this, but went short at 35.51 with
a stop of today's open of 36.20.

These will be short term swing trades with stops equal to today's
opening prices.

well, that was quick

After having a new Rally start on Monday, today it ended and we're back
in a Correction. Although apparently the S&P and Nasdaq did not
undercut their old lows, so if they have big gains on increased volume,
that could be another Rally starting. Phew. What a roller coaster.

I guess I will start paring my portfolio again.

now this is what I'd call a target rich environment

There are a lot of stocks that broke out today. Makes sense, since it
was a huge upday. 3 big gains in a row for the indices, including gap
ups on monster volume today. Very bullish.

I did buy some BHP on Tuesday. It gapped up nicely today.

I also put in orders to buy JASO and FSLR. JASO had earnings and opened
way up. I got it at 36 and it closed at 35. FSLR didn't hit my limit
order.

Many are saying we're now hitting resistance at trendlines in the
indices and will pull back over the next week or so and put in a new
(hopefully higher) bottom. I did notice many charts that today's price
spiked way up only to close much lower. Futures are down right now, so
we'll see.

If there is weakness, I want to start positions in EBAY, FXI, SLX, AAPL,
RIMM, and add to ILF.

groups on the move

After study of the stocks on the move + 2 watchlists from various place,
here's some interesting group pairings I found. I was researching each
stock individually because it broke out and kept noticing other stocks
from the same group that were also in the breakout list.

* moved at least 4% in price 50%+ in vol.

G3 *ACO, BHP [metal ores]
G5 *OYOG, *DRQ, FTK [oil & gas mach]
G6 *PCLN, NILE, EBAY [ecommerce]
G9 *DGII, *CSCO, JNPR [networks]
G13 *ROP, *CIR [machinery gen]
G25 *VMI, *BOOM [metal proc & fab]
G30 *ULTI, *CADA [software enterprise]
G32 *SIGM, *SMDI [elec semicond]

So, what does that tell us? I don't know. They're all in the top 32 of
197 groups and all breaking out at the same time. Looks like tech and
basic materials/commodities.

SIGM and ACO are cup&handle, most others are just new high/big vol.

I'll have to keep an eye on these. If this is the kind of stuff leading
this new rally, I want to be in it.

solar moving again?

FSLR and SPWR had nice updays today after hammers yesterday after a
downtrend.

JASO and TSL both bounced very nicely off the 50d.

Not great volume on any except JASO.

stops

Once again, I'm thinking about my stop strategy. I have been using a
strict system where when I place my order, I put in a sell stop to
liquidate a position on the downside and also a limit order to sell 1/2
my position at a profit target.

But the age old dilemma is how do you keep your stops from being picked
off intra-day? You can try and put it low enough so that it's out of
the average true range, but that can widen it so much that you have to
significantly decrease your position if you want to keep your risk
small.

I know the best strategy is probably just to go off closing prices.
Yes, you will get rocked every once in a while, but probably not as much
as you don't get shaken out by not having the order on the books. I was
afraid that I would not have the discipline to do it, and that's why I
was putting hard stops in.

But I think I have a new way of doing it. I made an index card that I
keep next to my monitor. On it, I'm writing all my stocks as I buy them
and exactly what price my stop will be. That is the line in the
sand--no ifs, ands, or buts. If it closes below that price, I put in a
market order to sell the next day. This will require me to look at
closing prices every day, but I'm okay with that.

JNPR

I did get into JNPR on Friday at the high of the day. I put in an order
to buy if it was higher than 32.65, which was 10c higher than Thursday's
close. It went up slightly, my order triggered and then it went down
all day, although on lower than avg vol. But it didn't close below my
stop. Today it was up 7% on big volume, and I'm up slightly on it.

BKS I didn't get filled on. It had a big downday on Friday. Today,
however, it made a textbook dragonfly doji pattern. "An extensively
long shadow on a Dragonfly Doji at the bottom of a trend is very
bullish." I will buy some Tuesday if it opens up.

I also like the chart of BHP. It had a nice hammer at the 50d and the
lower BB today on twice avg volume. It is also in IBDs group #2. Same
deal, I'll buy some if it opens up.

2 buys for tomorrow

I'm going to keep these small. Market direction is improving, but this
could be just setting us up to put in a lower low.

BKS is strictly a candlestick formation play.

JNPR has had two big volume updays, it closed at the high today, it's in
a strong group, and it has resisted pretty much all the selling of the
past 2 weeks.

missed ULTI

I saw ULTI last night as a bullish engulfing pattern. I waited til
after 9am for the morning trading to settle down and then put in an
order to buy it at 28.35. I think at the time it was around 28.50 or
60. My order never filled and it went on to close at 29.67 up 6% on the
day. Still, I think I did the right thing by not chasing it, so I
count this as a good trade (or lack of).

change of direction

Wednesday was a very interesting day. It was up/down many times. The
VIX spiked to 26, which is its highest reading since April 2003!

$SPX and $COMPQ both rose on increased volume. They also made hammer
patterns. All these things indicate a lot of churning and indecision.

This could mean we're in for some upside. Although, just like the weeks
after 2/27, we could retest the low again before we continue higher.