My thoughts and journal

This is going to be a brief update tonight since I took most of the time that I usually spend for this report to do a class in the Live Trading Room.

Lead by the semiconductors, the broader markets all sold off today as I had expected them to do. The S&P500 ended the day at 1103.29, down 10.36 points. Volume on the NYSE came in at 1.48 billion shares, a 4% decrease from yesterday. Jeff Semmel’s Tradingscans.com counted 28 new one month highs and 149 one month lows, an expansion of that number. This is showing continued downside pressure in the market and supports a cautious stance towards equities. Record high oil prices, and the third lowest inventory ever of heating oil put additional pressure on the market.

Looking at the markets I do not see very much that is of interest. The same themes I have harped on for the last several weeks remain. Add PETC to your list of stocks of interest.

Earnings season will be in high form next week. The real winners and losers for the quarter should start to show themselves and we can get more active.
 
Once a year I go fishing with my dad and I was talking to him this weekend about when we can do that this year. We decided when we will go and where. After I was done talking to him I got to thinking about fishing and then trading.

An amateur approaches trading like high stakes gambling, laying down too much money on each play and eventually this person will go broke.He is in it to fill some void in his life. Maybe this person has a boring job and wants some excitement from time to time. Maybe this person is a compulsive gambler and the stock market is his casino. This person has no patience though and has the need to be in on some action all day when they are in front of the computer. They look for the big risk situations and try to make a fortune overnight.

A pro on the otherhand is like a fisherman. An old fisherman has "his spot" in the river, one he returns to time and again. He castes his line out and waits for the fish to bite. Sometimes they do, sometimes they do not, but he knows he has a good spot and stays there. He has patience. A professional trader is much the same. The professional trader has a few setups that (s)he will watch and knows how they work because they use this setup time and again. A professional trader will have his or her line caste all day, knowing that the fish will bite and over time he or she will feed the family.
 
Looks to me like 9600 is a distinct possiblity. The increasing volume was not so apparent on the previous declines. I cant see how anybody is long but I guess half of us have to be.:)
 

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Quote from hypostomus:

Do you apply the same volume interpretation principle intraday? Sorry, nobody else is responding to you. That is the fate of highly intelligent threads on ET. I know, because I have to pitch my thread low to appeal to the LCD. I find your analysis highly disturbing, because I am long 401K's in PRSVX and VIVIX, somewhat hedged by VBTIX.
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Yes, anything that works in one time frame should work in another. Light volume pullbacks after heavy volume breakouts work very well intraday as well as daily, weekly, monthly.

Brandon
 
Quote from easyrider:

Looks to me like 9600 is a distinct possiblity. The increasing volume was not so apparent on the previous declines. I cant see how anybody is long but I guess half of us have to be.:)
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I think we are just in a very split market right now. The DOW in particular though does not look healthy.

Brandon
 
On Friday the S&P500 Gained 4.91 points, closing at 1108.2, while the NASDAQ Composite closed at 1911.5, gaining 8.48 point. The Small Cap Russell 2000 Index closed up 4.54 to 569.42. Total NYSE volume increased 11% to 1.64 billion shares, while the Nasdaq saw a small 3% increase to 1.63billion shares. The markets opened flat and then got some buying over lunch, after which they sold off again finding support at the prior intraday highs. It was all about as exciting as it sounds ƒº Advancing Issues led declining issues by about two to one and new highs outnumbered new lows by 93 to 62. The stocks tracked by Jeff Semmel¡¦s Tradingscans website recorded 46 new one month highs and 146 new one month lows. This number continues to get worse and should be taken as a serious warning. This is an important figure to look at to show you market momentum.

Overall the song remains pretty much the same in the market with the exception of the commodity groups, write this down because here is a change. The recent price action in leading commodity stocks has led me to no longer be bullish on this group. Stocks like X, STLD, STTX, RESC, PD and the like broke to heavily after rallying to new highs. This is not the action you tend to find in leading groups. Rallies in the commodity type stocks are at this point shortable in my opinion. You have a nice list to look at above, with X being one of my favorites at this point.

Another group I found this weekend that I liked a lot was the truck transports. If you look at a dailygraphs.com chart of this group its just got a very nice breakout working. Some names that I find attractive in this group are ABFS (I got long Friday), CNF, and ODFL.

As noted above I think that the market remains rather spotty and it is not offering the best outlook going forward. I don¡¦t have to be correct about this, and if the market does prove me wrong I¡¦m willing to change and position myself accordingly in a heartbeat, but at this time I think the only wise thing to do is keep a balanced portfolio. That means having some longs and some shorts. This does reduce your potential for profits, but it also significantly reduces your overall portfolio volatility and risk. The biggest X factor in this market at this time is a shock event, and having some shorts in there will not hurt you in the long run. On the short side I like stocks like SWIR, IDCC, BUD, TTEK and AMZN.

Open trades. UTIW broke out above $60.55, it continues to do very well. At this point I would be looking to trail stops back a few days. F broke down under $13.75, it has not yet done enough to justify moving the stops, AMT broke out above $15.75 and is acting well, stops can be trailed under this current base. ESRX setup short under $64.50, it has not yet moved enough to justify doing anything with the stop. ELX setup and I missed it, but if you have that you can trail your stops back a few days on the short. VIP setup long above $114.50, it started off showing us the love but then stopped out for a loss under $112. APCS setup long from $9.15 and is doing very well. Trial stops a few days back on this. UPS setup long above $76.50 and is doing well, but it has not moved to a point that stops should be moved. We got lucky on the commodity related names (GGC, TIE, OS, STLD etc) in that they did not setup. Look at these charts and you will see why it is so very important to have technical confirmation in everything you do. HMT gave its setup above $14.40 and continues to do well, but not enough so that stops should be moved. VOLVY setup and stopped out. PWN setup when it broke above $26.20, it too is up but not enough to justify moving stops. PGR setup for long traders when it broke above $86, and PETC did the same above $36.30. Each Monday I will update the stocks from the prior week, this was a pretty nice week for anyone who has followed along, and I expect we will have many more good ones to come.

Brandon
 
When I look at a stock to buy I want to find a leading stock in a leading group. What this means is that I first start of looking for a sector or group of stocks that are already attracting the attention of the markets. These tend to be the groups that have clusters of the strongest names in them. Once I identify a group I then hunt for a stock or a few stocks in that group that stand out above the rest. It has to pass several tests, both fundamental and technical for me to consider it worth putting my hard earned investment capital to work in it.

Currently the Transports are among the markets very strongest groups. Specifically with in the Transports the Trucking Stocks has been breaking out and acting very strong. A number of people have been arguing and saying the strength in this group has to be false, what with record oil prices and all: However, in rigorous back testing Relative Strength has proven to be one of the most robust and reliable of all methods of technical analysis. It is not one I tend to argue with.

Old Dominion Fright Lines, Inc (Nasdaq: ODFL) is a less-than-truckload (LTL) multi-regional motor carrier providing one- to five-day service among five regions in the United States and next-day and second-day service within these regions. Over the last several quarters Old Dominion has seen exception revenue growth of +59%, +33%, +28% and +12%. This is four solid quarters of accelerating earnings growth. The stock does have a higher PE than I like to see for an investable security (21) and is heavily followed and owned by banks and institutions. However, as an intermediate term trade I think there are few stocks that look better than ODFL. The stock has been basing near new all time highs for several months after breaking out from a prior base last year. This type of action allows a stock to rest and is often seen before a stock takes off for impressive gains. I will be looking to buy an initial lot of ODFL if it trades above $30.25 per share with my protective stop placed under $27.15.

Disclaimer:Neither Brandon Fredrickson, nor Venice Wealth Advisors, currently owns any shares of Old Dominion Fright Lines. The stock is considered trade worthy by Fredrickson, and in the even the buy triggers he does intend to buy shares for his own and is clients accounts. Brandon Fredrickson reserves the right to change his opinion on this holding at any time, with or without notice, and in the event he owns the stock to sell it at any time and for any reason.
 
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