October 2005 Archives

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I've listed four axioms in their order of priority although the bottom three may flip positions on any given day/moment:

1. Preserve Your Capital: This is always number one for obvious reasons -- can't trade with no capital. I do this by practicing sound position sizing and always entering (and adhering to) stop losses.
2. Take Big Profits and Small Losses (aka Let Your Winners Run and Cut Your Losses Short): In my experience the 80/20 rule is live and well with respect to trading. (It may even be more like 90/10.) That is 20% of my trades make up 80% of my profits. So my goal is definitely not to make small gains but to try to let the small gains grow as much as possible.
3. Never Let a Profit Turn into a Loss: This one is tricky. In order to get a big gain you have to give a stock room to fluctuate. So it's impossible to never let the tiniest of gains slip into the red. But at some point (for me, a 1R gain) I will move my stop loss order to break-even and then keep trailing it to lock in more of my gains.
4. Don't Try to Predetermine Your Profits: I don't like to use targets for exits because you just never know when a stock will become a moonshot. At the same time, as long time readers know, I've given back too many gains by trying to adhere to rule #3 above. So I've compromised by taking partial profits along the way but still trying to get the maximum gain on a portion of the initial position.

As you can see some of these rules contradict each other. But the bottom line is that I'm trying to keep the losses small (1R or less) while giving stocks enough room to produce large gains. Hopefully the small gains that I get "stuck" with will be more than enough to cover the small losses and a few big gains will pop up along the way.

(I'm reposting this since Bloglet is working for the moment)

For those of you you are subscribing to my site via Bloglet I strongly recommend that you switch to one of the newer email subscription services. I just noticed that they haven't sent out an update since October 11th. These newer services are much more reliable than Bloglet.

As you know, the Nasdaq sliced through its 200-day moving average yesterday. So once again all three major indices are in bear territory. Cash is looking real good right about now...

I just finished reading through Briefing.com's "In Play" page and there's not much feel bullish about today. That makes me think that perhaps it's time to start getting bullish but if MaoXian's sentiment indicator is correct it's still too early for that. I'm tempted to take another long weekend and return after "the Fed" but I'm going to at least hang around for the first couple of hours to see if anything interesting pops up (or down).

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's looking like another lackluster day. Keep in mind that there's a Fed interest rate decision on November 1 so that may keep people on the sidelines for the next few days.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

So Jim wants to know if Netflix "look like a good short or put candidate here." This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren't so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it's broken what's been its trendline for most of the year. It broke that uptrend while making what's supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn't exactly a falling three methods but it's close enough for government work.)

Personally, I don't like entering shorts right after a breakdown because of the potential for a snap-back. In this case I'd rather watch for a bounce toward that blue downward sloping trendline and short it near there if it started showing signs of weakness. That would allow me to place a tight stop just above the trendline. Of course it could just crash & burn from here without a bounce but I just don't like the risk/reward of that scenario. But folks who are comfortable playing breakouts & breakdowns would probably short it right here.

P.S. If it did crash straight through the 50 DMA I'd look to short it on a retracement to that moving average and place a stop loss just above the 50 DMA. I just can't see shorting it 52 cents above its 50-day moving average though.

P.P.S. If you go by Herb Greenberg's take on NetFlix, it's a screaming short. (Note that Herb is often right but his timing isn't so great.)

The S&P 500 crossed its 200-day moving average for the third day in a row today. It's been rejected shortly after each trip above that line. Given the bearish candlesticks it's printed over the last two days and the stochastic indicator I won't be surprised to see the index head back down toward 1170. Still, a close above the 200 DMA, preferably on strong(er) volume would change my outlook.

The Nasdaq also bumped up against resistance today. It got within 50 cents of its 50-day moving average and fell back. This October rally is looking tired right now...

Well that was a short visit above 1200 and the 200-day moving average for the S&P 500. So once again I'm more bearish than bullish on that index.

Although it seems like the oil inventory report isn't causing as much havoc as it has in recent weeks I'll still be waiting until after it is released at 10:30 today before I make any moves.

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

It's funny how once you learn about something it seems to pop up over & over again. I had a discussion about USNA last weekend at my college reunion. An old classmate asked me if I was familiar with the stock. I told her that I wasn't and she told me that it had a great track record but was lagging a bit lately. (She wasn't kidding about the great run the stock had -- check the long term chart below!) When I made it back home I flipped through the October 31st issue of Forbes and Usana is listed in there twice -- once in their small-cap wonners cover story and again in their list of 200 best-run small companies.

So you know me, off to the charts I went. What I saw wasn't very compelling though. It's clearly in an intermediate term downtrend. But the longer term view is mixed -- depending on how long term you want to be. For folks who got in back in 2002 or even early 2003 there's not much to worry about. (I hope they've taken some profits by now though!) The big red flag for me though is that the stock just crashed right through its 200-day moving average. I want to see the stock back above its 200 DMA and that downtrend line (see chart0 before I get interested.

Here are daily and weekly charts of USNA:

Seems like we have a pretty good recipe for a consolidation day -- a huge move in the last trading session, the S&P 500 just below its 200-day moving average and a Fed interest rate decision tomorrow. I'll be playing real light today and as usual I'm taking tomorrow off...

Potential swing trades:

See one of the recent 'Chart Reading' posts for some potential swing candidates.

Potential day trades:

This one is for Englishman Trader who wrote:

TOMO ... as a long. What intrigues me is the dimishing volume as it drops back from a second recent surge. I see a trend line from 9/21/2005 when it gapped and showed a lot of strength. I am wondering if we are going to see another run from here. Do you see something else ?

I see all of that but I also see it making lower highs. So what jumps out at me is that the stock is coiling/consolidating/building a triangle. If I wasn't already in the stock I'd just wait for the break to take action.

I was asked the following via an email:

I was just curious if you could share with us your trading objectives. Do you just let your winners run and protect your losses or do you consistently make small gains?

I basically try to perform a balancing act between several trading rules/axioms. I'v