Here is the game plan for Friday, taken from today’s Trade Report:
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The market drifted up today on decent (but not great) volume, and is nearing the $85 resistance level. Stochastics are very overbought right now, which leads me to believe a pullback is in order. From a trading standpoint, I hope there is a pullback. Entry will be easier once overbought conditions are worked off a bit.
I may consider a short trade if we bounce towards $85 on average volume. This would be a quick “against the short term trend” trade with a tight stop probably around $87.
Increasing the odds of a pullback soon is the fact that the T2108 indicator, which measures the number of stocks above the 40 day moving average, is reaching overbought territory at 75. I like to see the indicator hit 80+, which should happen if we get another day or two of bounce.
I am still holding SSO and FAS. I thought about unloading half of my SSO position today, but decided against it since my target has not yet been hit. I am concerned that FAS has not kept pace, but ill still honor my stop.
I continue to wait for a pullback for entries. I also may think about shorting if we get more bounce on average volume. Any shorts will be quick trades.
I continue to wait for pullbacks in focus list stocks. There were a few good breakouts today (solar stocks like FSLR were on fire), which I’ll post over the weekend. There’s no need to post then since it will take a multi-day pullback for entry.
See focus list stocks in Monday report: http://docs.google.com/Doc?docid=d5z8q8w_842c2357xhj&hl=en
All focus list stocks are over-extended.
If I decide to short strength for a quick trade, I’ll use one of the following inverse ETFs: SDS, QID, FAZ or SRS.