Trading for 2/19/08

I didn't trade on Friday, as I had mentioned last Thursday. However, one of my picks from last week broke out on very strong earnings. Although it gapped up, it would have provided a nice profit to anyone who bought at the open.


I really don't know where the market goes from here. The SPY has formed a symmetrical triangle.

What this chart doesn't show is the tight consolidation going on right now. The Bollinger bands are inside the Keltner channels, which signifies extreme consolidation. This is usually a good indicator that a big move is about to take place (See Chapter 10 of Mastering the Trade by John Carter). So it appears a big move is coming, but which way, who knows? Buying a breakout or shorting once the SPY breaks the poorly drawn support line I made, could be good trades.

I prefer playing the inverse ETF's, so I am looking at buying SDS if the market makes another downward move:


In addition to SDS, the DXD, QID and TWM all look similar. TWM is closer to the 50 day EMA, so a breakout in TWM could also be a good opportunity too.

I missed a great breakout of GLD, the gold ETF, around Christmas. It made a huge run after breaking out of a symmetrical triangle.



It has formed another one, but not as clean. It could also be a bearish Head and Shoulders pattern. So I would only buy if it broke the right shoulder.

If the market doesn't sell off, then I will be looking for opportunities to buy these stocks. I am going to enter this week with some caution though. I don't plan to buy anything during at least the first hour of trading on Tuesday. Then, I will need to see these stocks break above their buy point on heavy volume. THIS IS A MUST. So just because a stock is listed here, doesn't mean that I will buy it. I will continue to be early in taking profits, scaling out as the stock moves higher, and being aggressive with my stops.

Here's the watch list:


Still waiting for AKS to breakout.

I will only add to this on very heavy volume.


Nice bull flag on CALM.

CLF was first mentioned here on 2/4, and it broke out and ran strong the following day. It looks like it could go higher, but earnings are due on Thursday. I won't hold into earnings.

A lot of medical stocks are doing well, and I like CMED the best. A previous breakout that I am looking to try again.


As I mentioned in previous post, I am fascinated by how well CMO is doing, a mortgage stock. I may have an emotional attachment to it, so realizing that, I may pass.

CREE was an earlier pick that broke out strong. I am no longer in this, but would try again at new highs.

ISRG is consolidating at the 50 day MA.


I would try MON for a quick trade if it breaks 120


Would like to see MTL build a fuller bull flag before ot breaks out.


OI is another previous breakout I had. I am no longer in this either, but could try again at new highs.

As you can see by the lines, I really don't know what to do with POT here, but I will be watching it.

RRC is another previous breakout. It held support on Friday.

Another medical stock, and nice bull flag.


And finally YTEC



Be careful out there and good trading.