Take note that either a symmetrical triangle or ascending triangle is taking form. The upper and lower ranges are drawn out on the charts below. It will be wise to actually wait for a breakout or breakdown, because I find no hard edge benefiting one side (in an obvious way) right now. We could head higher or lower, and the odds are pretty much the same. That's why is continue to stress careful selection.
At this time, my goal is to preserve my gains. In a few days, I will rid myself of all of these $1-4 stocks that I own and let the general market consolidation continue. If you noticed, my picks that did not follow the market...are starting to follow it. The dynamics have changed since Monday and the end is near for these stocks if the market takes a plunge.
Holdings include FEED, CAR, FIG, RUTH, and an initial scale-in of the devil's ETF going by the name of FAZ. If done right, everything should hold steady, and I will be able to close out April with my largest monthly gain ever (over 60%). I find it interesting how March (with a gain of 2%) was my worst month in 2009. Perhaps, the souvenirs I bought for dirt cheap in Cancun made a difference. In any case, I hope you've had just as much success following my plays this month.
My previous post was executed in full and the 830-850 bounce took shape in it's entirety by yesterday's close. At this point, I am looking for 2 things: 1) the market continues to execute the neutral flag in preparation for a move lower, or 2) the breakaway fills it's gap and heads even higher. Regardless of what takes hold, both scenarios will "box" the market. We are now in a multi-day consolidation. There needs to be more time to consider taking on short positions.
For long positions, however, I warn that you must be very, very selective. The stocks cannot, and must not, correlate too closely with the general market. A good example of this is FEED or SIRI, or stocks that love to move up, regardless of how the market behaves. If you do want to short, you also must be very selective and find stocks that have the highest probability of moving lower, regardless of how the market behaves. Otherwise, incur the wrath of the whipsaw.
My MTD gains stand at +57%, with YTD gains exceeding +120% and I am fully long with no short positions. Interesting, no? I only have two positions, which are FEED and LVLT. FEED makes up the vast majority of my portfolio, and God knows what LVLT is doing. Let me reiterate my $5 target on FEED right now, due to the 40 some e-mails I've received on it. Quit asking me "if I am still holding" or "if I sold yet". I'm sick of it. I fully intend on making 100% on this stock inside my 3-week holding period.
Back to the market. The SPX has double MA support with the 100-day and 20-day MA's sitting 2 pts below the close. Before shorting, I'd like to see a weak bounce and some all day flagging action. This will set up the market for another major move down. It all depends on what happens tomorrow, and possibly Wednesday, before I start scaling in short positions. Note that the wedge has technically broken down, but it's all about the entry. Entry will depend on a neutral flag (developing between 830 and 850) that rides the 100-day and 20-day MA's. If it doesn't happen, then it doesn't happen. If it does, be ready for it.
