A lot of people asked me how I caught the moves in HGSI and DRL yesterday. In case you are new, everything's been documented in the previous post's comments section as well as on my twitter. HGSI required a 1.5 month time frame to make the decision to buy right at the open. DRL, however, required only the previous day.
I bought HGSI at $2.84 and DRL at $2.219. I sold half of HGSI at $3.52, sold a quarter at $3.83, and I am currently keeping the remaining quarter. I sold half of DRL at $2.65, sold a quarter at $2.49/$2.50, and I am keeping the remaining quarter. This is typically how I scale out of positions as they run higher. Potential tops are determined at previous resistance areas on the daily chart.
Within 15 minutes, I recouped my entire CIT loss. I told you that I would go back in the green, didn't I? I didn't think it would be this quick. You can see the upper sym tri resistance on the 1.5 month chart of HGSI and how the open would have gapped completely above it. You can also see the high-and-tight flag on DRL the day before yesterday, the most reliable short-term long pattern in existence.
So, that's how I did it. There are dozens of patterns that I look for that gap at precisely the right location at the right time. It's all about grabbing your balls and executing the trade immediately at the open. There is no room for "thinking about it" as you are gauranteed to miss the initial move. As long as the setup is high probability, it's a risk worth taking.
In the end, CIT failed to do damage to my portfolio. The more you don't care, the more you are able to focus on making things right. I had no choice but to be more aggressive yesterday to quickly take advantage of these gains and contain the damage. Folks, I do this nearly every single day. It's nothing new.
Imagine if you could bag a +20-30% gainer almost every single day? Welcome to my life.
Anyway, I'm thinking that the SPX pulls back to the 50-day support over the next few days. A breakout of the multi-month high would be an enormous victory for the bulls. It will confirm the possible continuation gap that was formed on Wednesday.
If you look at the COMP, you can see that the index actually made a new multi-month high. The pattern is extremely bullish on the daily. We can see a descending bear pennant and NOT a head and shoulders.
Alright, ya'llgot me. I did sell my soul to the Devil. That's why I am up +28% month-to-date as of today's close, not to mention +55% in April and 142% year-to-date 2009. You think I use technicals for my trading decisions? Wrong. That's just an innocent ruse to hide my sinister involvement with secret societies infiltrating the stock market.
For all the mentally stable people that made money off of my calls, congratulations. These "dollar menu" stocks are cash freakin' cows. I think I've proven that point week after week. Finding the setup is the first step, which is easy to do. However, the timing must be flawless, or you will miss the initial spike. Let's look at three calls I made just today alone:
HGSI was an imminent breakout call that was executed at 12:52PM at $2.025:
FLOW was also an imminent breakout call that was executed at 2:08PM at $1.889: TVL was the final imminent breakout call for the day, executed at 2:55PM at $1.73:
My trading philosophy is all about getting the biggest bang for your buck for the least amount of risk in the shortest period of time. Are there more $1-3 plays? Absolutely. I have an entire pipeline full of these monsters ready to "BTFO". However, I am trying not to add any more longs at this point (but I'm sure I will though). I want to ride my existing positions to their fullest extent and then dump them to all the latecomers. That's how this game is played. Either you're early, or you're late. If you miss a breakout, don't chase it. There are plenty of setups out there, so catch the next one.
As for the general market, we really need a pullback now. I did not expect this up move, though I did say 2 days ago that the bears would get screwed. What we are seeing right now is the gradual meat-grinding capitulation of the most stubborn short sellers. Like said many times before, I have only 2 criteria to commit to the short side: 1) exhaustion gap via black-filled bearish gap up, or 2) a major breakdown of -3% or more. If neither of these scenarios take place, then get the fuck out of my way.
I am currently 79% long, 3% short (FAZ), and in 18% cash. My personal holdings are as follows: AHD, BZ, CNO, CNXT, COIN, CPE, EMKR, FEED, FLOW, HGSI, NXG, TVL, WRES. They will be sold off one-by-one when they are ripe for the picking.
On a final note, I received 62 e-mails from random people asking me all sorts of questions. You can stop flooding my inbox by leaving your comments below. The simple answer to all of your questions is "look at the chart". Stop free-riding on me if you can't take 1-2 mins to figure out the entry & exit targets. If you don't know what you are doing when you buy a stock, then you already made a huge mistake.
