Good morning. I’ve opened up a member blog feature to current Patient Fisherman subscribers. This area will hold research projects, commentary, the trading plan for the week ahead that covers the general indexes, market breadth and Exact Entry points for stocks.
To access the member blog, log into Bluefin. If you are already logged into Bluefin, click the “log out” button on the top and log back in. Once you have logged in, click “Member Blog (IN BETA)” on the top navigation bar.
I’ve also done some spring cleaning on our scans and cleaned up the scans to remove duplicates between The Percolator scan and the Harpoon Scan. Now, the Percolator Scan is purely a breakout scan looking for stocks moving into highs while the Harpoon Scan has been modified to be a trend reversal scan catching stocks as they move out of correction. More details can be found on the member blog.
Looking at the S&P, we're still sitting under the 4ema (thanks for the last 30 minutes). We had 160 stocks up 4% which is not bad considering we have a 3-day weekend coming up. Current status, retirement accounts 100% cash, trading accounts 90% in cash.
Growing up in Florida, I remember my Dad waking me up in the early hours of the day so we could catch the right tide. The key to success was being at the right place at the right time for the current tide.
The incoming tide would cover the shallow areas bringing in all good things; nutrients, crabs, bait fish, followed by the larger fish looking for a bite. When timed right, you could fill up your cooler in a fairly short time.
Trading the stock market is no different. Looking at the past few weeks, we’ve been experiencing a dead tide, where the market chugs sideways and the currents are at a stand still. This is the time you want to head back to the dock and grab a beer.
For the indexes, use the 4ema as your tidal indicator. When the market is trading under the 4ema it’s an outgoing tide, when the market is trading over the 4ema it’s an incoming tide. You can review market timing models for more information on measuring market breadth.
Looking at the chart above, you can see tides switch in March. The market was moving sideways and then made a decisive move downward. After a healthy correction the tide turned and money started flowing back in pushing it higher.
In last week’s post “Chop Fest 2011”, we looked at the Slow STO indicator. A move below 20 on this would offer some over sold opportunities. This signal must be accompanied with a breadth thrust from StockBee’s daily indicator ( Stocks Up 4% or Greater ). We’re looking for a day with 300 or more stocks up 4% or more before moving back into the market.
For StockBee members, the 10 day ratio on the market monitor is another useful tool.
Many of the low float, high earnings, high momentum type stocks will move 10 to 20% in just a few days. With this in mind, look for a move below 1 as the market corrects and then look for entries as it begins to move back up. The new leaders emerge early. This allows you to catch them as they are breaking out in the first few days of a new move.
Looking at the table, you can see two thrust days on 3/18 and 3/21. The 10 day ratio dropped to .53 and then started moving back up to .75.
Another tool you can use is the Bullish Percent Index. CKBergin over at StockBee got me hooked on this P&F based indicator. The Bullish Percent Index is bullish when the daily value crosses over the ten day moving average.
In the end, we’re looking for a way to know when the market tides switch from outgoing to incoming. On the incoming tide, we can catch some significant moves off newly formed bases on the highest quality stocks out there.
With this post you have some tools to read the tides of the market, now it’s up to you to find the best places to fish and land a few big ones on the market’s next move.
The Post Earnings list has been updated. This list contains all stocks that had an 6% move or greater on the day of their earnings. All earnings since April 1, 2011.
https://spreadsheets.google.com/ccc?key=0AgxAXOuHdkMadDdZRFVNRDRoODVzR2o1ODhveWtydmc&hl=en
We're seeing a lot of chopping around in the market over the past few days. I remain mostly in cash minus a day trade here and there.
So far we have a decent reversal going on today. Until some new leaders break out on strong volume and we see a significant breadth thrust (300+ on Stocks up 4% or greater) I will continue to remain in cash.
Finally, I'm watching the Slow STO indicator for a move below twenty. Coming out of this zone we should be able to find some strong moves to the upside. Right now just a matter of sitting and waiting for the appropriate time to pounce.
The Post Earnings list has been updated. This list contains all stocks that had an 5% move or greater on the day of their earnings. All earnings since April 1, 2011.
https://spreadsheets.google.com/ccc?key=0AgxAXOuHdkMadDdZRFVNRDRoODVzR2o1ODhveWtydmc&hl=en
AGQ - Daily Candlesticks: "
Leverage is great when the stock is moving in your direction. The downside, if you get caught in the down draft gains can be erased 10x time faster than it took to get them.
So far it’s been a pretty ugly week for the markets. While we have not yet seen a 300 plus down day on Stocks Down 4% or greater, many leaders have taken it on the chin.
The spx is now sitting under the 4 ema. Combined with the action we’re seeing from the leaders (BIDU, LULU, OPEN, SOHU, APKT, LUFK, Silver) cash seems like the safest place to be right now.
At this point, I would like to see a 10% or greater correction which would reset many stocks and offer some new opportunities on the next wave up.
1340 on the S&P would be our first target for some type of bounce. Unless we see some new leaders emerge fairly quickly I’ll sit that one out.
Hopefully, you had your stops in place and were able to avoid some of the carnage. I have been tracking some stocks like IIVI, ACOM, IPGP, GMCR and will keep a close eye over the next few weeks.
