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The Market Today

The NDX needs to break back through the 8/17 high of 1585 (about 39.00 even for the Qs) in order for this young uptrend to grow some legs.

The S&P has me concerned. I’ve said the selling at 1300 was normal. It was. Now it’s time to move. The overhead resistance around 1325 is weighing heavy, and so far the SPX is running out of air like a beachcomber hiking at 14,000 feet. Here’s a longer-term chart, with weekly bars (I’ve used the SPY so we can see the volume):

Notice how the volume was increasing as the price declined thru the spring, and has been fading as the price rose thru the summer rally. That’s gotta change if this is anything other than a pullback into a BIG downtrend.

This anemic rise in the overall market is the major reason I play my stops so tight. If a big rally hits, the prices will run away from your stops… no worries. But as this thing goes sideways or rolls over, more swing trades than not will get stopped out. And if it rolls over, stopped out on my longs is exactly where I want to be.

Update on the MSFT (Microsoft) trade:

Speaking of stops, Microsoft hit mine today. I had left the stop at 25.69 from yesterday, and MSFT promptly ran down and took it out at 1030 EST this morning.

A break of 26.00 could mark a place for a long entry, but that’s a different trade.

Update on the CSCO (Cisco Systems) trade:

Big ole Cisco has been my poster child for textbook trades this month. This move today gets us solidly in the money, and it’s my cue to do two things:

1. Bump the stop, using the old tried and true dummyspots bread and butter swing trade trailing stop method (just coined that, who knows if it’ll stick). Previous stop 20.85, today’s high 21.69. Take about 20% of the difference- 17 cents. Adding that to the prior stop gives 21.02. I’ll round that to an even 21.00.

2. Pull a pseudo-Landry and cover half my position at twice my initial risk (That’s “2R” for you “R” fans). Initial risk was 35 cents (see the post where the trade was triggered), entry was 20.90. Covering half at “2R” would hit at 20.60 today. I’ve now locked in a profit equal to my initial risk on the entire trade (70 cents on half equals 35 cents on the whole), and have a minimum profit of 10 cents (current stop minus entry price) on the remaining shares.

Update on the CVTX (CV Therapeutics) trade:

This pop on CVTX is just beautiful, no? Now where are all the naysayers who wouldn’t have touched it with a ten-foot pole because of the “bad news“?

This bar is an opportunity to do the same as I did with Cisco today- bump the stop and cover half:

1. Bump the stop. Previous stop 10.45, today’s high 11.95. About 20% of the difference (30 cents) added to the prior stop gives 10.75. Now, looking at the last few days one can clearly see that 11.00 was a significant level of resistance. That level failing would also be significant, so I’m gonna exercise some executive privilege and round the stop up to 10.80.

2. Cover half my position at twice my initial risk (That’s “2R” for you “R” fans). Initial risk was 39 cents (see the post where the trade was triggered), entry was 10.37. Covering half at “2R” would occur at 11.15 today. I’ve now locked in a profit equal to my initial risk on the entire trade, and have a minimum profit of 43 cents (current stop minus entry price) on the remaining shares.

What about those Fresh Ideas?

Right now, it’s late and I’m wiped out. I’ll post these charts in the morning if I can, but here are some stocks that I think are worth looking at:

• HOKU - RIPE swing trade setup
• EMKR, LTXX, SWC - potential swingers
• AGIX, EGY, NVAX, TQNT - potential daytrade candidates
• AAPL - potential short setup around 66.15

NOTE: Charts have been added. See “Ideas for 30 Aug 2006” in the sidebar. Thanks.