On Friday I initiated two shorts that should prevail this coming week if the market sellers show up with greater force than buyers.
CRM & BIDU
CRM: The first chart, the daily, shows a nice RSI downward sloping trendline with price sitting on the 20ma. There is no real support until 146, which is an area that the 50sma and 23.6 Fib meet and would be ~7% profit.
The second chart, the weekly, shows a very, very steep climb since late 2011 for the stock, sitting at about 60% gains, with price almost exactly on the trendline. The RSI has begun to roll there. The two charts show a stock that should perform quite well if the market falters.
BIDU: BIDU Daily shows a nice downward sloping RSO and price sitting at the congruence of two lines, support here at 145 and a trendline from the late 2011/early 2012 move.
While the 141 level should come very quickly, probably intraday, the weekly here shows a better target around 135, representing around 6% profit, where the congruence of the 20,50ma’s and a nice support level reside.
It should be no surprise that those 3 trades I put on this week are not working out well right now. Breakout trades tend to get hammered the most when the market decides to fall, as it has yesterday and today. However, the trades were not based on technicals only, otherwise I’d have no reason to stick around. All of the trades have ulterior motives for being interested in them. The TA is simply a “when,” not a “why.”
I added to all of the positions into today’s mess.
Within the last 2 days, I’ve added three new positions. SRI, CCI & SWK.
Notes are on the charts.
Forget the homebuilding sentiment number coming in low. Forget the housing starts number coming in low. Forget mortgage applications and existing home sales falling. Forget the FHFA house price index revisiting 0%. Forget new home sales coming in low. Forget the worldwide PMI numbers coming in low, especially from critical areas like the Eurozone and China, and forget the import/export data from those same areas that in combination with the PMI information speaks to an absolute global slowdown. In fact, forget all the data.
Big Brother Ben Bernanke this morning said, basically, more QE ad infinitum; rigging the game, ad infinitum.
A little bit ago I posted a beautiful short setup in a stock with ticker, EXK, a silver mining company. The trade worked out beautifully, the short position having been initiated not just at the upper bound of a triangle near its apex, but having price action, as it almost always does near an apex, break through the triangle, in this case favorably to the downside. Here is a link to the post. The short entry was made at $11 and my final piece was covered below $10, for more than 10% in just a matter of days. Typically after a short-term trade works out so well, I’ll let the stock cool off and see how the chart settles before immediately entering another trade, no matter whether it be in the same or opposite direction as the first trade. But, I believe the chart is presenting a solid case for a long position, with an easy to manage stop-loss and favorable risk/return. It may seem odd that I’m willing to buy a mining company after bashing them so much in my blogs and on twitter, and after just very recently posting about my negative view of precious metals. But, do not confuse timeframes. This trade is short-term, very much so in comparison to the context of my opinions of the mining companies and the metals. So while I view EXK at much lower prices in the next 6, 9, 12 months and 5 years for example, the next 10 days after anyone’s call, and I think higher is the way to go.
Here is a followup to the weekly chart used for the initial short position:
The two best indicators here from my eyes are the declining sellers volume and the turning RSI. Check out the turning RSI on a daily:
Full disclosure: I am long EXK from 9.32