12-21-14 Trade Plan

Since I last posted the markets have corrected to a key level at $100 on the QQQ, held the level, and now working on a v shape reversal.  This isn't surprising to me at all given how far away the previous daily swing point was at (10/15).  It gave the bulls a lot of breathing room to put in a higher low and that $100 level was begging to be bought by institutions.  Now that they have done it we need to see it hold and continue with an intraday trend.  The Russell has quickly become my favorite index on watch after the false breakdown below key support and YTD breakeven into the 50 day and swift bounce breaking above $118, which was already a trigger level I have been watching for weeks.  If we get an intraday trend going here above $118 then there is a great probability we have liftoff to new highs.


You can probably see what I mean looking at the IWM chart.  Shorts getting trapped or adding to short positions after the breakdown and then buyers take control at 50 day and haven't looked back.  I like that kind of action especially if it can maintain with an intraday trend.  It at least needs to hold above $118 for the time being.  Second on watch is still the NASDAQ which means tech stocks are in play as usual.  If the IWM does start leading here though it is going to bring out a new batch of stocks as top performers.  They should show their face this week if that is what's happening but for now I have no intraday trends to use.

Here is the watch list for this week.  I'll be looking to identify more opportunity if the markets continue to hold up but this is all I have for now.  Some of these names I'm more interested in than others.  BABA, FB, YHOO, EBAY, & LNKD are at the top of my list.  When there is opportunity setting up in names that are known to produce big winners I am naturally going to pay more attention to them during that time.

I want to talk about oil & russia for a minute.  All I want to say is they are in downtrends, very strong downtrends.  To quantify that I'm saying the 65m trend has held for 3 months now in oil and a 130m trend for 4 months in russia.  But the huge move down only started about 3-4 weeks ago.  These things aren't sudden crashes out of the blue like some would have you believe, they are accelerations of a pre-existing downtrend.  I see a lot of people asking "where does oil go from here" something along those lines, they probably think my answer would be down because it's in a downtrend.  No, I don't think that.  I just know it's in a downtrend, that's it and if I'm in positions with that downtrend I'm using it's swing points to make profits.  In other words I just identify it's a downtrend and manage my positions based on that.  I have no thoughts about future price direction ever because it never matters and makes stress that is no help to anyone.

That's about all I have for this week, any updates will be tweeted as always.  Thanks for reading

-Michael