Short-Sale Patterns Dominate | Game Plan September 2

This was easily one of the biggest mistakes I made as a new trader…

Pete Renzulli ChicagoThere are trading scenarios where the trading edge is clearly to be either long or short-but-stocks eventually reach points of saturation in price action. This is where the stock is still a “long” or short” but the probability for follow through has diminished. Today you are faced with that scenario because short-sale patterns dominate the game plan.

To bring this back to today’s trading-not wanting to be short, does not mean you should be long. If your stocks have reached a point of saturation and they start to trade higher, in the long-run it is not a good trade to buy weak stocks.

Sure you will make money once or twice but the better trade is to look for a new short-sale after the stock has bounced for a day or two (depending how weak the previous trend is). If you want to be long today try to find strong stocks to buy.

Buying stocks with selling order flow is not good long term strategy.

Stock Market Today: Map of the S&P 500

(click the map for a full view)

short-sale patterns

Day Trading Game Plan: The SPY ETF Chart

The SPY is set to open higher this morning (7am) following through on yesterday afternoons closing imbalance. I don’t see any reason to be a buyer. If the SPY trades higher I will not be long.

(click the chart for a full view)

short-sale patterns

Stocks to Trade | Wednesday September 2, 2015

Pete’s Notes:

  • Not a strong edge to be long today (opening higher)
  • There are a few longs out there but I plan to wait for weak stocks to be trading below the open before I look for an entry.

Charts in Focus

Constellation Brands Inc. STZ

Strong chart in an ugly market. Above all key moving averages.

(click the chart for a full view)

short-sale patterns

Earnings in play today > 1M avg shares:

Stocks that showed relative strength– contra to the SPY – change from the open on 9/1/15: CVC, WBA, MDCO, ANF, AR, W, LB, BXLT, WPZ, HZNP, DISH, TERP, QUNR, ESPR

Above the 20sma and closed 1% higher from the open: (not necessarily all longs, but stocks to note for the price action of strong close from the open and above the 20sma) UAL, CVC, NOV, CAM, MDCO, STX, RRC, BHI, MSI, ANF, LB, STZ, EXPR, INCY, GES, SRPT, POST, SHLD

Bullish Ideas ATR/Volume/Price: TJX

Bearish Ideas ATR/Volume/Price: fit, gpro, wynn, juno, jd, twx, scty, qihu, terp, vtr, dis, cbs, all, grub, kss, baba, dvn, bx, amgn, cern, bidu, adsk, de, qcom, mhn, trip, met, unp, mpc, pru, c, myl, hot, ir, sndk, nee, gs, dow, mur, pg, stt, yelp, lng, isis, ibm, pm, utx, lyb, cof, lrcx, nsc, nbl, twtr, slb, cvx, txn, mxim, duk, xom, pxd, amt, hal, eix, apa, mar, oke, cop, cat, hp

Weak Stock Weak Close: wynn, juno, qihu, grub, bx, jci, joy, aer, c, sti, pnc, nee, usb, ctl, dltr, mur, fe, aapl, nbl, pxd, clr, mchp

Strong Stock Weak Close:

Weak Stock Strong Close: terp

Strong Stock Strong Close:

20 day Breakdown: eix, ed, hcn, d, lvlt, cf, aep, fe, wec, pcg, nee, cms, duk, wynn, hcp, bkd, twva, adsk, kim, peg, joy, xel, ggp, ppl, sol, exc, dltr

20 Day Breakout:

2x Normal Volume:

Watch List Longs: TJX

Watch List Short: dis,all, kss, amgn, ms, met, pru, bk, wmt, trv, adm, cof, slb, cvx, jnj, xom, ko, hal, cop, axp, wynn, intu, lvs, m, qcom, sndk, dow, emc, dd, klac, txn, lltc, intc

Inside days: cop, cnq, slb, oke, nfx, cam, clr, bhi, hes, eog, apa, nov, gmcr, hal, cog, sndk, ci

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SPY Volatility Begins September Trading

Short-Sale Patterns Dominate | Game Plan September 2

A short-sale pattern is when you believe the price of a stock is going lower.

For stocks, you will borrow shares from your broker dealer in anticipation of the stock trading lower. This is how you can “sell” a stock you do not own. The goal is to buy the stock back at a future date for a profit. When you buy a stock to exit a short-sale pattern you are “covering your position.

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