Monday, August 18, 2008

Metals are coming back in play

It has been a while since my Metals and laggards post, interestingly enough 3 out of 4 long ideas in that post in spite of severe selloff in commodities and related in general have been quietly consolidating, refusing to fall with the broader metallurgic sector (CPSL, AA, TIE ). Only one, STDL, behaved badly, but it does not surprise me too much - as I said in that post, I am not a big fan of long trades based on Cup&Handle (especially imaginary "ugly" one).
Now the story is changing, not only my latest "basket" (ATI, STLD, TIE, KALU, ACH) is doing quite all right, but many more stocks in that sector are poised to move up. e.g. CMC, GNA, NUE, SCHN, X. ( It is easy to find stocks in sector even if you don't have expensive subscriptions, I like using BarCharts - quick and effective, go to "sector" tab, punch any stock symbol into "sector finder" on the left and you will get multiple corresponding containing sectors).
There is no rush to get in, I think it will materialize sometimes next week, this week might present good opportunity to get aforementioned stocks at 5-8% discount to today's price.
I will be looking to add positions in metals when potential candidate will be within close proximity to lower Price Headley's Acceleration Band.

If your charting/scanning software does not include that highly usable channel (usable for staying in the trade, for getting into strongly trending momentum trade and closing out of failing position ) you may download Worden's BLOCKS ( end of day database is free ) and, if you are contributing member I will help you out with correct parameters for that channel and, for "very regular" contributors I will share my scan layouts built around DeMark Studies (very helpful for identifying reversals ). As an added benefits of Blocks you will not even have to use BarCharts - it is hard to dataset of Blocks.
Please, do NOT request layouts if you are not a regular contributor.

Speaking of stops - I was always wondering why most of the traders talk about "price stops" ONLY. I just cannot imagine that none is using "time stops" as well ( based on "research timeframe" naturally )

As for broader markets in light of today's action my short term opinion does not change: Long XLU, SRS, SKF,DBA, IGE, EWJ short XLF, XHB, SMH, IWC, BBH, IBB.
The only change I foresee is that "short term opinion" might become "longer term opinion", but ...things tend to change...

Below was suppose to be a huge screenshot of DeMark layout I am using, but Blogger yet again having regular problems with image upload - I will add it as soon as Blogger will decide to work - I am thinking of moving to WorldPress, really..