Newsletter for October 26, 2006

Primary List:

High-Risk List:

Forming Bearish:

Currently on our screens List: ^COMP (Nasdaq),^BTK (Biotech Index),^SOXX (Semiconductor Index),^OSX (Oil Service Index);


The market opened weak and stayed weak with losses accelerating during the day before the Nasdaq stabalized and ended down 10 points. We have often said that our system usually underperforms in big rally trend days and does better when markets look boring. Today was a good example of that as the Nasdaq took a breather and was red basically all day, with the S&P and Dow flat on the day. Thus, the action on our longs with 5 triggers, and 5 wins, felt extra sweet, as not much else was happening in the broader market: the Nasdaq ended down .46% and our five triggered stocks ended all significantly green:

Nasdaq: - .46%

RIMM + 3.23%
ATI + 1.78%
TIE + 9.13%
ILMN + 3.3%
DXPE + 6.14%

As we've said before, when you see so much stuff work -- be more aggressive as this is how the market functions. For our system, the market often goes through cycles of Harvest and Drought -- and for October, we've been in harvest season. Our longer-term readers know that when the drought comes, it's no fun, often with days in a row with no selections on our lists since we can find no chart pattern that we feel will yield a high-probability trade. However, until that time comes, try to reap as much profit as you can from good, solid, confident yet disciplined trading.

Let's review today's trades: DXPE confirmed and had a great move up 5% from the calm base on the daily chart; but she is very thin and we doubt many of you participated. RIMM was next; she ran like a wild horse up to hit our point and confirm. She hovered around for a while before eventually yielding a couple points --now why didn't she do this yesterday? RIMM was a difficult trade since you had to either buy on top of a crazy spike up, or enter after the dust had settled.

Next came TIE which unlike the first two aforementioned stocks, set-up perfectly -- look at how she consolidates exactly under our 30.2 number, breaks, confirms, and starts her staircase up, closing almost 2 points higher. We've been saying for a while that even though our trades have worked, lately they haven't been easy. TIE was thankfully one of the "easier" ones and we hope that some of you were able to get something out of the trade (and make up for the spanking most of us received in RIMM yesterday).



Then came ATI which set-up relatively well and yielded a quick point for the fourth win of the day as the whole steel sector was on fire today.

Last came ILMN, which exploded out of a nice intraday base at 43.5 and ripped right through our number with volume pouring in and kept going for another point for our fifth win. ILMN was one of these "base and explode" patterns that we have spoken about before in which you should not wait neither for the alert nor the confirmation -- you buy on the explosion from the intraday base with stop on any reversal (hopefully fill around 43.7 with stop 43.5). By the time ILMN hit 44, it was too vertical to really offer a good risk-reward trade.

It would be wonderful if the market offered a few great trades every day instead of handing out good set-ups in clusters but that is exactly what has happened. The last few days have basically triggered all our best charts; we've had 11 triggers (9 wins, 2 losses) in two days.

What we have left in our lists are second-tier set-ups that we are not overly fond of: FTO chart looks nice through 30 but she ended the day too close to our number for us to feel safe to place her on the the trading list. We would be buyers of FTO if she gapped down slightly and then reversed and went through 30. Otherwise, we'll most likely leave her alone. We had liked HOLX 50 for several days but now she's starting to look like she wants to roll-over and might be a better short through 48. AMED has a very nice chart through 42, but she's so thin that we're not going to bother as getting in or out will be too difficult for the majority of our readers (she traded 101k today). Hopefully some good charts will set up again for Thursday and Friday. Keep an eye on our Forming Lists as that is the place where these new set-ups most likely will emerge. See you tomorrow. HCPG



How to use our services      

Sample Newsletter    


Target customers

Our Blog

Giving Back


Best of our Blog