Wednesday, May 5, 2010

Account up 6% today!

The markets tanked hard today but my account increased by just over 6%! My short position in SVN gained 8% today and I now have unrealised gains of over $330.00 or roughly 2R for this trade (since I risked $158.00 including commissions on this trade). Ordinarily I would be looking to take profits at about $450.00 or 3Rs but I believe the carnage still continues so I will hold on for even bigger profits.

As I have said on countless occassions, many Chinese stocks have confirmed a shift into a longer term downtrend including the FXI. Many have broken down on heavy volume more than 5% from bases formed below both the 50 day and 200 day MA's and some even have the 50 day crossing down through the 200 day like RINO.

So it should come as no surprise that this is where my attention is focused for short set ups. There are also a handful of growth stocks that ran up significantly off the March 2009 market bottom but broke down on heavy volume on earnings dissappointments dispite announcing outstanding earnings and revenue growth like GMCR, MSTR, CREE, HTCH, NETL and SMCI that I will be looking at for short swing trades.

There are a few Chinese stocks that have set ups that I like CSIQ, APWR, and CRIC; the two I like best for tommorrow are SSRX and CMFO.

Here are there charts with the trading plan beneath them:

Trade #1: CMFO

My plan for CMFO is to treat it as a breakout. I will short on a move down through the $6.00 support level with a 5% stop but I will not wait to be stopped out if the breakdown does not follow through within the next two days. My target will be major support around the $4.50 level or a 20% gain.

Trade #2: SSRX

My plan for this trade is to enter short on a move below yesterday's low $11.70 with a stop loss above the pivot high around $12.00 risking about $0.30 per share. My target will be major support $10.00 for a potential profit of $2.00 per share.

These two trades should take me up to 200% short the markets from which I can relax and monitor my positions and the overall market for signs of a bounce.

Slowly but surely I am learning to be more disciplined and patient. This paid off with SVN. Will it pay off for SSRX and CMFO, I do not know. Will it pay off in the long run? bet it will!

Good luck and good trading.

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