Friday, August 6, 2010

Bearish price action in the markets...

It appears as though the SP-500 is breaking down from the low volume rising wedge it has formed over the last month or so. This may be a good opportunity to start longer term short positions in the weakest of stocks or ETFs with a stop loss above the highs of the wedge or a conditional stop above the highs of the indexes. I do not plan to take such a trade. I know that I had highlighted Visa as one such trade that I will take. However, I now think it is best to wait for follow through in the indexes first and for the weak stocks like Visa to actually break down through support levels on volume and then look to enter short on a pullback to resistance. Although, HAR, which reported disappointing earnings today does look very appealing.

Still I plan to stay in cash until I see trades that have in my experience proven to be the highest probability trades.

Until then, good luck and good trading!

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