Saturday, August 28, 2010

My stance on the markets and trade ideas for next week.

At this moment I am very bullish on the stock markets.

The T2108 is below 50 and reversing. The Sp-500 is at significant support and reversing on volume. It also appears very extended and poised for some sort of rally; whether a few days or a few weeks, I do not know. But this does not matter since with my "new trade management" strategy outlined in the previous post, I will likely lock in 2x risk on the real movers. So I have very strong conviction on the long side for the short to intermediate term.

In terms of individual stocks, I am looking at PWER, DTG, BIDU, PCLN, BORN and DDIC. I rate DTG, PWER, BIDU and BORN as "A" trades because relative to the risk I will put on I believe that these trades have the potential to produce gains well in excess of 3x risk and better overall expectancy than the swing trades I tend to take. So on these trades I will risk about 2.5% of my account on each. I believe that BORN in particular is a really top draw set up. The kind of trade that can make your year. So when I get set ups like BORN I often push the throttle a little further and risk as much 3% of my account off the bat.

PCLN on the other hand I rank as a "B" trade. PCLN is already quite extended, although it might still have a lot of upside, my expectation for gains on these trades is much lower than on the A trades and I will not risk more than 2% of my account on this trade. DDIC, I rate as a "C" trade. It is currently below the 50 day MA and has significant over head resistance at the $10.00 level. These trades have little room for error and so it is quite easy to get hit with a string of losers from these types of trades. Hence I will cap risk on this trade at 1.5%.

So those are the trades and plans I have for next week.

Good luck with your trading!

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