CHICAGO, June 9, 2011 /PRNewswire/ -- Zacks highlights commentary from People and Picks Trader "globlchrtanlysis".
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It looks like they are still selling into every bounce in the market which is a very bad sign for the bulls. We are reaching stretched levels that the market only sees 1 or 2 times per year and is normally followed by a bounce. But does it stick?
As our readers know, one should never look to get short or get long after a move has already occurred so one needs to sit tight and fight the temptation of getting short at this point. What we need to see here in the next day or 2 is a reverse off the lows, followed by a close near the highs of the day. This would give us a high probability market timing setup and allow us to trade off our strongest stocks list which have been holding support. This particular bounce should be tradable but will most likely give us a trade of only 1-3 days.
At the end of this next bounce higher we expect the play to be getting short stocks that bounced into resistance. At that point getting short this market into resistance is the stronger play and the weakest stocks should tumble as well. If this short play works, and the market can't get back above resistance than one should really be picky about any longs they still hold in their portfolio.
Any stock one is holding should be holding support levels and have favorable volume patterns. Any recent selloffs in these strong stocks should be followed by strong buying back above support levels. If one is not careful about carefully analyzing each position they are long they at this point, they could be hit by powerful profit taking and could see any profits disappear quickly.
Remember never jump the gun especially in market like this. For the rookies who are used to having the markets bail them out during periods of strong trends these are the situations where rookie accounts get blown up (and surprisingly stubborn portfolio managers).
To review a few of our rules: Don't chase after extended moves higher or lower and don't watch your portfolio get shaken apart like a majority of the players out there. Breakouts traders tend to fail more often than not but especially in these markets. Play the orderly pullbacks into support we point out instead.
Also, don't hold any stocks breaking support on heavy volume no matter how much you love the story.
One final note, always keep emotion out of any trading or investing decisions you are making.
As always in times of big moves up or down in the market we can list 10 great reasons to buy this market just like we can give 10 great reasons why we should sell this market. Don't listen to any reasons you hear either bullish or bearish just let the market be your guide. This is all that matters. It's time to drown out all the noise and play it smart. If you aren't an expert in technical analysis than follow our lead here or just sit on the sidelines until a trend is re-established.
The most recent picks by «globlchrtanlysis» are:
A buy rating on Green Mountain Coffee Roasters (Nasdaq: GMCR) and
a buy rating on AmerisourceBergen (NYSE: ABC).
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