What I Need to See to Trade This Market

09/10/2010 12:01 am EST

Focus: STRATEGIES

David Grandey

CEO, All About Trends

Summer is over and it’s time to get serious—serious in the sense of reviewing your goals. A question we find ourselves asking right here is, “What is it going to take for me to earn another 10% return on the overall portfolio from here by year end?”

Quick! Look at the total value of your portfolio right now. Write that number down and ask yourself, “What is it going to take for me to accomplish another 10% return to the total value of my overall portfolio without killing myself and by employing proper risk management?” By the way, proper risk management means not shooting for the hills.

And here is another catch: What if the market goes nowhere between now and year’s end? Have you factored that into your plan? We have.

Remember, around here, we do not employ what 90% of traditional Wall Street does via a cookie-cutter indexing money management style like, “As the market goes, so goes your account because all one has to do is buy an index fund and be done with it.”

This is why those who trade in tandem with us are up 64% over two years and up 20% year-to-date while never being much more than 50% invested. How does that compare to traditional Wall Street’s model of being 100% invested and at the mercy of the market?

Don’t get us wrong, we’re not slamming all of traditional Wall Street, just 90% of them. We know a lot of great managers—some even subscribe to our services.
It all comes down to “What do I need to see to make me take a trade?”

As far as putting new money to work on the long side here, it’s all about issues that are above the 50-day average that are building out pullbacks off highs (POH) long-side patterns.

Let’s take a look at some charts:

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First, Amazon.com (AMZN)


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That pink line, the pullback off highs (POH) pattern was textbook! Then the upside crossover of the blue line was the second-lowest risk entry point. Now? Forget about it. We need to see a pullback to the blue line or some sort of POH develop here to get us interested on the long side. Follow-through day or not, it’s what we need to see.

Same goes for Buffalo Wild Wings (BWLD) below:


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This is exactly what we saw with Netflix (NFLX). The result: $122 to $140 in four days! 

Here’s what I’m looking at in Netflix currently:


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By David Grandey of AllAboutTrends.net

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