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Try Try Again, Extended Market Hits Long Term Resistance Trend

The futures are attacking resistance here in the wee hours Monday morning. This is the second attempt since the opening in Asia on Sunday night. This is a critical level and what happens here will set the tone for the swing trade outlook, and the longer term. This report tells you what to look for today and this week.

Technical Trader subscribers click here to download the report.

9 of the 14 swing trade chart picks hit their trailing stops during the week. That was intentional as I tightened stops to harvest profits. There were 7 profits and two losses. The profits ranged from 3% to 30.8% and averaged +17.3%. The two losses averaged -3.5%.

Including those and the remaining open picks, the theoretical average gain (100% cash, no margin, no options) was 11.3% with an average holding period of 3 weeks, i.e. 21 calendar days. The average gain the week before was 10.3% with an average holding period of 18 calendar days. Two weeks before it was +4.8% and 11 days.

This week I’m again using trend analysis to adjust trailing stops and fixed stops to proactively take out selections where I think the move is probably done, or not going the way I expected.

Looking at the output of our stock screens of 600 large cap stocks, I’ve come up with six picks for this week (table below). I will track these assuming that the buys open above their stop prices, and the shorts open below. If the stops are violated at the open, it would suggest that the trend probably isn’t going where I think. I’ll wait for the next streetcar.

There are six new picks, half long, half short. That’s a big change from the past few months when shorts were few and far between.

I will assume starting prices for tracking purposes based on the notes in the table below (table for subscribers only). I’m hoping for better entry prices than simply arbitrarily picking the opening price. This is based on the pattern I see in the first couple hours of European trading. A lot can change between now and the New York open. We’ll see if it’s worth the extra effort. Probably not. 😄

If all six are opened, that would leave us with 11 open picks. 3 would be shorts and 8 longs. That’s still a heavily bullish bias, but less so than for the past few months.

I noted last week that the lopsided bullishness was a likely sign of end stage exuberance. This slight tilt supports that, but we must not get locked into any conception of what the market “should” do. I will follow the indicators, wherever they point.

Technical Trader subscribers click here to download the report.

Not a subscriber? Follow Lee’s weekly swing trade chart picks with Lee Adler’s Technical Trader, risk free for 90 days!  

These reports are for informational purposes, aimed at a broad audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

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