Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Life Sciences Biotech Smaller Cap High Risk Stocks Investing Binge - 24th Jun 21
Central Banks to Keep Buying Gold - 24th Jun 21
Will Gold Survive Hawkish Fed? - 24th Jun 21
The Clean Energy Compound That Could Change The World - 24th Jun 21
Everybody's Getting Rich (and Having Fun) Except Me - 24th Jun 21
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Time To Play Defense Before Buying Stocks Again

Companies / Company Chart Analysis Jan 20, 2011 - 03:45 PM GMT

By: David_Grandey


Best Financial Markets Analysis ArticleToday’s buzzword is DEFENSE

As a lot of you football fans will find out this weekend, no matter how good your offense is you can not get to the Superbowl without a good defense!

We talked about the market being Over Extended, Overbought, Over and Over again not to mention and how at any time the monkey could flip the switch. Well guess what, the monkey flipped the switch!

For the last few months we’ve been easily 50% cash and operated from a opportunistic standpoint vs. full speed ahead buy, buy buy and now you know why. That’s playing defense.

Make no mistake, yesterday in the broad market was an ugly day. Today is too as well in the growth oriented names . Especially the over-owned, over-loved tech screamers that have been priced to perfection.

FFIV sneezed last night and that was all it took to knock the wind out of the sails of numerous screamers over the last 3-4 months. So how come we didn’t take a “In The Face Of Fear ” trade on the long side with it? Simple.

We only do that with issues in CLEARLY DEFINED UPTRENDS ABOVE THE 50 DAY. Take a look at the chart below, you tell me is this issue in a clearly defined uptrend?

Is FFIV above the 50 day?

Not anymore! In fact it had a double top going into earnings here as shown and so has NTAP too by the way. Think, “Nice Uptrend, Puts in a Double Top, and then breaks to the downside. That’s been a mantra around here when it comes to change in trend patterns from up to down. And when you get some key market leading names start to do that? That makes us stand up and take notice.

There is a good possibility that before all is said and done that this is the first shot across the bow for a deeper pullback. We all knew it was coming but nobody knew when. Usually it takes a cataylst and that MAY have been FFIV’s failing to impress in last night’s earnings report.

What remains to be seen is whether or not this is just a much deserved pullback to relieve some over excess or the start of something bigger. We’re leaning to something bigger over time. Think First Thrust Down (what’s happening today in the cloud stocks), snapback rally and then bombs away to the downside. Here’s a great example of a stock that recently went through this process:

The blue box is the first thrust down, the pink bear channel is the snapback rally and upon a downside break of the pink bear channel that is the bombs away.

Numerous names in the growth space are taking it on the chin here and rightfully so. The markets have pushed these names up, up and away with many over the past 6 months putting on over 100% gains. Just look at charts of APKT, NTAP and RVBD to name a few.

As for the indexes? Let’s look at the daily charts.

As you can see, the thin green lines are those that are always on the 60-minute charts we show quite a bit around here. You can also see we are hanging around at them for the time being. But you can also see that the major green lines/50 day averages are still a ways away.

Over the coming days/weeks there is a good possibility that we head for the 50 day averages on the indexes before we get any sort of meaningful bounce. It’s at that point, we’ll want to get serious on the long side for some killer trades and at the rate we are going it isn’t going to take long.

We’ve talked numerous times about how the 50-day average tends to act as a support level and typically gets defended. With the indexes it’s no different. In fact if we were an index investor looking to get long for a trade? It would be at the 50 day average.

For us? Until we get to the 50 day average there is nothing to consider on the long side to buy.

By David Grandey

To learn more, sign up for our free newsletter and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains. A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

© 2011 Copyright  David Grandey- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in