Consider This

Posted on May 14, 2012 by Jan Arps' Traders' Toolbox

Hawk’s Scan Sentry Report May 14

Looking at the market as a whole we’ve seen quite a correction over the past several weeks. Since we’ve corrected this much, a lot of indicators are exhibiting pullback buying signals. Is this really a buying opportunity, or are we seeing the beginnings of a secular bearishness? It seems to me that there are quite a few hungry bears coming out of winter hibernation. One of the reasons for this perspective is that the rallies of 2010 and 2011 have been to a large extent fueled by bank bailouts and cheap dollars loaned into existence by the FED.  Is there any money left to continue to fuel this cyclical rally? Are the monetary manipulators running out of tricks up their deep sleeves? When you examine individual symbols you may still find opportunities to buy into. However, examine your pullbacks carefully; many of the current pullback opportunities are occurring following bearish pivot divergences at the recent highs and the pullbacks are in many cases making lower lows than the previous pullbacks. It’s true that false pivot divergences occur within strong rallies, but the last one will always be the correct one, and one of them has to be the last one! The lack of enthusiasm in the recent rally which peaked around April Fools Day leaves me (and my indicators) identifying my best trading opportunities at this time on the short side of this market. Nonetheless, I am just as prepared to buy as I am to sell.

This week I’m finding several trading opportunities using combinations of the Triple Trender and the Trend Exhaustion1 tools. Following is a smattering of what I’m looking at after I filter through all of the symbols that I examine to establish my Sunday night watchlist? The charts are accompanied by a little explanation about each of the indicators. As always, if you have any questions about any of the indicators on these charts you can find an indicator legend at this link.

_____Longs_____

CERN

(Here we see a pullback into the short-term Triple Trender (and the breakout price) after making new highs. This is accompanied by a Trend Exhaustion1 Oversold signal. We also see increasing bullishness in the Radar1 Fear/Greed indicator.)

AXP

(Another  pullback into the short-term Trender . The Radar2 Price Leader is showing the set-up signs of an oversold buy signal. This is especially appealing as the Radar3 Trend Strength indicator is showing indications of a pullback in a bullish trend. )

_____Shorts_____

ESRX

(One of my favorite set-ups! A bearish pullback into a recently synchronized Triple Trender. Our Wave Count indicator indicates that we are likely past the end of bullish Wave 5 which is corroborated by the series of bearish pivot divergences leading into the highs of early April.)

OCN

(Here we see a Trend Exhaustion1  overbought signal. Note how the Radar3 Trend Strength is showing that this is a pullback in a bearish trend while the Radar2 Price Leader is not only overbought, but preparing to give us a sell signal by crossing below the slow line.)

By the way, last weeks picks did nicely. In a bearish market even the long recommendations did well. HAIN was up over 7% on the week. We had some short positions which did well as well. I hope you did too.

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.

Posted in Hawk's Picks | Leave a comment