Archive for the ‘Market Update’ Category

Metals and Crude

The M48 model is still long 55% in various S&P ETF’s (exchange traded funds) with stop losses in place.  Resistance is just above 900.  Support is at 850 and 820.  Today the model added the ultra long crude ETF = DIG again.  The stop is at 24.72.  Fill price on DIG is under 27.  Maybe the Middle East tensions will give us a shot at 32+ which is resistance.

The M48 also added GLD (gold ETF) today w/ a stop a stop a 79.26.   The model is currently long SLV (silver).  SLV held 10 which is a good technical sign.  Based on probabilities I prefer to see SLV hold 10 to stay in this position.

Keep an eye on UNG (natural gas) and TBT (short bonds).  My stop on the TBT would be 35.80.  Close today is 37.09.

When a market (stock/commodities etc) is in a channel like it is as of this post, a well managed call writing program is ideal for a percentage of your portfolio.  Call me directly at 858-805-1773 for more info.

Everyone’s risk tolerance is difference.  View these positions for educational purposes only.


Range Bound

Friday – 3 hours before the close.

The market has been in a channel for roughly a month.  If the market breaks down the M48 will go to cash and or explore short positions.  If we break 918 (SPX) to the upside the model will add as mentioned in the prior post.

AAPL and DIG no longer exist in the model.  Perhaps in the very near future these two positions will be added to the M48 w/ improved technicals. 

The M48 will add GILD to the model w/ a close above 48.91 w/ increased volume.  This position if added will consist of 5% of the model portfolio value.  The stop would be 45.66.  EPS and RS ranking are 90+.

You know how I feel –  these are exciting times if you can maintain strict discipline by using stops to limit losses and lock in profits.  This is exactly what the M48 does.

Have a great weekend!

Target 918 on the S&P

The SPX (S&P cash) ran up to 918 today but closed lower at 904.  The M48 will go to 80% long w/ a close above 918 .  The 918 target was mentioned in the post on 12/11.  Initial claims are out tomorrow. 

I believe it is important for the S&P to hold 851 in order to maintain this rally.

Crude closed down today but the M48’s small position in DIG closed above yesterday’s fill price.  The stop is moved up to 27.67.  The model will add to DIG if we get a close above 32.50.

Added w/ Increased Price and Volume

So far the market likes the cut – so here is where the M48 stands-

Today’s technical action has increased the M48 model to 55% long.

Let’s start with crude.  Tomorrow we have crude inventories at 10:35 EST.  The M48 model put on a small position ahead of the report w/ a buy on the ETF  = DIG (pro shares ultra oil & gas). 

DIG Fill Price:  29.90    Stop:  26.67     Close:  31.43

Other purchases today:

IWM (Russell 2000 ETF)  Fill Price:  47.25    Stop:  43.94    Close:  48.33

SPY (S&P ETF)  Fill Price:  90.77    Stop:  84.66     Close:  91.88  

Added more SSO (S&P ultra ETF)  Fill Price:  26.12   Stop:  50% at 23.44 and 50% at 21.87   Close:  27.12 

SLV (Silver Trust ETF)  Fill Price:  10.64    Stop:  9.90     Close:  11.03  (mentioned on the Pro Investor Show last night)

AAPL (Apple):  Really don’t like the action.  Moved stop today to 94.20 which will probably get taken out tomorrow.  I prefer to use these proceeds in the SSO w/ increased strength.

Note:  Remember ultra typically implies double the move so the stops in the M48 may be split.  The added leverage in the ultra shares enables new subscribers to make up previous losses from their advisors quicker provided the model is on the right side of the trade. 


COP looks good w/ increased volume and a close above 55. 

CEPH looks good w/ a close above 78.35.  (mentioned on the Pro Investor Show last night)

Always read the risk disclosure.  This is for educational purposes only.

Stocks & Stops


Keep an eye on the following stocks for potential breakouts using fundamental and technical analysis.  Because everyone’s risk tolerance is different – view these for educational purposes only and or paper trades.   The fundamentals were gathered from IBD (Investors Business Daily) and the technicals are mine.

As of this post-

MCD (McDonald’s) = RS (relative strength) is 94 and an EPS (earning per share) of 90 along w/ decent ROE (return on equity).  I like the chart if it breaks out above 64.  The model will not chase it past 67.  A stop would be placed 8% from entry or 55.44 if you are willing to risk more.  An individual stock trade does not amount to more than 10% of the M48 model.  This stock was mentioned on the Pro Investor Show a few weeks back.  Close on Friday was 60.59.

CMTL (Comtech Telecommunications Corp.) = RS is 96 and EPS is 91.  The M48 likes it on a break above 50.55 w/ a stop at 8% back from entry or 44.54 at the most.  Close on Friday was 48.95.

SXL (Sunoco Logistics Partners) = RS is 88 and EPS is 87.  Very thinly traded and not interested unless it breaks above 50 w/ a stop at 43.11.  Close on Friday was 43.79.

CVX (Chevron Corporation) = RS is 87 and the EPS is 92.  The M48 likes CVX w/ a close above 80 with a stop at 70.91 or even tighter at 73.60.  Close on Friday was 79.00.

The M48 has a 33% long position in the S&P.  This should be a key technical week which will determine if the model increases its percentage long from 33%.  I’ll let you know.  If and when we break 820 on the SPX (S&P cash) = all bets are off and we go back to cash.

Investing and trading with STOPS is a plan.  BUY & HOLD is not a plan unless the position(s) continue to trend in your direction at which time you would use trailing stops along w/  a profit taking strategy based on technicals.  So easy but so few have the time to acquire the discipline.  Hence, which is why clients/subscribers follow the M48 model which teaches discipline while implementing diversification along w/ market timing – which is a plan.

Videos coming soon.

Somewhat Choppy

Really no change in the M48 model since last week.   For the most part the major indices have been choppy and unable to close above the 50 day.  Today we had increased volume with a price decline which is a negative.  If price decline persists w/ increased volume the model will exist any S&P long positions which is roughly 33% of the Model as of this post.

What a sad blood bath year for Wall Street! However I am very pleased w/ the M48 as are the subscribers because the model has continued to cut losses short and let profits run.  Human nature is to not cut losses and to not admit a wrong – but instead to hold and hope.  The M48 has preserved cash in ’08 which will enable the model to capitalize when a trend eventually takes hold. 

AAPL ran up to 100+ only to turn around and close at 95 today.  The stop is at 88.86.  A gap could be filled below 85 – so as always we will cut our losses short and let our profits flow.  If AAPL heads North – the model will sell 50% of the position at 110 and move trailing stops accordingly to lock in profit.  Keep in mind that Apple only makes up 2.5% of the M48 model.

Back to the S&P.  The S&P looks like it wants to roll over again and test 860 and then possibly 820 if the 850/860 area doesn’t hold.  Based on probabilities I think we will retest the November lows again if we break 820 on the S&P cash.  Remember we add as price and volume increase and therefore the M48 will add when and if the S&P moves through 900 and more specific, 918 on a close.

Watching Crude the Dollar and Gold using ETF’s:   You can play the long side of crude by purchasing USO, OIH or DIG and placing your stops at the most recent support which was last week.  You can short the buck by buying the short U.S. Dollar ETF – UDN.  I also like Gold long using the ETF – GLD.  The obvious decline in the buck is helping crude and gold.  I will let you know when and if the M48 takes a position in any of these.  Stops and fill prices will be included.

Christmas Rally?  If it’s coming – it better come soon.

Have a great weekend,


ps- Always read the risk disclosure above.  View this for educational purposes only.  Each investor has a different risk tolerance and therefore this information may not be suitable and should not be considered as investment or trading advice.  Videos coming soon to help further your pattern recognition significantly.

Unemployment Report=Mental Stops For Friday

Tomorrow could be a very volatile session due to the unemployment numbers prior to the open.  

Even though our most recent AAPL purchase is only 2.5% of the M48 model account value – I will remove the hard stop and instead use a mental stop based on a closing price and not an intra-day swing where we could get stopped out only to see it possibly rally and close higher.

Discipline is everything  – especially in this market environment.

ps- the market gave back some recent gains today – the good news is that volume was lower.

Stepping In

The market seems to be shaking off all bad news for now and I therefore like the technical action in the last two trading sessions.  Obviously the market can flush just as quick and go test the lows.  That’s why we always use stops – hard and or mental.  Because everyone’s risk tolerance is different – please view the trades below for educational purposes only and not trading advice. 

The M48 model purchased the SSO and some AAPL today.  I wish I could show you a video (coming in Jan.) on these trades because it would allow you to see what I see w/ more clarity.  If the market trends higher I will add by using a combination of the SPY and SSO as mentioned in my previous post.  I would like to see a move through 90 on the SPY soon to increase the probabilities of a Christmas rally.

Long AAPL at 94.81 w/ my stop at 88.16 which is very near term support and 7% back from our entry.  Close today was 95.90.  I thought it was important for it to close above 95.  I was following it on a 1 minute chart and based on probabilities felt it would close above 95 -which it did.  If it goes, our next resistance is at 100 and then 110 roughly.  I prefer more volume.  At this time this APPLE trade is a small percentage of the M48.  I will add w/ increased price and volume.  If we get stopped out – that’s ok too.  I told the Pro Investor Show listeners to be out of AAPL at 162 when the price was 170.  Now they get to buy it back at a nice discount knowing that if it doesn’t work we will exit again. 

Long SS0 (ultra S&P ETF) at average fill of 24.54.  I would like to see it get through 26.63 before I add.  If we break 21.87 – based on probabilities I think we go lower.  I do see a gap that could get filled for a quick pop to the upside.

So what does all this mean?  The M48 is slowly buying into various positions and will add with increased volume and price.  If we are wrong we will exit w/ a small loss to preserve capital inside the M48. The trend is your friend – and so are my clients.

The Rest Is Just Commentary

It’s all about price and volume and the rest in just commentary.

It’s possible that the M48 model will not buy the S&P until we break through 900+ to the upside at which time the model will accumulate additional shares when and if price and volume continue to rise.  We shall see.  If we go to new lows – it becomes a new ball game.

No oil play or individual stocks yet inside the M48 today.   I’d probably have to see the exchange traded fund USO break out above 45 before the M48 takes a long position in crude.

I’ll let you know if the M48 puts on a short as well.


Always read the risk disclosure above.  View this for educational purposes only.  Videos coming soon to help further your pattern recognition.

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Doug & Gary