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Thursday started off with everything zooming higher – – the Euro, the NQ, the ES, gold, silver – you name it. I've been carefully watching both of my trendlines on the ES chart below, and they acted as firm support, as I anticipated. If we can somehow manage to break these lines, the game is going to change very quickly. Until then, the bulls are still in control.
Halliburton (HAL) setting up nicely to the long side this morning. I took a long position in it at $34.16. Now the question is likely to be asked, why am I still adding long positions at this juncture in the market. For one, we haven't broken down yet, and haven't broken the 1430 SPX key price level that is necessary. Secondly we are still trading in an uptrend channel off of the 6/4 lows, so its hard to load up positions to the short side (though I do hold two positions short).
Finally, there are plenty of stocks out there that because of the weakness from the previous four trading sessions, are at critical support levels, and if they hold, and this market holds, we could very well see a sizable bounce. And because, our risk is fairly tight on the trade like the one here on HAL, I don't have to lose much capital before finding out whether the trade will ultimately be a winner or a loser.
On the flip side, shorting the market here is a lot riskier as we are short-term over sold, and a lot of stocks that would've been nice to short, have already made sizable moves. So if you're a bear, you are better off waiting for that bounce in the markets before getting short in any additional manner.
Here's today's lazy trades long and short.
Long: Halliburton (HAL)
Short: Dominion Resources (D)
Today's long and short setups involve two setups that have extreme appeal to them, and offer incredible entry-opportunities.
The first is Liberty Media (LMCA), which for years now has been a great upward trending stock. But if you'll notice, it tested that trend-line to day on an insane amount of volume, formed a hammer, and blasted higher.
The second setup is a short in Copart (CPRT), which ironically in the past, I have had ZERO success at going long on. So perhaps now, with a breakdown of the consolidation from the past month, it will finally give me those returns I always thought I could get out of it.
Here's today's Lazy Trade Charts.
Long: Liberty Media (LMCA)
Short: Copart (CPRT)
