Monday, November 27, 2006

The Down Jones!

Just as I expected, I made a call to myself that we would sell off this week, but I was prepared this time and had the short ideas ready for action! Now there are lots of types of sells offs. We do have a weaker dollar, and of course the weak Wal-Mart Store sales have been highlighted, but as President Bush's words would say, "This market is strong, and we intend to keep it strong" (appears redundantly on CNBC). I believe this to just be some profit taking, we've had our run up, the bulls conquered, the bears covered, now I expect the Put/Call Ratio to liven up quite a bit, and also the VIX should get shaken up from it's complacency. People will be thinking we're headed lower, but with over $9 BILLION DOLLARS$ spent on Black Friday, I am staying alert for reversals. I'm looking for retailers, tech, and some oil to play on, as they should all tread higher after a nice pullback, and maybe a brief consolidation period. Here were my short ideas coming into the day!

SunPower Corporation (SPWR)
Here, I'm going to highlight a technical candlestick pattern which I've head great success with, called Bearish Harami Patterns, and SunPower fit the criteria Perfectly!! The key to a higher risk/reward ratio is to short the stock on or near key levels of resistance.

Description of Bearish Harami Patterns:
1.) The market, or stock's chart, is characterized by an uptrend.
2.) A 2 candlestick pattern in which a long white candle on the first day, is proceeded by a black candle whose real body is completely engulfed by the real body of the first day's white candle.

What it Means:
1.) A sign of disparity about the market (or stock's) health.
2.) A small black candle shows some uncertainty.
3.) A change of the trend.

I will remain short both of these stocks until I see it necessary to cover from a reversal in the current market sell-off.

Electronic Arts Inc. (ERTS)

Also check out a great blogger and market analyst's Steve Puri's Market Opinion.


Cath from Paris said...

Excellent, I keep on storing my cash under my mattress !
No investment, no property, no bonds, no stocks, just gold in bars and lots of pints in bars also. And 2 suitcases always ready just in case... This is what my grand ma used to say, she was so riiiight !

Love and Peace from limelight Paris

Phileo said...

Hi Cal,

Nice blog you've got here.
As for SPWR and ERTS, did you short the stock itself, or did you buy puts?

Cal said...

I am currently short both stocks. I'm still studying my bearish options strategies nightly. Thanks.

em said...

cath... I also live in Paris. Just moved from the states in June. Do you also trade?