Trading Ideas for the Week of January 7

by Alex Salomon on January 7, 2013

trading ideasBy Alex Salomon
Happy New Year to everyone!!

It’s that time of the year when energy is flowing, so let’s take a look at some charts that appeal to me and offer up some ideas. Not advice, just sharing some trading ideas!

Amazon.com (AMZN)

AMZN technical support, trading ideas

The appeal is a break out above the multiple tops. When it happens (call it > $263) then the chart eventually opens up to $290. Just like pretty much everywhere else, the ideal entry was that “little” (!!!) January gap, but that’s history. My trade? Buy >263, take tier profits at 270, 280, 290. Eject back below 259.

Direxion Daily 20+ Yr Trsy Bear 3X Shrs (TMV)

3x ETF based on inverse treasuries, ie. a leveraged instrument to play rising US rates… $TMV goes up when the US longer maturity bonds rise in interest rates; 3x ETF are extremely volatile, with quick decay and present significant risks, so caution and risk management necessary.

tmv bearish bonds, trading ideas

TMV was a money-printing machine all last year (October until February) and then it all stopped – well, it printed tons of money if you shorted it!!

The major, significant break puts it back on my radar screen. I bought and sold it on Thursday & Friday January 3-4, 2013 but it is still on my radar/list.

The trade would be a volume break above $60: 50% position on the first day close above 60, 50% above 61; risk at 59. If the trade unfolds, I’ll sell 50% at 65 and 50% at 70, or trail stop $2.50 along the way.

Direxion Daily Retail Bull 3X Shares $RETL — the 3x ETF for SPDR S&P Retail (XRT)

RETL bullish retail, trading ideas

XRT technical support, stock trading ideas

RETL goes up if XRT goes up, but 3x ETF are extremely volatile, with quick decay and present significant risks, so caution and risk management necessary.

I started a $RETL position into the close on Friday January 4, 2013 at $105.65 and I think it is reasonable to base it off an XRT break out above $64, targeting $65 and $66.

The trade is to buy RETL and to sell 50% when XRT hits $65, and the other 50% when it hits $66.

BONUS FOR 2013: The Mo-Mo darling trading ideas!

Namely: EGHT, RAX, SSYS, DDD.

They all could gap down and crumble your portfolio… or they could double, again, in 2013. Since June 2012, I have been accumulating $DDD in my 401k every 3rd trading day of the month. It helps with the wild risks of gap downs.

For swing trading, it is high risk, high reward!

8×8 Inc. (EGHT)

EGHT technical support, stock trading ideas

Perfect momentum chart with a big advantage: no recent gap to fill, no magnets, not since mid-December. It’s overbought, overstochs, over-everything, but it is not quitting! Not yet…

I am thinking about buying it on the next kiss with its 10d SMA, about $0.20 lower, and then take profits at 7.75, 8.00 and keep a $0.40 trailing stop going on the last tier, for as long as possible.

Rackspace Hosting (RAX)

RAX technical support, stock trading ideas

RAX squares me a bit more than $EGHT because it is over-over everything, but it’s a beauty for investors. I won’t touch it just yet, but for risk-lovers, any good news will make it touch $80, soon. Careful, though!!

Stratasys Inc. (SSYS)

SSYS technical analysis, stock trading ideas

Wild and extended and everything, just like RAX, but what a ride!

It could exhaust all the way to $90 (which would make a nice short, too). I am not buying it, not even close, but it is on my radar and will be all year. $70 entry would be a dream.

Just an idea or suggestion for investors looking to potentially accumulate these stocks — $EGHT, $RAX, $SSYS, $DDD — “as if it were for an investment plan”, so for investments over 6 months and more, I’d consider buying a 15% position every time we rest on 10d SMA.

Something like this: wait for pauses on 10d SMA, don’t trigger until the 5th day on that 10d touch.

Accumulate 6 times to remove emotions and swings, and then build a plan: sell if it violates your risk profile (for instance, for RAX, if it closes below $60, a long time support and break out), sell if you hear about irregularities, etc.; otherwise, ride it for as long as you can, maybe with a 10% trailing stop below your cost-averaged price.

This is just one of many ways of accumulating strong momentum stocks; it removes emotions. Buy on a rule and given price and identify a given floor to eject… while riding strong potential upside.

Take 3D Systems Corp (DDD) as an example – I have been buying every 3rd trading day of the month since June 2012.

I’ll eject and take profits at $50 (for now).  But note that since I will continue to accumulate, that target may change over time. I will only add, now, on a 5th day post 10d SMA touch, no more than once a month.

Let’s revisit some of these trading ideas next year, on January 5, 2014!!

DDD technical support, trading ideas

Twitter:  @alex__salomon   @seeitmarket

Positions in AMZN, DDD, and RETL at the time of publication.

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