Watch List for August 1st

A Quick Review

The markets closed down brutally across the board today with the S&P down 2% and the Dow Jones down 317 points. It was only a matter of time before this crack below the daily chart support line happened and caused a huge flush since everyone was watching for that line to hold up. I mentioned the possibility of this in the watch list video last night, so no one should have been surprised. The screen share went awesome today and I think it is a very good addition of value to the website. Other people charge you $100 a month to let you watch them trade. I see no reason for this. I just want to teach people, and its great because even if I lose money, you can see exactly where I went wrong and how my thought process turned my position into a loser. A valuable tool for you either way. Only costs me $70 a month, so I think it is a real bargain.

For tomorrow I think that break out or continuation setups are out of the question because there won’t be too much momentum behind those kinds of plays because no one is looking for them right now. What people are doing is trying to find some good names that they want to buy on a discount. Even more in play are stocks that are oversold in their own rights, but have now been pushed down a huge amount by the overall markets. If we get a gap down and flush tomorrow, I think there could be some extreme momentum back up with the strategy that I just mentioned. Take a look at where two important support trend lines are on the SPY daily chart, which leads me to think we need to hold above 189, but will most likely come below 191 before we continue back up. Going straight down to that area is not likely, but instead another red day and then small bounce, followed by another strong leg down, but be open minded as always. A crash through these two lines may mean we need to be SHORT SHORT SHORT.

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The Plan

Keep these stocks on watch for tomorrow. I have 6 of them for you to check out. They are listed in order of which one’s I think are most likely to work out favorably for us without fake outs and such. All the criteria for them are basically the same. We are looking for a gap down and flush right off the bat, and then bounce back higher. The strategy here is to use the 1 minute chart and watch the flush, then start to scale in small once it looks like the down wards momentum is slowing. The most important thing here is to SCALE IN small at first. Do not take a full sized position. Don’t even take 1/2 positions on your first buys. Taking partial positions will allow you to average in and not get freaked out or be sitting on big losses, and will actually teach you what to look for next time to better time the bottom. I will be doing these plays tomorrow in the chat room, so come and watch!

GNW

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