The MTG Stalk Sheet
January 9, 2008
The MTG Stalk Sheet presents you with the best individual
stocks that Morpheus Trading Group is stalking for potential trade entry
each day, all in a concise and easy to understand format. Please be sure to read the MTG
Stalk Sheet User Guide in order to understand the terminology below and to
receive the maximum benefit from your subscription. Enjoy!
"FULL-SERVE" STALK LIST
The best way to really outperform the market is to buy strong stocks (at or near 52-week highs) in leading groups after a significant correction in the market. We look for stocks that are consolidating in tight weekly ranges, no more than 5-10% off their 52-week highs, that are poised to breakout to new highs. These future market leaders exhibit great relative strength during a market correction and stick out like a sore thumb. The key to this style of trading is market timing and stock selection. We can not get heavily invested on the long side until the market flashes a buy signal.
A buy signal is generated by a combination of factors (strong chart patterns, bottoming price action in the broad market, and strong market internals) that have a collaborative effect over the course of a few weeks. The best way to gauge if the market is in a short term bounce off the lows or beginning a new uptrend is to look at the quality of the chart patterns. Any bounce in the market next week will certainly not be something to generate huge buying interest, as there are not many stocks with great patterns. Most stocks are getting blasted, falling 20-30% off the highs on heavy volume. On a short term bounce, we can buy stocks for a quick pop in price but not much more. We will go over in greater detail what signals we look for to determine a market bottom as they become relevant.
Right now there isn't much to do on either side of the market. A decent bounce in the market should present us with ideal short setups in stocks that are now in firmly established downtrends. But until that happens, there really isn't much to do. As long-term subscribers to this newsletter already know, our track record of consistent trade profitability over the years is the result of being aggressive when market conditions are ideal, while laying low when risk is too high. If you're a new trader or subscriber to this letter, please realize that capital preservation, not high profits, should be your main goal right now.
"SELF-SERVE" STALK LIST - UPDATED EVERY MONDAY (Click here to view the "Self-Serve" Stalk List
section of the user guide.)
LONG WATCHLIST AND TRIGGER PRICES
Pullback entries - (changes to trigger prices are highlighted in red)
- QGEN - 22.41
- DO - 137.00 (gapped above entry on 1/8)
- VIP - 41.31 (gapped above entry on 1/8)
- NBL - 79.65 (triggered 1/8)
- GOLD - 37.70 (gapped above entry on 1/8)
- PAAS - 35.51 (gapped above entry on 1/8)
- MBT - 97.21 (triggered 1/8)
Breakout entries - Higher failure rate in weak markets
- BVN - 64.20 (gapped above entry on 1/8)
SHORT WATCHLIST AND TRIGGER
PRICES
- We will list setups if/when they develop
Daily Stalk Summary
Below is an overview of all
"full-serve" open positions, as well as a performance report on all "full-serve"
positions that were closed only since the previous day's newsletter. Net
P/L figures are based on the $100,000 Stalk
Sheet model account size. Changes to open positions since the previous
report are listed in red text below:
Open positions (coming into today):
IVGN long (150 shares from Jan. 8) -
bought 93.39, stop 91.84,
target 98.00, unrealized points = (0.51), unrealized P/L = ($78)
UTHR long (100 shares from Jan. 3) -
bought 100.58, stop 97.55,
target new highs, unrealized points = (1.96), unrealized P/L = ($197)
Closed positions (since last report):
Current equity exposure ($200,000 max. buying power):
Notes:
Market Conditions / Gameplan:
Market failed both rally attempts intraday, which led to a vicious sell-off into the close. The S&P 500 and Nasdaq dropped about 2.5% and 3% respectively in the final 90 minutes of trading alone! When the broad market action turns ugly, traditional support levels such as moving averages and uptrend lines are no longer valid, as stocks tend to melt through support like a hot knife through butter.
Market Leaders:
Monitoring the price action of leading stocks is the best way to gauge
the health of the market. This list of leaders is updated every Monday.
Leaders - TRA, AGU, ATW, MON, SVNT, MOS, OXY, CF, HOLX, MUR, DO, CBI, RIG, HES, MTL, UTHR, ONXX, BMRN, POT, UPL, NBL, GG, BVN, ABX
Leaders at/near the 50-day MA (a key institutional support level) - MA, MR, AMZN, AAPL, SPWR, OSIP, EDU
Leading stocks breaking the 50-day MA - CMG, GOOG, ISRG, BIDU, SOHU, RIMM, DECK, GME, MICC, FCX, CME, DV
Notes on leaders:
- Leading stocks are under severe distribution. We should see a signficant rotation in leading stocks over the next few weeks.
Open Position Detail:
- UTHR - Closed just above our stop. If UTHR gaps down below our stop on the open, we plan to use the 5-minute low (minus 10 cents) as our new stop.
- IVGN - Fell apart with the market into the close. Note the new stop above.
Edited by Deron Wagner,
MTG Founder and Head
Trader
DISCLAIMER: There is a risk for substantial losses trading
securities and commodities. This material is for information purposes only and
should not be construed as an offer or solicitation of an offer to buy or sell
any securities. The Company and/or its affiliates, officers, directors and
employees may or may not buy, sell or have a position in the securities
discussed in The MTG Stalk Sheet and may profit in the event the shares of the
companies discussed in The MTG Stalk Sheet rise or fall in value. Morpheus
Trading, LLC (hereinafter "The Company") is not a licensed broker,
broker-dealer, market maker, investment banker, investment advisor, analyst or
underwriter. This discussion contains forward-looking statements that involve
risks and uncertainties. A stock's actual results could differ materially from
descriptions given. The companies discussed in this report have not approved any
statements made by The Company. Please consult a broker or financial planner
before purchasing or selling any securities discussed in The MTG Stalk
Sheet. The Company has not been compensated by any of the companies listed
herein, or by their affiliates, agents, officers or employees for the
preparation and distribution of any materials in The MTG Stalk Sheet. Past
performance never guarantees future results.
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