ARUN And BTN Pilot Positions Testing The Market

by Olivier on June 14, 2010

The looks of today’s candle with the S&P 500 isn’t exactly compelling as it closed very close to the session’s low. The 1100 resistance got sold and the next 2 days should be telling. We either move back down and keep trading within the recent trading range or the market is able to stage a break out to the upside.

The reason I put on the two pilot positions serves one purpose. They will help me gauge the strength or weakness of the market. I chose BTN – Ballantyne Strong and ARUN – Aruba Networks as both look extremely strong from a technical perspective. The idea is similar to simply having exposure to bull markets like Jesse Livermore suggests. Bull markets will bail you out if you put on long positions even if your timing isn’t perfect. The charts of today’s two pilot positions, pilot positions mean I am not being aggressive and going crazy with position size, are clearly in strong bullish uptrends. They are able to swim against the stream as BTN is trading within striking distance of its all time high and ARUN was able to print a new 52 week high during today’s session. ARUN has decent pattern pressure while BTN in my opinion has decent story stock potential. When the market trades sideways or moves up odds are higher for stocks with these kind of technicals to outperform.

I am starting to see more bullish and constructive patterns emerge. I am also starting to see trader’s expecting a false break out to the upside to sucker in new longs. The next few days will indeed be telling. I am willing to bet a small amount on two charts I deem to be displaying incredible strength as they should move up very easily if the market can stage any kind of rally. During today’s session both were leading and moving well. That’s the ones you want to own when the tide turns. Even a false breakout to the upside would be enough to propel those two stocks to the upside as I would expect a false break out to last at least 1-3 weeks.

Considering the deteriorating market technicals I am rather short term oriented with those positions. I am more in a ‘cautious trading mode’ as opposed to ‘position trading and being very patient’. That means although my stop losses are giving them a lot of room I might simply exit without waiting for my stop losses to hit just in case it starts getting really ugly out there.

You have enemies? Good. That means you’ve stood up for something in life. – Winston Churchill

My public list with all my charts can be viewed here:

Buenas noches!

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