A Long-Side Setup for the Short Term

As this market bubbles higher, the long trades get even leaner. Not only are prices marked up again with disinterested buyers, earnings are not exactly being bought so far. Although I expect selling to take effect up here somewhere, I'll keep making individual trades when the setups are there on the long side. Last week I lucked into a trade on Provident Energy (PVX), which was taken over on Tuesday, so maybe lightning will strike twice! Carrols Restaurant Group (TAST) is a consumer stock, and that isn't exactly the sector I wish to put much money into at this point, but the setup here isn't bad at all. Earnings are due out on Feb. 20, so there's still time on that end of the trade. As for the technical setup, here's the daily chart. TAST Daily Investools View Chart » The trend is confirmed bullish on this time frame, and the retrace off the January highs has been reluctant and has occurred without any kind of volume escalation. At this juncture, price is pushing into the anchored support zone, which happens to coincide with the highs of the prior swing point. That's a bonus. A purchase in the $11 area for a $0.70 trip north would garner about 6%, so not bad. Risk is not much if you come in at that price point, so reward-to-risk works. Flipping to the weekly chart, here you can see the same anchored support zone and the volume expansion as prices rose; this turned the qualified trend confirmed sideways. Again, not bad and supportive of a continued rise, which is what is needed for the probability of a successful trade. TAST Weekly Investools View Chart » The monthly chart is the one that is a bit disconcerting, as price is already pushing into resistance on this time frame. TAST Monthly Investools View Chart » Even though there is the possibility of an AB=CD up (it is confirmed too) that would take price to the $14.50 area, I am a bit concerned about the strength of resistance on this time frame. And so this reinforces my stance on keeping the trading time frame short -- not intermediate or long term. Let me in at the right price, give me a quick $0.60 or $0.70 and let me say goodbye. That's my thought process here. I don't know about you, but I can't get very excited about trying to buy a market that is apathetically moving higher and doing it almost exclusively on the back of gap-up trades that have nothing to do with any buying and selling that takes place during regular market hours. I'll let the long and strong bulls chase that stuff and will mostly keep to the short side of the ledger while picking at these few trades that have nice setups where I can be in and out rather quickly. I'll also keep looking for trades in places outside of the pure stock equities, such as the short on gold that was mentioned yesterday. When the equity market pulls back a good double-digit percentage, then I'll think differently about my approach. Of course, if I am completely wrong and the market participants decide there really is a need to start buying at these higher prices with some measure of conviction, then I'll raise the white flag and join them again. Until then, I have little choice, as I simply can't buy into this nonsense. Thanks for listening, and until next time, just keep trading the charts! Please note that due to factors including low market capitalization and/or insufficient public float, we consider TAST to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

A Long-Side Setup for the Short Term

If you want to get in and out quickly, Carrols Restaurant Group has the right chart.

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