"Talk Your Book" Expanded Analysis

Posted by downtowntrader | 2/11/2010 09:58:00 PM View Comments

I'm loving the "Talk Your Book" show on Stocktwits TV for so many reasons. While obviously many people shares their trades on the Stocktwits stream, its very difficult to go through your thought process in 140 characters. The stream also doesn't lend itself as well to swing trades because of the time difference between entry and exit. I think this show hits a sweet spot because it provides insight into the thought process behind a trade, but also keeps it short enough to keep it interesting. Great Job Stocktwits Braintrust!

If you missed the segment, you can view it in the embedded video. If you already saw it, feel free to skip to the charts below.

In this post I will go over the charts for my first two "Talk your Book" segments. I put these up because it's hard to look through the chart in a low resolution video and I can also expand on some thoughts I didn't have time for in the video.

The first segment was on Southwest Airlines Co. (NYSE:LUV) and one where I thought I would be stopped out after the markets were getting whacked around last week. It managed to hold and is looking much better now.

LUV broke out of a base in December and has been consolidating above the base since then. It has been trading in a very tight channel as volatility dies down. The 50-day moving average has risen to meet the bottom of the channel, and in fact coincided with the bounce off the bottom of the channel a few days ago. One of the reason I like this setup is due to the outstanding relative strength in this stock and in many Airlines in general. LUV held above the breakout recently, despite general market weakness. LUV is currently testing the top of the channel and actually tagged a new 52 week high today. It also had a new closing high and could be close to ending the recent consolidation.

The next video was for a short setup in Trina Solar Ltd. (NYSE:TSL). TSL is actually a stock that I have liked historically, and has been one of the strongest Solar stocks over the past year which may sound counter intuitive. However, I like the chart setup and even the best companies undergo corrections. TSL has been marching higher for the past year, rising from under $3.00 a share last March to over $30 a few weeks ago. It had a sharp move lower off that high, slicing through its 20 and 50-day moving averages. This downwards thrust has the markings of an impulse move. Typically a stock will move in an impulsive move with the underlying trend, and then "drift" in a counter trend corrective move. If you look at TSL on the way up, you will see a series of impulsive moves higher, and then corrective moves lower. The thought process here was that TSL has at least one more impulsive move lower to complete an "ABC" correction. The stop is just above the recent bear flag.

If you have any questions or comments on these trades feel free to share them in the comments section.

Good Trading,


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