Walk on the Long Side

Round and round we go. The bulls pound their chest and bears struggle with their sanity as the market refuses to sell off. Worse yet, we are staring Tuesday in the face. Why does that matter? Find me a weak Tuesday this year. Tuesdays and Fridays have been slam-dunks for the bulls. At some point that will change, but I know guys who are just trading the long side into Monday and Thursday closes to grab the "sure thing" Tuesday and Friday ramps. That isn't my style, but the more I see of it, the better I will feel about the pattern changing soon. Very soon.

CMG Source: StockCharts.com View Chart » View in New Window »

Even with all that, I still look for both sides of the trade, long or short, but it's much easier to find setups and breakouts on the long side. For instance, Chipotle Mexican Grill (CMG) is breaking out of a nice flag pattern and judging by the volume when the stock broke out, just about every momentum trader saw it at the same time. I have a measured move here to $387. My approach here is to get long the May 17 $380 calls and short the May 10 $385 calls. This diagonal call spread is one I won't pay more than $3 for, but would like to see something closer to $2.90 if possible....218 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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