Today I exited my SPY position for a $1748 gain and have taken two bearish positions.
I entered 400 shares SDS at $61.85 (currently $63.68). This is a leveraged short position.
I shorted 400 shares NTRS at $57.03 (currently $54.36). I detailed this setup in last night's report.
I was tempted to take the 2 grand in profits at the close, but decided against it and will stick with my profit targets.
Trade Alerts were sent to subscribers during the trading day.
Thursday, April 30, 2009
Short Setup: NTRS
I went short NTRS this morning. The stock has broke down below support, pulled back and shows a negative volume pattern.
Wednesday, April 29, 2009
Trade Update: SPY
I exited half my SPY postion at $88.05 (entry at $84.03). I am still holding 200 shares.
Tuesday, April 28, 2009
Focus List Stock: AMZN
I currently only have one position (SPY at $84.03). I'm patiently waiting to add positions on a dip to support. One of my favorites is Amazon, which is consolidating after a monster run and breakout. I'm looking to enter on a pullback to the $80-81 range.
Thursday, April 23, 2009
Spy Chart
I currently have only one positions (SPY at $84.03). The chart below show looming resistance levels, which correspond with my targets.
Tuesday, April 21, 2009
Sunday, April 19, 2009
Monday's Game Plan
Here is the report I have sent to subscribers laying out my plan for Monday:
Market Notes:
Let's go over the state of the market on different time frames.
The long term trend is bearish. We are still in a bear market. While I have not posted a long term chart, notice that the 200 day moving average (which comes into the chart in the top right corner and is red) is still sloped downward. The slope of a moving average is an easy way to identify trend.
In the intermediate term, the market has reversed and is bullish. There are three clues that identify this time frame as bullish. First, the strength of the recent price trend. During this trend volume has been positive, which signals strong accumulation. Finally, the 50 day moving average is no longer sloped down and looks like it's about to turn upward.
On the short time frame, the market is slightly overbought. The stochastic readings are 80 and 74, which signal overbought markets. However, in strong uptrends I look for a stronger reading for shorts.
How do we use this information?
Since I do not trade on the long term time frame, I pretty much ignore this information (though I do use it for my longer term portfolio). I am focused on the intermediate and short term trends. With a bullish intermediate term trend, but an overbought short term trend, I wait to initiate shorts. I look for a pullback to support and moving averages. For shorts, I wait for extreme overbought readings to initiate shorts.
Bollinger Bands and Extremes:
I don't post bollinger bands on most charts because they tend to confuse many of my readers. The reason for this is much of the published material on Bollinger Bands contend that touches of the bottom or top of the bands should be used for reversal trades. I disagree with this. Bollinger Bands are very complex and act different in different markets. In a strong trend, a touch of the Bollinger Band can signal continuation of trend. We only need to look at the band from February to March to see this.
I use the band for "extreme" reversal trades. In trending markets, I only use Bollinger Bands for reversal trades when the band is strongly pierced (rather than just touched). My own backtests have shown a 15-20 percent increase in win rate when using this method (though trade frequency decreases, and identifying trend for this trade is subjective).
Right now, we are moving along the upper band but it has not been pierced A strong move to the $90 range would not only likely pierce the bollinger band, it would also create an extreme stochastic reading and move right into strong resistance. This would be an excellent shorting area.
The bollinger band can also be used as an entry for trend pullbacks. The BB mid-point is the 20 day moving average, which many traders look to for support. A pullback to the $82-83 range would provide a good entry level.
Game Plan:
Short strength, Long on pullback.
Trade Tracker:
I have no open trades.
Focus List:
Since we are not near any long entries, I am not putting any charts up tonight, though I am posting the entire focus list. The only charts are for short entries.
Longs:
Financials, residentials, industrials, metals (not including silver and gold), retail and select tech all show strong relative stength, price and accumulation patterns. Stochastic readings are included in the list below. I'll narrow the list as we get closer to entry points.
Shorts:
Setup: Triangle Breakdown-Pullback. Enter on pullback to the top of the breakdown bar, which also corresponds with moving average resistance.
Disclaimer: All information and opinions expressed in this report are to be used for entertainment purposes only. The author of this report is not an investment adviser and does not give buy, sell or hold recommendations. Trading stocks is a risky undertaking, and due diligence is required before making a trade. Consult an investment professional before making a trade. The information in this report is not verified and may be incorrect. The author of this report may or may not hold a position in stocks mentioned in this report.
Let's go over the state of the market on different time frames.
The long term trend is bearish. We are still in a bear market. While I have not posted a long term chart, notice that the 200 day moving average (which comes into the chart in the top right corner and is red) is still sloped downward. The slope of a moving average is an easy way to identify trend.
In the intermediate term, the market has reversed and is bullish. There are three clues that identify this time frame as bullish. First, the strength of the recent price trend. During this trend volume has been positive, which signals strong accumulation. Finally, the 50 day moving average is no longer sloped down and looks like it's about to turn upward.
On the short time frame, the market is slightly overbought. The stochastic readings are 80 and 74, which signal overbought markets. However, in strong uptrends I look for a stronger reading for shorts.
How do we use this information?
Since I do not trade on the long term time frame, I pretty much ignore this information (though I do use it for my longer term portfolio). I am focused on the intermediate and short term trends. With a bullish intermediate term trend, but an overbought short term trend, I wait to initiate shorts. I look for a pullback to support and moving averages. For shorts, I wait for extreme overbought readings to initiate shorts.
Bollinger Bands and Extremes:
I don't post bollinger bands on most charts because they tend to confuse many of my readers. The reason for this is much of the published material on Bollinger Bands contend that touches of the bottom or top of the bands should be used for reversal trades. I disagree with this. Bollinger Bands are very complex and act different in different markets. In a strong trend, a touch of the Bollinger Band can signal continuation of trend. We only need to look at the band from February to March to see this.
I use the band for "extreme" reversal trades. In trending markets, I only use Bollinger Bands for reversal trades when the band is strongly pierced (rather than just touched). My own backtests have shown a 15-20 percent increase in win rate when using this method (though trade frequency decreases, and identifying trend for this trade is subjective).
Right now, we are moving along the upper band but it has not been pierced A strong move to the $90 range would not only likely pierce the bollinger band, it would also create an extreme stochastic reading and move right into strong resistance. This would be an excellent shorting area.
The bollinger band can also be used as an entry for trend pullbacks. The BB mid-point is the 20 day moving average, which many traders look to for support. A pullback to the $82-83 range would provide a good entry level.
Game Plan:
Short strength, Long on pullback.
Trade Tracker:
I have no open trades.
Focus List:
Since we are not near any long entries, I am not putting any charts up tonight, though I am posting the entire focus list. The only charts are for short entries.
Longs:
Financials, residentials, industrials, metals (not including silver and gold), retail and select tech all show strong relative stength, price and accumulation patterns. Stochastic readings are included in the list below. I'll narrow the list as we get closer to entry points.
Shorts:
Setup: Triangle Breakdown-Pullback. Enter on pullback to the top of the breakdown bar, which also corresponds with moving average resistance.
Disclaimer: All information and opinions expressed in this report are to be used for entertainment purposes only. The author of this report is not an investment adviser and does not give buy, sell or hold recommendations. Trading stocks is a risky undertaking, and due diligence is required before making a trade. Consult an investment professional before making a trade. The information in this report is not verified and may be incorrect. The author of this report may or may not hold a position in stocks mentioned in this report.
Saturday, April 18, 2009
Poker, Trading and Making Adjustments
In my Thursday report to members, I talk about the current market, making adjustments and poker:
Before we begin, let me compare what's going on now to poker. In Texas Hold'em, the best hand pre-flop is pocket Aces. Most players try to get as much money into the pot as they can when they are dealt this hand. While this is a great hand before the flop (the three community cards that are dealt to everybody), a flop that leaves open the possibility for a flush, straight or trips (hands that beat pocket aces) can spell disaster. Great players can lay down pocket aces or control the betting in order to limit risk. Amatuers can't adjust and end up losing their bankroll. The ability to adjust the game plan as more information presents itself is what seperates the men from the boys.
With the poker analogy in mind, let's analyze what's going on with the market. Originally I planned to start shorting as low as $87.50. At his level I expected stochastics to reach 90, which would give an extremely overbought reading. However, we've had enough consolidation to drop stochastics enough that the $87 price level will probably only give us a mild overbought reading. Thus, it's time to adjust.
I am raising my short entry level to $89-91. If stochastics are still not near 90, I'll raise the price entry to $93-95. These price level correspond with the resistance lines on the chart below.
I am not looking to enter at these levels. Basically, we are at a level that is too overbought to enter, yet not overbought enough to enter short.
Before we begin, let me compare what's going on now to poker. In Texas Hold'em, the best hand pre-flop is pocket Aces. Most players try to get as much money into the pot as they can when they are dealt this hand. While this is a great hand before the flop (the three community cards that are dealt to everybody), a flop that leaves open the possibility for a flush, straight or trips (hands that beat pocket aces) can spell disaster. Great players can lay down pocket aces or control the betting in order to limit risk. Amatuers can't adjust and end up losing their bankroll. The ability to adjust the game plan as more information presents itself is what seperates the men from the boys.
With the poker analogy in mind, let's analyze what's going on with the market. Originally I planned to start shorting as low as $87.50. At his level I expected stochastics to reach 90, which would give an extremely overbought reading. However, we've had enough consolidation to drop stochastics enough that the $87 price level will probably only give us a mild overbought reading. Thus, it's time to adjust.
I am raising my short entry level to $89-91. If stochastics are still not near 90, I'll raise the price entry to $93-95. These price level correspond with the resistance lines on the chart below.
I am not looking to enter at these levels. Basically, we are at a level that is too overbought to enter, yet not overbought enough to enter short.
Wednesday, April 15, 2009
On the Radar: Residentials
Residential Real Estate and homebuilders is one of the hottest sectors right now, showing strong accumulation, price patterns and relative strength. One of my favorites is DHI. The chart speaks for itself . . .
Sunday, April 12, 2009
Monday Short
While I am still bullish on the market, I am looking to short on a very short term time frame. The market is overbought and nearing resistance. I will only short strength that moves strong to the February highs.
Wednesday, April 08, 2009
A Momentum Stock in a Sea of Bottoming Setups
NFLX is one of the few stocks that has been enfuego this year. It bottomed in December and has been on fire since. I like it on a pullback to the mid Bollinger Band level, which is also the 20 day moving average.
This is a trend pullback setup.
This is a trend pullback setup.
Tuesday, April 07, 2009
Today's Trades: X and FDX
I used the morning pullback to enter X and FDX. I only took small "pilot positions" since there is still room for more pullback.
I also unloaded my SDS position for a decent gain.
I also unloaded my SDS position for a decent gain.
Monday, April 06, 2009
10 Things I Think I Know
1. I am waiting for a pullback to enter long
2. A bottom may be in, but pay attention to volume for clues of a pattern failure
3. Tech is showing relative strength vs the market. Could be a clue for the next leaders.
4. NFLX bottomed in December and is now trending. I thought DVDs were dead?
5. Lots of good looking bottom patterns.
6. Four words that have been the key to trading this market: support, resistance, overbought and oversold
7. Financials, real estate and retail are showing signs of life and accumulation.
8. The Vikings pulled a double whammy by passing on Jay Cutler.
9. Props to Michigan State for making it as for as they did.
10. Why has nobody signing Tory Holt?
Sunday, April 05, 2009
Monday's Game Plan and Market Notes
Here is my plan for the market this week. The member only "Trade Report" also included my focus list, consisting of the stocks I plan to trade if we get a pullback.
How overbought is this market?
Take a look at the T2108 indicator (stocks above 40 day ma) and the answer is clear: we are nearing extreme overbought levels. A little more bounce would get is near 90, which is where I would look to short.
Market Notes:
As I noted last night, the cup and handle pattern emerging from a bottom formation looks good. While it may not be a true bottom, it at least gives an intermediate term clue. The market is nearing short term overbought, so I do not feel comfortable adding longs here. I am waiting for a dip.
If the market continues to inch higher towards near term resistance, I may enter a quick short trade in anticipation of a pullback. If the pullback does come, I would expect a move to support and then resumption of current trend (higher). Thus, my stop on any short trade would be tight, and target near support.
If we get a pullback before becoming extremely overbought (we are currently only slightly overbought), I'd like to start adding positions once SPY hits the 79-81 range.
If we get extremely overbought, I would add shorts in the 85-86 range, with a stop around $88.
Take a look at the T2108 indicator (stocks above 40 day ma) and the answer is clear: we are nearing extreme overbought levels. A little more bounce would get is near 90, which is where I would look to short.
Subscribe to:
Posts (Atom)