The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I can be contacted via email at firstname.lastname@example.org
Friday, October 31, 2008
AAPL to $120; the gap created on Thursday's session was filled today, but price tested and stayed above the 20EMA.CBI had a strong day today. The past three session saw above average volume. Overhead resistance with the 20EMA, but keeping in mind that today's price behavior could have set up an Inverse Holy Grail.CSX had a big day today (also BNI and other RailRoads)CLR cleared it's 20EMA and seems to have turned resistance into support by closing above the middle apex of the "W" bottom. Over-head resistance being the 50EMA.
CF closed above the 20EMA. Looks like some resistance at $69 before it can take on the 50EMA.DRYS has had above average volume this week. Today closed above the 10EMA, looking at a target of $25 in the near term. FWLT If it can close above the 20EMA, otherwise it could turn into a short to fill the gap created by Thursday's activity.
MON might put up a fight to get above that 50 EMA.MOS looking to close above the 20EMA and play for that $52.50 resistance, otherwise an inverse holy grail type set-up.
Thursday, October 30, 2008
Q's Overhead resistance with the 20EMA, more of a doji here.
SPY 20EMA overhead resistance, hanging man-like candle here.
DIA settled above the 20EMA, more hanging man like on this candle.
Wednesday, October 29, 2008
Most telling (to me) was the SPY 1-minute chart. With volume like that coming in a move was sure to follow.Later on we also saw a volume spike at the Highs of the day (HOD), with a very low volume retracement to base at resistance, not giving up much at all. Volume then surged and voila, rally!
Here's the Q's and the DIA, which both reflect the same story:
Tuesday, October 28, 2008
Monday, October 27, 2008
Q's, DIA, SPY all gapped down at the open, eventually to be filled.
Can you believe that selling in the last 15-minutes? WTF?!?
Here's the old standby QLD on a 5-minute chart:It looked a little cleaner today on a 500,000-share bar chart:
Saturday, October 25, 2008
1. Take into account that great love and great achievements involve great risk.
2. When you lose, don’t lose the lesson.
3. Follow the three R’s: Respect for self, Respect for others and Responsibility for all your actions.
4. Remember that not getting what you want is sometimes a wonderful stroke of luck.
5. Learn the rules so you know how to break them properly.
6. Don’t let a little dispute injure a great friendship.
7. When you realize you’ve made a mistake, take immediate steps to correct it.
8. Spend some time alone every day.
9. Open your arms to change, but don’t let go of your values.
10. Remember that silence is sometimes the best answer.
11. Live a good, honorable life. Then when you get older and think back, you’ll be able to enjoy it a second time.
12. A loving atmosphere in your home is the foundation for your life.
13. In disagreements with loved ones deal only with the current situation. Don’t bring up the past.
14. Share your knowledge. It’s a way to achieve immortality.
15. Be gentle with the earth.
16. Once a year, go someplace you’ve never been before.
17. Remember that the best relationship is one in which your love for each other exceeds your need for each other.
18. Judge your success by what you had to give up in order to get it.
19. Approach love and cooking with reckless abandon.
~ Dalai Lama.
Friday, October 24, 2008
Here's an updated look at the same chart.Perhaps we could also have bounded our diamond pattern without the candle wicks and just kept real bodies bounded, in which case we could have had our long signal on Wednesday. When I posted this chart the other day I mentioned that this particular pattern could go either way. I mentioned an upside break would likely take us to the test of the lows, and a downside break a test of the range prior to the vertical move. As you can see we tested (and slightly exceeded) the prior highs and actually made a higher high on a closing basis.
Tricky situation we're in.
A measured move to the upside would put price around $105 range (depending on how you draw the diamond and whether you consider yesterday the break or today). Basically all I can say about it is that as a technical pattern it certainly met my expectations and my measured move target. Where we go from here is a whole other story. The chart looks completely overextended and ready to come crashing down, but what doesn't in this market? Looking at the momentum indicator I use today's move wasn't as large as the previous momentum swing high, but a lot can happen Monday morning.
I'm getting too easily distracted by these late day extreme conditions and then find myself revenge trading in order to work myself out of the hole. It's funny how you could read all these books about trading and position size, and end up ignoring everything for the sake of trying to make lost money back.
Anyway, I'm going to really have to re-tool my plan and start back next week with very small position size and a more solid focus on what my plan is. What am I doing trading this market (as a beginner) after 3:00p.m.?! I resolved a long time ago (back in the days of less volatile markets) to NOT trade the last 45minutes to an hour of the day, yet here I am trying to scalp moves in hopes of bringing myself into the green.
Thursday, October 23, 2008
Oh well, it's obvious I'm just not ready for this level of volatility, and I suppose it's better sitting and watching/learning than chasing something and losing money.
The only thing I have left to say about today, that I should have kept in mind is, always short a day when Greenspan speaks!
Wednesday, October 22, 2008
On the chart I have marked 3-day time cycles at the bottom of price, starting September 29th when we had our widest range down day and fell through support. Since that time every third day was a wide range day that was either a new low or closed on it's low with a large range (October 2, 7, 10, 15). Pretty coincidental huh? This past Monday would have marked another 3-day cycle, but price instead rallied. Perhaps we're transitioning to a 6-day cycle? Which just tells us that it's taking more time to have these wash-out sell-offs, which in turn could mean the downward trend is slowing down. We'll see how things turn out tomorrow.
Notice also that the 10-MA is resisting upward price movement.
Here's QLD today on above average volume.Tomorrow ought to be a doozy, one way or another.
Here's the Daily on QLD. The trend is in place and downside moves certainly bring in more volume.
As far as I can tell, this chart pattern is known as a Diamond. One of my favorite sites of reference is Bulkowski's thepatternsite.com where you can find a wealth of information regarding chart patterns and how to measure/trade them.Diamond Tops can break up or down. The measuring rule calculates the difference between the high and low point of the diamond, in this case a $34 range (not shown, but easy to see), which would be added to or subtracted from the breakout price.
However, since price has made a quick and nearly vertical rise into the pattern, a measuring rule like the one just described may be impractical. For instance, if we were to break out in the $70 range a measured move would put us at $104 (new highs) or $36 to the downside (levels not seen since June of this year). While anything is possible, measured moves aren't precise, so perhaps we should be a little more conservative in our estimates.
A break-down from here could, more likely, be suspected to return price to the point where it was before the vertical rally (around the $50-$55 range).
A breakout to the upside would put us testing the highs, in the $85-$90 range.
Some of the key concepts that Thomas Bulkowski teaches with this pattern include;
"High velocity moves after the pattern often follow high velocity moves leading to the pattern."
"A rising volume trend results in the best post-breakout performance."
We should also keep in mind (even though not shown in the chart) that volume has been declining ever since the early part of this pattern and also, the two extreme highs have been red/bearish candles.
Remember, this is an inverse ETF of the Q's. A break to the upside = crashy crashy. To the downside = bear market rally!
With commodity prices taking a hit and fears of a global recession, it appears the U.S.Dollar is being perceived as a safe haven (if you could imagine that). At least compared to the Euro, Japanese Yen, Pound Sterling, Swedish Krona, Canadian Dollar, and Swiss Franc.
Price has exploded about the 200 moving average (weekly chart), one of it's last tests of overhead resistance. If price can be supported above this $85 level we can eventually expect moving averages of price to show a bullish disposition. Price has gone parabolic, gaining 10-points in two months time. Perhaps by next summer a trip to Europe will be in the cards with a strong Dollar in the pocket!
Tuesday, October 21, 2008
AAPL traded very poorly today ahead of earnings, closing at the lows. Maybe the market just suspects the same old dance routine with their earnings release (better than, or as to be expected earnings numbers, with a conservative outlook going forward).
I'm still holding my very small position in BNI, it started to move this afternoon, but suffered the same fate as the rest of the market when the broad selling took hold.
Just for the sake of having a chart up today, here's QLD. It can at least act as a study on how you might go about trading such a choppy and indecisive market. In hindsight I suppose the market was plenty "decisive." There was little conviction in buying (yet again) and plenty of jumping in when the short signals are triggered across everyone's screens. Anyway, let's check out QLD:If you were quick and decisive you could have jumped in long (out of the opening range ascending triangle) and rode the move out until you started seeing those upper-wicky candles, or the doji/hanging man-like candle.
In my opinion, the key candlestick to get short for me would have been that gravestone-like doji where the 20- & 50-EMA's converged and the faster EMA (purple) was sloping down. At this time also the Macd had ticked negative.
Price chopped around S1 before making new lows on the day (corresponding closely with previous day's lows). A bullish tweezers with the bullish momentum divergence was a good probability sign to get long.
Price returned back to S1 for more chop. From noon to about 2:15 the chart looked a lot like an inverted roof, which would have put a measured move to the upside back at around the pivot point (yellow line). Price never made it that far though.
Chop ensued again around Vwap (red dots) for about a half-hour until we got that big momentum candle taking price back to S1 and beyond. The same "forced-selling" excuse seems to be our reasons behind why we're getting these 3:00p.m. snowballing sell-offs.
Monday, October 20, 2008
GS broke out around $120 (opening range high). Check out the daily. Looks like we could have, at least, a possible run up to $142.We see a lot of these chart patterns on the daily time frame. The "W"double-bottom, a clearing of the middle apex on HK can give us a potential target of $22.
As with most stocks across the board, we need to see some serious conviction volume to trust these moves to the upside. So, while playing for a target, be ready to bail if strong selling comes back.Buying in CCI picked up late in the afternoon and closed at the highs of the day on large volume.Same with WLT. Strong volume closing near the highs of the day.
Ditto AGU and IPI...VLO
Friday, October 17, 2008
"I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. "The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government."
"All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.''
"He also suggested that billionaire George Soros sponsor a forum in which ``great minds'' would come together to create a new system of government, as the current system "is clearly broken."
"He added, "The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.''
Lahde said the only reason marijuana remains illegal is because ``Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other addictive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers.''
We got a pretty shitty sell-off at the magic 3:00p.m. hour. With that said; I refer you here...
Thursday, October 16, 2008
QLD spent a little time testing new lows today. Watching the 30-min. chart we had a steep trend-line that formed over the past two days (similar to the trend-line broken on Monday). Looking at the 15-minute chart we could see the new lows on decreasing volume, while the trend-line break took place with stronger volume. The retracement/test of the trend-line after the break out also took place on weakening volume. The lows and close of the previous day were tested and held as support. Notice also the wedge that formed along the trendline.Take a look at the 5-minute for a little clearer perspective on the "V"-bottom, support/resistance levels and volume trends.
Tuesday, October 14, 2008
The DJIAThe S&P500The Nasdaq Composite
Monday, October 13, 2008
Take a look at how nice and smooth QLD traded today on the 5-minute. Some sweet spot set-ups to be had.Looks like we can attempt a try at the gap fill on the daily.