Archive for November, 2009

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Black Friday Trading Could Be Very Black ?

Thursday, November 26th, 2009

Today is Thursday Thanksgiving day, November 26th and all is not well on Wall Street.

Maybe traders and investors had too much Turkey or maybe they will be feeling more like a Turkey after Black Fridays session to come. I believe it is going to be a half day of trading today, ending around 10 am West Coast time, but you should check to be sure.

Things were looking good this week, being that the days leading up to Thanksgiving are usually bullish for the market. This year proved that again, but what about the day after Thanksgiving. I don’t remember the stats on that one.

I just came off of the site where I get delayed readings by two days, gauging the market sentiment by the so-called experts. I will have to say, it is alarming.  It was looking good as I said and we will all find out soon, but the numbers have taken a big jump again for the better which in reality is for the worst. It has a reverse effect.

Last week I warned that the bearish sentiment dropped from 27% bearish down to only 21%, not very many. This week on Tuesday the numbers came out, but for me I can only see them on a two-day delayed basis.  Well, it dropped again, down to 17 and that is very-very bad. The amount or level of bearishness is so small, only 17% of the experts think the market is going down from here. I can tell you that is usually a screaming sell signal.  

This may be what the market was waiting for, to catch the majority off guard and feeling good about the Holidays with the trap being layed.  I checked the news and it seems like there is some credit problems in Dubai, (the middle east). The banking sector is not going to like it and it could be the trigger point to get this market on a sustained sell off.

From Wednesdays High, it looks like  the market has reached its high and is likely to decline down to 890 – 840 on the S&P over the coming weeks/months. I had wished I seen these numbers when they came out on Tuesday. It could have given me a little more time to warn everyone of the dangers.

If 1086 on the S&P Cash market gets taken out on a closing basis, it will set the stage for a continuation of the sell off. The market can not afford any big sell-off from here. Traders are going to use any excuse  to sell, now that we are in this short-term overbought area.

We are and have formed a rising wedge in a uptrend, when that gets broken, you usually get additional price movement in the direction of the break. Take a look at the video below.

One other note, I can not help but make a note on the price of Gold. Almost 1200 an ounce now. I follow the gold  market and did see the low in the market many years ago. I bought gold for myself at just under 300 an ounce and am holding on. I believe it is a reflection of the many problems to face as a nation going forward. I wish it was not so.

So keep your chin up and get some exercise after that big meal and keep your blood pumping, we are all going to need it in the days/weeks/months to come.

 

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Round 2 for possible surprise rally? or Not !

Wednesday, November 25th, 2009

Today is Tuesday November 24th and the major market index’s are showing signs of life.

The short-term trend is just barely down and I am measuring this on the 120 minute bar chart. Any significant uptick will turn it UP, so we will have to see what tomorrow brings us. The daily trend is clearly still up and as well as the weekly. The monthly will have to wait still yet another month to make things clear.

That is how it measures up as far as the technical picture is concerned. As mentioned, any significant move higher from here will more than likely spark a big short covering rally. We are pretty much in the same place as we were 4 days ago.

The trigger points have been clearly established and now even more so at this point. Pressure points are  built up on both sides of the fence. This is where you need to be careful and wait for confirmation to buy into the argument of a solid longer term pull back. We are not there yet and the price action is confirming this to be true AT THIS POINT. 

The bullish sentiment, as of its last reading 46% is in the middle of its range. A reading of  55 is considered very bearish and 35% bullish. We are in the middle. The bearish sentiment is very weak which does signal a bearish tone, only 22% of the experts are bearish, which is really not good for the overall bullish argument. This represents conflicting attitudes and does not represent a consensus on future direction at this time.

That being said, you still have to give the benefit of the doubt to the bulls, until and unless the markets say otherwise. So lets see what happens. As I said last week we are in a position to spark a big short covering rally. We have not been able to take this market down as of yet and it may be that the positions are just building. That may be true, but the same can not be overlooked for the bullish side of the argument. A break out over the most recent high could spark a rally that Wall Street was not expecting and with it, bring a wave of buying that will only cover loses for the short sellers.

We really just need to let the market tell us, but don’t be surprised if we get the surprise rally I was talking about. Stay open-minded until it becomes clear as day.

I did place a few trades today and I will have to say, I was not to happy with it. I was a little early on a few trades and I had to endure a little heat. The first trade I did intentionally place a larger stop to accomodate the volatility, 6 ticks. The market went against me 5 and was still alive. That was really OK, because I intentionally allowed for it. A couple of the other trades were a little a to early and should have waited.

I don’t like to have the feeling that I am going to miss a rally, that I am pretty sure is coming. I hate that. I need to be OK with missing it.  Today is worked out, the trades did not go more than 3 ticks against me but it did not have to even come to that, if I had waited for the right timing.

Maybe my next session will be better. It may look like I am being overly critical of myself given the good results, but I don’t look at it that way. Doing the right thing at the right time is the most important, not the results, because I know that if I do the right thing most often, the right things will automatically take care of itself.

Thats it for now, I will probably not trade on Wednesday. The price action is usually a little strange during this Holiday week, although today looked pretty normal overall.

Until my next post, I wish everyone a Happy Thanksgiving to you and all of your families.

Vince

http://www.screencast.com/t/ZDUyZjk0Yzgt

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DAY TRADING LESSON TODAY, understanding time/tick charts!

Monday, November 23rd, 2009

Todays post is for Friday’s session, November 20th and the sell off slowed a bit, but still ended down slightly for the session. I did not trade today, traveling out-of-town and may wait until next week? We will see.

The momentum has swung to the downside, going into Thanksgiving week, where we typically see market strength. It will be interesting to see how the market handles this dichotomy. A word of caution, the volume is going to slow this week. It should be a little busy early on, say the first hour, but after that it will probably slow substantially. Each day will get slower until Wednesday’s close. Just from memory, the session during Thanksgiving week Wednesday, is usually a half day. Everyone should find out what the hours are for the week. Fridays session is usually normal hours, but you should look for yourself. If I have time tomorrow, I will look it up and post it for tomorrows session.

One more thing I will say, before I go to the next section is, the market sentiment did get more bullish by a few % and the bearishness dropped. Only 20% of professional stock market newsletter writers are bearish, that is not very many and does pose a problem for the bulls to continue higher. It had been at these lower levels but it dropped by over 5 % this week and is the lowest in recent memory. Only one in five believe the market is going to go down. Sounds like a minority position to me. All I advise is caution, be careful, keep stops on all of your long-term stock positions. You just never know what can happen with this market. Take is a day at a time. Currently the short-term momentum is down.

TRADING LESSON TODAY !

Today I will continue with a topic I touched on last week. Each day is usually different as far as price movements are concerned and the person who can feel the pulse of the market can get an edge on trading it.

Each day, the market expresses itself in different ways, those expressions come out exhibiting the struggles between both sides of the market, bullish or bearish. Usually one side will have the upper hand and prices will end the day in that direction. Along the way, the struggle will be shown when one looks into the micro moves of the market.

I feel, the best way to do this is by using tick data. Tick data is far different from using time data. With time data, the charts reveal the price movements, high, low and close for that specific amount of time. Many traders use 5 minute bar charts to trade the S&P. Far more traders use time charts over tick data. If I had to guess I would say at best it would be 80/20 but it may be more like 90/10. 

If you day trade the E-Mini markets, you may want to look into using this type of data. It is different and it may take some getting used to, but it offers much more advantages than disadvantages in my opinion. If you are looking to limit your exposure and risk, tick data, if used properly can do that for you.

You will get a much better look and feel for where you get in and out of the market. As volume increases, the bars will post more often and reflect the quicker pace of the market action. With more detail and information, you have the ability to make a more informed trading decision, thus putting the odds in effect, more in your favor.

As mentioned, you have the ability to limit your risk by identifying more defined pivot points, which in a way, could be classified as decision points. This does give you an advantage by identifying where the tipping points could come in at. Not every pivot point is a decision point and you have to understand a lot more than this, but it is a start.

If you go back over some of your previous trades and look to where you placed your stops for some of those entries, you will find that you are probably in good company. I would bet that most of those stops had a significant amount of movement in the direction of your stop. The reason for that is most people place there stops in the same places and they don’t even realize that they are doing it. In some way, they know the exact spot they will through in the towel to get out along with everyone else, which causes the price to move substantially in that direction.

What if you reverse the process and do not yet place an order and look, think and ask yourself, if I was in this trade, where would I place my stop to get out?  That is probably the place for you to establish an initial position and ride the wave of everyone elses stop orders going off. 

Again, this is one way to help understand how price action works and how you can take advantage of it. Don’t fight it, go with it and everyone else. There loss is your gain. That is why and how, I am able to risk only 3 or 4 ticks on a trade and still have the odds about 80% on my side that the trade will produce some profit for me.

That is why and how I came up with the term, “SNIPER-DAY-TRADING”. If I can limit my risk to a very small amount and get the momentum on my side, so that the current natural rhythm of the market is to go in my direction, by stop orders and current position orders going off in my favor, that is all I can ask for.

Keeping the struggle down to a bare minimum, is what I enjoy. I don’t like fighting the market and if I lose the edge, I get out, immediately until a new edge presents itself to me.

I feel, this is hard to accomplish if not impossible with minute charts. So that is why I have built my trading models around this type of analysis. You may want to explore it further on your own to see if you can find or get the edge.

Good Trading, Vince !

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Today was clearly the day, short term direction now down.

Friday, November 20th, 2009

Today is Thursday November 18th and we finally got a clue of what is going on.

Today was the day, that decided the short-term direction. It came in the night trading and did not look back. I can say, that after the night trading had pulled the market down, the open was a sure thing to come off of its high and the first move after the open decided what the direction would be.

Just a few minutes after the open, the market started to form a very nice triangle formation with the tops coming down and the bottoms holding for the moment. After the apparent break short the move was established and the only trade an open minded trader could take was short.

That move was good for about a good 10  points. I am going by memory and I know I am close, but it sure was a clear signal down. If you look at a daily chart, you can see a clear point of resistance and I knew we were up against it, but I just wanted to stay open to the possibility that we could get a ”Blow off Top”. That is a fast hard spike to the upside which usually takes out all the stops, holds for a spell, then drops like a rock.

I did not want to be taken by surprise and did not want you to be either. I have one of the video’s below, showing a 120 minute chart of the Dow and you can see we were right up against resistance at yesterdays close.

Today was the day, that decided for us, which way the short-term direction was going to take us. Currently the trend is down. There is a good chance the S&P will bounce off the low established from last week around 1082 or so. If it breaks like I said yesterday, it will clearly establish the direction as down and lower prices are likely. 

If we do come down to that neckline, it will look more like an early Head and Shoulders formation. The likely next move after that, is a bounce up about half way and then a failure below the establish pivot point.

Trading is about observing conditions. If this, then that. I have said this several times and it will consistently play itself out in the daily price action on a regular basis.

There are those who try and predict moves and I do it on occasion. It is really best to keep opinions close to the vest and then trade-off of what is happening. I get my best results when doing this.

Sometimes I like to be a hero and go against the grain, like yesterday, just a little. I knew it was not probable but I thought, I should leave the possibilities open. 

With the open, breaking support, and a consolidation taking place at lower levels, it does not take a genius to see that we are consolidating for lower prices. Some I am sure will not be able to see it, for all the reasons I mentioned yesterday.

Keep your mind open and read the current  price action. After todays open, it was saying lower, can you see it. Get in a practice of looking at different time frames.  Try and learn to think on your own by learning how to read price movement.

I will and can tell you right here and now, that “PIVOT POINTS”  are the key to help you determine the direction of future prices. I don’t often say much about how exactly to read price action, but if you are reading this and if I was you, I would commit that first line in this paragraph to memory and investigate further.

If prices move higher, it is obvious that they have to push ahead of previous highs. What do you think is happening when that happens. Small resistance points are getting over-run and new highs are being discovered. The same is true for the downside.

There is a formation that happens on rare occasion and it is called “search and destroy” or at least that is what I call it. It pushes higher to take out a high and it immediately goes down to take out the pivot low. After that, it pushed straight up to take out the pivot high again. Each break over the highs and lows are causing the stops to be hit and additional movement in that direction.

This formation is rare and it does not happen very often. That being said, the norm is, pivot highs being taken out followed by further increases in price. The same is true on the down side. Pivot lows being taken out, followed by further downside price action.

That is the very basic form of how prices move higher and lower. You would think more people would try and understand this and how to use it to their advantage while day trading, or any other kind of trading as far as that goes.

OK, that is it for now, I may continue with this tomorrow, we will see. I never know what I am going to say each day, it just comes out. Well, this was a really important point for those who are astute in understanding what I am saying.

This is the hidden gem, in understanding price action. Very basic, but no one is born knowing this and even thinking about it. If I were to show you, which I won’t right now, the lights would go on. They would be lit up like a Christmas Tree. That was my response when I understood it, many years ago.

Below, I have a couple of video’s from today, one of them I think the second one, has a current view of the daily Dow and showing where we were and where we are likely to go.

 

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Stock Market Building Up Pressure, tomorrow could be the day

Thursday, November 19th, 2009

Today is Wednesday November 18th and tomorrow could be the day.  

I am sure as I said yesterday that I know a lot of traders are just a bit surprised that we have not dropped big as of yet. I think they still think it is coming, but it won’t come until the majority stop expecting it. That is just how it works. If the majority were always right, no one would make any money.

We are playing off many emotions at this point of the rally, those who are just sure we are going to drop like any moment and are building positions to take advantage of that drop. They have been loading the boat, so to speak during the last few days.

What is going to happen, when the boat leaves the dock and decides to go to Alaska and they have only packed cloths for Cancun. The itinerary changed and they did not get “The Memo”. Can you say, short covering rally. I can it say just fine.

All of this talk, is  just to get your attention, to pay attention to the price action and don’t get sucked in too much by your emotions.

Trading is an emotional endeavor and will always be that way, that is what gets people to place orders, their conviction about direction in the stocks they follow. The important part is to not become attached to any one position or belief that is so strong that you can not see the changes that are taking place.

If this market takes off , I believe it will be a rally of several hundred points on the Dow. That is not a popular opinion right now. I may be all by myself with that call and that is OK.

I will tell you, if certain events happen and things change, I will change along with them. That is how it is during the day while day trading which is what I do.

If you get to convinced that a move is going to happen or about to happen, you can become blind. I am not kidding. I can only imagine that it must happen to a lot of people.

This is one of the biggest things that turned my trading around and was one of the biggest problems I had to overcome. CONVICTIONS. If they are to strong, and you dont’ get it right, you are in trouble. You end up building your game plan around what you have already decided and see everything through the conclusions that you have already made. This is big one.

I hope everyone reading this can let that sink in a bit, I am sure I was not the only one who used to do this. I know it happens everyday by more people than would care to admit to it.

So, in short, look both ways and try and come to an understanding of how price movements work. Indicators are nice, but they have limitations. You want to be able to understand why price is moving and how it relates to momentum and  the release of pressure points.

Momentum takes place in every time frame and is relative to the time and space that it takes up. When you ride through highs and lows to an overall price objective, it can be said that you are in a trending market. You have to be willing to give up profit, for the great gain down the line, which means you need to stay in the market longer.

Having an idea of how far the market will carry you towards your price objective is important, but how do you do that. Well, as I said, I believe every trader needs to understand how, why and when all of this takes place. A better way to describe it is coming to understand that the stock market is 3 DIMENSIONAL . You may say, “what is he talking about”?

The three components that make up the market are as follows;  * TIME * PRICE  * SPACE . It is the spacial relationship of these three components that drives the stock market. The combination of these three elements are what moves markets. When one of these three and or a combinations of them in varying degree’s gets out of whack, they re-align themselves and adjust.

If a market stalls and goes sideways for several days, it may be absorbing previous gains and needs to rest, so time is now a factor. As time passes, buy orders are being placed on both sides of the market and will add to or take away from the current price in a very big way. Prices have as well stalled along with time and will only add to the move once it again resumes. Space is the element of the current price range that takes up the previous two, time and price.

I will tell you know, this is not an easy concept to explain and if I choose to expand on its many functions and how it relates to price action, I promise I will do it slowly. There really is something to this. Understanding how and why prices move and how it can be used to identify key target area’s can only add to your overall bottom line.

Maybe tomorrow, I will go back to a very simple way of explaining this concept first and if I continue with expressing myself on the subject I will go a little deeper. Overall this is not rocket science or has nothing to do with things like Eliott Wave or what have you.

I have only heard one person in my 25 years of following the market talk about these spatial  relationships. I have looked on the internet and I can not find anything on the subject. I have seen the fullness of this expressed in the markets on a daily basis. Writing about it here, affords me the opportunity to clarify my idea’s and hopefully help a few people on the way.

That is it, I hit my limit, 1000 words. STOP, DO NOT PASS GO…..

 

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Stock Market Still Showing Signs of Life

Tuesday, November 17th, 2009

Today is Tuesday, November 17th and the rally stays alive on Wall Street.

The Dow was up 30 points and closed at the high-end of its range for the day, a good sign for tomorrow. The close of each day is really very important when you look at the big picture and are reading price action. A couple of weeks ago, I showed a video of daily data and how the close on some of those days gave a clue about a pending market reversal.

Well, it is nice to see it close at the high-end of the range. It is no guarantee but it sends a message to the “Steet” that the buyers at the end of today, have confidence that tomorrows open will be higher and they want to position themselves to take advantage of what they think is the next market move.

The Nasdaq was up about 6 points and the S&P 1 or 2 points. So the rally is across the board. I did just check the adv/dec line for today, and it looks like the declines did outpace the advances by around 300 issues. That is not usually a good sign, but don’t draw your complete conclusion on that. Those that are looking for an excuse to sell short this rally will definitely be looking at that and saying, “see, see that……” and so on. The price tells all.

If the news is good the rest of the week, the buyers may not be able to help themselves and may start shopping, lets hope so. Keeping the rally alive, is good for  everyone, God knows our country has problems and traders know too. If we can get over the hump as I have talked about the last couple of days, it could set the stage for an extension to the good times.

November is typically a very good month for the market, December too. The traders and investors need a break this year, I can only imagine if we don’t crack and break the current momentum, all of the heated debates about the economy and politic’s over the Thanksgiving Holiday. WoW. It will sure give everyone something to talk about.

I am going to try and start posting earlier than I have. I went back and read yesterdays posting and I saw 4 type o’s. Not cool. I have been posting late and I am sure I was pretty tired, so, lets see if I can follow through?

Yesterday, I briefly talked about always having your stop in at the time of order entry. Let me go over that a little more.

When you place an order, there is no way any trader is going to expect his account to survive if he does not know at what point he is going to get out. That is plan and simple. If there are readers of my blog, that do that, let me kindly and gently encourage you to always place a stop at the very millisecond your order goes off. Most trading software will have a feature like that. If you place and order and then go and click on your stop price, maybe as you have always done, eventually, and it may not come for a while still, but anyone who has been trading for any length of time, will tell you, that you are going to get burned.

It only takes one time, to mess you up. You may have forgotten or not even aware of a Federal Reserve interest rate cut or increase and just at the moment you place your order, long or short, the market moves away from you so fast and far, you freeze as you see that you are down 10 points in seconds. The next few moments are critical, you need only do one thing, hit the close button and go flat immediately. If you rationalize the move and say, it will come back, maybe it will and maybe it won’t. How are you going to feel when you see yourself down 20 points and you only had intention of risking 6 ticks on the trade.

It could happen and I only tell you because I was one of those guys that it did happen to. This happened a long time ago but I never forgot it. I was shocked to see my position move like it had wings, in a blink of an eye, I was down 10 points. I rationalized it and waited and was down another 5 points, waited and now hoped and down another 3 points, inside of just minutes the position was down 20 points and I could not take it any more and closed it out.

I learned a valuable lesson that day, NEVER TRADE WITHOUT A STOP IN PLACE, IMMEDIATELY ON ORDER ENTRY.

The day that this happened, it never came back and in fact dropped another 15 points to close at the low for the day. When you find yourself wishing, hoping, praying, you know you are in trouble and doing those things are not going to help you. So, for those who say, they don’t like putting a stop on right away, they don’t want to get stopped out by giving away their position.

That is not a good reason, in fact I don’t know of any good reason for not having a stop order in place at the time of order entry. Getting wiped out, is what the novice does, not having a stop in place is what the gun slinger type trader does, neither will be expected to last very long. In fact  “Wall Street” feeds on these people like those little small orange fish you see at the pet stores, in fact they call them “Feeders”.  Don’t be a feeder, become a feedee….

I just made up a new word, I don’t think it will be in Websters anytime soon, but do you see my point. You need to do the right things as a matter of habit and not as a feeling.  So that’s it for now.

Last thing:  My website updates should be done this week. Those new people who may be following me, look for the updated pricing. It is much more affordable for those wanting to get started.

Good Trading to All !

http://www.screencast.com/t/ZTY1NTY4N2Qt     Today’s equity curve

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Wall Street Rallies Catching Many by Surprise

Tuesday, November 17th, 2009

Today is Monday, November 16th and Wall Street rallies, catching many by surprise.

One day, a trend does not make, but it was nice to see the market keep its footing and start tossing out the bears. If we get another day like today, it could set off a  feeding frenzy . The Bulls will be goring their way through those Bears like nobody’s business, leaving a mess behind them.  

It has not really happened yet, but I only point out the possibilities. Last week, I just could sence it. Everyone thought we were going down. In fact, I am sure that they were surprised that we even made it back up to the higher levels by the end of the week.

Today’s close was very important and I was watching it. If we had a steep sell off at the close, that was not going to be good. It started to look like it was going to happen. Just after I picked up about 4 points for the session, the market stalled and went sideways. I finished trading, but I totally saw the break short late in the day. It started to look like it had legs, but it stopped right where it had to, to  mount a counter trend rally back up. It made half of the sell off back and we ran out of time. This is 50% back up off the little sell off, typically a continuation point for a sell off to continue.

The Dow was up 136 and the S&P +15 points at 1109. The S&P is about 10 points off from hitting its 50% retracement (1120) level from it’s all time high and the Dow has already done it.

Let me draw a line in the sand. This will help define things a little better. If the Dow and S&P break down below last Thursdays low, we are going to get some selling behind it. This is what the Bears want and the orders will really kick it to dump shares that were accumulated over the last months.

On the other hand, if we can contain the sell off and mount a rally similar to today, it is going to bring out all the Bears from their hiding place and they are going to have to cover their short positions only adding to the rally that already is under way. That is why I say, it could be a frenzy. If I had to pick one, I would have to pick the latter, I think a lot of people made up there minds about this market going down a long time ago. I was one of them, but I repented, from my ways and now see the light. The light I am talking about is that I need to remain open-minded about direction and not make my mind up before price action tells me too.  Although, this is what I said months ago, “I would have to see what is going on when we get there and combine that with market sentiment”.

One common mistake traders make all the time is that they try and pick tops and bottoms. It might be fun to try but if you are doing it with trading and investing capital, it usually does not work out for the majority.

It is best to let price action tell you what is happen and let the hero’s pick the tops and bottoms. We will not have far to trade-off the highs to see if in fact they are able to take it down. The last pivot low for the Dow is 10,171 and the S&P is 1085. With this market being only 25 points off that critical level, it pays to wait. Just the week before it was at 1029.

So, the trend it still up and I would say, we are smack dab up against resistance in all the index’s. If it closes higher from here, it is going to spark a big rally coming out of nowhere. At the same time we have to stay above the last pivot low as  just mentioned to keep the rally alive. A break of that level, could end it.

That is it. Now we wait. There is a lot of news coming out this week. This is a link that shows what is coming out and at what time. http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm  All traders should know these data releases. The news is not as important as the time of its release is, (my opinion). Don’t be caught off guard. Most of the news looks like it is coming out before the open, but Friday has a 7 am new release this week.

I believe everyone should always have a stop in place as they put on a position and that means the same second. If you don’t, it will only be a matter of time, that some event or unusual news release catches you or just  market action, takes you and your account down, sending you to the corner.

I will talk about this and other things next go around, until then,

Good Trading!

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Big News Week Ahead, Volitility to Increase!

Monday, November 16th, 2009

Today is Sunday, November 15th and this is a post is for Fridays session.

I will try and get the Friday edition out on Friday, next week so we have current market action to go over on the weekend.

This week is going to bring a lot of movement, mark my words. We are at a critical juncture and the market is going to have to make some decisions here pretty soon. Those decisions will have to conclude, which way we go from here. Everyone is expecting a big pull back and it may happen. I have to remain open to that, but it could go the other way and I am really watching that. It will not take me by surprise, that is for sure.

While it is deciding, we now have pivot lows above us and ones below us. That will set the stage for the next major action. The markets move by pushing through highs and or taking out lows. At every turn, there are support and resistance levels that go with it. Once a new level is penetrated, the likelihood of a new high increases. That is how it was all the way up to the level we are currently at.

I won’t go into it much here right now, but I will come back to the subject some time this coming week.

Fridays trading was OK, I did take a few trades I did not like, but that is the way it goes. I need to follow my method just like anyone else. If I do, I will have an easy day, if I don’t, it could be more of a struggle than I want. 

 I am running short on time and will cut it short for today. Below, is a video I did on Friday and will post it here showing a few comments towards the end.

Here is a good example of what I have said in the past a few times. Trading is about, examining conditional situations, like, “If this then that”.

Friday I said, if the break on the 5 minute chart gets broken, in either direction, that was the way the market would trade into for at least a tradable move.

That is exactly what happened. The support was broken and something happened, that is where a trader needs to react and place a low risk directional order based off of what just happened. The price action that followed, was an 8 point move in the S&P of which a trader could have captured at least 5 points of that move or maybe a little more.

So, you can see, I made the call before it happened towards the end of the video, something took place and subsequently a move in the direction of the break happened as well. Knowing how price action works in its most basic form, is essential and is the starting place for every trader in my opinion. Indicators can be helpful but it is better to be able to get your own fish than wait for someone to bring you one. If you do that, you may starve in the waiting process. What does the saying say, teach a man to fish and ….. , well, you know what I mean.

See you all on Monday,

Good Trading,

Vince

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Price Action Rules When Trading the Markets

Friday, November 13th, 2009

Hello, Vince here from Sniper-Day-Trading and today is Thursday November 12th and we got a little pull back today in the markets.

To be expected, we were right up against resistance and a pull back is quite normal. Next week we will see a lot of economic news coming out. If there are any surprises, it could exacerbate the moves in the index’s one way or another.

Let me help you keep your eyes open to both sides of this market. I don’t have television (by choice) and I don’t watch CNBC, but I could only imagine what the street is saying about this run up. Sell- Sell-Short- Short. They may be right.

Seven months ago, I had said that the natural move of this market should take us to Dow 10,300, again, that was 7 months ago. I had been saying that off and on all along the way. During that time I was actually pretty bearish after that objective would have been reached and commented on it good and plenty. Well, we reached the objective and I have to remain open-minded and not have my mind made up about where we go from here.

That is what a lot of traders do in short-term situations. They make a decision as to where prices are going to go, but do so with a sort of conviction that damages their ability to stay open-minded to the current price action. If you do that, let me tell you exactly what is going to happen, without a doubt. You will become blind. You may still see with your eyes, but you will not allow yourself to see the changing price action as it takes place right before you.

You may think I am exaggerating to the idea that you will become blind, but I am not kidding. If you tell yourself, “This Market is Going Down”, and for a brief moment is does. All of the sudden, things start to change and buyers come in for what ever reason and pull prices up. You rationalize with yourself saying, “It is only a temporary spike” it will come back down. Seeing that you have already gotten stopped out, you are only looking for a place to get back in short, so you enter. The move shoots up against you and again, Stopped Out.  You are still so sure that this was only temporary and you try and short again at what you think is a safe spot, it looks like it is going to go and suddenly, turns quickly and Stopped Out, again.

Is this scenario familiar to you, well, it has happen to all of us one time or another, so don’t feel to bad, but, you need to understand why that happened to you and how are you not going to let it happen again, or at least not as easily.

Understanding price action is the first key. I won’t go into it all here, but I will tell you that the current price at any given moment reflects everything that is happening within a company when compared to earnings, revenue, etc. It is constantly being adjusted to reflect the value at that specific moment. It is all built in. So what come first, the cart or the horse, the chicken or the egg.

Some may disagree, and that is ok. This is America, but everyone’s decisions are based on hundreds of variables and there is no way for anyone person to know what all of those are. So it makes more sence to look at everyone’s decisions collectively and draw your own conclusions to future direction. That is the way I see it and it works for me.

Buying and selling are based on emotions. How you feel about all of those variables, which cause you to draw a certain perspective and outlook on future direction. You may be wrong, but at the time you do not think you are. It compels you to make a buying decision and away you go. Other traders and investor are drawing different conclusions on the same subject matter and now you have a conflict.

The struggle begins, like a tug of war. Prices move higher as the optimistic view wins out for that moment, then met with selling as the current price no longer represents value. All along the way highs and lows are established, creating support and resistance. We see it everyday the markets are open. A trader NEEDS TO KNOW HOW TO READ SUPPORT AND RESISTANCE LEVELS while he is trying to pull points out of the market. If you only rely on indicators you will always be at a disadvantage to those traders who do know. That is the first and most important things to know and remember if you are going to be consistently successful at a trading career.

I will continue with the subject in the coming days as I become inspired to share.

Before I run out of time and room, I did want to mention that Bullish Sentiment has decreased by another 4% this week, incredible and bearish sentiment went up about the same %.

More traders and investors become increasingly bullish at the top of a market. That is not what I am seeing right now. It is currently under the middle range of the extreme. That tells me, there is FUEL left in the engine to push this market higher. Like I said yesterday, if in fact that happens it would take everyone by surprise. We may see a little more pull back to get the short sellers to commit, but I do say, keep your eyes open, it could come real fast and big to the upside. Next week could tell us all we need to know.

That is how markets work, dont be convinced about anything, learn to read price action and don’t depend on others. It takes time, but the sooner you start, the better off you will become.

I have a video of todays turning points with no explanation, why or how, but I have the screen marked. Later in the video, I have my live trades I took posted.

Good Trading

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Dow Jones Hits 50% Retracement From All Time Highs Today !

Thursday, November 12th, 2009

Today is Wednesday and the Dow finally did it, 10,341 and a full 50% retracement from the all time high’s.

The market quickly shot up on the open and pushed higher, saw a pullback and made another run for new highs. The price action was good today, with trades on both sides of the fence. The bears did not waste any time at having a hand in bringing this market back down. I am sure there has been a lot of people waiting on the sidelines for todays level to be hit.

That being said, it is going to be very interesting to see how the market handles this move up. I have a chart posted below of the Dow and it clearly shows resistance at todays high. It has hit that same trajectory resistance many times already and each time has backed off. That may or may not be the case this time. I alway say, trading is moving off of conditional situations. If this, then that. Well, I would say the “This” is, a breakout above the yellow resistance line and the that is, a follow through with the rest of the market coming up the rear.

Now since that has not happen yet, it sure would be different. Most people are expecting a pull back, I say, what if we don’t get one but get a break to the upside. Now would not that surprise most all of the analysts. I think, Yes.

I really don’t know myself this time, but I will not be as surprised as most, to see the Dow up 200 points plus some day next week, or this for that matter. I always say, you have to look both ways. If you just assume that it is going to back off, just like it has in the past, you could get burned. The odds say it does, but, the trend is up and the pessimism is up as well, which is really fuel for the bullish fire.

As I was saying above, if you don’t look both ways, you could get run over. Thats what my mom always told me, I think it is good advise.

I took a few trades after the New York lunch time and did good. Trading small but trading and getting my daily goal +++.  I am doing a lot of work on my website and it is taking a bit of time, I will soon be finished and a little more focused, but I am enjoying the process.

I will cut it short today, but have something interesting to write about tomorrow, I am sure. Until then,

Good trading !

http://www.screencast.com/t/YTY0NWU0NzI 

 

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