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“Day Trading Support & Resistance”

Thursday, July 29th, 2010

Today is Thursday, July 29th and the market advanced and then retreated after the open to close down 5.25 points for the session.

Yesterday, I mentioned that the early morning move was likely a move to 1106 and at which time we would, ” pull back for a moment” and that is first what happened. The market pulled back 3 S&P points and then broke out over the 1106 area making a run for the 1110/ 1111 target area mentioned in yesterdays blog post. Unfortunately all of that happened in the pre-market before the open. We did go a couple of points higher than that, around 1113 before the pullback began. With such a large opening gap, it looked apparent that we were going to fill the gap and it did.

The market continued with the selling into the late morning session where it gained its footing at much lower levels and staged a good rally back up. Selling came in with a slight pull back and that is where we are now, 1096.75 on the S&P 500 emini futures.

I think we still have more of a pull back to go in early trading for tomorrow. I see some short term resistance at 1100 after which we could pull back with a break of 1095 triggering a continuation of the selling of which could take us to 1080 rather quickly in tomorrow session. Support should come in around that level if in fact the sell off takes hold.

On the other hand, if 1103 were to break to the upside, that will be the first sign that the selling has stopped and further sideways to up action could be expected. If 1110 gets taken out, that should spark a very good rally with legs behind it to continue with the overall advance.

By tomorrow mornings pre-market open, I could get a better idea of which way this is going to go. If I had to pick one now, I would say to the downside, but will be met with a lot of buying off that lower level back up rather quickly to continue the advance. At this point its a little hard to say, but I do think the advance will continue into next week after this correction.

Today’s trading went pretty quickly and I did OK picking up my daily goal in short order, about 35 minutes of trading. In-fact it came by way of a few Short trades in the markets second hour. I have my screen shot below and a few notes on it showing the good and the bad parts. I don’t show all of my screen but as I note on the chart, some is better than non. This consistent view of the market on a regular basis, hopefully can give you an idea of the timing that is available to those who see this as a value to there own trading. I don’t say what the tools are and or how I construct it, but the consistent view of price action moving off of the turning points as identified on the screen, as mentioned, may be a help to some traders who think that they could benefit from this.

There is a whole lot more to being successful at day trading, but showing what I do on a regular basis, can help you decide over time if this is something you could see yourself using. I have other time frame charts that work together with this as well as learning how to read the price moves themselves. Trading indicators are a reflection of the price itself as I have said many times, if you can find low risk area’s of interest at short term market turning points and trade with the natural rhythm and flow of the markets, you could do well. The only thing that can likely stop you, is “Yourself”.

We can be our worst enemy, when it comes to trading. Having unrealistic expectations of what we think the market can and should do for us, can be a problem. The first thing any trader needs to do is understand price structure. The market gets taken up, to only get taken down. It does this at key spots for many different reasons. An understanding of support and resistance is also a must. This is the way prices move. When there is a barrier of resistance overhead, prices can not advance. That resistance becomes re-enforced as it attempts to overcome the invisible barrier. As time passes, more resistance and market pressure has built up, and the barrier has now been over-run. A flood of orders hit the market tripping buy orders for different reasons. Some are buying to take advantage of the new move, while others are buying as a means of protection to limit there losses. The same action but for different reasons. I don’t care what the reasons are, but my job is to assess the pressure and see if it is adequate enough for a trade. The more pressure the greater the move.

Time comes into the picture as I mentioned yesterday, by allowing the market pressure to build. If the market has spent all of its energy on a one directional move, it will often need time, to bring in more pressure, trade positions, above and below the current market. Those orders are placed in time and space, which establishes the next level of advancement, long or short. Without the element of time, the process and positions are weak.

This is established on every time frame and with a level of unseen co-operation at every level. Time charts at the yearly, monthly, weekly, daily, hourly, minute, and down into tick and volume charts of every size. There is something for everyone at all levels. Your strategy and trading personality will determine what is best for you. Be sure you put the right peg in the right hole, which means, trade according to your strengths and dominant trading personality. Don’t hold positions overnight if you are a scalp trader and don’t scalp trade if you hold for longer swing trades.

More on the topic tomorrow from where I left off today…   Until then, Good Trading.

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The Stock Market and Time Element

Wednesday, July 28th, 2010

Today is Wednesday, July 28th and the market is pulling back a little after yesterday’s gap opening higher.

We hit some resistance yesterday, as the market pushed up yet another day in face of bad news, but today, it looked clear that a pull back was in order. After early weakness, the market did present itself for new short opportunities, of which I did not have the time to trade. I got stuck in the dreaded dead zone, mid day. The market performs so much better in the AM and afternoon trading sessions, but I am partial to the AM.  I don’t often trade it, as I wish sometimes I lived on the East Coast. That would make it a lot easier. I should not complain, so I will just clam up about it. All I can say is, I am working on it.

The after market trading in the S&P, is showing some strength, with the current price at 1104. I see short-term resistance coming in at 1105.50 and will likely trade back down, for at least a moment. If  this market can get over the 1106 futures number, we could see 1110 pretty quickly. This is just the next couple of likely moves in the morning session. If 1106 is broken, we should trade up to 1110 or so.

The market is going to need an element of time. Time is very important in the trading equation. The stock market moves through time and space. It has a natural rhythm to it and natural trading target area’s that it will gravitate to. The element of time is something that is often forgotten. Without time, the market would not move. I know that sounds like an obvious statement, but traders often want what they want and they want it now.

The market will not give you what you want on cue. You have to be in tune with it and trade on its time. After a big market move, many times you will see the market go into a slow consolidation, of short swings up and down. With no real direction, it is in effect moving sideways trying to digest the big move it just made.

When you have a large meal at home or at a restaurant, you need to pause, take a break and then maybe have desert. The desert can be the last wave up in an ongoing move, but after that, it is time to relax and digest the meal. Every chart has a left and right side of the chart. The left side is called the acceleration phase, the right side is called the deceleration phase. There is a top in the middle that separates the two phases and that is an expression of time as the market goes back and forth, up and down, as the struggle for control takes place. This happens everyday, a balance of power is waged. We should not consider ourselves smarter than the market and we should not argue about its directions because the market is always right. We are the ones who at times don’t get it right. So what are we going to do about, ( I ), get on the right side of the market and go with it and not against it. That too, seems like an easy answer to a not so easy task, but every trader needs to find the rhythm of the market and trade with it.

I put up a couple of indicators on my screen shots to show my readers how the price drives the market to these natural turning points that we see everyday. Day trading or any kind of trading, is about getting into sync with the natural rhythm of the market in that specified time frame.  This is expressed in many time frames across the board. The market is amazing and I don’t know of anything else like it. I have talked before on how the stock market is “Fractal” in nature. That means that it expresses itself in exactly the same way, but across a multitude of time frames. That is why I have put up different time frame charts a few weeks ago of the Dow Jones and the S&P in 30 minute bar charts.(U-Tube Video Gallery)  This is just an expression of what is happening in that related time field as the synergistic effect is still always present. You will see the same expressions of timing and natural rhythm expressed across a multitude of time frames and that is just amazing to me. In the beginners section of my website, I have a few pictures of this symmetry as examples, that are found in nature. If you care to take a peek, just go to the heading “Beginners” and scroll down to see a few pictures of this. I am easily impressed, and I think this is just amazing, but that is me.

In my first trade today, I took profits to early and on my second trade or so, I should have closed out my second half before I gave it back for -1 tick. I did OK and came out on top, but came up short of my daily goal and was getting tired so I stopped. I new the market was going to get going in the afternoon session, but I burnt myself out already looking for movement where there was little.

Yesterday, I had only two trades, and hit it nicely, roughtly 2,3,4 points on one trade and just a small scalp for about a point on the next.   Both days of trading are below.

That’s it for now, we will see if the market marks time by going sideways or pulls back, both will accomplish the pause we need for further advances.

Good Trading,

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Today’s Target Hit in S&P 1110 Market Call

Monday, July 26th, 2010

Today is Monday, July 26th and we hit the 1110 number as called in Friday blog post with precision.

Friday I called out that we would see 1110 on the open and was going to be a target area for me unload the one contract I was carrying over from the weekend. (I see I had a typo and put in 1010 and not 1110). All was well, until I moved my stop up to break even instead of leaving it where it was at -1 point. In last nights night trading the S&P pushed up and pulled back just enough to hit my stop exactly and I was out. That is the way it goes.

I started to follow the market in today’s session late, just as things started to slow down. I had a few glitches in updating to the new version in TradeStation and caused me to stay up way to late.  That caused me more pain, because the market had made some nice moves on the open as it was inching its way up to the 1110 area. I put on a few scalp trades as that was all the market was allowing as it approached the New York lunch hours. It was slow going for a long time, but what can we expect being summer and lunch time blues.

Things started to pick up about 11 am or 2 pm Eastern and we saw a nice move down to an area I called out in today’s U-Tube video, 1104/1105.  We traded right down to that and found support. I did not trade the first move back up, but waited to see if the move was real and caught the second push back up for a few points. I was still just a touch shy of my daily goal after my last trade in the video and decided to get the rest of what I needed. The market obliged and gave me the points. That brings us to the close in few minutes, as I see there was enough behind the last move to push it a touch over the 1110. With 5 minutes we look like we are going to close near or at the highs.

I do see a long sustained move, like I had been talking about in previous postings, but we may see some pull backs here and there. The surprise is going to be to the upside as the market has done a good job climbing the wall of worry. Last week there was all kinds of bad news, one thing after another and I had even posted an article called “Wall Street to climb the wall of worry”. So far, that is playing itself out. There will be obstacles in the days and weeks ahead, but we should continue.

As I mentioned in Fridays post, I am not going to be overly concerned with the large trend of the market from here. I will be focusing on the smaller short term swings long and short as they come up. I don’t want to be distracted from calling weekly cycles and the likes. I did my part at this point and saw the turn, when no one else was looking for it and it showed up as on cue.

The market showed me something two weeks ago, said we would likely see a pull back for a few days and that was a gift to those who could prepare for the bigger move that was coming. It showed up, as we have another 100 point day on the Dow and solid gains too today’s target on the S&P futures.

The market is closed and we have 8 minutes left before the after market futures closes for its 15 minute break, before reopening. We are hovering at 1110 and appears likely we will close around that number. I find it very interesting that the 1110 number I said was going to be resistance for today has pretty much proved itself to be a significant number. Tomorrow is a new day.

I have a video posted today in the U-Tube Video Gallery, top right corner of my site, if anyone cares to watch. It is not very exiting as the market is not moving very much but non the less, it shows what I was doing and thinking a bit. Screen shot below of today’s trades. Until next time, Good Trading

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Looking for S&P 1010 on Monday’s Open

Saturday, July 24th, 2010

This post is for Fridays action, July 23rd where we saw another 100 point + day on the Dow and an equivalent move in the S&P futures.

The market did put in another triple digit day on the Industrials as the market kicked in a confirmed move over the 1090 S&P futures area I had mentioned last week. Currently we are at 1101 and closed at the very high of the day. That is exactly what I was expecting as I will show you in the chart below. Before I get into that, the sentiment numbers did come out this week and even though the market had come off its highs, the numbers did back up a few % to currently 35%. That is a still a very good number and it will likely only come off back to the middle of the market sentiment range, by a rally. A number of 35% is actually a rally signal number. Last week we were at 32% in the face of over a 5% rally in the market. The number actually dropped, which is a  little usual.

The numbers I am talking about is the market newsletter writers that put out weekly information on the direction of the stock market and individual issues. These guys are usually trend followers and almost always get it wrong when a market extreme is reached. We are coming off just such an extreme, whereby you usually see a reaction of that extreme in the opposite direction. I have literally seen about 100 of these signals generated and they are very consistent and reliable. You will see on average 3 to 5 signals over the course of a year and when you multiple that by over 25 years, you get to around 100. I can’t imagine, this one is different.

This is for the longer term picture and I will not be overly concerned by this signal going forward. I am looking right now only for a short term target that I am almost certain will be met. More information below will clear that up.

So, I am expecting a short term target of 1010 on the open or even in the night trading starting Sunday after 3:30 West Coast. The target of 1010 is a short term number I see the market trading up to, on its way to higher prices. We can certainly back off once we get to the next short term target I just mentioned, but I feel it will be short lived.

So, overall, I think the market will trade higher, but may have some pull backs along the way. I posted a new video on U-Tube and will put it in this post at the bottom. It is a 30 minute bar chart of the S&P Emini futures with the night trading taken out of it, so you see the gaps from the previous days if there are any. This view is in a trending model, T-2, and will show you all the turning points since April, about 4 months.

We just went positive two days ago with a 200 point advance in the Dow, followed by a 100+ points behind it. There is about 70-80 points on the Dow and 9 point on the S&P before my short term target is reached as already mentioned.

On Friday, I was able to trade while I was resting from the previous days outing up the Columbia River. What a ride. We had a 40 foot Jet Boat all to ourselves (wife and son), with a captain and deck hand. On the way back down the river, he must have been going at least 50-55 mph, which is fast for such a large boat. I know I am off topic, but we went inside of a giant box with a large ship next to us, and it raised the water level 75 – 100  feet, so we could continue up the river. Wow, that was strange and very different. Never new they had that kind of thing. OK, back to the market.

In Fridays trading I was able to hold through a 10 point advance in the afternoon session and closed out 5 contracts right at the top and doing something I don’t normally do, am holding one contract over to get to the 1010 target area I am looking for, either in Sundays pre-market or early on Monday mornings open.

Below is a screen shot just before the close on the S&P emini’s showing my 1 contract position hold over, of which was from the add on contract I intended to hold over, with 4 points of active profit still in it. Below that is the U-Tube video showing the turning points on a 30 minute chart or the S&P emini’s, no after hours trading.

If anyone has questions, or wants more information on what I do, or wants to ask advise on what you are currently doing, I will be more than happy to give you my opinion to better help you reach your goals. My desire is help traders, period. If you need help, ask and we will go from there.

Best Regards to all my readers and followers,

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Market to Climb the Wall of Worry

Thursday, July 22nd, 2010

This post is for Thursdays market and we saw a nice reversal from yesterdays move down, to better get ourselves in a position to move out and climb the wall of worry.

Yesterday I did say in a video I posted that we would see first 1080 and then 1085 just after the aftermarket trading opens up and that is exactly what we saw a high of the day when the market was 18 points lower or so with both of those targets hit to the tick. The natural flow of the market was for it to pull back yet again, to “create new pressure for the advance”. Well, that took care of the pull back and the new advance.

It would appear that we are ready for the market to continue on with this new rally that has just gotten under way now. A nice big trading day today with the Dow up 200 + and the S&P +23 and now more  expected to come.

I will have to cut my post off short today. I traveled to Portland Yesterday morning to visit my son and my wife and I are having a great time. Took a jet boat up the Columbia River for a full day excursion and it was great.

I will have limited postings for tomorrow, but will try and get my thoughts in for the weekend for sure with charts possibly showing how high we go from here. So look back over the weekend and I will try and have that updated.

Just before I left this morning for our outing, I did have enough time to trade, about 50 minutes and was able to take advantage of part of the move after the open. I came in following things just before 7 am and picked up around 8 S&P points, but did scale out along the way, still very nice and painless. Its nice to walk away knowing that you traded well.

Until my next posting, Good Trading to all.

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Stock Market Co-Operating with Bull Advance Call

Tuesday, July 20th, 2010

Today is Tuesday, July 20th and I got everything I ask for from the markets today.

Well, what a day. In the night trading, the market went on down to the 1050 mark and satisfied that minimum target area I called last week. I saw something in the charts yesterday that told me we were about to move out, but before we did, I nice target hit in the 1050 first. The market moved up nicely after the open and continued to push higher through out the session.

I made a U-Tube video of some of the turning points but elected to show it in a clear screen. You can see the trades I took through out the day and some of them were for good gainers to the long side.  I did take a few more trades after the video and they worked out nicely adding to previous gains. A very nice day over all, with nearly no losses. This is another one of those big $ days I talk about that we all need to hit on occasion. It does not have to be every day, because the market is not going to co-operate with what we want all the time, but when it does, take the easy and obvious trades it offers without struggle.

I did some scalping as well, locking in partial profits along the route. During the video, I mentioned that we were going to see 1080 on the S&P either late in the session or in tomorrow session. Well, right at the end of today’s session we hit the 1080 level 3 times and looks like we are going to close right on the high of the day.

If you look at yesterday’s blog title and article, you will see, I was expecting this move. In fact as of last week, I have been saying that we will likely move down for a few days to work off the current excess with likely targets at 1050 minimum and 1040 on the lower side but had a bias to the 1050 number, because the move back up was going to be explosive. That was the call. The extra time to prepare is a gift to those who can map out a strategy on how they can take advantage of the large Bull move that is still coming. We are just getting into position for this to play itself out in a big way.

There is likely going to be some catalyst for the move and I don’t have a clue what that will be, but it could be earnings surprises, since we are in earnings season? What ever it is, it does not matter. The surprise is going to be on the upside and it is going to get the bears running for cover in a very big way. That is the call and I am sticking to it.

I did say that confirmation will come in at 1090 to 1095, so we have not seen that. I don’t play the overnight, but like to follow and call the daily moves, because I know some of my readers do. In addition, it is a good exercise for me to get an early read on where prices are likely to go to, during the course of the day. Trading in that dominant direction is best for the larger moves throughout the day as in yesterdays 8 point short gain (partial) and some of today’s extended moves, (long).

We will likely see the 1085 I mentioned in my video, either in the aftermarket trading or early in tomorrow’s session. That is not the end of the road, but the market may pause there for a moment, to build up additional pressure for the coming advance over the levels I mentioned above.

Pretty bold calls, I know, but so far so good. Lets take it one day at a time and participate if your own work confirms my idea’s.  Good Luck and Good Trading, Vince.

P.S.  I started writing this blog before the market closed and just mentioned that we would likely see the 1085 target in the after market and I just looked to see that as the market reopened at 1:30 West Coast time, the market advanced 5 S&P points to exactly 1085. WOW. It backed off once it hit that number by 3.25 points, proving to me that the number was a good valid target hit. OK, that’s All Folks !!

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Sustained Bull Move Coming Pretty Soon

Monday, July 19th, 2010

Today is Monday July 19th and we saw some pretty good moves today, on S&P but just consolidated after Fridays selloff.

The Dow Jones was up about 55 point, the NASDAQ up around 19 and the S&P futures flat. We moved sideways as the end result but had a nice sell off around 30 minutes after the open. I saw that one coming and picked up 3 points, 5.50 points and 8 points on the last part of my trade. Just the one trade for me today. I am trying to trade the early market hours and today was a good reward. I normally would have missed that move and had to come in scalping a bit here and there. The move I entered, looked like it had everything I wanted in a big move, and there you have it. I do like to scale out of trade often, but don’t do it every time. If you trade multiple contracts, scaling out, releases some of the pressure associated with having the trade on. It gives you stamina to stay with the rest of the trade, as it could jump up against you and take half of your gains back in a flash. Covering into weakness (short) is a way to lock in the profit at some of its better fills.

The downside is that you could have had more if in fact you waited, but I often would rather take a piece of move when I have the advantage, even if it keeps going. I was able to pick the bottom of the move as you can see in the screen shot. I always like it when a plan comes together. The market turned up just after my out and the last signal long was a sustained move. I likely would have skipped it, as the downtrend was looking pretty solid. More basing could have persuaded me to change my mind, but we did not get that and I was gone.

I have been looking for the market to get to 1050 and as low as 1040, but with today’s lows coming in at 1057, and seeing how things are shaping up on the charts, I would have to leave the possibility open that we have seen the low. I only say that, so as not to taken by surprise and see the market move up without me spotting the real sustained move. The confirmation will not happen until 1090 S&P, but after that price, you will start the beginning of a sustained bull move to the upside. It does not usually matter much for me to catch the bottom, as I am  just watching and identifying   the larger turning point in the market.

I see things that are saying, we could go up from here. To me, this is healthy, because, the worst thing a trader can do is have strong preconceived opinions of the market and loose your objectivity. If you only say, this market is going down, you will not see when it is going to turn and will not be able to trade it, even if everything says that this is a great long trade. Your mind is a powerful thing and is often the main reason why traders struggle much more than they have to. Making repeated mistakes and not being objective, is one of the worst things a trader can do for his confidence.

So, take each trade on its own merit. Tell your self to look at both sides of the market and don’t get fixed on any one idea or outcome. The chart will talk to you if you know the language.

If anyone has questions or needs a little advise off the record, just email me and I will do what I can for you. If you have a stock that you would like to see the turning points on, just let me know, and in what time frame you prefer to see it in, weekly, daily, hourly, 5 minutes, 1 minute, tick chart, volume chart, range chart, what ever you use. Also, if you want a free copy of my branded E-Book, “The Power of Concentration”. It is available for the asking. I won’t be pounding you in-box with this or that. Just trying to help. All I ask is that if you get the book and or anything else I might send you, to send me a reply letting me know that you received it and that’s it.

Enjoy the summer, and get some fresh air. Vince.

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Exercising Self Control while Trading

Friday, July 16th, 2010

Today is Friday, July 16th and we saw the first signs of that expected temporary pullback.

I mentioned on Tuesday that we could very well pull back for a few days before we see the expected bull surprise move to the upside. As we move down, I see us getting to 1050 minimum and possibly 1040 on the S&P. I can see possible weakness on Monday as a follow through maybe after an initial bounce up, but we came this far, so getting to 1050 minimum and maybe 1040 is very likely. As the market comes down, it is only going to add to the bearish stand that the market has set in motion. This looks like the perfect storm brewing. The extra time the market is taking, is a gift for those who want to prepare for something bigger. Well, that is how I see it all happening. If you disagree, that is OK with me.

I will point out the numbers I will be watching to confirm the move is underway. When I see a break of 1090 S&P futures, that should do it. The next important number to take out is just above that at 1096. When we see those two numbers broken to the upside, you are going to see the mother of short squeezes and general buying. I don’t know what the trigger will be but, I really believe it is going to take out that last high like no body’s business. Again, this is my own opinion on the matter and is not investment advise. I am just one guy with an opinion of where the market is going to go over the next several weeks. This is a very unpopular belief right now and I know that.

Last year I could see the market making this advance to where we are today and thought then, that this would be where the next big drop would come in at. That was then, March and April of 2009. Now that we have pushed the upper limits of this rally retracement, 1550 to 666 and back to upper middle range 1060 currently, but things have changed. If to many people take a one sided position, the market never likes to accommodate them so easily.

So, lets just let this market settle into this pullback, gain its footing, and see what it can do. The prove is always in the pudding and I like pudding.

Took today off, since yesterday was such a good day and have relatives visiting from out of town. We live in the a small mountain community in Northern California. The Marble Mountain Wilderness is basically in my back yard. Lots to do for the adventurous. Summer is going by so fast, hardly keep up with it.

We all need to rest and take breaks from trading, to help gain and keep perspective on everything. It is easy to get out of balance, especially when we are on a quest for greatness. The thing is, you can at times achieve more by stepping away from the ring, to get and keep a healthy perspective on your short term and long term goals.

I think it is healthy to be able to not trade at times and be OK with that. This business does have the ability to burn traders out, by over-trading and reaching for the upper limits of each possible day.

Self control is more than some nice word that sounds good when spoken here or there. Self control will make all the difference in the world to how long you stay alive to meet and reach your goals.

Most traders have desire and that is a good quality which can drive us to take action for the “pursuit of happiness”. Desire is good, but you will need more. For traders, self control while trading, will hold you back from jumping in to soon, before things come together. Self control while trading, will also help you from getting out to soon, when you have the perfect trending trade setup and move under way. Self control, is so important, it can not be overstated, or understated for that matter.

Over trading is another problem traders face when they loose control. Trading is something that we do and no one else can take the credit or blame for our success or defeat. The word “Self” says that this is in-fact true and the word control, would imply that you can handle it.

Is this the case for most day traders entering the market place each day?  I don’t think so.  For those who want to be apart of the very small percentage of profitable traders, you will need to have and find this control over your trading or you will just not last long in this venture.

We can exercise and find this control, by starting with our lives first. Some may not understand this, but every weakness we have as human beings will be exploited by the markets. The markets will ferrite out your personal weaknesses and try and bring you down. I am not making that up, its just the way it is. I have been at this a long time and know that to be true for me. I know I am not the only one, for sure. Human nature is such that this applies to everyone who enters the trading game.

This is where taking time off occasionally, especially in summer, to do those things that can help bring balance and perspective to the whole operation.

Being able to not trade, when you want too, is a way for me to exercise self control over my trading, especially when you did well for the week already. There are a lot of ways for me to do this as well and I am going to explore one more of them. Trading the early morning market open. That is a hard one for me. I usually stay up late and the open here come at 6:30 am. We will see how I do this coming week ?

Below, are a few stock charts showing there respective turning points in different time frames.  Anyone with question or inquiries, don’t hesitate to email me, I am here for those who need it.

Have a good weekend. Vince.

P.S. Click on the chart to open, click again to enlarge. If you click one more time, you will  get clearer view of the chart.

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Bullish Reaction Move Expected to Show Up Soon

Thursday, July 15th, 2010

Today is Thursday, July 15th and so far so good as the market is consolidating, before its take off.

In yesterdays blog posting, I wrote about a significant development, in that even though the market is up over 5 %, a sentiment shift has taken place. I have to think back a long time to try and remember when I have seen this before. I just can’t come up with a year, time of era. It may have happened, but I don’t remember it. I have been following this little unknown tool for decades, literally. Since the early 1980’s, if you can believe that, its true.

The point here is, this is significant. Usually, market newsletter writers are trend followers and seem to do as badly as the general public as a group. I am sure there are a few who do well long term, with one guy that comes to mind, “Bob Brinker”. I have heard him on the radio off and on for many years and he is pretty good as far as being on the right side of the market as far as the big picture is concerned.

Today’s market reversal, was a good sign as I mentioned yesterday that my gut says, this market does not give up much ground. Normal market behavior could easy have the market retrace a little from here and even if we do, that would create an even more powerful move once it happens. So, all is well as this develops into a very nice upcoming surprise for the bears.

Long term, somewhere down the line, I am a growling Bear, but this is not the time. I wrote about this kind of stock market psychology before. The market never does what the majority think or want it to do. You always have to look at it from that stand point. There are many other stock market psychology indicators that are of benefit, but I just don’t follow them. The put/call ratio has been one that is pretty good and the volatility index is another (actual name slips my memory), but as mentioned I don’t follow them. This one I do follow and would have to call it OL’ Faithful. I have never seen it fail, never.  The only time I have seen this tool lag, is when you get massive drops or rises that extend for long periods of time. One of these recent scenarios is the big market drop of 2008 and 2009. Take for example, just from memory, we had extended bearish reading for a long time and they were extreme. It lasted for weeks, because the market was going down. Here, it is obvious that the market was going down and no one was bullish at the market bottom, except me. There you could not say, see, we have a very bearish reading, which should produce a bullish reaction. Up to that point, the bearish extreme reading had been in effect for some time, but at its most extreme reading, did signal the eventual turn around. It was  March 9th of 2009 that I saw this most extreme reading. The least amount of bullishness in decades. I used that along with a few other things to write in my blog, that the next day we would see a market move of several hundred points. From memory, I believe I used a figure like “Tomorrow we Rally 280 points minimum on the Dow”. You can go back and check, but I said something like that. We rallied a few points shy of 400 Dow Points in one day.  One of the clues I looked at was this market extreme reading. There were a few other technical factors, but this gave me big insight.

I will give you the last two signals we received from the market and you can tell me if you would not have liked to have know that information at that time. What could you have done if you had a high 90% chance that we would make a significant lasting move over the next several weeks. You could change a few things in your life, for sure.

The dates the last two signals given were, February 9th, where we saw a  34.1 % Bullish signal trigger and May 4th, where we saw a 56% Bullish signal trigger. The extreme trigger points are 35% Bullish or less, a minority position, will bring in a lasting move in the opposite direction. With a Bullish reading of 55% or greater, you will soon see a lasting significant market move in the opposite direction. The top in January also produced a large turning point signal.

Go to a daily chart and look up those dates. Tell me, what kind of strategy could you come up with as a trader if you had this almost “crystal ball” knowledge. Any investor or trader should be able to come up with something.

I don’t use this tool in a way that I could, as I am explaining.  To capture large moves in the options market or some other vehicle, but I will one day. This is not going to stop working any time soon.

In writing about this, I am getting motivated to form a mega $ strategy around this. OK, more to come. I just lost power and now working on back up power

The days turning points below, with a stock chart showing the applicable turning points, and yes I had a good day in the markets, staying with the long term turning point for maximum gains. Good Trading,  Vince.

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Alert !!!!! Big Development for Wall Street Bulls

Wednesday, July 14th, 2010

Today is Wednesday, July 14th and we have a surprising development to announce.

In a very surprising move, the Bullish Market Sentiment as conveyed by the Investment Advisory Newsletter Industry has come out with the new numbers this morning and it is a surprise, even to me.

With the market up several days in a row, showing strength and with no retracement of this recent move as of yet, the Bullish Market Sentiment has gone into Very Bullish Territory. The numbers have dropped 5% to a very bullish 32.6%. A reading of 35% or less, is a good indication that you will very soon see these newsletter writers wrong again.

With a reading like this, there is very little bullish market sentiment on Wall Street, which in turn will foster a large rally that will catch the majority off guard, running for cover. It has been established by the masses, that this market is going to go down. People are convinced of it and that is one reason why it will not happen when they think.

I wrote about this possible scenario several times and have just been waiting to report this to my readers. You always have to use caution and be prudent, but, I am telling all those who will listen, this market is going to blast off, igniting a massive short covering rally, catching the masses by surprise.

Usually, you will see the move, very soon after a signal like this, even on the day of the released market sentiment information, but, just keep in mind, we are coming off a multi day advance which could give the market a moment of pause before the move. I can not rule out a slight correction of a few days, which will likely only get the bears to jump on the short side even more. If I had to guess, I don’t think we pull back very much. That part is hard to say, but the much bigger development, is that we are going to rally. Anyone with longer term horizons, (weeks), could really clean up here with what ever you trade. Just use good judgment and always protect yourself what ever you do.

This is my own personal opinion on how things will develop over the next several weeks and is not considered investment advise, just my opinion.

I hit my daily goal plus today in 35 minutes. I took two trades out of the Nasdaq emini as well as the chart trades below in the S&P emini. It was a bit redundant, in that I traded the same direction as the S&P in both markets catching a similar market move. I liked the look of the Nasdaq trade a little better to start, but then did see the S & P trade come together and moved on that market too. It turned out good and made up for yesterdays inaction. OK, S&P chart below.

Good Trading and always be safe.   Vince.

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