Archive for the ‘Chart Patterns’ Category

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Chart Pattern Showing Previous Resistance as Current Support

Thursday, August 26th, 2010

Today is Thursday, August 26th, 2010 and the markets pulled back into the consolidation zone as I call it, -75 on the Dow and 9.75 for the S&P futures.

Today we did pull back inside of yesterdays range and after all is said and done, the market needs to make a stand here and now. If we hold, we rally. If we break down tomorrow, there is no more grace for this market as the breaking point will have been reached.

That said, I am not without hope that this market will hold on. I could only be blowing in the wind, but until I see how we close tomorrow, I will hold any judgments off until that time. Getting the daily direction right, really does not mean anything to my day trading and I could get this wrong, but I will be sure to play the short term swings as that I am sure of what will happen. Moves in my direction, long and or short as the day unfolds its hand.

Last week I mentioned that the market momentum was down in the daily and hourly and that is still the case, but I was and still am looking for things to turn back up. Thursday and Friday was my days for a significant market rally as stated last week. We did drop down a bit more than I thought, but my idea is sill alive by a thread.

There is really no more room for error as it is clear that other factors will be at work if we drop significantly through yesterdays lows. That said, a break of today’s highs will be a signal for at minimum a short term rally of significance. The maximum move up while still remaining in the context of this downtrend is around 1100 S&P futures.

So, to remain objective, which is a little easier now, a break of yesterdays lows will trigger a lot more selling and be considered a break down in the market, while a break above today’s highs will get a short term rally started at a minimum. Strong resistance is at the 1100 S&P level and we will just have to wait and see after that.

OK, I was waiting for the update and it just came in at 9:30 p.m. West Coast time for the “investment market newsletter survey” of professional newsletter writers. It did come in as suspected and as I wrote in yesterdays blog. The numbers did drop to 33.3% which is significantly bullish and a trigger point number. The last trigger point moved the market a month ago and now this is a second attempt at this bullish scenario. The position of the market the last time was a little premature just based on a pure technical picture. The market has done the back filling that it needed to do and looks like it could be ready for that larger move now. There is still no guarantee’s but I would say it is much more likely now that this is all complete and we have favorable sentiment numbers to prove those bears wrong at least for a while, which is all that needs to be done.

September and October are traditionally the two worst months of the year for the market and we will have to deal with that, but I would just love to see the market blow through that paradigm and prove so many wrong. The pure technical play of the market will confirm all of this shortly, but getting a jump on the potential shift at least mentally can be an asset.

Last week, I showed a chart of the S&P 500 market but I did it in the cash market. I will show you one today in the futures market since that is what I trade. It does look a little differently and reading the support here is actually right on target as you will see. I know the current financial environment is terrible, but I am not looking at all the reports coming out of which their are many, but just the technical picture. In the chart below you will see support coming in at which was once resistance weeks back. Lets look and see together if prices can stay above that line I drew on the charts?

In today’s trading, I did good, but was just focused on closing out the position that I carried over from the day before of which I rarely never do but on very rare circumstances. I closed out additional contracts today at +16 points and +12 points of which I was very happy. I had a few scalp trades to add to the total of which I was very conservative. I know that a trader will have his biggest losses when he has had some of his best gains. I only know that because of personal experience and share to those, be careful not to let your guard down in protecting your capital, because this is where it could happen. With that said, don’t trade in fear, because you will never reach your potential if you are are afraid of pulling the trigger. When you do, just be sure it is a method trade, what ever that is for you, and if you error, let it be on the conservative side.

The chart below is a small tick chart that I have scrunched together again. This the only way you could see a detailed view of what happened in today’s market turns and include the trade I had from yesterday. Tomorrow, I will go back to showing the first 90 minutes and if I can make it to the action on time, I will have my trades there as well.

I am going over to the coast of Oregon tomorrow morning to a town called Brookings. It is right on the beach and will spend the rest of the weekend there with my wife. So, if I can put on a few trades before 8 am West Coast that will do it for me and my week.

Good Trading to all who follow my blog. I hope you find your way through all the confusion in financial world with much success, Vince.

P.S.  Read today’s message from the “Daily Motivator” (on the right margin of my website) as it is a true motivation to live your dreams. Just click on the title “Imagine Intensely” which will likely be the second post in line. Be sure to read the whole thing by clicking on the title. This can be yours if you decide. Often that is all it takes to get things going.

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Daily Chart of S&P 500, What Do You See !

Friday, August 6th, 2010

Today is Friday August 6th and what a ride on the street today as we saw a big market reversal take hold in the last 90 minutes of trading.

At 5:30 a.m. eastern time, the market got a reason to sell off, as the jobs data came in worst than expected. There was hope that a higher than expected number would spark a rally, but gave way in the form of a let down. The selling could have been a whole lot worst, as the market shifted down a notch to a level of major short term support.

In the context of the overall move, we have not done any technical damage to the chart, as the market bounced right off of this major support. It does yet again, provide more room for an advance if in fact one shows up. The low in today’s market will be the line in the sand for now. Monday is going to be very, very interesting. If the market has it way and takes out say, 1106, just above the low of the day, I would bet that we will see lower prices over the next few days. There is upwards to 35-40 points under the market if the low gets taken out. So, that is the best way to forecast this market right now. If this, then that.

There is still very little bullish sentiment on Wall Street right now. This last week, the market sentiment data came out and it moved up to 38.5%. Actually, it stayed about the same, because last week, it had moved up a few %. Currently it is still very low and would be saying there is more to go. The market never moves in a straight line, or not usually, but for the time being, I can not overlook a break of today’s lows if in fact that happens. If that breaks, then, a big push to the downside is in order. It should be at least to 1084 and could be lower. The maximum I see is to around 1075 to 1080 and it could come in just a few days, but that is the maximum. There is major support at that level if only we break the 1106 area, just above today’s lows. I don’t think we have to break the low to get a market reaction that will temporarily send this market down.

With all of that said, the market sure showed some resilience, in only being down a few points after all the bad news and big drop. Some forget the wall of worry, of  the past. This may be like that, but this time, there is really something to worry about. All of our national financial troubles are really much worst than the mainstream media and government is letting on. I think the public senses that and is trading on there intellect.  Wall Street does not care how smart someone is, but only that they are in-tune with the pulse of the market. The majority is never right.

Above, I have a daily chart of the cash S&P 500 Index. I encourage you to take a quick look at it. You may see it a little differently than you normally would. I won’t go into it, but there is order in what seems like chaos. Knowing how to look at something is a start. I may post again on Sunday afternoon, but for now, enjoy the weekend and get outside and enjoy some of God’s creation. It can give a nice fresh perspective on life and our work.

As always, good trading, Vince.

P.S.  no trading for me today.  Relatives from out of town and have to many distractions

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Possible Inverse Head & Shoulders Setting itself Up

Friday, June 4th, 2010

Today is Friday June 4th and what a ride Wall Street had today, as things seemed to be sliding all day and into the close.

It looked like someone was anticipating the reaction on the street as 3 a.m West Coast rolled around, the market started selling off in a big way. After the open, we saw a bounce after first dropping 30 S&P points from the high. The unemployment numbers did come out and they were good, but not good enough, as much of the gains came from short term Census jobs.

The S&P was off 40 points, the Dow off 325 and the NASDAQ off 64 points, roughly around 3.5% across the board. This was a big sell off and with only two more trading days before the new weekly sentiment poll to be taken this coming week  after Tuesdays close, the market may now work itself into a larger bearish position, as more of the Street will become bearish and we may finally get the market extreme I was looking for.

Currently the level of bullishness is at 39% and had dropped over the last three weeks straight, with last week staying the same. It is going to be interesting come Monday and Tuesday. If the market can contain the selling into those two days, there is a chance we could see a real surprise rally over that 1107 figure that I have mentioned two or three times. In the night trading last night just before the selling began, the S&P emini futures went 3 ticks over that price at 1107.75. It quickly reversed and went straight down from there. That goes to show, that the 1107 number is a very valid and strong number, that if overcome with conviction, will prove to be a trigger point that will ignite the short covering to kick in at a higher level. Just remember that number as we go forward. If we continue to sell off, it won’t matter, but there is a lot of worry out there and rightfully so. There is a total mess when you look at the big picture.

Going back to what I said a moment ago, if the market can contain any selling that may come in Monday and Tuesdays sessions, don’t be surprised if you see a massive reversal of all the losses from today and a whole lot more. Just realize that it is possible and that a complete wipe out from here is not a for gone conclusion.

I don’t talk a lot about patterns and technical analysis, not because I don’t follow it, but just the contrary. What we could be looking at is an “Inverse Head & Shoulders” if as mentioned we can contain the selling to no more than say 1150 on the S&P Emini Futures. Take a look at it, it looks just the same as an upright “Head & Shoulders Pattern” but in reverse. We could be working off the right side of the shoulder flushing out all of the weak hands that allow themselves to be overtaken by Fear. Once those traders, investors and everyone else have gotten shaken out, the market will then reverse back up, leaving them in the dust.

In addition, this Head & Shoulder trading pattern, has a tendency to exacerbate short covering rallies. The initial rally once it takes hold, usually is very fast and catches many by surprise. If things take shape as laid out, I would expect the blast off point to come in some time next week and as early as Wednesdays session. This will give time to sell the last hold outs that we are going down, which in turn will cause the market to bite them as they get left behind.

This is all conditional, in that the next two trading days we will need to hold, giving up no more than -16 S&P points and or -160 Dow Jones Industrial points. So, it can still go down and it would even be better if it did, getting the last of them to take the bait.

On the other hand, I too can not become sold out to my theory, because I to could be taken by surprise if the market were to crack the 1036 S&P lows. For me personally, I don’t hold any positions overnight and only day trade the short term market swings, so it is not going to effect me that way. I do hope my theory plays out, because it just means that there is more time before the market crash that I do think is coming. I can not say when that is and it may not happen for a while as things get strung out, but if I had to guess I would say September or October this year. Anything can happen and it could be now, but I say the odds favor later in the year.

Going back to the possible Inverse Head & Shoulders trading pattern that may be setting itself up, investors need to be prepared. If we do see that breakout and it is confirmed by the breaking of 1107 with conviction, that will be a pretty good spot to buy and hold stock for at least a little while.

In my own trading today, it only took me 30 minutes and 5 about trades to take what I wanted from the market and I was gone. Click on the chart above and then click it one more time to make it larger if you care to see the trades I took from today’s session. I could have traded for more and probably made more, but I had already done my extra work early in the week posting big gains. The last three days I have just been cruising and playing it safe. This is all apart of good money management for me.

Traders often have there biggest losses right after they have had there best gains. It is important to not get overconfident and let your guard down as you start to see some success. Once you have made it, the money is yours, it is not free money, you earned it. You need to guard your equity and not let it leave your account the same way it came in, but do not let fear hold you back from putting on the trade either. Trade what you know and leave all the rest.

Good Trading to All !

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Is the Stock Market pausing or ready for Sell Off ?

Monday, April 19th, 2010

Today is Monday April 19th and the market put in a reaction rally off of Fridays sell-off.

To me, it looks like we may see some sideways to down action coming this week. It is just a quick observation as it looks like the top side has hit a temporary cap to its upside momentum. The volume from Fridays session is what I was hoping to see a while back, very nice volume, more than double its recent average. That made for some great opportunities.

I had a big day on Friday, the best day trading for the year. I took advantage of the increase volume by hanging around a bit longer than normal. I was going to stop after better than double daily goal, but decided that this was a day that I should put the pedal to the metal. We have not seen days like Fridays session for some time, so I took advantage of the price action. I traded like I normally do, with tight stops, but was able to let some of my trades run and run they did.

Going by memory, I think it was Goldman Sacks was being sued by the Feds and that got things moving. I saw the volume instantly kick in with huge lot size behind it. I was in that move but I had only picked one point out of the trade. After the first consolidation, I jumped in and rode the move down for several points. It was like that for the rest of the session. I watched the market most of the day and took a few breaks in between. Below is my equity chart of my results for Fridays session.

I did trade today as well and it went fine. I only traded for 45 minutes and ended it. I have been making a solid effort to trade earlier in the session. There are much more opportunities and things don’t take as long to come together, overall much better. Below is are my equity chart results for today’s session.

Below I have one more chart for you to take a look at. It is a daily chart of the S&P futures continuous contract and the cash Dow and cash NASDAQ markets. Take a look at the resistance running across the top of the Dow. That is some pretty strong consistent blockage that it keeps running into. There are only two ways to resolve that, a drop or a breakout. Both options can be looked at, but, which one has the most likelihood for the next move. I will you make up your own mind on that. I see for the short term, sideways to down, but we will see in the days to come. The market can continue to go higher, but it needs to move sideways to digest its gains. By moving slightly down, that, also gives it additional time and room to move higher, but it is going to need to do at least one of those, time or a little backing off in price or both.

Well, that’s it for now. Lets see how things shape up. I will be sure to report the Investors Sentiment numbers that come out after tomorrows close on Thursday. I get a two day delay. For the link look in the resources section of my website. They update it for free and it posts usually late Thursday evening.

Until next time, good trading.

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Fractal Nature of the Stock Market

Wednesday, March 31st, 2010

Today is Wednesday March 31st and the market bounced off some key support today, 1162, two times.

The S&P market is holding in there. It does not want to go down and not able to move up, for some time now. A big report is coming out on Friday, the unemployment numbers. The last report was the first decrease in unemployment since the recession started and a back to back positive reading is going to send a strong message to Wall Street. There are many traders and investors thinking only one way. That this market was going to go down. That is having tunnel vision and not usually a good idea. You need to stay open to direction and then interpret the price action to properly trade this market.

I know there are traders who are adamant about this market falling and they may be right, but it has made virtually a complete come back from the drop earlier in the year. If the unemployment numbers are good, it may spark a big rally just be ready either way.

The trend is up and holding, but five trading days ago, we traded at 1177 to the next days low of 1157 and we are currently at 1167, right in the middle. We have bounced up and down inside this range for the last 5 days. That is why yesterday I said that we will probably see inside action over the next day or two, “Containment”. This containment is only adding to the fuel that will be expelled once the market gives way outside of this consolidating range. I will show a chart of it tomorrow and explain a thing or two about it, so be sure to come back and get some insight as to the next big move.

In today’s trading I took 8 or 9 trades and did pretty well. I only had two small losses for a few ticks, the rest gains. I scaled out of the early trades and took an all in, all out approach for the last bunch. equity chart below.

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I have been talking in between various topic’s, like trading within your dominant trading personality. If you trade stocks and look at 15 bar charts, your pool or available trades are going to be limited, but your rewards are going to be much bigger than someone trading 5 or 1 minute bars. Your stops are going to automatically be larger based on your time frame, but everything about trading is still the same and is relative to the time frame you are trading.

That is because the stock market is fractal in nature. Some may not know what that means so I will explain. If you trade daily charts and follow a set trading method, you will have to wait for days as the bars line up to a desired formation or condition as per your method or system. Again, your rewards will be much greater than someone trading hourly bars, but your risk will be greater as well. The stock market shows consistent patterns inside of every time frame and can virtually be traded exactly the same in any time frame producing the same type of results, but with relative returns. I have an example of this fractal nature found in nature itself below.

This is the reason why it is important to trade within the time frame that best serves you and your personality and situation. With the leverage available through trading futures contracts, a trader does not have to trade for very large moves to make a good daily return, but he needs to be able to keep risks small and exploit market moves as they are given to him. Just as the price moves are relative to the time frame you trade, the returns are as well relative. By using leverage in the market you magnify your moves, positively and negatively or you could say, for you or against you.

It has been said, that the smaller the time frame you trade the harder it is. Now, why do you think that is?  I think the reason is, traders are not conditioned enough to react as new patterns are presented to them. They are pron to make more mistakes and to over-trade. What can be done to change this. Practice and get the conditioning you need by knowing what to do and when to do it. Get the knowledge you need to exploit these price imbalances and live your dreams of trading for a living. There is rarely any way around paying your dues if you are going to attain this goal. Many forgo training and leave there results to a combination of idea’s, but never having a complete trading method, and road map to follow. If you are going to trade, you need knowledge and support.

If you become proactive in learning how to trade, you can trade stocks, commodities, forex or any trade-able investment instrument and speed up your learning by trading the smaller time frames. You will be forces to interpret the price action and follow what ever indicators you have if any, to gain the trading edge.  After doing this, you will see that when you go back to higher time frame instruments, you will see, feel and know so much more than when you traded daily, hourly or 15 minute bar charts. In addition, you may find that this smaller time frame type trading is what you are best suited for all along. That is how it was for me, but it took years to figure it out on my own. I am just presenting the idea’s to those who have not thought about it.

Consider it a training boot camp as you get dozens of market conditions reads per session, capturing the trading edge.

Give it some thought, trade on and trade safe.               Video of today’s turning points using tick charts, take a look.

http://www.screencast.com/t/NGJlNTJi                     Equity chart of today’s trades

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Double Top Approaching in S&P 500 Index

Wednesday, March 10th, 2010

Today is Tuesday March 9th and the markets have moved higher over that last few sessions.

The S&P is currently within striking distance of its old high, creating a “Double Top”,  where the Dow Jones is still pretty far behind. The shining star is the Nasdaq as it has already surpassed its previous high from early January.

The market sentiment has increased only slightly this last week to 42% bulls, which is OK. When it gets to around 55%, that will be a sign that there is to much optimism and we could see serious selling pressure. Back in January just before the drop, we got to around 53% but the level of bearishness was at a 10 year low of 15%. That was a strong contrary position for the market to trade the other way. It was only when the bullishness increased into the 50% + area did the market take its cue and drop as both were at extremes by historical standards.

We currently have room to rally, but are coming up against previous highs and that double top in the index. I don’t have any predictions so to speak but currently I have noticed the volume weaker than I would have expected. That to me is not a good sign.

Currently the market has some very clear key spots on the charts that need to remain intact for the uptrend to continue. If we break them, you can bet that you will see the sellers. If there is little volume and conviction to buy, we just may see it on the other side, when that day comes.

I have been very busy this last week and have had little time to trade. I am not to worried about it, it is just temporary and will be back at it pretty soon. Any points I have missed out on, I will make them up. I did trade for a few moments on Friday and picked up 1 point, no trading Monday and only traded for about 10 minutes today and caught 1.25 points. I have been working on producing some new training video’s and updating other training material as well as re-working my website. Lots of work, but its still fun work. I love what I do and am very thankful for it all.

Here is a couple of screen shots of my tiny trades. No big deal, that is for sure, but it is better than a loss. When things settle down, I will focus more on my own trading and pick up more than enough to make up for my shortcomings.

I still hope to change my personal schedule around to trade the open. Somehow I need to do that. There have been days last week that the afternoon session is producing nothing like it used to. The morning session is the way to go, like the first 60-90 minutes. Trading during these hours will most often offer several points in the first 30 minutes. So that is where the opportunity lies.

I will have to personally challenge myself to get up at the 5 am time needed to prepare and settle in for the 6:30 am West Coast opening. It has not been easy, but I know what the rewards are.

That’s it for today,until tomorrow;

Good Trading

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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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Daily Dow, next view !

Thursday, October 1st, 2009

Today is Wednesday, September 30th and what a day on the Street today.

We have not had a day like this for a while, in that the price action was great. There was a real nice break just after the open and down we went. If you happened to be able to ride that wave down, you would have done great. The set up was there and down see went. It took all of about 25 minutes to drop 14 points straight down.  There was a nice tight consolidation just after the drop, usually the consolidation period would have taken longer before the next move.

The force of the drop, must have spooked a lot of traders to take on the short position, they thought it was the real thing and jumped on it. Well, it wasn’t at least not yet, in-fact it may not even come at all within this move? That is something all traders need to be aware of. Trading is not an exact science, but of probabilities and conditions.

What if statements, need to be asked all the time. What I mean by this is, “If this, then that”. If a break down or up at key pressure points takes place, then you can expect a move in that direction. The market is ruled by order placement. Order placement at key turning points. Your job is to find out where those pressure points are. An exact spot on the chart that is going to “Tip”, the movement in that direction. Once the momentum has shifted and we get to the tipping point, it usually does not take long for the price action to move out in that direction. The reason? STOPS. That is right, stops, SELL STOPS AND BUY STOPS. Those orders can be parked and act as fuel for a move in the opposite direction once hit.

As I stated earlier, usually a counter trend rally like we had today after the drop, will have run out of gas much sooner than it did. That can be a little clue that the move up may not be done yet. That is why you always have to look both ways. Seeing the case for a sell off is fine, but you have to know where the turning point is if that does not happen. With the daily close still in tack above support, I would have to be looking at a turn back up, just the same. Haven’t you always heard, “look both ways before you cross”, it still applies.

I have another daily chart up, showing a different possibility than the one I showed yesterday. With the market sentiment right in the middle of the range, there is more room for a run up before the numbers become extreme. Just an idea, we have to keep an open mind.

http://www.screencast.com/t/pfb41GqE              Next view of Daily Dow

http://www.screencast.com/t/bb0eVQDgeM     Just one trade today

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Dow Hit Resistance at 8240 + Level

Friday, May 1st, 2009

Today is Wednesday, April 30 and resistance is met at 8240, will it break through?

Today’s trading went easy, picking up all trades entered, 8 for 8, but all the trades were very small contract size. I just took it easy because yesterday after the Fed announcement, which I don’t even know what they said, I took a trade that looked real good. I planned it for a high point move and it played out as planned, 5 1/2 points on 5 contracts, 1375. So I just took it easy today and totaled little over 4 points, but just on a few contracts.

Yesterday, I said to watch the 8250 level, that was going to be a key resistance level. Well, it went right up to it yesterday and retreated like it saw a ghost, straight down. Today, it went for a second run at that resistance level, same thing, retreat. Two attempts and no luck. That level will need to be broken to the upside for the trend to continue. Tomorrow, I will show a chart of it, looks very clear.

Also, in looking at the Fed news release, it was funny to see it play out exactly like I said that it usually does. That is, after the announcement, it will shoot in one direction, to suck players in, then over shoot in the other direction and take everyone out and then it will establish the move that it wants to make. Pretty much exact. Once it hit that 8240-8250 level, it went straight down.

All of this is not really that important.  It’s only important that you are able to position yourself to take advantage of some of these moves and I did that as stated above.

I will post a full article for tomorrow’s blog and possibly show the trade after the Fed news – I recorded it!

Have a great evening!

http://www.screencast.com/t/xMyEoaQud Today’s equity chart

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Market hits resistance today

Friday, April 3rd, 2009

Today is Thursday, April 2nd and the overall market ran into some resistance today.

I have not talked much about daily market direction lately, because I had not seen anything that was worth pointing out. I wish I had posted what I saw yesterday, but today is still OK. I will give you a 5 minute overview on what I see and how it could be played out over the days to come. But before I do that I want to give a quick recap of today’s trading.

It turned out good. That is always music to my ears, but as I mentioned before, if you are not in focus and have distractions going on, your performance is going to suffer. That is how I started out. I was giving a trading lesson to one of my students and I had not yet gotten my points. My mind was not on the current price action and when I got around to taking a few trades, they were good for gain, loss, gain, loss.

I did that three times, back and forth, until I settled down. Part of the problem is trying to trade in the slow patch of the day. I needed to take my own advice from yesterday’s trading tip.

I thought about that today as I found myself in the red. On my way into negative equity territory, I had to pause, take a deep breath and relax. The market has a natural flow to it and you need to find that rhythm or flow. I cleared everything out of my mind and just waited for the trade to come to me. I did not have to go after it.  After that point, I had 10 gains, one loss and one even, to go from -600 to + $2,000, much better.

My daily loss limit is two times my minimum daily goal, (between 2 & 3 point) and I have yet to stop trading because of my loss limit. It has not happened yet with my daily gains now stretching into the start of my third month in a row. The actual trading totals have been on average about 3 times my daily goal. For a long time, I was struck on trading 5 contracts and I must have been averaging 3 times that on a daily basis. I have currently wanted to trade less and increase size, so I have been doing an OK job with that.

You need to be emotionally ready, as well as financially, to increase your size. But, if you are able to see the trades each day and know why and where it is you are taking those trades, then it is just a matter of doing what you know. Leave the fear behind. In a market with volume, you will not be in the trade for very long and this will cut your anxiety or fear down to manageable levels.

Again, for the trader who is just getting started, you need to be able to put those winning days together, one after another. That is why, I feel, you should not be in the market all day. It is too much for most to handle. The market has a way of wearing you down, until you get sloppy or let your guard down. Then you may find yourself in the fight of your life. Don’t put yourself into that position. Get your points and get out.

I have seen just about everything the market can throw at me, but I need to respect it, or I too will be humbled. There are times when you should not trade at all. Erratic movement without periods of consolidation and choppy direction-less formations are all telling you to take a break.

It is amazing what that decision can do for you. When you come back after an hour or so, it can look like a whole new market, with predictable swings and volume.  That is the environment you want to be in.

Tomorrow I will record a few of my live trades with commentary as I was doing before, for those who are looking for that.

 As I promised, below is a short overview of how I see things in the daily’s. I hope it helps, but remember, you need to think for yourself and see it for yourself to be able to trade it for yourself. 

http://www.screencast.com/t/qCTlcKhG         Today’s equity chart

http://www.screencast.com/t/bljwZXzuz9e   Market overview on the Daily – video 5 minutes

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