Posts Tagged ‘market sentiment’

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Market on Course for higher prices

Saturday, October 9th, 2010

Today’s post is for Friday’s session October 8th, 2010 as the market continues to defy all logic and climb higher, +57 points on the Dow, +4 points on the S&P futures.

The market continued its climb higher as we moved into new high ground. Last week and before, I talked a lot of market direction and it was nice to see the expected resolve to the upside. It could have gone down, but their were far more things showing me higher prices. That was totally the unconventional market call, I know, but reading the current price action in what ever the time frame is possible. Having an understanding of market sentiment can help a lot if you also know how to interpret it. With that said, anyone following me for any length of time knows that I have been bullish for months now, from the very market bottom of 1040 and with a confirmation at 1060 on the S&P. That is 120 points from the bottom and 100 points from the confirmation point.

Calling for a market bottom and reversal up in late August was not a popular call and I remember feeling a little uneasy about it back then, but I had seen this scenario a hundred times if not more over the years in the daily and weekly charts. Taking the unpopular stand in not easy, but that is why most people loose money in the markets. As traders, we need to really think for ourselves and understand why we do what it is we do. It is in understanding our positions, where we come to really learn how to trade.

In the market sentiment numbers I follow, they moved up 2.3% this week to 45.6%. That is basically a neutral reading, but that does not mean that the market is going to stall. There is still room for it to gradually move higher and given its pattern of increasing sentiment a couple of percentage points per week, a continued move higher in prices and overall bullish sentiment is likely. I am looking for prices of S&P 1125 or higher in the weeks to come and the Dow, I see moving up to 11,700 or higher. We will just have to wait and see how it all turns out and how much higher if any we go, but that is the likely path of prices at this time.

A lot of people are calling for a market crash and that might come, but I don’t think it will just quite yet. I will let everyone know when that time will come, so stay turned if you care to know my opinion on market direction.

I missed a couple of days trading this week, Wednesday and Thursday, but was able to trade on Friday. I had a lot of preparation to do before what some are calling for, “a long hard winter” in the mountains of Northern California.

My trades from Friday are below which was a pretty good day. I had only one small loss on the last trade, but picked up some nice moves before that making for a nice day.

If anyone has questions please feel free to email. I will more than happy to answer and or help you where I can. If you want formal training we can do that too, but if you just need a little free advise, I am open to helping those that ask for it. If you have Skype that is the best way to talk and if it can be handled through email that will work too. My Skype name is “SniperDayTrading”.

So enjoy the weekend and get outside while you still can, before the bit of Winter sets in.  Good Trading to all, Vince

P.S.   My indicators are not the trading method. They are only a tiny reflection of what I can show you. Their is a complete trading methodology behind every move and one that can be duplicated time and time again. In fact you can trade the Sniper Day Trading method without any indicators at all and do well.  We teach how to read price action in what ever time frame you trade, but have a set of three main time frames we start out in depending on volume and volatility. This chart is the smallest one of the three but I have a unique way of integrating them all so it really becomes just one chart.

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Stock Market puts in Reversal Day

Thursday, September 30th, 2010

Today is Thursday, September 30th 2010 and the market looks like it put in a reversal day.

The Dow was up over 100 points just after the open as the buying kicked in from yesterdays inside trading day. The S&P was up similarly and just before 7am, the high for the day was hit. The market quickly filled the gap and then some as the drop did not stop until we saw 200 points shaved off the top in the Dow and 20 points off the S&P.

Today’s closing position was very important as it showed weakness into the close, putting in what I call a reversal day. That is not usually a good sign and we could see a break down coming either in tomorrow market, (Friday). I will give a few parameters that will show which way it is going to go.

Currently, we are still OK, but at any big daily turning point the market is always going to get tricky. This is part of that trickiness being played out.

I will be watching two numbers tomorrow, both to downside, to see it we will hold or not. The first one is today’s low at 1131.25 and the next one is the low set two days ago, at 1127.25.  Both of those will be your clue. The market is currently sitting on a major tipping point. I mentioned about the major resistance overhead and we saw that played out today. Now we will see if the downside support will hold. If those numbers get broken, you will see a big wave of selling come into the market. It is very likely that it will last a few weeks and take the market to as low as 1082 on the S&P.  There is support around that number, as we will be set with a whole new set of conditions.

Under normal conditions, the market is likely to sell off and break the numbers I mentioned above as the reversal day pattern is a good clue and we are likely to see the move down as mentioned, but I said normal conditions. We have not seen anything normal as far as economic reports and stock market behavior. A terrible report comes out and the market rally’s huge. That is why I don’t get to caught up in the reports, but they usually do have some connection to market behavior. That is normal and we are not normal right now. That is why we have to wait and see how the market is going to show us its hand. If the levels hold that is going to be great. It may just move against all the bears that are betting the farm on the coming drop.

So all one can do right now, is wait and see. I would be on guard for for the party to begin. The movement is going to start heating up, either way. Coming off the summer month slow down,  big players are coming out and they are getting ready to move the market.

OK, I was waiting for the sentiment numbers and I just got the delayed release. They are up 1.9% from last week and still in a fairly good range. Here is how it has gone over the last 5 weeks. We hit a market extreme at 29% bullish 5 weeks ago. That is a screaming buy signal for a move in the opposite direction. (trigger points 35% or less bullish and 55% or more bearish). This works in the opposite direction. So five weeks ago, the sentiment from the professional newsletter writers was only 29%.   I was screaming it for days before the move. Well, we are up 100 S&P points from then and at a major wall.

Back to the numbers; the last five weeks are as follows, 29% , 33.3%, 36.7%, 41.4% and today 43.3%.  That is not even in the middle of the range and has to be viewed as still showing some degree of strength.

One scenario would be, if we do move back down to the middle of the range, those numbers will again come off and get into another market extreme. The market sentiment will again shift to a minority position of bullishness and we could then have another large rally getting over this very large current resistance point.

I will likely know which way it is all going to go in the morning, Fridays new session. If nothing happens, we may have to wait until Monday, but we at least know exactly where we are and where the market is likely to go once it tips its hand, well that is how I see it.

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In today’s trading I took a few good trades and made up for yesterdays non performance. An equity trade chart below shows my results. Traded just 3 and then 2 contracts, but had a pretty good day. I missed all the move up and down as I came in as the market was finding its daily bottom. Just scalped my through the mess and was quiet satisfied. Looking forward to tomorrows session.

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See Yourself as the Trader You Hope To Be

Monday, September 20th, 2010

Today is September 20th and we saw more follow through as the Dow was up +145 and the S&P +16.75.

This was the likely path I had talked about a few weeks back. In my September 3 post titled, “The Market Looks and Feels Strong”, I had said that we were likely to go much higher in the coming weeks. At the time we were approaching some key resistance around the S&P 1100. As stated, if we get over the 1100 area, we are likely to go much higher around 1160 on the S&P and at least +400 points more on the Dow. We are approaching the Dow target, which would be around 10,800 but the S&P area is still a ways off. In any case, I think over all we will still see higher prices, but, we are at and or near “Major” resistance again. This resistance area is not anything you can see from any recent support or resistance area formed. This stuff is long term and is a force that needs to be overcome to get to the next level. One step at a time.

Seeing where we have come from:   We have come a long way. The last days of this August, I was saying that we are going to move out big. That was the only likely way for the market to move. The market sentiment was so bearish and so few people we bullish, that became the likely directional move, up.  I know I posted and posted about it, saying this was going to happen. It was not popular at the time and I could even feel it myself, but I knew better following the market sentiment as a excellent gauge of future direction. Well at the time, the market was taking its sweet time building a bottom base and it seemed like forever, but after a week of going nowhere, it finally happened. That was three weeks ago and here we are almost 100, that’s right, 100 S&P points higher.

This general area is the next barrier to higher prices yet. The resistance is very very strong in this area. It would be normal and natural for the market to pull back any time from here. At the same time, all of us can not rule out the possibility of blasting through this area to a final move destination. I can mark the Dow area maybe a little better and I see it around 11,500. If the market is able to get over the coming resistance area described, we will likely see this 11,500 area on the Dow in the coming weeks. I had said before that the S&P final target area may be around 1245, but I think that is a little high. It looks more like S&P 1225.

I would bet that this new excitement for higher equity prices may be enough to get everyone on board and could create a new trigger point for the downside, but that is still way off from now.

Three weeks ago at the bottom, the market sentiment numbers I was talking about “Investors Sentiment”, was at a screaming buy signal area of 31.7, if my memory serves me.  (35 is usually a trigger point)  The next week we moved up a few %, followed by the same the next two weeks to where we are now around 37%. That is still a very strong reading indicating more to come. The new numbers come out after the close of tomorrows session and can be seen for free on Thursday evening. The direct link is in the resource section of my website for anyone interested.

The chart above, is my trade for today. They are not to exciting, since I missed the big move early on. I was going to wait out the two hours in the middle of the market, but I did not leave the scene and was just looking on. I got a little board and took a few trades before I wanted to. I am trying to not trade during the 9-11 am area or 12 to 2 New York time area. The volume is so slow and the movement so flat most of the time. It is just so trying, like in my patients. I do not like to wait. That is the type of trader I am.

Ever trader has strengths and weaknesses. I know what my strengths are, as they are outlined in my trading method. My weaknesses are waiting. I don’t like it. I like to see what I want in a trade, take it and move on to the next one. In a fast market, that is just what you usually get. I thrive in that environment. In a slow market you have to wait and wait. It does me no good. I am better off to get out of the house and do something else. In fact that is the best thing to do. Fresh air does wonder for the body and in the mountains where I live, their is plenty of it.

Anyway, trading during the active time zones best serves me, but I to often slip back into my old habits as I most often miss the open.  Sooner or later I will get it. If you are a trader, trying to find your way, you would be best served to stay away from the 12-2 pm N.Y time area.

I still got a few points today, the lower side of my daily goal and that is really OK. I know I can do better, and likely will in the coming sessions. Being optimistic and confident about what you know you can get from the markets is very important. We all need to see ourselves as we expect to be, not as we are. That allows for growth and improvement.

Until next post, Vince at Sniper Day Trading, over and out.

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Just Released: Market Seniment lowest since March low’s of 2009

Thursday, September 2nd, 2010

Today is Thursday September 2nd, 2010 and we saw a little more follow through from yesterdays big run up, + 8.25 on the S&P , +50 points on the Dow and +23 on the NASDAQ.

We are almost there, the 1100 S&P figure I have been talking about since last week, one more day should do it. That is my short term target, with a possible pull back following. That would be the normal progression of things as we move up to that 1100 resistance area on the S&P, then to move back to around 1165/1170. That would be normal and natural for the market to do that. What happens after that is going to be the big move, if we move back to the 65/70 area, then move up off that, you will have SOLID TRADE POINTS to trade off of.  Every trader in the world will looking intently on that next move as the market will be getting SQUEEZED on both sides. Huge positions will be taken at that point. All the bears will be loading up big time as we are coming into the worst trading month of the year. Actually, September is a worst trading month overall than October. A lot of the big market crashes took place in October and that month is fast approaching as well.

One thing first, tonight after I post this blog, this weeks sentiment numbers will be out again and if anything significant is out, I will post again those numbers, but from last week the numbers would represent some bullish fuel. I can’t say for sure how the market will express itself, but a lot of people are calling for a market crash here and now. The question is, are they right and if so when will it happen.

I have made my opinion known pretty clear over the past many months. What is happening is exactly what I thought would happen as we came off the March low’s of last year. Everything is literally exactly as I said then and is now. I have changed that up just a bit as the next part did include a new bigger market decline that will last for quiet a while, but I think that is on hold right now. I can’t see the majority being right about that market call. It rarely ever happens. I could happen this time, who knows, but going by history, when only 33% on Stock Market News Letter Writers who have 100,ooo’s of subscribers collectively think the market will rally, that is a small minority position and good tell tail signs that they will get it WRONG. That is one of the catalysts that helped us rally off the recent lows. So, I am temporarily on the other side of that camp, but for how long I don’t know.

The market will collapse here sometime and hope it becomes obvious to me at that time, but probably not to the majority. I saw all the big market collapses coming in the past, not to sound cocky, but its the truth.

I will hold a few special sessions on markets of the past and how it relates to our current market and what we could expect, so look for that in the coming days.  It’s no fun talking about large equity declines, because it helps no one, but if you know something is coming like an iceberg it is normal and the right thing to do, to warn those you care about. That is what I will be on guard for in the coming days, weeks and months ahead. I know the dangers, but I think we will get through this period short term for now. Since I am on the subject, if the last market lows get taken out seeing that we have come up off the bottom nicely, you could expect to see a 1,000 point drop in the Dow and about a 100 point decline in the S&P futures in short order. That would put the S&P at about 940 with that drop happening very quickly. That is not likely to happen right now, but for some unknown reason, war, this or that, comes out, the 1040 S&P area is clearly defined and will be cause for a release of energy to those levels. Just keep that in back of your mind or right it down if you like. I do need to say, this is just my opinion and should not be considered investment advise.

Above is a chart of my trades from today. I did OK, with the first trade a loss as I to often get wrong. I need to be more patient on my first trade. Starting later in the session is not how I envision the perfect day. Right at the slow time of the day. The two hours in the middle of the session is very slow moving and can try even the most patient day trader. The first two hours and the last two hours are usually very active and what you want. Trading the two hours in the middle is not really advised, although I do it all to often. Next week marks a time of new beginnings for me as I see myself trading the first hour of the day and that’s it. It is a nice thought anyway, but one I will keep trying to do.

The price action did pick-up at 11 am West Coast, as the big traders came back into the market. We need those guys to move the market one way or another and they always seem to do a good job. Our job is to identify which way they want to take it and get in on it. Sometimes its a hit and run for a point or so and other times its a runner.

The last trade was a bit of a runner as I held on through a painful pull back. Normally I would sell some after a good push up to insulate me from a reversal, but I held onto the retracement and added on on where I thought was a low risk spot. My method said to enter where I did, but the indicator said to wait just a minute or so more. You can see in the chart above or in the short video below if you have time. I also point out all the other turning points as applied to just my idicators for the rest of the day.

Good Trading,  Vince

Alert: The new sentiment number are just in and it is a very bullish reading of 29.4%, another drop of 4 % back to back. You can see the report at this website link below and is also in the resource section of my website. This figure is the lowest reading since the March low’s of 2009, and can only be view as a lot of fuel for an unexpected market rally that is going to catch many by total surprise, but not us.

http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm

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Two market scenario’s, which will prevail ?

Saturday, August 21st, 2010

Today is Saturday August 21st and the markets had an interesting week keeping the selling contained.

The markets were rising early on in the week, only to give it back plus a little more. As the week moved on, the selling was contained. I am pretty sure that we are going to hold up in this area. There are a few cross currents taking place, but I think this is what is needed to purge the excess out of the market before any future advance can take place.

Looking back I was a little off in initial support of the market, which it did come in as expected, but it did not hold. The lower area of support held more or less, off by a couple of points (S&P futures 1065), as other factors take hold of this market in its support for a possible sustained rally.

The market sentiment changed for the better in defense of the bulls, in that the sentiment turned a bit more negative, which in turn is positive. We never did get the big rally, but only a smaller reaction rally coming off the lows of the much larger sell-off from months past. The market needs time to fill in the gaps and that is what it was doing. I would add, if the market really wanted to go down, it sure is in a perfect place right here to “crack”, but somehow, I don’t think that is going to happen, again, just my opinion, which could be wrong.

I see the current position in the market as finding support in this area. We may hoover for a couple of days, as again the new sentiment numbers will be voted on after Tuesdays closing market. This is useful for a couple of reasons. Last week the market sentiment turned down from 41.7 to around 37%.  That was significant because the signal changed as the market had advanced sizable on the day of the poll.  So we saw a 4% shift negatively as the market advanced. The selling that took place Thursday and Friday should add to the negative sentiment if the market can hold in this area come Monday and Tuesday. Either way, there is a lot of negative sentiment floating around which usually can only be erased by a market advance.

The market needed to work off the excess and time needed to pass to better allow the market to be and get in a position so that it could move out. Either way, the energy is being built up so that it can be expelled in one direction or another. As day-traders, we don’t really care which way it goes, only that it goes and it will.

So my best guess is that we consolidate in the general area for a couple of days, further building up this market pressure for a surprise market advance later in the coming week. This time, the market should have some staying power and the shorts will really be covering themselves in full force. I do realize that something could make this change of which I have no control, not that I had or have control anyway, but this is just the big picture and how I could see things shaping up. Late July and early August the market wanted to advance, but a continued move from that point would have been to obvious, so a little head fake was in order. In addition, this move back is very normal and consistent with general market movements before a rally, again I say if it comes.

I want to through this in, just to balance out my opinion on the coming move. When I look at the daily charts, I see the other side of the equation as well and I need to look at it no matter how or what I think will happen with the next move. In fact before I continue with my reasoning, this is exactly what needs to take place for any smaller market move when deciding to go long or short. You size up your analysis based on your trading method and which ever direction has more evidence for that directional move, you need to consider a trade in that prevailing direction. Looking at the other side of the equation though is just as important. I know when I get one-sided in my opinion I can get tripped up as any trader can.

With that said, the market is also in a perfect place to continue its sell-off,  if in-fact it wants to.  I will put up a daily chart of what I am talking about so you can see all of what I am saying. Where the S&P 500 currently stands, their exists a free flowing path to the downside area, around the bottom red line as drawn would be normal and natural for it to occur. That would be looking at both sides of the market and a wise thing to do. This is where market sentiment can give you a clue as to the next major market move and where I am taking one of my clues from. I have been following this “Investment Advisory Market Sentiment” figures for a long, long time and have seen it come through time and time again.

If the market can hold up Monday and Tuesday, the outlook for the market advance becomes stronger. Again, be sure to take a look at the daily chart below. You can also see market resistance coming in at around 1110 or so, the top red line. Currently the daily and hourly momentum is down and the path of least resistance is down, but lets see if we HOLD this Monday and Tuesday to give my scenario a chance for life. 

I did no trading this week as I took some time off to spend with family. I have a couple of shots below of my area, where I got out to enjoy some of God’s creation. My kids came to visit and it was great to see them. My son John, 28 who is an electrical engineer in Portland Oregon and my daughter Angie, 24,   (entrepreneur) visiting from the San Francisco Bay Area.

We hiked on the Pacific Crest Trail which is a trail that links from Mexico to Canada and passes right through where I live.  I have a shot of a nearby waterfall and swimming hole a couple of miles from my home, very cool, take a peek if you care to.                                 Thanks for stopping by and Good Trading to all,  Vince.

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Nice Profit Day, Even with a Few Mistakes

Thursday, August 12th, 2010

Today is Thursday, August 12th and the market was down today to hit that low side target called in last Fridays post.

I said last Friday that we would trade down to maximum 1075 to 1080 on the S&P and today we hit 1071. The market did trade past the mental target I had, but it came back quickly which is important. That shows that the market is likely to have found a short term bottom at least. Currently the market is trading up off its close for the session and looks good for tomorrow to be an up day.

With tonight’s aftermarket  break long of 1083 on the Emini Futures, we will likely see 1097 to 1104 either in tomorrows session or Mondays. The natural rhythm of the market should swing the balance of power back up to this level.

The market sentiment for this week saw the bullish side move up 3 percent to 41% and change, getting closer to a neutral standard setting. This rally here is what it is all about, if this rally fails the market is in trouble. We will need to stay above today’s lows. Again, if that gets taken out, I can not see how that is going to good for bulls, as heavy selling will come in for sure. Being objective and just reading the charts, that is how I see it. So lets hope for a big bounce first and a powerful push higher from here. If this rally looks and acts weak, that will be a sign of trouble. I believe, we should see heavy buying up to the numbers stated above and a very strong market to that point, after that, we will have to see.

The bearish camp dropped down to 27.5% and represents a 6% drop from last week. That is not good for the bulls. More people are getting bullish and less people are getting bearish. When you get a minority position, marked by certain levels, you will see a swing in the opposite direction.

One thing I believe for sure is that we will see an uptick in volume and movement. Even though this is summer and usually slow, I think you will see nice swing trades coming.

Below is today’s trades. The first shot is for this mornings trades and the second one is for the afternoon session. I did a video of the whole day and show all the turns with a little commentary. You can find it in the Video Gallery and should be the last one in line.      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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Market Sentiment getting closer to trigger point

Thursday, June 17th, 2010

Today is Thursday June 17th and the markets have marked time for the last two trading sessions and ended the day up 2 points on the S&P.

The markets have been quite the last two day, with yesterdays session flat and today’s up only 2 S&P points. We came pretty close to the low end target of 1122 I called days ago with today’s session high’s coming in at 1117 and change.

The market sentiment numbers were released this evening (2 day delay) and I am really surprised at what I see ? The market has rallies and that is what I expected, no problem, but the sentiment numbers have again slightly moved in the bearish direction (which is bullish, since the signals go in the opposite direction)  getting very close to a trading trigger point. Currently it stands at 37% down from 38.5 % and only 2 percent away from a trading trigger point. That is what I call it, when the numbers get to an extreme, in this case a minority position of only 35% of Stock Market News letter writers believe the market is bullish. That is the area that we see big rallies from.

The only thing I can think that may be setting up is, if the 1122 S&P low target area is hit, the market may back down, which is what I figured would happen,  but it may not crack as I thought it might after all, but the slight sell-off may give the impression of a bigger drop and the last of the bears jump in to send the numbers to the bullish trigger.

I will have to just wait on this one as its a little tricky. The main thing right now is to see if we at least hit the 1122 S&P number. We were 5 points away from it today and backed off. Over the weekend I will look at the Dow charts again and see what has happened and if I see anything very different.

In today’s trading I took 3 trades. The first one, I scaled in and scaled out and added on later in the move. The add on did not work out. I did not wait for right timing and tried to anticipate the move without any evidence for doing so. The last portion of my original position canceled out the add on position for no gain on that, but good gains from the others.

The next trade was only a small scalp trade that I took in my T-1 scalp screen and it was only for a half point. I wanted to get .75 but just took the small move. I could have skipped that trade all together as it was a bit risky. But my intentions were for only 2-3 ticks. The last trade was a continuation of the downtrend and my timing and entry was good. I have a video of the first trades and a NASDAQ trade that I put on at the same time that worked out pretty good in the video gallery section of the website, top right corner. In addition, I have a video of yesterdays first trades as well if you care to view them. Below is a screen shot of today’s trades for a quick look. To see a larger view, click on the chart and then click it again to enlarge the screen.

That’s it for now, and will pick it up tomorrow (Friday) with a solid trading lesson of some sort.


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Price Action Trading & Trading Indicators

Sunday, May 30th, 2010

Today is Sunday, May 30th and I missed a couple of posts last week, but I am back.

In my last post on Wednesday, I said that the market was ready to push much higher as the market closed around 1056. The target area I called for was 1110 on the S&P and it was likely to take a couple of days. Well, on the second day, we came up to 1106.75, call it 1107 and within 3 points of the target area before it started to back off. On Fridays session after hitting the high mentioned, the market sold off towards the low of the day around 1087. Currently the S&P futures are up about 3 point at 1091 but it is very possible we will see lower numbers before we attempt to go higher, but not by much and for very long. I am looking at 1075 to 1080 as a possible turning point area. We will likely see some buying come in around those numbers. How the market reacts will be important as it trades into those area’s. I could see a good rally coming off of that area if hit and it is possible it could take us up to S&P 1130 this time over a short time span, about 2 days. That is where we will see stiff resistance, from there?  This is just what I see as a possible market move and it would be within the realm of a natural rhythmic market.

The sentiment numbers were out on Thursday evening for me, but released on Wednesday morning and they were lower yet again, a good sign for the bulls as it gets now within striking distance of yet again another sentiment reversal. The bullish sentiment of stock market newsletter writers for the past four weeks starts out at a bullish extreme figure of 56%, followed by the massive sell-off we had right on cue. A figure of 55% or greater is usually a strong tipping point. The next three weeks we had all lower figures of 47%, 43.8% and last weeks 39.3%.

This latest figure is now very interesting as the market sentiment extreme is now closer again to a bullish tipping point of 35%. The way the market reacts on Monday and Tuesday will set the tone for the new weekly numbers that are released on Wednesday morning and if we rally big, that could send the sentiment back to neutral, 45%. Professional market newsletter writers are really no different or better at picking the markets major turning points than the public. They are all trend followers and always have been. The thing is, when the market makes its intentions obvious to the public, it is about to turn and go in the opposite direction. A simple and yet effective tool for trading against the public. All of this is not so critical as short term day traders, but its a good exercise for all followers of the market to look at weekly, daily and hourly charts to see and gain insight into where the markets next large moves will come from.

Below is a video I posted last week on U-Tube and am posting it here. I have been showing one of the timing tools I have available at Sniper Day Trading. I do not say what it is, but want to post this video, to show traders that it is possible to time the market and be successful at it, using the right tools. I have a few other things up on my personal screen, not shown here, which makes for a complete view of how I can handle the market. This is in my Trending T-2 model and works well, when the market is moving. When we are range bound and the moves are small, I just trade out of a different screen with a different set of objectives and goals. If the market is likely to make a move and reverse, it is best to take a all in and all out approach. If the market is trending I often times like to scale out of the trade and average the position out. The market always gets to decide. Either way, hitting a daily goal of 2-4 points per day is not that hard and can usually come rather quickly.

Trading is knowing when you go long and when not too. When to go short and when not to. As I have mentioned before, knowing when not to trade is just as important as knowing when too. If your timing is off, you loose. If your timing is good, “Bingo”, you got it. So, being able to say no to a trade that you may want to enter if vital to your success. Do you have a map or guild to tell you with some degree of consistency that you are making the right decision or are you going by just a gut feel. The later, will play games and tricks on your decision and you will often question yourself if you don’t have clear rules for entry.

With all that said about trading indicators, I feel, every trader should learn to read the price as it moves, thus the term “Price Action Trading”. If you know how to read the price of anything, you will more closely know why you entering long or short. Learning to read the price takes time, and often traders are not willing to put the time in to educated and expose themselves to all the different reads, tricks, fake outs and natural rhythmic moves the market can throw at them and that is where trading indicators can help, initially. As time goes by you will get the exposure you need to be well grounded and thus a profitable consistent trader.

The video’s are only to show you what is possible. You only need one or two of these trades per day to make very good money, not thirty. So, again, many systems or trading methods don’t show you how or even a part of how this can work for them. I am glad that I am able to show you something to help you better see, again, just what is possible.

Above,  is another video of a stock and I cover three days of typical movement here. I basically mark up the screen of every trade signal through out the three days and again shows you what is possible. This is in my T-1 Trade screen and is geared more for short term swings with an occasional runner. You only need two or three of these trades a day to make a good living not all the ones as shown.

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Market Drops Off as Sentiment goes with it

Thursday, May 13th, 2010

Today is Thursday, May13th and the market started to pull back after hitting overhead resistance.

Well, the market hit the overhead resistance I had talked about in the night trading. It came within a couple of points at 1175 before the sellers took advantage of the offering. I would bet you will have some holding on for big potential returns. If it does not happen, they may get stopped out for a 2-3 point loss, but if it does go down like I mentioned in yesterdays blog, it could be a big runner, potentially to 1120 area.

I saw overhead resistance at the previous break, it is not rocket science, but a pull back from that point would be a market play and I am sure there were many looking to get short after the open as well. There were a few good opportunities to do so, with one run producing a trade-able 13 S&P points.

I came into today late, at the last hour and missed all the fun. The market was in that big sell off when I started watching it. I did have a very nice trade just at the close of session for about 4.50 points.  It was that big counter trend move back up. Before that I had a couple of trades I would call bad trades. All losses are not bad trades, they are just losses and that is trading, but if I go against my rules and enter at a point that is not consistent with my method, I call that a bad trade. Even if a trade turned into a gain and I did enter properly, I would still call that a bad trade.

I was able to come back and then some, still hitting my daily goal, but I don’t like it coming so late in the day. You may not have enough time to recover if you are down. Well, that again is my fault for starting so late.

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Just a short word on the market sentiment numbers released on Wednesday morning. This is the investment newsletter writers weekly survey of bullish or bearish opinion. After hitting the tipping point on Wednesday morning the market watchers may have used that to sell it off. All the major Indexes were in the right position to sell off. They were on the right side of the chart as a top had been established with definable short entry points. The break that started on last Wednesday is exactly what we hit in the night trading from today’s session. It basically came all the way back up as if nothing had happened. The sentiment numbers being so bullish at 56% had something to do with it. At 55% and above, is typically the time when you will see a reversal.  With so many people thinking one way, that is a sign that it is about to go in the opposite direction. It lost no time as the decline really started on Wednesday and you now know the rest of the story.

Currently the numbers have dropped off to 47% and that is a good start. At 45%, that is considered neutral and 35% will usually trigger a bullish rally. If we see a pull back as mentioned, the numbers should come off again by next week. The newsletter writing community are usually trend followers and as the move becomes obvious to the majority, it then is time for a change in direction. We are not there yet and are still working off this overly bullish stance.

We will need more time for anything new to develop. You will usually see 3 to 5 good turning point signals from this tool per year. I will keep you posted and interpret as things progress.

That’s it for now, hope to see back again, for another session tomorrow.

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