I know some of you had questions, right now I'm having trouble accessing my gmail account. The short answer is that I do believe that we have a decent positive divergence that could lead to an early bounce sometime tomorrow morning. I don't know how long it will persist but for short term traders thinking of taking profits in AH, I think it probably couldn't hurt as you will probably be able to get back in at better pricing.
The EOD divergence that was positive was on 1-5 min. charts, it was the best of the day, but we did see an earlier one fail and another not produce much.
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Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.
The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.
We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.
You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.
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The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.
The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.
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The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.
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Futures Update BR-EXIT Edition - So the conventional wisdom couldn't have been more wrong. Those chasing risk and closing hedges couldn't be in a worse place right now. I would still remin...7 years ago
9 comments:
SPY is trading in AH at the $108.72 range. Is that significant for the market even though it is in AH?
Looks like they spent the last 2 hours driving up the Eur/usd trade to let it fall after the stock market closed. Just seems like odd trading action. Almost like this sell off was to orderly in fashion and they only wanted it to sell off so much. Maybe to keep it from the big drop so others can get out slowly with out to much lost.
Yeah, under $109 would have been big trouble tomorrow, they defended that area several times. Like I said, I think they realize, but want to keep the sell-off orderly-no flash crashes.
Hi Brandt,
The SPY is now at 108.18 after hours, well under 109.00. How does this affect things now?
$108.04 was the low so far that I see. Just a few minutes ago.
Hi Brandt,
I think we need some guidance on what the highest probability is for tomorrow. As at present, there are conflicting signals. What's the best play here?
I'm with you on that, I wasn't expecting to see such a large drop in AH. I am up another $1.40 in TZA after hours and tempted to lock it in, but doen't want to jeopardize possibilities tomorrow. Initial claims are always scary because they can move the markets quickly one way or the other and recently no matter how bad, it has always been up market.
I'm Leary of Ah but it's significant. I think it trades to 8 pm , honestly I don't know. They could be manipulating ah as it is easy to do. I have a long term perspective so I don't really try to trade around these too much as you can lose out on a good move. I have no 3c ah data. You could take partial profits but other then that I don't know. I find it strange they would defend 109 all day and then let it slip in AH. My best guess would be MM s loading up for a bounce play. But it's just a guess. Long term I think we go much much lower. Hope it helps
I don't know, 108.30 area, that's pretty low but I'm guessing retail got home and put in sell orders. MM's could be picking them up on the cheap. Whatever the report says in the am, they still probably would have the ability to spike it temporarily. The positive divergence are on 1 and 5 min. and started on the 10 min. I believe at some point tomorrow, they'll bounce this, whether they get up very high is anyone's guess. AH is so difficult to tell because the volume is so low that it is very easily manipulated.
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