I ran about a dozen different scans looking for different things, some are limit orders for the potential bounce, many are position trades-that are core positions, a few are short term swing trades,it's all in the notes. Please set alerts so you don't miss any of these.
I see so many excellent short positions right at support, that alone leads me to believe that we'll see a move up, but the greater things about this is there are so many great positions for our main strategy. Some are ready to go now, some will be ready in a few weeks, but all have shown exceptional weakness and are trades that aren't already half spent, on other words, you are getting excellent positioning on them, that's why I don't want you to miss any that trigger.
When I use a lot of limit orders it's because we have short term uncertainty in the market and they give you an edge, you sacrifice a little profit, but with the excellent positioning of the trades, it's a moot point.
The dollar broke out right after the market close, it has declined significantly since then, this is also an indication of a higher probability of a bounce. As of now the dollar is about where it closed, that's quite a reversal tonight.
I don't want you to get lost in all of this bounce talk though, if I had to value this I'd value it at 10%, meaning the longer term short strategy is what is really important. A bounce provides a little extra money, better positioning on shorts and potentially helps the down trend accelerate faster and further for reasons I've mentioned several times today and the last few days.
So we'll see what we have in store for tomorrow, but remember, in this environment you want to be quick about taking any "gift" gains, anything double digit in a day or two I consider a gift. Unless I make mention of a long being a possible "position", "trending trade." Management of these quick trades is essential so if you find yourself with a nice gain, feel free to email me for a second opinion. NEVER let a gain turn into a loser.
Until the a.m....... I wish you all the best and I'm here for you. By the way, my short sale list, trades that I'm waiting for that perfect positioning, is now over 200 stocks.
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Risk Management
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- * Understanding the Head-Fake Move Part 1
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- * The Holy Grail of Investing and Trading-MUST READ-MUST UNDERSTAND IF YOU WANT TO EVER MAKE CONSISTENT MONEY IN THE MARKETS
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- * Placing Stops-What you should consider...
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3C Quick Start
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.
Welcome to Wolf on Wall Street.
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.
Position Sizing
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
3 comments:
Hi Brandt,
I had one thought regarding the analysis you perform on the leveraged ETFs that you might have a word on. I am having this doubt that since they are a function of the performance of the underlying ETF (eg. UPRO and SPXU depend on the performance of the S&P) that the accumulation/distribution analysis on themselves might not often be accurate. Although it is impossible for me to imagine accumulation in UPRO and a distribution in the SPY at the same time, I wonder does it make sense to even look at the acc/dis in the leveraged ETFs, isn't it enough to analyze just the underlying ETF?
I wonder also how bid/ask on the leveraged ETF is determined. If there is a huge buyer of the lets say UPRO and is hitting the ask offer, will that affect the SPY? I think not. Could that imply that if we see a strong accumulation in the DBO that we need to see also a strong accumulation in the USO in order to conclude the expectation of a higher move in oil prices.
Am I getting something wrong here?
Thanks!
From what I've seen SPY gets tremendous volume and are a pretty good proxy for the market. I'm not that familiar with UPRO, but in '08 the inverse ETF's did seem to be the tail wagging the dog. Anymore I'm not so sure.
The SPY is the best proxy I think for the market, but I look everywhere for clues. Each is a piece to the puzzle and hopefully it allows me to put together enough pieces to get a picture. The UPRO chart was interesting just to demonstrate the effects of a market maker during a rather docile market with no other seeming interference. If a bounce was expected to be short lived, I'd expect equity traders to move into the leveraged positions, but I have no real proof of that as of yet. Also each stock is accumulated in different fashion, whether that be due to market makers, demand, market cap, I don't know, but sometimes you'll find a leading signal somewhere surprising before it shows up in the SPY.
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