As I suggested in the last post, we have the bear flag breakout on a modest rise on volume. The SPY already has a negative divergence, the DIA does not yet, it's still inline with price, the QQQQ has 1/3 in a negative 1 min divergence. On the 5 min they are all solidly negative in leading downside divergences.
I don't know what it will mean yet, but I just saw a nasty downside candle-1 min. It may be the start of the move back into the bear flag trapping longs.
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Risk Management
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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:
Well, TRIN failed again. There was a low closing TRIN value on Friday and yet the market finished up near the days high. I think that's about 4 failures in recent history.
And today's closing TRIN reading is 0.60.
As many have said before, this market is just a series of FED 'free money' interventions. If they keep intervening this persistently why would they suddenly stop?
VIX finished at 21.19, do you still think it is going to double tomorrow Brandt to make as many VIX options expire as worthless as possible? I don't think it even went up that high and fast during the May flash crash.
The vix hit $40.71 on the flash crash intraday and had intraday highs the next day of $42.15.
Personally I do not think it will double, or hit $45, but who knows? That's why I said on the spread sheet last night if I took the trade I'd go lower $30-$35 maybe. The TRIN hasn't been working for awhile, that's why I haven't been using it. I think that it probably works pretty well in a market that's not being manipulated higher, this market seems to be being manipulated higher and that's why I've been trying to get an indicator made that basically gives the daily weighting of each component, because when you see an A/D line going down into higher prices or the P/V relationship as bad as they have been into rising prices, it's obvious the bid/ask and news events are being used to manipulate it higher. In that case there's no way possible for the TRIN to work.
There are periods when there's less or no manipulation, I've seen this often in stocks-individual. However, I believe where we are at right now, we are probably seeing the most intervention-wherever it comes from, since Q4 2008-Q1 2009, back then it was openly obvious.
As far as why the Fed would stop-or more appropriately, let the market fall is because of the business cycle which is a Fed controlled event, although others obviously profit from it. There's periods of wild expansion when money is everywhere, like we saw during the housing bubble and then there are declines and the media says the market "LOST" XYZ dollars today. It wasn't lost, it was transferred and I'd say most often that transfer is from the hands of the many to the hands of the few. So a never ending bull market doesn't make sense, there has to be that transfer of funds.
"zero hedge" highlights interesting discrepancy between govt deficit(monthly) and Treasury dept debt issuance...BIG differences(eg 212 bio issuance vs 90.5bio deficit). Such difference buys ALOT of market manipulation. hate to sound overly conspiratorial but i wonder how much of the stocks being bought are going to offshore incorporated shell companies...aka proxies of Uncle Sam.
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