I don't have a lot to say that I didn't already say, we'll see what happens. As I mentioned last week, there was a positive divergence starting in the dollar, so the pullback there could be coming to an end. There was also a positive divergence in Treasuries-short and long so look for some action there this week as well. As you know I haven't like Gold for awhile, but now the 10 minute chart is in a leading divergence, I'd watch for a continuation of Friday's downside move. Silver should come under pressure too, it's showing a 1 min and a really nasty 5 minute negative leading divergence, I'm not sure why it held up Friday, but I don't expect that to last.
Oil is starting to look indecisive, except on the 1 minute timeframe, there it looks bad, those could be a reflection of the accumulation in the dollar. The longer term charts seeming in disarray may be a switch from one sentiment to another with the 1 minute leading the way, we'll have to see if those charts come into line.
The 1 minute on the SPY is in a negative position, it doesn't look horrible, but it's not confirming the recent uptrend. It's the longer term charts that look bad there whereas they looked good before the bounce so as you know, I'm expecting a change there soon. The one minute chart may need to go into a leading negative divergence before we see that change or it may not, that could happen in half a day.
It's largely the same for the IWM and DIA, but the QQQQ has one particularly large negative 5 min leading divergence, I'm wondering if it is going to be the weaker of the 4?
In any case, will wait for some confirmation before acting too aggressively on the market, the treasuries, Dollar and precious metals may be something you want to take a look at now, maybe get your toes wet.
I don't see anything important on the economic calendar tomorrow.
I'll see you in the a.m.
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Risk Management
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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.
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.
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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
2 comments:
I think we now have a clearer picture as to the catalyst that was in question. It seems alot of the bogus bank stress test are now coming back into play as well as the soveriegn debt of Europe. In addition a slowdown in the US and now China would be disatrous for Europe. News release are saying that the Banks of Europe need billions of new capital. Maybe the big boys were also waiting for more traders to return from summer vactions to have max effect.
It seems so, this was no coincidence. This is how it works, we see something they are up to and we have to trust blindly in following their trades as we don't know how it will end, but 99.9% of regular traders don't have a clue and think this is all about a moving average, a Fibonacci number or something else like that.
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