Sunday, June 6, 2010
Take a Look at Trade Guild
I posted one of my indicators I use (custom), Price/Volume Relationships. Red is the worst, Green is the best, you can figure out the rest. Notice the Red in the recent consolidation and the orange on Friday on the daily chart. However, remember I said early strength on Monday, look at the size of the last green bar on the second chart! I used 3C for that, I looked at this for the first time on a long time and it happened to confirm the 3C analysis. I have a lot of custom indicators for TeleChart and StockFinder. any re much more useful than I sometimes give them credit for.
Probabilities
***Update-futures are down overseas, which doesn't mean we will open down but makes it more likely. That does not negate the probability of early strength, if you are a nimble trader you may want to buy an ultralong like UWM at the first sign of it moving up and sell it, well that's your choice, but maybe in the $29 area or until it stops making higher highs/higher lows on a 5-minute chart.
Playing cards professionally and gambling are two distinctly different things. One entails risk management and having the probabilities on your side. The other usually has no risk management or something even worse-human emotions dictating the size of a bet (which is why Las Vegas hotels can build as grand as they do) and no edge. The edge is probabilities, the only sure thing is already behind you. Risk management is there for when your probabilities fail you.
So the probabilities have been stacked against this market pretty bad, the breadth readings for anyone listening to them (they are boring) have foretold all of this as we've gone.
Now below we have a series of very negative situations.
Click on the charts to enlarge. First the NASDAQ COMPOSITE: it broke out with the NASDAQ-100, the S&P and Dow didn't follow. Since the days of Charles Dow, it has been well known that this can mean trouble for the market. I posted as such last week. The breakout now has failed which means it's a false breakout-note where it failed-at that gap. False breakouts, because of the structure and emotions behind them tend to reverse quickly and deeply. STRIKE 1
And here's the bear flag target for the SPY.
However, the 15 min, which is the rock vs the 10 min which is the scissors, ultimately wins out and says the downtrend will prevail. Again, the fall on Friday was fairly easy to see as of Thursday.
The plan for tomorrow is the last thing you probably want to hear because we as humans don't feel productive unless we are doing something, but there is a time to be still that will accomplish more than any flurry of trades you can throw together. Unless you do not have your 50% or so, core short position together with proper risk management which I talk about every post, then you have nothing to do tomorrow unless by some strange occurrence the market breaks below $104.40 (SPY) then you need to add 25% more to your short positions, whether they be the core ETFs or any of the shorts I've recently listed. You can always play any of the limit trades that have not triggered if you just can't sit still.
If you are new, then you have work to do and tomorrow if we see higher prices as probabilities say we will, then you should be looking at the core inverse Ultrshort and 3x Bear ETFs and shorts I just listed the last few days. Ultimately you have to do what you are comfortable with, but our plan is to be 50% short right now, many of us are. When the SPY breaks $104.40 we add another 25% of the portfolio short and 25% stays in cash.
So if you are new to the site, you may have some spring cleaning to do, selling longs into higher prices, selling short into higher prices, read everything I have on both sites on risk management and if you need help please email me. When this market breaks you do not want to be scrambling to get yourself positioned. We have been doing this since the SPY was well above $112-$114. You need to get caught up. Take a look at the core ETFs, it is what I am using. Also you may be able to buy a little UNG right on the open at market but only 25-30% of your intended position. It's already moved, the rest you'll probably need to wait for the first pullback to the 10-day m.a.
If you have questions, email me at BT46n2@Gmail.com
Silence is the sound of dignity, patience is the mark of a successful trader. Time to be still....
unless this market goes the other way in a big hurry. Remember, we are with the probabilities, not the fortune teller's crystal ball so RISK MANAGEMENT (new people, read the "2% rule" and both "position sizing " posts at Trade Guild under "Resources and Concepts" on the left side of the site.
Playing cards professionally and gambling are two distinctly different things. One entails risk management and having the probabilities on your side. The other usually has no risk management or something even worse-human emotions dictating the size of a bet (which is why Las Vegas hotels can build as grand as they do) and no edge. The edge is probabilities, the only sure thing is already behind you. Risk management is there for when your probabilities fail you.
So the probabilities have been stacked against this market pretty bad, the breadth readings for anyone listening to them (they are boring) have foretold all of this as we've gone.
Now below we have a series of very negative situations.
All the indexes had this pattern in them, it's called a bear flag and it's a continuation pattern. This is the SPY and the implications which are laid out on the chart give us an "initial" target of $95. Wall Street's new volatility game will usually try to pull prices back into the flag, it could take a day, or two days, maybe more, but they want to wring out the shorts, get there bulls back in the market, set their shorts and then let it all fall apart again so watch for that possibility, but don't take it too serious. It's probably not worth betting on unless you are using 3C and watch the market all day. Note the diminished volume into the flag, the increased volume on the breakout and the nearly vertical drop that forms the flag pole (upside down).
And here's the bear flag target for the SPY.
I mentioned the divergences building last Friday, here we see a good example of a positive divergence in the 1-min SPY, suggesting that we will see early strength.
Here's a 10-min 3C SPY Chart, this divergence carries more weight. However, note the negative divergence on Thursday and remember Thursday night's post and how much I talked about "key" negative divergences. With a chart like this, it was fairly easy to see where the probabilities were. However, if this 10-min divergence continues, then we may see more than just early strength and as I mentioned above, Wall Street would love to see prices back inside that flag for a few hours or a day. So the probabilities are increasing that our little bounce here may be more than just an a.m. event.
However, the 15 min, which is the rock vs the 10 min which is the scissors, ultimately wins out and says the downtrend will prevail. Again, the fall on Friday was fairly easy to see as of Thursday.
The plan for tomorrow is the last thing you probably want to hear because we as humans don't feel productive unless we are doing something, but there is a time to be still that will accomplish more than any flurry of trades you can throw together. Unless you do not have your 50% or so, core short position together with proper risk management which I talk about every post, then you have nothing to do tomorrow unless by some strange occurrence the market breaks below $104.40 (SPY) then you need to add 25% more to your short positions, whether they be the core ETFs or any of the shorts I've recently listed. You can always play any of the limit trades that have not triggered if you just can't sit still.
If you are new, then you have work to do and tomorrow if we see higher prices as probabilities say we will, then you should be looking at the core inverse Ultrshort and 3x Bear ETFs and shorts I just listed the last few days. Ultimately you have to do what you are comfortable with, but our plan is to be 50% short right now, many of us are. When the SPY breaks $104.40 we add another 25% of the portfolio short and 25% stays in cash.
So if you are new to the site, you may have some spring cleaning to do, selling longs into higher prices, selling short into higher prices, read everything I have on both sites on risk management and if you need help please email me. When this market breaks you do not want to be scrambling to get yourself positioned. We have been doing this since the SPY was well above $112-$114. You need to get caught up. Take a look at the core ETFs, it is what I am using. Also you may be able to buy a little UNG right on the open at market but only 25-30% of your intended position. It's already moved, the rest you'll probably need to wait for the first pullback to the 10-day m.a.
If you have questions, email me at BT46n2@Gmail.com
Silence is the sound of dignity, patience is the mark of a successful trader. Time to be still....
unless this market goes the other way in a big hurry. Remember, we are with the probabilities, not the fortune teller's crystal ball so RISK MANAGEMENT (new people, read the "2% rule" and both "position sizing " posts at Trade Guild under "Resources and Concepts" on the left side of the site.
