Okay, I'm in the middle of running scans and keep coming up with the same cast of characters. There are a few interesting developments I'll go over in the next post and you'll have your ideas for tomorrow and this week. Below I took this from one of the classes I teach, it's a bit advanced for the typical person who is only vaguely familiar with T.A. but those of you who read charts and can spot confirmation and divergences both negative and positive, should appreciate this post. I had to paste PDF pages so that's why it's a bit messy. You can use whatever your fvorite indicator is, I used my 3C (usually yellow) because it simply is easy to use in spotting divergences-that's all-plus I think it's awesome!

The point is, I used this method to nail an entry on GS down to the day and minute more or less with a lot of confirmation. So check it out, if you have questions, let me know Brandt@Trade-Guild.net

More coming tonight.

Aligning Time Frames

Once you have established the direction of your trades, have identified the main driver of any one position-the market's trend, then you probably want to look for the ideal time to enter. While this can be done with daily charts, depending on your style, time and resources, it can be further narrowed down. For example, “I know the stock I want to short, I know the market is in a bounce which is good because it gives me better positioning with less risk, but how do I determine when to initiate my short?”

Aligning Timeframes

There are entire books on this subject so I can not cover it extensively in our class, but the premise is, the daily chart is favorable for your short, you want the hourly and maybe all the way to the 1-minute chat to be favorable as well. How you determine favorability will be up to you. Here's an example of How I use my 3C Custom indicator to “Align Timeframes”

In this daily chart of GS I can see clearly that my indicator is registering a negative divergence around August, but this only tells me there is “Distribution”-it does not tell me when they will have depleted their inventory through distribution and when prices will sink. I have also established a trendline for the top and as it develops I can see it is a H&S top. I would like to be short the stock once price breaks the neckline and then a rally back near the neckline for my entry.

The next daily chart of GS  (previous) shows the break of the neckline and the subsequent rally to resistance, this is an ideal place for me to short, having a confirmed top and a rally which presents low risk, but how do I know which day is the best day to enter, “when will this bounce be over and price will start to move down?” Point “A” (2/3/2010)  looks ideal on the chart-it's a reversal signal and at resistance.

The next chart (above) is still GS, but a 30-min chart focused on 2/3/10 and as you can see price tests resistance (the red trendline) you can see at point “A” another negative divergence indicating a lot of sellers stepped in at that level. This helps me align my timeframes and gives me a higher probability of having reached an excellent entry point.

The final chart of GS (previous) shows my indicator focussed on 2/3/10-each bar represents 5 minute5! You can further see here that the ideal time to short GS was on 2/3/10 at approximately 3 p.m. when I saw another negative divergence in my 3C indicator at point “A”. I have now aligned my daily, 30-minute and even 5-minute charts all to give me the best possible known entry (known because anything after 2/3/10 we have the benefit of already knowing what happened in looking back.)

Further confirmation shows the QQQQ's daily chart at point “A” (2/3/10) at resistance.

An hourly chart of the QQQQ (previous) representing the market, shows another negative divergence at 2/3/10 point “A”

Finally a 1-minute chart of the QQQQ shows negative divergences at 3 p.m. and a worse one at the retest of the 3 p.m. highs near 3:45 p.m. Now I've not only received multiple timeframe confirmations on GS, but the broader market as well-I found an excellent entry point by aligning and confirming.

Summary

As you know, Technical Analysis is about putting the probabilities on your side. I Found a very reliable Head and Shoulders pattern in GS-a financial company. I know financials did not perform well toward the end of the rally for several months. I say daily distribution using my indicator showing negative divergences. Not knowing how long the stock would be under distribution before a move lower, I waited for confirmation in the break of the neckline of the Head and Shoulders top and then waited for a high probability low risk rally to resistance. I used an hourly chart of my indicator to verify there was true selling at the resistance point and further narrowed it down to almost exactly 3 p.m. on February 3rd, 2010. To add even more confirmation, I used the exact same process using the QQQQ as a proxy for the overall market as the market's moves have more gravitational pull on your individual stock then anything else. I saw all the same negative divergences at nearly the exact same time. So I had many probabilities in my favor:

1) A weak industry group

2) A Stock in a highly reliable top formation that confirmed the formation

3) I saw Distribution further confirming the top

4) I waited for a low risk/high probability entry

5) I confirmed distribution at resistance on the day I wanted to short GS in multiple timeframes

6) I further confirmed all the same as above in the QQQQ-or more or less, I saw the market was showing a strong likelihood of a downside reversal.

All in all, you couldn't ask for a better entry!

Shorts Everywhere

Review the lost from the last few days, there are great shorts all over it. Here are some that may or may not be on the list that look good right now-All short-All at the open at market

ADCT looks good here

YZC in good pos. w/ an excellent neg. divergence in 3C
MVC in good pos.
RTP in good pos.
RY
WBK
TSL is about to trigger a short limit order out of the bear flag
CMC-nice  H&S
VALE strong Short
RTP

Intraday Update 2

Looking at 3C, I see nothing that would keep me from shorting in this area, it looks like a reversal for the most part to the down side.

Intraday Update

I continue to believe yesterday's 12:20 high for the QQQQ NASDAQ 100 was the high probably for the rally and we are moving down from here. We are adding positions, SLV short and long DZZ a leveraged short on Gold. There are many others in the watchlist that look great and trades underway that are profitable on the short side and can be added. We used the 30+% move in SSN today to exit that long.

FXP and FAZ are two 3x leveraged short positions (you buy them) that look very good right here. Watch your correlation-China is correlated with the $, commods, gold, silver, etc-and the market in a round about way. And of course the short on financials, you'll want to consider any banking shorts GS, JPM, etc. you may have and almost consider them as one position. That is why I gve you so many shorts last update so you can find groups not closely correlated to your current positions.

Today is the Day?

Maybe? Yesterday many of the averages-most except for the Dj-30 put in short term reversal signals, meaning the bounce may be over. The Dow was stronger because of KO's announcement of earnings. You may want to start building some short positions/adding, but don't get too aggressive until we see that reversal for sure. All the shorts I posted two nights ago for the most part are in even better position to short. If you have questions, email me.

More then Enough

Yesterday I posted more then enough trades to keep you stocked and today most of them are even more attractive-especially on the short side. All prices UNLESS otherwise noted in the notes are buy on the open AT MARKET. All stops are SUGGESTIONS. You can give them more room (I'd advise buying less shares to equalize your risk) or you can tighten them (and afford to buy more shares at similar risk-there's a lot on Trade-Guild.net under Resources and Concepts on proper risk management which is the centerpiece of what we are doing here).

ALL STOPS ARE AT or as close as possible to MARKET CLOSE-otherwise you are justing getting needlessly stopped out of trades during intraday swings. For the most part, the short trades are position trades, meant to be held for weeks-months-Read at TG under Resources and Concepts "How to make more then 100% in a short". Instead of the stocks, you may also want to look at a leveraged ETF in the same industry group and I'm always happy to answer emails as timely as I can.



NOTE, I Have not notified anyone of their subscription running out, but several of you have gone ahead and renewed-Thank you very much -I'm glad you are getting something of value from the site. I will be sending out notices if you are about to renew or are past due and I'll give a day or two grace period. Please feel free to send suggestions of how I can make this site more helpful to you and check back during the day. Today I noted at 12:50 tht 12:20 was what I believed would be the high of the day-that can be useful information and it was dead on for the rest of the day.

Thanks for reading!

Intrday update #2

Based on 3C readings of the Q's I have reason to believe we may have hit an intraday high at 12:20. I see plenty of negative divergences throughout multiple timeframes so we are holding our short positions and using strength to exit longs.

Intraday Update

These trades-most on last night's list, are all looking interesting this am.


BVN
SNWL
SF
WIT
MOT
MNTG
FCX
TUP
OXGN
CRM
IOC
CRNT
NEXM
ATW
CYMI

Bunch of new Trades up

You'll find them under Feb 8th on the spread sheet at the bottom and all are for execution on the open at market except where noted.

The market did not give us the same strong close we saw Friday and made new lows in several averages. It looks like we're back on the way down. Short trades like MOT, JPM, GSS, etc (email me if you need another opinion) can be conservatively added to and all the others are fairly good position to take a full position although you may want to enter partial and add upon follow through or a pullback. There are a few longs as well-mostly speculative.

I know there are a lot of trades, but I listed what looks good right now. The key to choosing may be that you chose a trade that you do not already have correlated exposure to. For the first time there are some gold stocks and more oil industry stocks. So don't be overwhelmed by the list, look for trades that are in groups you are not in yet.

SRS

is an UltraShort on Real Estate (2x inverse) and looks pretty good right in this area. The breakout would occur around $8.50 where I'm sure there are a lot of buy orders lined up. Take a look, I like it here.

XLF (11:30 am) looks like it's hit in intraday double top and should pull back a little from here, it could be a quick day trade on a leveraged financial ETF like FAZ or SKF-or this could be the start of something bigger, but I can't say that yet considering the strength of Friday's pattern.

Check back often today.