Wolf on Wall Street

Monday, November 1, 2010

I'm Back

All the gory details later, just suffice it to say Murphy's Law was this morning's theme.

Since I couldn't update at all on the ship or even open my charting software, I have some catching up to do, but this is the current state of the averages, the gap up looks like it's being faded this a.m., here are the charts:

Basically negative divergences right off the open-(Selling the opening gap, not unusual to rip off the retail limit orders). Right now the QQQQ and the SPY show a possible positive divergence forming, although it's to early to say until they make a move down or up.

I'll look over the charts and keep sending updates.

Sunday, October 31, 2010

Lost At Sea

Normal WOWS service will resume around 11 a.m. tomorrow a.m.

Unfortunately on the ship I paid for one hour what I normally pay for a month and
CAN NOT update any charts. So Monday a.m. I'll resume posting from home. We lave the ship at 9 a.m. and clear customs and have a 15 min drive home. A month's worth of service effectively WASTED! Aggravating.

Thursday, October 28, 2010

Last Post Before I set off-to Set Sail

These are the 5 min charts of the averages. There is a little deterioration in them surprisingly.

Being today is a POMO day, it should close green, if it doesn't (in which case it will be fighting against the sinking dollar today), it will be in my mind a very bullish sign and perhaps a reason that story was floated this a.m. during the Fed blackout period. Watch volume into rallies, it should increase if it is healthy. Volume that's big into declines is bearish.

Watch the TICK chart if you can, it will give you a good idea of where the market is headed as it trades in a channel, when it moves out of the channel, you'll know that's the most likely directional change.

I'll be updating tonight and if I get on the ship early enough, maybe again during market hours.

There is surprising weakness in the financials today, so look at the list and recent financial trades I've posted, most of all, SET THOSE ALERTS from the trade watchlist.

See ya soon and hope that I float.

Request For 3C 1 min charts

Strange thus far...

All of the 3 averages are now in 1 min leading negative divergences-pretty nasty ones as well.

SIRI Up on a BREAKOUT Move

Take a look, the stop is difficult here, but this looks like a breakout. You can always have a wide stop with fewer shares, position sizing.

Muddy the waters

?maybe this is the traditional, screw the little buy we see in early morning trade as they bought the gap up, but DIA is showing a 1 minute NEGATIVE leading divergence.

Surprise-BWS

The BWS short just triggered.

Starting To Feel A Lot Like a Banana Republic

Initial Claims and continuing claims were both revised higher for last week. Now it's about 40 revisions up and two down. Each week the numbers are made to seem better then they are, when the information doesn't matter anymore, they correct it, and it always goes up-except for twice out of about 42 revisions. So today's beat, can be expected to be a miss by next week.

Ahhhhh... Kind of speechless on this one.

Last night it was clear that 3C was forecasting a bounce in the market, as I said yesterday, it starts at the 1 min charts and the more serious ut gets, the longer term charts it effects, by the end of yesterdy it was on 5 min charts which would suggest to me that the market bounces today, thus a lot of bounce trades last night, but is that all?

It's hard to say for certain after reading this last article, it's hard to believe. I think there's going to be some serious blowback on this one.

http://www.zerohedge.com/article/paralyzed-fed-defers-decision-monetary-policy-primary-dealers

The Euro has liked it so far it seems although it hasn't travelled as far as it seems.

Keep an eye this morning on those bounce and long trades.

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.

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.