Wolf on Wall Street

Monday, January 3, 2011

Another cats and dogs long that just triggered. I suspect with all of the international markets up today, we will probably be seeing a lot more of these.

Trades

KBX and VLNC both just triggered Cats and dogs longs and URBN a short

BPOP and MMG

Both just triggered Cats and Dogs long trades. Still trying to get my softwate up , should be soon.

NOW Silver looks like a viable trade. I'd still like to see it hold there a day or so, but for those inclined and who like the idea of the silver trade, now might be a god time to start building a position with a stop under $30.

Sunday, January 2, 2011

New Year Snafu

Unfortunately, I'm having a problem opening my Worden software after installing a beta product. It should be back up tomorrow morning as I've sent emails to the service department.

The only developments thus far are in Asia which is trading pretty strong, we should see early morning futures up, how that plays out after the open remains to be seen. We've had two weeks of failed gaps in both directions that have led to nearly flat closes.

The good news is, we should be able to get into some decent trending trades with volume picking back up. The first few days of the new quarter are always interesting, but I think have little impact as funds replace holdings they did NOT want on their books at the end of the quarter or year for their new prospectus-sometimes they sell some as well, but usually they are replacing non-performing positions that they believe in.

We'll see in a few hours. Interestingly the Euro is down and dollar is up as of 11 p.m.

Saturday, January 1, 2011

Happy New Year!

Friday, December 31, 2010

Financials Update

XLF decided to test resistance again today, thus far it's failed.

15 min XLF chart.

JPM also ran up a bit with financials and it also is showing signs of distribution on that run up.

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.