Wolf on Wall Street

Friday, January 21, 2011

XING-C&D LONG

XING's 15 min chart has a very nice positive divergence, it looks like it could sustain and second leg higher.

Update

Here's the SPY looking like some of that gap will be filled, the dow looks a little stronger and the Q's look the strongest.

Keep an Eye on PARD

If this passes $.75, it's setting a new breakout high and is likely to add more, especially if volume increases.

Thursday, January 20, 2011

Not a Conspiracy Theory

Not when you have irrefutable proof and yet again, today, another POMO day sees the Prmary Dealer levitate the market with freshly picked green cotton at 11 a.m. at the end of the POMO.

Positive divergence on 5 min chart of the SPY-note the time, The market really didn't look back after that.

Today I was very ill with some sort of flu so I apologize that there were no posts. If could have put anything up with a situation update I would have. My wife called 14 times and I couldn't even answer the phone right next to me. In any case, the fever seems to have broken and I'll be back on the case first thing in the a.m.

I tried to get to everyone's emails today, if you have any questions, please feel free to email me as I try to get caught up on today's action.

Again, my sincere apologies.

Check out Trade Guild Tonight

I posted a video of EEE, one of our best performing Cats and Dogs picks. What I hope you will take away from this is the ability of 3C (by the way, this is a newer version of 3C-so if you're using the indicator email me for the code-it's similar to the orange 3C) to find some of the best exits allowing you to hopefully maximize your gains. If you're not using the indicator, please email me and keep in touch when it gets to trade management. After seeing this video, it should be clear why.

On another note, I'm using some new tools on a Beta release of TC2000 which is awesome. I sill have to set up my templates, but there's a few tools that I think will help gauge the amount of accumulated volume and distributed volume which should also help in finding the best entries and exits, plus a whole slew of new scanning tools. So if you see some different indicators in the days ahead, it's the beta version coming out soon. I have links to TeleChart and StockFinder at the very top of the site, check them out.

Wednesday, January 19, 2011

Market Update

Well there are stocks everywhere getting slammed today. I'd attribute a large part of it to the Portugese incident, but I'll have to do some dgging later to confirm that.

One thing is for certain, yesterday I told you the Dow was tipping it's hand and showing some negative divergences/distribution. Ironically today it's held up the best.

Here are the current charts and if you are a bull, you're not going to like them.

The DIA's negative divergence is now spread to the 30 min chart which means the situation is more serious-but you can see that in the market's action. The last 2 days have confirmed this divergence.

The Q's were coming out of an ascending wedge, I talked about it and knew that we'd see the typical volatility of a very familiar pattern as the black boxes love to make 100 years of technical analysis the weapon of choice they use against you. The 30 min picked up on the divergence late yesterday and is leading today.

The SPY 15 minute, which is a nice timeframe for reversals of the "Swing" magnitude, traced out this nasty little divergence which was relative until today when it went into a leading divergence.

There are some short term positives, I'm not sure what to make of them, but the market has been very "Gappy" lately so a gap in the a.m. would make sense (to the upside). We also haven't seen downside in many of the averages like today in quite awhile. Just looking at the 1-5 minute positives, I see there's a slight bid in after hours, so it could be about that too where the market makers/specialists pick up some shares toward the close and sell them to permabulls who are stuck on the "Buy the dip" mentality no matter what the charts say.

For now, lets take it for what it is, a bad day. I'm going to check the market breadth and the P/V relationships, today could have created a one day oversold like the one day overbought I mentioned last night. As they say, one day does not make a trend. I do believe though we are setting up for some nasty downside. The bases I've seen in some of the inverse ETFs are just too big for them not to pop. If/when they do pop, it's going to be ugly with bases of that size.

I'll be reporting back, I have a lot of charts to look at.

FXI another bear flag breakdown

Here's the familiar bear flag. Note the trend lines are drawn a bit narrow, the reason why is the two days sticking out were both false breakout/breakdowns, the reason I know this is because of the quick and immediate move in the opposite direction.

On the 30 min 3C chart you can see both with divergences representing the false moves so that gives us some further confirmation

The 15 minute shows the negative bias as well as the false breakout as well. Note the position of 3C at the recent high, this gives me some confidence we are not seeing a false breakout as the distribution pattern is larger-actually throughout the bear flag, which is the very reason bear flags exist.

The 1 minute chart is in confirmation of today's move out of the flag.

This is a fairly new breakdown so it's in decent position.

Stops that can be used include $44.65 and $44.85

DELL a Short Trade

Dell daily, a bear flag consolidation breaking down. I've had an alert set for this breakdown, it just sent a trigger.

3C 60 minutes in nice confirmation until several days ago, a beautiful negative divergence at the top of the range.

30 min chart confirms the same

10 min chart confirms again, this is what I like to see, multiple confirmations.

Dell may pullback a bit and offer a better entry, but you may risk it not coming back at all. You could try a phased approach adding on any strength, wait for a pullback or just go for it now, but your stop needs to take a pullback into consideration.

I'd think an initial stop at $14.20 would work. The trend channel is at $14.27 but it'll probably hit $14.20 by the close. This is another bellwether stock taking it on the chin-not good news for the market.

And they BEAT!

Here's yesterday's earnings pick-a short sale in AMR which reported earnings this morning.

Can someone email me and let me know they took this trade? Down -5.8% in a large cap.

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.