Wolf on Wall Street

Saturday, September 3, 2011

TEST

Friday, September 2, 2011

3C Calls and Portfolio Positioning

This is a $100k model portfolio that I have very little time for, but I wanted to show members that all of the information in the 3C calls can be used to trade effectively. No trades are placed until the update appears here first and very often I don't have time to even place the trades unfortunately. I also have to deal with 15 min delay, so when I see an optimum entry that you can trade immediately, I have to wait 15 minutes, often loosing the great positioning.

However, 3C has been right on the money, especially through this very transitional and volatile time.

Any way, there are 6887 portfolios, some are MIT students and other business schools that are competing.

Here's this week's ranking...

#10-the top .02% of 6887 portfolios with nearly a 60% return this week.

This isn't meant to be bragging or taking a victory lap, it's meant to show what you can do with risk management and the information contained n just about every post on the Wolf on Wall Street site.

I hope you had a similar great week!

Best Guess For Tuesday

SPY 1 min accumulation-seems like there could be a gap up on tuesday that may allow for better positioning on shorts.

The 10 min chart shows the same positive divergence, but in the middle of a bad leading negative divergence, suggesting the same as above.

The 30 min chart is downright ugly with no improvement today. Remember, nothing goes straight up or down, so I plan on trading around this a bit, but maintaining the bulk of my shorts for now.

Taking some profits

As I mentioned in one of my last posts, I'm going to take some profits and hope to get better positioning to re-establish shorts at a better level, maybe today, but most likely Tuesday a.m.

DTO position update

DTO 1 min seems like there's some more intraday upside here... but

The 10 min chart is not in line with price and a bit negative.

So is the 15 min chart.

The 30 min chart suggests more upside, so I think we may see some short term volatility that may take DTO a little lower, then up after a day or so, I'm guessing at this point. I intend to at least reduce my position there to lock n a profit.

As for the dollar, there's a short term negative divergence, which means some selling pressure, that seems to indicate that USO will see some upside and probably explains some of the DTO intermediate negative charts.

The 15 min chart is inline.

The hourly chart seems lke the dollar is headed higher, which should help DTO in the longer term.

Market Update

DIA 1 min- can't say 'm surprised to see a positive divergence here on the break of the triangle-remember-volatility around important support areas.

DIA 15 min also shows some longer term accumulation, I think this is institutional money taking advantage of the short seller volume.

DIA hourly seems to suggest there's more downside to go in the bigger picture, although we may see volatility as I mentioned last night, both intraday and on a daily basis.

IWM 1 min-same as above.

IWM 5 min is in line with the downtrend

So is IWM 30 min-suggesting more big picture downside.

QQQ 1 min-same as the DIA 1 min chart finding.

QQQ 1o min -same as the finding on the other chart-institutional money taking advantage of the volume from short sellers.

QQQ 15 min is in line with the downtrend.

QQQ 60 min-we are close to breaking the triangle here, but not like the SPY and DIA which already did. This chart is leading negative-big picture suggests more downside.

SPY 1 min-same as all the other 1 min findings-volatility around important support.

SPY 5 min is in line with the downtrend.

SPY 15 mn-same finding as all of the others-institutional money accumulating the short seller volume in my opinion.

SPY 60 min, big picture suggests more downside.

Addendum

I should have added the possibility of a bounce at triangle support, being it' an important level. Look for volatility in price around this area.

Plan is working-Short Sellers are taking the bait

Remember, the triangle is what all retail technical traders are watching. It broke out to the upside, so it seemed to be a solid pattern. My call for a move down included a break of the triangle, this would tell retail that the triangle breakout has failed and technical analysis teaches them to reverse positions (in this case go short) on a failed technical pattern. THIS IS WHAT WALL STREET WANTS! They need the short sellers to enter the market so they can squeeze them on the next cycle up. This is a perfect example of what I mean when I say Wall Street adapted to Technical Analysis and uses it against technicians, but technicians still after 10 years have stuck to the dogma of technical analysis and have not adapted to Wall Street, making technical trader's actions predictable, which makes Wall Street predictable.

This volume spike is on the simple break of intraday support, the diagonal line is the top of the triangle. Short sellers will really enter the market in droves on the break of that support and a failed triangle-at least that's what they think.

Here's the daily chart and how close we are to that failed triangle. The short seller volume will make it that much easier for Wall Street to accumulate in the wide open as someone has to take the other side of the trade, it raises no suspicions!

On an intraday basis, here's how close we are to breaking the triangle! PERFECT!

As For Emails

I pride myself on answering emails in a timely fashion, today I've had a lot and the response time is not what I would like, but I have a lot to watch in the market for the whole Wolf Pack. So if you have an email that can wait until after market, I'd appreciate it if you sent it then. If you have something that needs to be addressed right away, please mark the subject line as "Urgent" so I know I need to get to it ASAP, some of these posts like the last one took nearly an hour to put together, but I think it was important information for everyone to have.

Thanks for your understanding...

USO update

It seems like the 12:36 pot about re-entering USO short worked out.

USO has moved lower since I re-entered the short on strength intraday.

The 1 min chart looks like a little bounce or consolidation is coming up. I do expect more downside though as far as the intermediate term goes. If we get a bounce here, t may be a chance to enter USO short.

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.