Wolf on Wall Street

Tuesday, April 9, 2013

AGQ / SLV / GLD Follow Up

I still have pretty high hopes for a GLD and SLV trade on the long side, I think the base needed is still there, but I didn't see the reason in watching these two deteriorate and just waiting there for the stop to be hit when they made a decent amount in the few days they were open (Friday)

At the fill, this came out to be about a +8% gain on the ETF for 2.5 days. I would have much rather held it and hope to again soon.

SLV 1 min

3 min

The divergence went as far as 15 min so I figured it's a pretty decent one.

GLD

1 min

2 min

3 min

And out to the 10 min so again, it seems like it was more than just intraday selling.

Closing the Rest Of the IWM $91 Weekly Call This Week expiration

Going to take AGQ Long off

I'm going to close the AGQ long, maybe re-open at lower levels if possible, if I had long GLD positions I'd take them off as well, I feel there will be at least a decent pullback.

Other Averages: SPY, DIA, IWM

So far my favorite among the averages is the Q's for a quick Put position, however among the 5 min futures it's ES/SPY and TF/IWM, perhaps that will sort itself out. The DIA has been the strongest of the averages for almost a week now.

DIA

1 min Leading negative

3 min leading negative

5 min leading negative

IWM

1 min leading negative pretty bad

1 min intraday

2 min leading negative

3 min leading negative pretty bad

5 min leading negative very bad

10 min shows the strength from last week and why we were expecting more to build before the algos ran the market up, there's still most likely a decent base there, but we'll have to look at everything with new eyes.

The 10 min here is totally flat so it's lading negative the last 2.5 days

SPY

1 min leading negative

2 min leading negative and pretty bad as this is intraday

2 min with some context, leading negative

3 min leading negative-all are worse in to today, as I said yesterday, I don't trust this move.

SPY 5 min

The 10/15 min charts that were so strong last week, the reason we too out some long positions, but again these will have to be viewed from a fresh perspective on a move down.

There goes AAPL making its move

QQQ Update

I'll get the other averages out in the next update, but a lot of the concepts are the same.

By the way, the R2K Futures (TF) also now have an intraday 1 min negative, not as bad as NQ, but it's there and that was one of the stronger positives.

QQQ 1 min leading negative, because yesterday was algo dominated, there wasn't accumulation, it was buying, selling, buying lower, selling higher, it wasn't true positioning.

Here's the same QQQ 1 min chart on an intraday basis, you can see why it has made the moves it has, but you can't ignore that oin context it is leading negative (above this chart)

2 min also leading negative

3 min also leading negative

5 min leading negative

And 10 min where no accumulation-positive divergence was added at all on the institutional timeframes of 5 and 10 min, this is a large negative divergence considering price movement.

Went With QQQ Weekly PUT / expiration 4/12 / Strike $69

Going to open half of Spec Position in QQQ weekly Put

Expiration this Friday, not sure of the strike.

The NQ intraday futures, as I said, can change fast.

This intraday chart is now leading negative.

To me this is worth the risk of half of a spec position, I'd like to fill out the other half, but will wait for further confirmation

AAPL is showing improvement

There's improvement on the 2 min chart above

And the 5 min chart.

The 10 and 15 min already looked good.

I don't see much improvement on the 1 or 3 min, which if anything suggests AAPL may make a move to join the market, but is not necessarily ready for the move I'd like to get involved with.

I'll keep an eye on it, but for now, I personally will stay away. I think if you were very nimble and had time to watch it very closely, there's probably going to be an intraday tun to the upside.

Futures

I'm going to keep the futures and the market average posts separate so I can get them out faster. First I'm going t show you why I am considering the Put in one of the major averages and then why I'm waiting for the right moment or signal.

NQ (NASDAQ Futures) and divergences on the 5 min charts have been productive for 1-day weekly calls or puts, the negative divergence here is pretty bad.

TF (Russell 2000) 5 min chart has a nice negative divergence.

And ES 5 min (SPX Futures) have a very nice negative divergence as well.

Now what has held my hand back...

NQ 1 min has some positive intraday divergences suggesting higher prices intraday, plus after looking at the leading indicators, I'd like to really see strong negative signals short term and in leading indicators.

TF 1 min has a very strong intraday positive divergence and has already moved significantly off the lows.

And ES has a positive looking 1 min 3C chart and is in confirmation with 3C at new intraday highs, these can change pretty quick so I'll be watching them, but also leading indicators.

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.