Wolf on Wall Street

Tuesday, June 4, 2013

ALL INDEX Futures are positive

AAPL Shaping Up Too-Again SPECULATIVE

I don't see how trades like AAPL (with no 2 or 3x leverage like some of the ETFs) are worth it without some leverage

I'd Love to Add to HYG- I can't Maybe you Can use it?

HYG is going to be needed to set the spark.

I'd add, but I've already taken on too much.

About 10 mins ago when I said HYG is in position that it looks like it "could" put in a strong divergence, it was about where the white box is, now it's leading stronger almost every 10 seconds.

XOM Is Another Short term Speculative Long

I'd only use call options on this for the leverage, if I had XLE (Energy) as a spec long, then I'd skip XOM, too much correlation.

TICK Transitioning

This isn't the tight "V" reversal in the NYSE Tick (intraday), but it's clearly transitioning to the upper part of the channel and above it.

COST by the way is an asset that I'd like to short, but in the very near term, again for a speculative long, maybe a call option, it looks like it too is getting ready to make a run to the upside.

XLF / FAS Long

These are speculative too, they aren't my favorite, but the SPX has about 22% weight in Financials so the sector will have to perform and it doesn't look bad for the type of hit and run spec trades.

If you don't like options, the 3X leveraged Financial long ETF, FAS looks decent here.

XLE Speculative Long

Energy broadly speaking looks like it can put n a pop tpo the upside, this is a short term trade and speculative.

SCO worked out, but there was no decent set up that was low risk so I just stuck with the open position rather than add, however XLE is the Energy sector, not just oil, it's made a head fake move, it's going positive, it looks decent for either a long leveraged ETF or a call.

MORE so than EVER, speculative positions.

Market Update

I expected that because smart money didn't sell off positions Friday or in to yesterday's strength, that they wouldn't need to and wouldn't want to do much more accumulating for the same reason I didn't, I don't want to be too top heavy on the long side when the music stops and it's time to tact the boat.

That makes it REALLY difficult to judge the reversal point as they aren't going to sink much in ($ I mean), but rather let retail do the work. Still they need some arbitrage assets to spark the move.

The USD/JPY on the upside is one, it hasn't been giving any signals other than in line, but the $USDX is giving a stronger positive, the JPY looks like it "could" be setting up for a negative.

HYG as I showed earlier looked like it was used real quick along with TLT to turn the SPY back down as it was starting to run up a bit too high and no wonder, look at the orders they hit on that run.

HYG is starting what looks like it "could" be a strong divergence, but it looks like it needs at least a couple of swings sideways, TLT is relative negative up to 5 min and both TLT and VXX didn't respond to the upside anything like they should have with the SPX move like that.

I think watching the NYSE 1-5 min TICK chart's trend will be important (draw trenlines around the channel for today) and look for a stronger TICK move above that channel-

It actually looks like USD/JPY may FINALLY be giving a positive signal instead of inline as it has been all day.

Breaking my Rules...Adding to NFLX

Way too big and if I get crushed on the trade, it's my fault, but adding to the calls.

Believe it or not, GS Spec Long Looks Decent

Yesterday it was being sold in to strength, today it looks like it's seeing accumulation in to weakness, this could be market makers trying to fill a GS sell/short order and they need prices higher, but it may make for a VERY speculative, short lasting long trade.

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.