Wolf on Wall Street

Monday, November 29, 2010

Chart Request SPY

Here's the SPY daily chart.

Trying to get this out quick-Request

I just updated the market , I'll put up the daily tonight. Here are SLV, GLD and USO on 1, 5, 10 min and daily timeframes. I won't have time for interpretations before the close, but they should be fairly straight forward. Ticker and timeframe are in the upper left corner.

Falling Apart

DIA 1

DIA 5

QQQQ 1

QQQQ 5

SPY 1

SPY 5

Looking at the 3C chart, the DIA and SPY certainly look very negative , the 5 min charts probably need more time to show anything interesting, but they are in simple confirmation. Unless there's another volume spike, I'd expect a reversal off negative divergences like these, they are pretty extreme in a short period of time.

PPT?

The Plunge Protection Team in action? It's hard to say, but there was a coordinated push around 2:30 p.m. with volume straight out in the open. We didn't see any divergences suggesting a move of this magnitude (in a parabolic sense) and that is why we are seeing volume out in the wide open. When traders see volume like that they assume it's a smart money move, but smart money moves are quiet accumulation, the positive divergences we see into a down trending or lateral market. Someone is trying to give the impression of instituitional buying. You can see their original volume surges and now the mrket is coasting on retail traders chasing the volume spike.

Remember, the market is near a very critical point and someone for some reason is giving the impression of defense of the support levels.

DIA

QQQQ

SPY

DIA

QQQQ

SPY

As you can see, 3C is not confirming the move up as volume is not, it looks like an initial kick start that isn't supported beyond that, but they could come in at some point with another volume surge. If not, then I'd like to see how the 5 min chart develops in a bit when it catches up.

Chart Request ACL

ACL 1 day 3C

ACL failing momentum in MACD, RSI and the linear regression channel.

1 min 3C bounce, but a little weak

3C 10 min chart showing a bounce coming.

This looks like an oversold bounce, it's not extremely strong in 3C, but it was calling for a bounce. I'd probably look at this as a very short term bounce opportunity, but more likely an opportunity to set up a short at a better risk:reward entry point.

DIA showing a positive divergence

The SPY has moved back in line and the Q's are slightly negative.

To be honest, I'm not getting very good signals today, whatever that means.

Looking at price action alone, I'd expect a bounce soon.

Correction

I have FAZ on the list 2x, one from earlier in the month and a current trade, the current trade was listed as a "S" short, it is not, I corrected it. While FAZ is an inverse or short ETF, it is supposed to be a buy. It is corrected on the list now.

Update

We now have some order, there are currently 1 min negative divergences in all 3 (Q's , SPY and DIA). The Averages are sitting in a very precarious position. Should they break down on volume, we may be opening a flood gate.

MORE TRADES UP

I just put up another 12 trades. A few are at market now. If you have any questions about any of these or anything else. drop me an email at BT46n2@gmail.com

Update

DIA 1 min

DIA 5 min

QQQQ 1 min

QQQQ 5 min -

SPY 1 min

SPY 5 min

As you can see, there are a few divergences here and there, but nothing very definitive in all averages across the 1 min/5 min. In other words, other then the few divergences, there doesn't seem to be a lot of institutional activity right now.

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.