Using Moving Averages for Long and Short Trades
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
Friday, November 28, 2008
TODAY'S ACTION
Looks like we're in a bear flag or a rising wedge (close-up view). This pattern usually spikes higher and moves laterally toward the top of the flag/wedge and then falls off a cliff quickly. The volume should also be decreasing each day (regardless of whether it's a holiday week or not). It's important to short as quickly as possible because the breakdown almost always falls much faster than the time it took for the pattern to materialize. The top of this pattern must be paid attention to as it could be a false pattern. This is most easily determined by Fib retracement levels. I did lose a few % today covering some test shorts, but it's all part of the game. Knowing when to let go of a position avoids ruin. Monday should give some additional guidance to short provided that the pattern doesn't fail and monstrously breakout to the upside which I highly doubt will occur.
SPX 1-day
SPX 3-day
SPX 10-day
SPX 1-day
SPX 3-day
SPX 10-day
WEDNESDAY'S SPIKERS
What’s great about spikers is that if you don’t get to catch them on the way up, there’s a good chance for you to catch them on the way down, by shorting, of course. Not all spikers will fall as fast as they went up and many will spike even higher and stay there, not giving you the opportunity to short them. What you need to look out for are shooting stars, doji, bearish engulfing, and dark cloud cover candles. When the time is right, you’ll be ready. Save these for your short-term trade watchlist.
Thursday, November 27, 2008
YESTERDAY'S ACTION
I can't write much cause it's time to travel, but Happy Thanksgiving to everyone. My friend T.G. posted a Thanksgiving video that's very nice to watch. For those that suffered significant losses since Oct 2007, it must hurt tremendously, but put things in perspective by watching this video. Also remember that Jesse Livermore went bankrupt and lost his fortune multiple-times throughout his career, but he still banked coin. If you're reading this blog, chances are that you have all the basic necessities, plus an education and "stuff" that's not really necessary. You are still better off than most people in the world, but you probably don't want to hear that. You want to make more and more money. Forget about all of that and go spend some time with your family today. Cheers!
SPX 1-day
SPX 3-day
SPX 10-day
SPX 1-day
SPX 3-day
SPX 10-day
Wednesday, November 26, 2008
TODAY'S ACTION
Doji day! Yes it was. Nothing really happened and the day was plastered with indecisiveness. If you tried to get in-and-out throughout the day, chances are that you didn't end up green. Typically, I would enter short positions at the end of the day, but today proved, once again, that the market likes to show its altered personality in the last half hour of trading. Thus, I remained in cash once again. Days like yesterday mark a 50/50 chance for a sharp movement in either direction, and it's usually a reversal. Many sectors look like they will reverse imminently, so be warned (Example: Solars).
SPX 1-day
SPX 3-day
SPX 10-day
SPX 6-month
SPX 1-day
SPX 3-day
SPX 10-day
SPX 6-monthDon't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
TUESDAY's BREAKOUTS & BREAKDOWNS
We still don’t have many solid breakouts despite the large three day rally we’ve had so far. We have a steady number of breakdowns each day but they no longer hit thousands in number. The most promising gauge? The new highs-new lows index. The market hitting 235 new lows is actually bullish compared to some of the numbers we’ve seen last month (Oct 10: 22 New Highs/4,340 New Lows!!!). Yesterday formed a doji, or indecision day, and that means the market can go in either direction, nearly 50/50. Usually, this determination is made on the opening gap, depending on its size. There’s a mix of spiker plays, possible double bottoms, and a few breakdowns, all for educational purposes to be used in the future.
Tuesday, November 25, 2008
YESTERDAY'S ACTION
I came back from a nice dinner, a very important annual meeting of my own, and a very controlled, early night of hedonistic pleasure. I run several businesses, so unfortunately, I cannot participate in late-night debauchery sessions. My first and foremost allegiance is to everyone else, and not myself. I realized that when a friend asked me why I never planned a personal party. Answer: I'm just not the outgoing, personal planning type. I keep to myself most of the time. I prefer small groups of friends and associates and familiar places vs. large groups and high-end venues. However, I will be going out every, single day this week because it was my tradition to do so since I turned 21. Therefore, posts may be delayed during this most important week as I make this painful and sudden transition from 23 to 24.
Okay, anyway. We had the Citigroup rally, but we always rally on a bailout, so what's new, right? I say that if we have a down -350 to -400 point day, this rally is entirely over and the leg down continues via bearish engulfing or dark cloud cover. If we drop less, then we are most likely ok and we will become range bound. The only thing I don't want to see are continued spikes with more and more narrow days as they tend to exhibit strong reversals at the end. We have hit a key resistance area which can be seen in the multi-month chart below. What was support has now become resistance. It all depends on the size and shape of any morning gap within the first 30 minutes. As for today's orders, the program has been changed to promote short positional trading and no orders were issued today.
All I can say is that we won't be continuing up in a straight line fashion. We can either reverse here or at the 20-day MA. It is possible to thrust back up to our consolidation zone. This week will determine if we continue in the fourth leg or if we just hang out in an excruciatingly painful neutral range designed to slowly wipe out people's accounts. I will remind you that a strong bull rally requires buying conviction. There is still so much fear money on the sidelines. I made it back to +68% for the month and feverishly wait to break +70% in time for Thanksgiving.
SPX 1-day
SPX 3-day
SPX 10-day
Okay, anyway. We had the Citigroup rally, but we always rally on a bailout, so what's new, right? I say that if we have a down -350 to -400 point day, this rally is entirely over and the leg down continues via bearish engulfing or dark cloud cover. If we drop less, then we are most likely ok and we will become range bound. The only thing I don't want to see are continued spikes with more and more narrow days as they tend to exhibit strong reversals at the end. We have hit a key resistance area which can be seen in the multi-month chart below. What was support has now become resistance. It all depends on the size and shape of any morning gap within the first 30 minutes. As for today's orders, the program has been changed to promote short positional trading and no orders were issued today.
All I can say is that we won't be continuing up in a straight line fashion. We can either reverse here or at the 20-day MA. It is possible to thrust back up to our consolidation zone. This week will determine if we continue in the fourth leg or if we just hang out in an excruciatingly painful neutral range designed to slowly wipe out people's accounts. I will remind you that a strong bull rally requires buying conviction. There is still so much fear money on the sidelines. I made it back to +68% for the month and feverishly wait to break +70% in time for Thanksgiving.
SPX 1-day
SPX 3-day
SPX 10-day
SPX 6-month
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
Monday, November 24, 2008
ON THE RADIO...BRIEFLY
National Public Radio here in my backyard, Washington, DC, wanted to interview me and others about the benefits of fantasy trading and WSS: http://www.npr.org/templates/story/story.php?storyId=97295923.
I am authoring a 25-30 technical trading article series for WSS and I am currently on article #8 if you have been reading up to this point.
I am authoring a 25-30 technical trading article series for WSS and I am currently on article #8 if you have been reading up to this point.
HAPPY BIRTHDAY TO ME!!!!!!!!!!!!
Yes, that's right! I turn 24 today. I'm getting old (90% of the people reading are saying, "WTF?"). Ha, no I'm not getting old, I still have have a lot to learn. Usually, my birthday is either on Thanksgiving or before or after that day. My birthday will always be remembered as Citigroup's bailout day. Wonderful.OH, and about this week's free weekly commentary: I didn't make it. Today's my special day and decided to take a day off given the uncertainty of the C deal, low volume holiday trading, Obama's potential speeches/future selections, gov't regulations, all of which could be happening this week to move the markets. It makes my weekly technical writing useless in the face of that much uncertainty. I'd rather enjoy my birthday, thanks. And, if I don't post in the evenings anytime this week, then I am enjoying myself with friends whom I have hardly seen because the blog has taken away my social life.
Sunday, November 23, 2008
READER'S REQUEST: DJIA
I was asked if we may be trading in a range for the next 10-30 years just like the market did from the 1960's-1980's (green box). I find that scenario highly unlikely. We can see a break in a key support line dating back to the end of the 1929 Crash in 1933. Of course, that support was broken in the 1970's, but they didn't create hundreds of financial weapons of mass destruction. No one knows where the official bear-ending bottom is, but prepare yourself. Just take a minute to look at the severity of the drop (in qtr bars). Only the last leg of the 1929 Crash exceeds our present quarterly decline.
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!
(click to enlarge)
Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!CITI AD SPEAKS THE TRUTH
Don't you love it how all these troubled companies are still pumping ads about "trust" and "confidence" and other bs?
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