congamike on stocks

FW&A

2010-01-13T08:12:00.000-08:00

Somebody please call the Fraud, Waste, & Abuse hotline...

Health and Human Services, the Boy Scouts, and the Forestry Service have WAY too much money on their hands... Their commercials play on every channel all day long.

My state is covered with 6 inches of snow. Please tell Smokey the Bear that forest fires are not a valid concern rite now.

2009-10-23T09:04:00.001-07:00

Here is a 60' spy chart

Click for larger, browser back.

Notice the MACD line. Its on a steady downturn. I think I'll be buying the 3x shorts (bgz, faz, tza, etc) on their dips.

Gann Angles can indicate reversals

2009-10-15T09:32:00.001-07:00

Here is a recent (just now) hourly Wilshire 5000 chart:

Click for larger, browser back.

Notice that low I circled in green. It was a huge dip! I profitted well by being in FAZ.
By reviewing Price, we can see a double bottom. This is also referred to as a W. Its a huge buy point (obviously). Also notice that I have added in some Gann Angles. The primary line is the major trendline. When the second line was breached, it indicates bullishness. Then there was a bit of fearful retracement. The next morning, the third line was breached and Price never looked back.

We have to start watching for this setup... it is not rare, it is fairly reliable. With this chart in mind, I can confidently place long trades.

For extra bonus points, see how the gann angles react to this 10' SPY chart:

Click for larger... yada yada.

Now, go try it on your own charts.

On another note:
I have accepted a part-time job. I find myself now conversing with lots of cool people in emails and on-line meetings. At the end of the day, I am talked out! That is the reason I have not blogged as much lately.

I do plan to keep recording my finds here (like the post above), but it probably not be as regular or frequent.

The SPY could fall

2009-10-06T10:01:00.002-07:00

"This is one of the juciest shorts I've ever seen in my life." DSeven commenting on the monthly Spy chart.... Video here.

In other news... "The fiscal year-to-date deficit is at $1.378 trillion versus $500.5 billion a year ago."

Downtrend confirmed

2009-10-01T18:36:00.000-07:00

I could post some charts and discuss them here but it has already been done in this video. In fact, my mentor has done a much better job of it than I could. (The video is highly recommended.)

If, after watching, you have questions, you are welcome to ask here, in the chat room, or in the FTV forums at FreeTradingVideos.com

I enjoyed making 11.74% on my FAZ investment today. I hope you also benefited.

Click for larger, browser back.

As you can tell from the SPY daily chart above, it is too early to totally commit to short positions, but after tomorrow, the support line I drew in should be broken. From there, large shorts will be less risky.

Be long in uptrends

2009-09-25T05:23:00.001-07:00

Here is a 5 minute, 4 day chart of the UUP, the Dollar index ETF.
UUP is the candles, and the broad market is represented in the line graph.

Click for larger, Browser back.

Notice that they have an opposing relationship, When the UUP (candles) rallies, the SPY (yellow line) pulls back,

Hotlist stocks are not so effective when the market is in a downtrend. It is not a good thing to expect your stock Price to increase when the markets are falling.

That said, this pullback provides opportunity...

Step one... Hotlists provide resources to scan for stocks that remain relatively unaffected by market downturns. Those are the ones that nobody wants to sell!

Step two... We know that this downturn is related to dollar strength, Who in the room believes that our government has completely stopped flooding the market with dollars to pay their debt? I thought so... this Price dip is very likely temporary. There is no need to panic sell your portfolio yet.

Step three... Buy the dips. Discounted Prices are becoming available.

Once this dip flattens out, I'll be buying again.

Tonights list

2009-09-16T13:33:00.000-07:00

Here is the list for today....

apc
atpg
bap
bvn
cno
cnu
fnm
fre
gnw
grrf
gtn
gsic
holi
ivn
kerx
lmdia
mgi
mni
mpet
ovti
pir
pxlw
rad
rdn
tpi
tvl
uis

---
Now, how did yesterdays list do?

stock prev close close
atpg 17.66 20.51
axl 7.66 8.13
cno 5.06 5.95
ctb 15.60 15.84
fire 19.88 21.99
gtn 1.25 1.76
hf 5.86 6.53
holi 7.69 8.78
ivn 12.03 12.67
mgi 3.24 3.29
mvis 3.66 3.9
pir 2.6 2.91
pxlw 3.98 4.06
rad 1.74 2.08
shfl 8.72 9.30
tpi 3.90 4.05
tvl 4.21 5.74

Two went down, the others went up. The best was GTN at 27.5%

Methinks that this list and some good Technical Analysis should make me profits!

Note: No Technical Analysis was used to create my list. Up to this point, it is all about a stocks' fundamentals and how the market reacts to it. This list simply weeds out a few thousand other stocks so I don't have to review so many charts.

The Hot List

2009-09-15T15:59:00.000-07:00

In addition to my previous hot list post, this market offers some unique opportunities. I have been gathering up stock symbols via different screeners. The resultant list is now over 100 stocks, way too many to type accurately here, or properly trade. (I have been trying -- and profiting)

I tuned up a google spreadsheet to help me pick the best of the best in the list, and here is today's results:

atpg 17.66
axl 7.66
cno 5.06
ctb 15.60
fire 19.88
gtn 1.25
hf 5.86
holi 7.69
ivn 12.03
mgi 3.24
mvis 3.66
pir 2.6
pxlw 3.98
rad 1.74
shfl 8.72
tpi 3.90
tvl 4.21

I added today's close price just for record keeping. I'll com back in a few days and check the results.

Please do not consider this to be a trade recommendation... just a watch list. Trade responsibly. I can hook you up with training if you are interested.

Buy The Dips!

2009-09-15T07:54:00.001-07:00

Don'y have much time.... just wanted to say that it can be a buying opportunity here... I just bot LVS on this dip. (Not a recommendation -- ask your broker)

Minor setback today

2009-09-14T18:36:00.001-07:00

Here is today's hourly SPY broad market ETF.
Notice the trendline I have drawn in.

Click for larger, browser back.

This morning, we gapped down below the line and some in the FTV chat room were talking doom and gloom. I kept track of the market internals while sitting on my hands. As I watched the NYSE up and down volume charts, I noticed that some stocks were becoming interesting. With all the discipline I could muster, I only bought (went long in) four of them.

The "buy the dips" strategy has worked many times recently, and according to the internals, it was the right thing to do. As it turns out, Price has improved and I was properly in synch with the markets (see post below).

The SPY daily chart still indicates upward strength and I am enjoying the ride.

We did get a pull-back on the weekly chart, eight candles ago, so this can not be expected to run many more weeks. When the next dip occurs, I hope that I'll be ready -- I am watching for it.

Wisdom from the Tao Te Ching Pt 2 of many

2009-09-13T16:02:00.000-07:00

Market wisdom from the Tao Te Ching, Chapter 29, Translated by Derek Lin

Derek made a great presentation today in discussing the chapter copied here in part:

Those who wish to take the world and control it
I see that they can not succeed ...
One can not control it ...

Because all things:
Either lead or follow
Either blow hot or cold
Either have strength or weakness ...

Therefore the sage:
Eliminates extremes
Eliminates excess
Eliminates arrogance

Wow, that's a lot of material in just a few words!

What I am able to understand rite now is this:
- Don't try to catch the absolute bottom or top, just try to own a large chunk out of the natural run in the middle.
- Don't clutter the real story (Price and volume) with excessive indicators, or expectations (news, analysts, fundamentals, etc.)
- Don't trade by emotions, we are incapable of perfectly identify the tops or bottoms in real time.

Sure there's that obvious stuff, and so much more...

We should not allow ourselves to become angered or confused when the markets do not fulfill our expectations. The market is neither bad or good, it simply exists.
Likewise, our strongest hopes can not cause it to change into something else.

The only thing we can do is change ourselves. Our baggage, once discarded, will no longer bind us to making possibly (likely) incorrect assumptions.With baggage removal completed, we can place trades that are in synch with market direction.

My biggest piece of baggage is selling at a small loss and then missing the run my analysis indicates is eminent. What's yours?

---

Don't forget to read my post: Wisdom from the Tao Te Ching Pt 1 of many

Breakout!

2009-09-10T13:37:00.001-07:00

Here is the current daily SPY:

Click for larger, Browser back.

The Head and Shoulders pattern I warned about below, has failed. Market action has now turned all of that into a pleasant series of higher highs and higher lows. I cautiously stayed in my long positions, taking profits as was reasonable, and made some great $$$. I hope you did too.

Today, the broad markets formed a recovery high and rallied to the point of being over bought. Trading slowed down, but did not pull back. Therefore, I have begun the process of adding to my long positions with great value stocks. I'll tell you how I screen for these in another post... coming to my favorite blog (here) soon!

Note: There are some perma-bears out there. They add to their short positions on every rally just in case the markets might turn. I feel sorry that they are so determined to place trades that have absolutely no technical reason for support. Several small, "feeler" positions, can add up to big losses and their spouts of negativity can make newbies doubt properly positioned investments. So sad.

Change in the wind?

2009-09-04T13:18:00.001-07:00

Here is the current SPY daily chart...

Click for larger, Browser back.

I am a little concerned here.
It is a left shoulder, the head, and maybe a right shoulder in the making.
In checking the volume, I see that one huge red bar, and a few green Pygmy's. This indicates strong downage and weak upage.

Not scary because we can make money from the market moving either direction, but I have a lot of long positions that I want to exit profitably.

Another Bull/Bear Indicator

2009-09-02T19:43:00.000-07:00

In my never-ending quest for Market Mastery, I have assembled another indicator. This one is based on the NYSE Up/Down volume ratio. Here's what it looks like:

Click for larger, Browser back.
Here is a handy link: http://www.freestockcharts.com?emailChartID=b5425477-2f4b-448d-a529-7481db3ff95a

Here is another, possibly clearer way to see the same thing:
http://www.freestockcharts.com?emailChartID=a6b0191e-f165-4793-9732-f6280e67c6b6

Tonight's chart shows that Down Volume is higher than Up volume, but closing the gap. This should signal the eventual end of a bear rally... we'll see. Hopefully, with this tool, we'll get better.

And, for no extra charge, here is yet another good one...
This one allows us to the total number of up issues compared to a moving average

Click for larger, Yada Yada.

And... don't forget about the older Bull/Bear index.

Big Breakdown

2009-09-02T05:34:00.000-07:00

The $VIX (Fear Indicator) is at about a 6 week high after an abnormal run-up yesterday.

Yesterday's sell volume was at about a 8 week high.

$BANK is at about a 4 week low.

The Wilshire 5000 and the SPY has made lower highs and lows for 2 days.

The SP500 closed below 1000 and the Nasdaq closed below 2000.

All of this happened on relatively good news.

It seems that the big traders (institutions) have simply decided that its time for a pullback: Anxiety about the health of financials and worries the 2009 global stock market rally may have run its course hit U.S. stocks hard on Tuesday and then carried over.

"But the glass is still half empty. Macro data has improved, but we're in a pattern of destocking-restocking, and the outlook for consumer spending is still grim."

Could it be that Cash-For-Clunkers has depleted much of the savings that Americans have amassed? If that is true, then Christmas will not be the retail boon that traders and the economy need.

I am not yet totally convinced that this is the beginning of a Bear rally, but I am remaining open to the possibility. I am actively not re-investing funds made available by profit taking and stop outs at this time.

Just for the purpose of holding a hedge, I may buy one of the 3x short ETF's on a SPY high today.

Situational Awareness

2009-08-18T09:09:00.001-07:00

5 minute chart...

Click for larger, browser back.

Just a few candles ago, this was a Trade #1 buy. In fact, it did go up some. Then it pulled back. As I write, I see that it formed an M and pulled all the way back, forming a picture perfect bull trap.

My friend KM was considering buying on the 10 minute up-trend but I was able to talk him out of it. Here's why I did that...

30 minute chart, same stock, same time.

Click for larger, u know the drill.

Notice that the BBands are indicating a HUGE downtrend. Yes, there is recent wonderful strength, yes the trendline has broken (not illustrated here) but its still scary.

Here's the point:
When investing, or even scalping, we must be aware of whats going on in the other charts (and the SPY). A lovely uptrend in the 1 minute chart can prematurely fail because of a downtrend in the 60 minute chart. To say that another way, patterns on the one minute chart are not as powerful as the same pattern on the hourly.

And another way to say it:
If you buy it on the one minute chart, be prepared to sell it on that charts action as well.

This has many implications. The perfect world buy signal would be a signal on the daily, hourly, 30, 15, 5, and 1 minute charts at exactly the same time. I bet it happens, I've never seen it. Oh... and the SPY has to be in synch also. Too much for my little brain to look at all at once!

Here is a theoretical work-around. First, wait for the trade to come to you by observing a reasonable amount of charts. then buy on the one minute chart. After riding that a while, check the next chart up to ensure it is bullish there. Repeat all the way up to the daily and be aware of the weekly.

Now for the sell signal:
Once the opposite of a buy signal is observed on the daily, continuously drill down to faster and faster charts for confirmation.

Who is gonna do this? Not me! Too much work. I will just set a stop under the previous low (adjusting occasionally as needed) and wait for it to trigger.

As always, your comments and questions are welcomed.

short term recovery

2009-08-17T09:03:00.000-07:00

Here is a 60' chart of the $tick...

It is pulling up hard.
This could be a good dip to buy a swing trade on!

The dollar

2009-08-12T06:15:00.001-07:00

Here is a chart of UUP, the US Dollar ETF.

Don't bother clicking on it, its small.

Notice the volume as Price increases. That's exactly what we want to see in a bullish trend.
Sadly, it explains why our stocks and commodities have been falling, and the poor $TICK indication described in the post below. This might be a place to sock away a few investment dollars... I'll be watching.

OK, this is bad...

2009-08-08T18:26:00.001-07:00

In thinking about my previous post (while watching TV), I wondered what secrets the TICK would tell...

Here is a daily/8 month chart of $tick.

Notice that $tick is registering an 8 month low. That's a bad thing for those of us with long positions.

Make that a two week vacation!

I'll be selling my longs and watching for an entry into my favorite shorts next week.

Update

2009-08-08T05:52:00.001-07:00

Here is a 10 year, weekly chart of the NASDAQ ETF, the Q's (QQQQ).

Click for larger.... browser back.

As pointed out in this article: stocktiming.com,
we are approaching resistance. Since the Q's are a leading indicator of the broad market, this could have some importance.

I am seeing Price approaching the trend line and Big Red, the 200 MA, so we'll have to trade cautiously. Notice this broad market chart:

Here is the weekly, 2 years, broad market (SPY) chart...

Click for larger.... yada yada.

Since the Q's are in trouble, I took the time to dissect the broad market a bit further than usual...

Downtrend line 1 indicates the power of the exercise. Notice the difficulty that Price had in bouncing off several times (below the 3). Further, notice the strong resistance that line 3 held in the area of the 5. That's some powerful juju! Line #2 is hanging above our heads to become important at some future date.

Uptrend line 4 describes the tops of the uptrend we currently enjoy. Notice that we are quickly approaching it.

Now, with the framework set, here's the bottom line....

Notice the uptrend line #5. It is not parallel to line #4. That's a bad thing because Price hates to be squeezed. We have to expect a breakout, up or down, from the squeeze. It may happen next week, it may come to us four months from now, it is definitely coming.

To my eye, the weekly Price action of the Q's and the SPY, are looking at a pullback_sell pattern.

Bonus points:

Notice the last 4 candles. The first being HUGE, the remainders becoming much more constrained. This indicates a dissipation of momentum. Notice that the same effect occurred on the Q's even more.

The oddball:

The one thing that contradicts all of the above is volume. This week, both the SPY and the Q's enjoyed an increase. It could be an indication of sidelined money entering the market. It could indicate bears waking up but being matched by the bulls. If the second scenario is true, a pullback is more likely.

OK, the real bottom line:
My guess is a struggle next week. The markets are not really convinced that they want to go up. In fact, fundamentals do not predict further increases. Confirmation, the NASDAQ only increased one point last week. We might see some pullback before the lines are broken. If the pull back gets momentum, we could see a test of SPY line 4. Hopefully not any lower.

Have fun but keep a close watch! This is not a good time for a "set it and forget it mentality. If I wasn't watching closely, I'd sell everything, take a week off, and wait for a better market to trade. Hmm... that sounds like fun, my family could use a vacation. Oh well.

Pending breakout?

2009-07-31T08:19:00.001-07:00

Here is the 30' SPY...

Click for larger, browser back.

Notice the trend lines, thats called a Symmetrical Triangle. We should break positive from here.
I'm really hoping the SPY can test 100 today. If it clears 100, we will be very bullish.

2009-07-29T13:12:00.001-07:00

Here is the 60' SPY chart:

Click for larger, Browser back.

Notice that the recent swing low was a bit lower than its predecessor. Then notice that the MACD made a higher low. That's called a divergence. Such conditions are a prerequisite for some buy signals; to some traders, it is a buy signal.

We'll see. I am holding several long positions, and no shorts... pretty durned trusting!

These days, a consolidation seems to serve as a pullback, therefore, we might be getting ready for another up leg.

We gotta pull back sometime... this many green candles is just ridiculous.

2009-07-27T15:17:00.000-07:00

Here is a brief video clip that shows just how hard one of our elected officials is working to represent us.

freedomslighthouse.com

Situational awareness

2009-07-24T07:57:00.001-07:00

Here is a 5 minute chart of today's EBAY Price action...

Here is a 10 minute chart of today's EBAY Price action...

The two images were captured at virtually the same time but tell very different stories.

This adds to the complexity of our work. One must be aware of all the timeframes, and what the broad market is doing, and what the sector is doing. All at the same time.

The only option is to trade on a daily chart and ignore the intra-day fluctuations.

The MA crossover trade.

2009-07-23T14:06:00.000-07:00

OK... in the Free Trading Videos chat room today somebody reminded me of a stock purchase strategy... the Moving Average crossover. I was able to tease the Finviz stock screener to produce a fairly nice representation of stocks in this category with at least minimal fundamental qualifications.

Here is the link

The goal is to buy when the 20 ma surpasses the 50 ma. Obviously, other MA combinations are also interesting, however, this is the best I can do today.

Yah yah... when to sell? One obvious answer would be when they uncross.

Notes:
- This will obviously only work in a sustained bull market.
- Make sure the 50 ma is in an uptrend, or at least flat, when you buy.
- Make sure the SPY 50 ma is in an uptrend or at least flat when you buy, else, your poor trade won't have a chance... it will be counter the major trend.

Enjoy!

Update:

Extreme Price change can invalidate the signal:

Update on UGA, SLV, and UGA - Humiation

2009-07-23T09:39:00.000-07:00

It's 12:40 rite now... I finished my lunch (noodles and a can of sardines) and pause to check up on a few of my favorites... what have they done today?

UGA is up 3.95%
Slv is up 1.26%
URE is up 8.75% today

I sold UGA at $31.31 it is currently trading at $32.58
I sold SLV at $13.22 it is currently trading at $13.63
I sold URE at $3.56 it is currently trading at $4.00

My advice to readers: do as I say, not as I do.

Sheesh.

I have managed to catch the ear of a Tao Master. I hope he can teach me to do better.

Oops

2009-07-22T13:58:00.000-07:00

Sadly, I have stopped out of UGA, SLV and URE. I read this as a sign; the market seems to be changing. I'll be waiting a few days for either recovery or correction. After all, it has been a LOT of up days in a row. an unsustainable trend.

Here is a great article: The_Stimulus_Plan_Is_Working_In_China

Well I'm certainly confused!

2009-07-21T10:05:00.000-07:00

"As Commander in Chief, I will do whatever it takes to defend the American people...
... That's why I'm grateful that the Senate just voted against an additional 1.75 billion dollars to buy F-22 fighter jets...
... At a time when we are fighting two wars, and facing a serious deficit, this would have been an inexcusable waste of money...
... Every dollar of waste in our defense budget is a dollar we can't spend to support our troops, or prepare for future threats, or protect the American people...
Our budget is a zero sum game and if more money goes to F-22's, it is our troops and citizens who loose.
... Now, I've also said that health care costs are the biggest drivers of our deficit..." Obama on Bloomberg 7-21-9

Well folks, that leaves me with questions...
- Why are we sure that we won't need the F-22 next year? It seems to me that we are fighting two wars. I am also not forgetting Korea, Georgia (Russia), and others.
- Won't the displaced engineers, trades people, suppliers, shippers, writers, logisticians, etc. risk becoming unemployed?

Seems to me that "stimulus" should like employing engineers, trades people, suppliers, shippers, writers, logisticians, etc.

If the F-22 budget is a "zero sum game", then how can we afford to spend a trillion on the health care bill?

Breakout!

2009-07-20T18:26:00.001-07:00

Here is an hourly chart of URE the Ultra Real Estate ETF...

Click for larger, Browser back...

Today, was a pretty monumental day in the markets. The SPY broke its resistance line at $95 and held there for about an hour. Only the end of day sell-off was able to cause Price to retreat.

I celebrated by buying a half sized position in URE. Yes, it could risky. Yes, we are still in a recession. Yes, we will still be in one for a while. Yes, real estate problems are still bountiful. On the other hand... can you think of a sector with fewer shorts against it?

It seems in the chart above, that Price is ready to run since there is a breakout here as well.

I'll be maintaining my stops so that risk is under control, but they will (hopefully) be loose enough that Price has room to continue a pattern of higher highs and higher lows. That's what its all about!

Also of note is SLV...

Click for larger.... yada yada

...and UGA with a very similar chart. I have been in them both for a few days now. Funny thing about these, they would be of no use to a day-trader at all yet in a swing, we can make good profits!

Workspace

2009-07-17T08:42:00.001-07:00

This is just a handy little spot to post charts as needed for the chat room that I moderate...
Up to 100 traders, most of them are serious, lots of eyes on an ever-changing marketplace.
http://www.freetradingvideos.com/chat/ (note: sign-up is easy and free)

Here is a 10 year $vix chart for my friends in the room...

Click for larger... Browser back

2009-07-15T13:19:00.001-07:00

Here is the current SPY hourly chart...

Click for larger... Browser back.

Notice that the downtrend has been broken.

I took the loss in my short positions (article below) and took a few hours off to mourn the loss of my invested capital.

Upon returning, I got to work and recouped some of the loss by daytrading a few short interest stocks.

Market volatility is picking up, therefore, this would be a good time to consider daytrading. Do be careful though, three updays cry out for a profit taking pull-back.

15% of the earnings reports are due this week.... the remainder next week. Be cautious!

FTV Stock Picks... Discount offer

2009-07-11T13:00:00.000-07:00

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You receive the vNewsletter each and every weekend, delivered straight to your inbox so you have time to methodically review each trade idea BEFORE the markets go live the following week.
You get from each analyst, the powerful benefit that video delivers by seeing and hearing the value-added reasoning and thoughts on particular trades. Instead of merely reading about ideas or worse, not getting any helpful insight at all, you get to be enveloped in a multi-media atmosphere and receive a miniature dissertation of each trade prospect. You get it all here at FTV!
You get the best value that anyone could ask for. You get a rigorously honed trading list derived by the combined efforts of the FTV analysts for a rock bottom monthly subscription price.

The vNewsletter is available HERE at a special discounted and grandfathered price until Wednesday the 15th. I recommend it.

Nevellier's flawed blog post (and then some)

2009-07-11T08:18:00.000-07:00

This may seem unrelated to the markets at first blush. Ultimately, it is connected at the hip.

Typically, I enjoy reading the Nevellier blog. A recent (irresponsible) post offended me. My response to the post follows. I copied it here for posterity. If the moderators at Nevellier do not publish my comment, I will re-submit it again some day.

But here's the thing folks... We gotta start speaking up for America while she is still recognizable. Our dollars, our rights, our businesses, our courts, our Constitution, the best health care system in the world, and more might be at risk of "change." For those of us concerned about these changes, now is the time to begin speaking out.

....
Dear Sirs,
Typically, I enjoy reading your posts. This one is an exception.

"...it seems that we must hope Mr. Obama is re-elected,..."

It is not in my heart to do that.

As a patriot, I vowed to defend the Constitution which is apparently the opposite of the Obama administration. The bailouts, the takeovers, and the deficits hardly seem either Constitutionally or fiscally sound.

Your article seems to have praise for Clinton while totally disregarding the recession he left us. Also overlooked is the fact that President Bush oversaw the Clinton recession recovery and subsequent all-time market high. (I could continue in this direction but shall not.)

It seems that I hope for two things, a fiscal conservative to bring America back to her rightful position of strength, and a less biased newsletter.

----

Something to keep in mind:

"The Cato Institute was strongly opposed to the $787 billion package passed earlier this year, and would oppose additional stimulus packages on the same grounds."

"Once government expands beyond the level of providing core public goods such as the rule of law, there tends to be an inverse relationship between the size of government and economic growth," argues Cato scholar Daniel J. Mitchell. "Doing more of a bad thing is not a recipe for growth."

----

Obamacare does make for an interesting search term.

The Obama administration has sent an email to me! They want me to call my Senators (phone numbers provided) to discuss their support for socailzed healthcare. While I do intend to do just that, my response is a bit different than he suggests. This article, and this one, will be references for the calls. Sheesh... There are tons of references! For those who think that Canada is a great model to follow, here's a great list of references. I gotta "just say no." I gotta let my voice be heard. Can you do that too?

----

In effect, our President can sell "refrigerators to Eskimos" at will. Congress supports this because they enjoy the resulting commissions. Ditto, the "fourth leg" of the government, the media. That leaves the third leg, the Supreme Court. Hmm... is that arena about to receive "change?" Folks, we gotta speak out in support of the Constitution, liberty, and free markets, else, they will be gone.

New Bull Bear Indicator

2009-07-10T08:10:00.001-07:00

Update to my bullbear-indicator-recipe
Here is a picture of my updated Bull/Bear indicator...

Click for larger, Browser back...

Its a FreeStockCharts.com chart.
Its a 10 minute/one day chart.
It's the 3x leveraged S & P index, UPRO.
It's a comparison of the 3x leveraged short S & P, SPXU.
The Volume Weighted Average Price (VWAP) has been enabled.

Note the chop and overlap from 9 to 11:00. That is a "no signal" condition... not a good time to try to identify market direction.

Note that the UPRO candles are WAY below the SPXU line graph and the red VWAP... very bearish!

Here is another way to acomplish the same thing.... but without using FreeStockCharts.com

Also see the Alternate Bull/Bear Index.

2009-07-08T11:44:00.001-07:00

SPY Daily...

Click for larger, Browser back...

The support line I have drawn has been thoroughly broken. $87.00 has been holding as the next level of support.

The Dow has a similar appearance.

I am expecting further downside, therefore, I have purchased two investments... EFU, and SIJ.
Had to overcome my natural tendancy to buy more ETF's and more shares.

Will but more bear ETF's when the Nasdaq cracks.

2009-07-01T12:17:00.001-07:00

Broken support = resistance

2009-06-22T17:48:00.001-07:00

Here is a daily chart of the broad market index ETF, the SPY.

Click for larger, browser back.

Notice the big red candle on the far right... she's a Dusey! Today's market action broke through several trend lines and two of the most powerful Moving Averages known to man. The 20 MA was tested and then broken a week ago, both the 50 and the 200 MA's were decisively taken today.

Prognosis, bearish. That said, I again have a small position in SIJ. That said, it is possible for me to take small profits out as soon as tomorrow. Nobody can be sure what will happen but look at the relationship of today's close to the Bollinger Band. Now does anyone think that BBands are useless?

It is possible for the market to recover a bit tomorrow. for two BBand reasons. First, they are about to give the oversold signal. Second, look at the general direction of the big grey band... it indicates an uptrend. The market will have to do a lot of pulling to whip that band into shape.

Of course, the market will be able to do that, perhaps this week, definitely this month. If you have noticed the pattern that Price is making, you noticed a Head and Shoulders... congrats!
Sadly, today's pullback was on light volume. No worries tho mate! in a few days, everyone will get the hang of it and jump on the bandwagon. There is little prayer in hoping for the markets to recover the lost ground in MA's and trend lines that were decisively defeated today.

When the SPY closes below $88.36, I'll be taking on much larger positions in a diversity of short ETF's.

Bull/Bear indicator recipe

2009-06-18T11:22:00.000-07:00

Ingredients...
- the SPY is considered to be THE broad market indicator.
- SSO is the 2x SPY
- SDS is the inverse 2x SPY
- VWAP is Volume Weighted Average Price indicator (sort of a moving average)
- FreeStockCharts.com offers them all in real-time

Instructions...
- First, load up the charting package
- Make SSO candles
- Under "Settings", click "Compare"
- Pick an empty box, check it, and enter SDS
- Click OK
- Click "Add Indicator"
- Click "VWAP" (used as a garnish)
- Adjust the time-frame to 10 minute (more or less) candles for 1 day (scroll the mouse wheel)

To consume...
When the candles (2x SPY) are on top of the other stuff, that's bullish
When the SDS line is above it all, that's bearish
Pay particular attention when the two cross!

This indicator told me to sell my SIJ this A. M. I'm glad I did.

Correction... I really goofed.

2009-06-17T16:23:00.001-07:00

In the is post: alphatrends-is-out-of-my-scope

I stated that Brian has stopped doing something that he said he would do. For that reason, I stopped linking to his blog.

My mistake. Well, I went to one of his websites for promised content, sadly the wrong one. Had Brian pointed this out in his response email (instead of blowing me off), there would have been no problem.

Ultimately, my fault, therefore, I am sorry.

Watch Lists

2009-06-17T14:01:00.000-07:00

As mentioned in my Trade #3 post, I make a list of the top ETF's, here's more on that:

Every weekend I make four lists, three longs and a short list.
For stocks, I always like to have a list of good fundamentals and a list of high short interest.
For ETF's, I need top long performers and top short performers.

The Yahoo screener finds me the top performing ETF's of the quarter. I divide this out into the long and inverse (short) lists. These get culled for volume and then for redundancy. Sheesh, about four of the top 10 were silver. Chili and copper are pretty much the same thing, but then, different enough to keep both.

Stock lists come from an IBD screen (which I further screen) and a short interest screen from Yahoo.

Now, armed with my lists, which do I pull from on any given trade day? That depends on several things, but mostly the broad market index, the SPY. Sadly, the daily SPY rite now gives little clue about market direction. Fortunately, the 60 minute version sends a strong (if not preliminary) message.

Click for larger, browser back.

The last several days of trading have broken the consolidation pattern. (yay!)
We definitely do have a lower highs and lows thing going on but it is still too early to get fully invested. All of that left-side-of-the-chart action could provide powerful support and stall or even reverse the trend.

With that going on, someone would not be interested in covering a short, therefore, the short interest list is passed over. Great fundamentals and high performance ETF's also require bull markets so they are also left to gather dust. This leaves the list of inverse ETF's which are the only way for me to trade a bear market.

Yes, I have tried to go long in a bear market before... it doesn't work very well.

I am holding a small position in SIJ (my top high performing short ETF). Notice that I said small. There are times where the SPY moves up in a bear market. When my SIJ transitions from green to red, I don't get concerned. I know that the overall market is going down so my investment will pay. Since my investment is small, the red numbers are small and do not cause heart failure.

Eventually the market will recover. When the 60 minute chart shows signs of uptrending, I'll look to the fundamentals stocks and performance ETF's. When new highs are experienced, I get to use the Short Interest list and really watch the fireworks!

Have fun with that!

Wisdom from the Tao Te Ching Pt 1 of many

2009-06-15T10:20:00.000-07:00

Towards the end of chapter 14 the Tao Te Ching say:

. Wield the Tao of the ancients
. To manage the existence of today

Bingo! The book has some Market Tao in it; other cool things too! I'll be studying it thoroughly.

Chapter 8 includes:

. Governing with great administration
. Handling with great capability
. Moving with great timing
. Because it does not contend
. It is beyond reproach

To me, that sounds like consistently being on the right side of the trade, with an appropriate share size, affordable risk limits, then getting out when appropriate.

I need that.

Hmm... here's one from chapter 9:

. Holding a cup and overfilling it
. Can not be as good as stopping short

Today's wisdom says: Bulls make money, bears make money, hogs get slaughtered. The ancient version sounds much nicer to my ear.

This gives me some things to think about in my current trading paradigm.

Bullish on the daily, Bearish on the monthly

2009-06-13T14:45:00.001-07:00

Here's a great video:
Weekend Report
Everyone invested in the market should watch it.

That information, combined with this:
Friday Report
Explains why the markets have been lackluster bullish for several weeks.

----

Its been odd...
I have been hanging out in the FreeTradingVideos chat room during trading hours. Nobody there wants to believe their eyes. Even with all of this horrible news, the market still goes up!

Notice this daily $Tick (market sentiment) chart...

I am noticing that the last three highs and lows were lower, and recent action seems to be reaching for a breakout low. What this indicates is that even though Price in the SPY has generally been moving up, there are more NYSE stocks moving down than up. That is somewhat of an apples to oranges comparison, but remember that the SPY only sees 500 stocks. It is expected to catch up some day.

The key here is to not hold any investments long-term, except possibly a small short or two, and only trade what the charts show at the moment.

Beware... the bears are coming.... the bears are coming!

Update: In reading through the last several posts, I seem to have been mixed in reporting market direction. I stand by those reports. Taken as a whole, it indicates a choppy market observed on differing time-frames. This effect may be indication of a topping action, loss of momentum, and pending trend change. As the first video mentioned above points out, the weekly chart is still firmly in the bearish camp. Trade accordingly, but observe opportunities to profit from bull rallies on shorter terms... that's all we can do, other than sit on the sidelines waiting for a better market in which to invest.

Exciting!

2009-06-12T13:47:00.001-07:00

Click for larger... Browser back.

Hmm... Is that a reverse Head and Shoulders I see on the SPY weekly?
Yum!

Boring!

2009-06-12T13:14:00.001-07:00

Here's the 60 minute, 4 week, SPY chart

Click for larger. Browser back.

It was nice that last weeks pendant broke to the upside.
It was very nice to see yesterday's breakout.
It was not surprising to see today close at resistance (and no further).

But come on folks! We can't trade this! We need volume. We need a trend.

Here's the daily view:

Click for larger. Yada Yada.

We have been without a sense of direction for 10 days.

Reasons to be Bullish?
It has held up without submitting to the bears.
It closed at the high today.
It is testing the resistance line.
It has already broken resistance once.

Reasons to be Bearish?
The bulls do not seem to be committed.
The MACD is in divergence on the daily chart.
The news is bad.
The markets are extended and need to form a higher high.

As for me, I'm flat the market. On Monday, I'll day-trade what I see.
This is definitely not time to be invested in a long term position.

The sky is falling!

2009-06-11T06:06:00.000-07:00

From the Ap Morning Brief...

"Chrysler may have been granted a fresh start, but it still faces old problems: how to sell enough cars and realign its fleet.... A 42-day stay in bankruptcy court cleansed the company of much of its debt and labor costs, but many analysts say Chrysler's immediate future is bleak. It lost $8 billion in 2008, and sales are down by almost half for the first five months of this year."

"Japan's benchmark Nikkei index pulling back from its first move above 10,000 in eight months amid conflicting signs about the strength of an economic recovery."

"...crude to fresh highs for the year."

"...the main reason that borrowers default on their home loans, foreclosures likely will remain elevated this year and into 2010. Many economists expect unemployment, now at 9.4 percent nationwide, to rise as high as 10 percent, and some project it will exceed the post-World War II record of 10.8 percent."

"China's trade plunged in May..."

"...confirms steep recessionTOKYO (AP) — Japan's economy shrank at a 14.2 percent annual pace in the first quarter — better than first thought, but still the worst quarterly contraction ever for the world's second-largest economy."

"Australia's unemployment rate rose to a seven-year high of 5.7 percent in May,..."

Prepare for liftoff ?

2009-06-09T11:26:00.000-07:00

In this 60 minute/four week chart, we see a high base forming...

Click for larger, browser back.

The base has been tested several times. Each test reduces its strength, therefore, the market may be poised to do great things here. We'll see.

Auto Dealership Thought

2009-06-08T05:45:00.000-07:00

"Peter J. Walsh, the owner of Walsh Dodge in Jersey City, N.J., started out selling used cars in his hometown 28 years ago after the birth of his daughter. He slowly built his business, and felt as if he'd finally made it when he earned his Chrysler shingle in 2000. But on Tuesday, Walsh Dodge will lose that shingle — as will 788 other dealers across the country... Chrysler has asked a bankruptcy court for permission to terminate the franchise agreements of about 25 percent of its dealers." from the AP Morning Brief

It occurs to me that Mr Walsh and many others have their entire careers wrapped up in the business of selling cars. He has worked hard to develop a following of devoted employees and customers.

Weather right or wrong, his contract with Chrysler is being dissolved by government decree. Being free from those bonds, he no longer has that business and no ties with any particular auto manufacturer.

He is now free to pursue the business he loves and prospers in, selling cars, if he so chooses. It seems to me that he is free to begin offering Honda's, Toyota's, Suzuki's, Hundai's, Nissan's and a myriad of high quality, popular, less encumbered, products.

The effect is that the courts have turned Chrysler's most powerful assets into their most fierce competitors.

That's how I'll be placing my trades.

Trade #3

2009-06-03T06:09:00.000-07:00

I have been missing out!
I just found a whole slew of top performing ETF's that have been going up without me! Sheesh... look at KOL its awesome!

Click for larger... Browser back.

Here is how to find these winners:
(It only works in a bull market)

1. Pick a screener that can limit results to ETF's... I like this one but membership might be required, I'm not sure. Also check here, and the Yahoo offering. There are more.

2. Set the YTD (or quarterly) performance to the highest value available, then run the screen.

3. Sort the list so that the highest performers float to the top.

4. Copy out the top 25 or so.

5. Cross out those with less than 60,000 Average Daily Volume (or pick a higher number)

6. Look for entry points on the 60 minute, 4 week chart. Buy when ready (MACD crossings are nice).

7. Set a stop based on the Parabolic SAR. Update the stop every couple of trading hours or so.

8. Repeat as required.

Optionally, this paradigm could be modified by substituting the word 'Daily' for '60 minute'.

For a lower maintenance version, choose less volitile ETF's. See INP, UGA, and SLV's recent activity.

Priceless

2009-06-02T14:46:00.001-07:00

Recently, Michelle Obama went to serve food to the homeless at a government funded soup kitchen

Cost of a bowl of soup at homeless shelter $0.00 dollars

Having Michelle Obama Serve you your soup $0.00 dollars

Snapping a picture of a homeless person, receiving a government funded meal, while taking a picture of the First Lady, with his $500 BlackBerry: $ Priceless

Commodity pullback?

2009-05-31T19:56:00.000-07:00

Below is a weekly chart of SLV.

Click for larger, Browser back.

My friend KM makes a good point: Silver should be pulling back some. As we can see, last week's action totally blew through the Bollinger Band. This typically indicates a turning point. The decline should be swift, and result in one ore more red candles.

There is some support nearby, however, $14.00 looks like the first really strong line in the sand.
With my stop in place, I am guaranteed profit and if it does pull back, I'll re-buy with twice the position size.

Happy hunting.

Three long weeks

2009-05-28T07:44:00.000-07:00

For a long darn time now, the market has been moving up and down, making and loosing the same dollar over and over. Blah!

Of course, there are hot-spots: Gasoline (UGA), some commodities (SLV, GDX), agribiz (DBC), and more.

"The metal (silver) has gained 33% this year. In comparison, gold has risen less than 10%... The $15 level is a break-out area for silver," said George Gero, a precious-metals trader for RBC Capital Markets. "Silver is not a pure precious metal. It's also an industrial. So what helps silver is the fact that there could be a recovery." (From IBD)

Essentially, the market has been marking time with millions/trillions of dollars moving about with nothing to show for it. (Hmm... that sounds familiar.)

There is a chance of movement though:

Click for larger, Browser back.

The last two highs in this daily SPY chart are lower than their predecessors. The lows are higher also. There are many more down days than uppers; I think I'm seeing a trend develop.

Probably best to wait it out until the market picks a direction. But, as mentioned earlier, there is a direction in several key sectors.

Rats! The FreeStockCharts.com hover widget doesn't work here. Oh well.

Testing...

2009-05-27T10:22:00.000-07:00

This is a real-time daily chart of the SPY. I am trying out the widgets at FreeStockCharts.com

Had to chart the SPY because the pull-back seems to have failed... I am somewhat invested in bullish stocks and ETF's now.

2009-05-26T05:58:00.001-07:00

My trading friend, KM703, offers us this daily chart of SLV, the Ishares silver ETF. In fact, he offers it just in time!

Click for larger, Browser back.

Since Price is above the 20ma, and above the rising 50ma, this is pretty safe. Further, KM shows that key resistance points have been broken and there is plenty of room overhead for growth. The upper Bollinger Band has opened up, Volume is on the rise, and resistance at $15 seems to be pretty weak compared to the current level of momentum.

I am equally encouraged by the 30 minute chart which shows no intention of pulback.

Here is an interesting article about (among other things) commodities buying in China.

Here is a goldmine of commodity vehicles, some will be great investments rite now.

Update: Here is a great article on copper.

Thanks KM! You can contribute here anytime.

Update: There was a huge pullback this morning. I took advantage and bought in. I have placed a % trailing stop to sell just so I am protected... I don't plan to 'work' this one, I hope to hold it for at least a few weeks.

The Foole has been Fooled... leveraged ETF's have issues.

2009-05-22T07:57:00.001-07:00

Here is a chart of SDD the 2x leveraged Ultrashort Smallcap 600 fund...

Click for larger, Browser back.

Here is a chart of SAA the 2x leveraged Smallcap 600 fund...

Click for larger, Browser back.

Notice that these charts do not reference Price, they are referencing position to the SPY, broad market index. Next, notice that they are both below the SPY. I am here to cry FOUL! Since they are opposites, one or the other of them should be in the money.

Sadly, this is not peculiar to this pair. From what I can tell, most if not all of the 2x and 3x pairs are not appropriately balanced. In fact, the Proshares website indicates: "This ETF is designed to meet daily objectives; results over longer periods may differ."

Conclusion:
- These are wonderful vehicles for intra-day trades. They provide access to markets previously unreachable and they leverage your gains/losses.

- It was suggested to use these as long term investments by our friends at the Motley Foole, but they didn't do the math (my friend IIC at SharpTraders.com did).

- It should be good (wonderful) for a longer term trade to short the opposite of the pair.

- Ultimately, to make reliable gains, we should invest in fundamentally sound stocks during a bull market. (I like the book Rule One Investing for this.)

Around the Horn

2009-05-22T06:23:00.000-07:00

- SPY, Broad Market Index:
(Daily Chart) Uptrend broken. Overnight action has resulted in Price laying directly on the 20ma
- BGU/BGZ, Large Cap Sector:
(Daily Chart) Uptrend broken
- MWJ/MWN, Mid Cap Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- TNA/TZA, Small Cap Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- TYH/TYP, Technology Sector:
(Daily Chart) Up-trend thoroughly broken. Lower high, lower low.
- FAS/FAZ, Financial Sector:
(Daily Chart) Up-trend intact. Lower high, lower low.
- ERX/ERY, Energy Sector:
(Daily Chart) Up-trend intact. Lower high, lower low.

Monday may be a good day to place long positions in short ETF's.

News headlines

2009-05-22T06:14:00.000-07:00

http://www.google.com/hostednews/ap/article/ALeqM5jXPJmkJdyKGBu_J5HvhnfYCkYAzgD98B6O7G0

TOKYO (AP) — Japanese stocks fell Friday...

WASHINGTON (AP) — New rules for the credit card industry...

SINGAPORE (AP) — Oil prices stayed above $61 a barrel Friday in Asia as investors sought a hedge against inflation amid weakening U.S. dollar...

BANGKOK (AP) — Asian stocks wilted Friday as the possibility of credit rating downgrades for major economies and bleak unemployment figures in the U.S. added to fears the recent massive rally was built on shifting sands....

LONDON (AP) — British Airways on Friday reported its biggest full-year loss since...

WASHINGTON (AP) — Auto lender GMAC Financial Services will receive $7.5 billion in additional government aid...

WASHINGTON (AP) — The federal seizure of struggling Florida thrift BankUnited FSB is expected to cost the Federal Deposit Insurance Corp. $4.9 billion...

Further: (From here)

"Currently, 46¢ of every dollar that the federal government spends is borrowed, which makes each dollar worth less in terms of other paper money alternatives, or in terms of a basket of commodities."

----

Hmmm... Methinks thes headlines may seal the deal for bears, at least for today.

Have fun!

The 20 is broken

2009-05-21T17:26:00.000-07:00

Click for larger... browser back.

The chart above is the broad market index, the SPY, daily.

As you may notice, the center line of my Bollinger Band, the 20 day Moving Average, has been breached. In fact, we closed below it. This powerful signal indicates the beginning of a pullback.

There is a lot of support below (see this video) so no one has a clue how deep the pull-back will be, but I'm hoping that it will be significant. The market needs a higher low to draw in basketfulls of sidelined money.

Oops... dinner is ready... gotta go!

Market may be turning

2009-05-21T06:22:00.001-07:00

My friend D7 at freetradingvideos.com did a great wrap-up video last night... It's a must see.

http://www.freetradingvideos.com/vlog/Events/default.asp?Year=2009&Month=05&Day=20

----

Something that nobody seems to be mentioning is that the last day President Bush was in office, the SPY closed at $92.85. That level was tested on the 7th, and 8th of May. On the 8th, the market actually did close above that level ($92.98). The theoretical line in the sand then failed. Yesterday made a high only 5 cents below that.

Somehow, I can't see how market fundamentals have improved since then. Therefore, I expect a significant pullback.

D7 and I agree that it is early to place your investments... that would be betting. Like he says in the video: "trade with your eyes not with your mind."

Here is a 60 minute chart of FAS:

Click for larger, browser back.

Is this a Head and Shoulders forming?
This could indicate a small recovery and pull-back in the making.
A downtrend in financials can pull the rest of the market.

The Stars Were In Alignment

2009-05-19T06:15:00.000-07:00

The TRIN was in the mid 70's virtually all day.
The TRINQ started over 1 but fell to .5's during the day.
The TICK 8ma was positive all day.
The TICK Q 8ma was positive all day.
The VIX fell to new lows.
The Advance/Decline was above 50% all day. (51 to 76 range)
The A/D Q was above 40% all day.
The banking index was improving all day.

The results:
The SPY bounced off the daily 20ma thus reversing its downtrend.
I covered my small short position (sold TZA), bought FAS, and made money for the day.
The markets are, at least for a little while, bullish.

There are plenty of reasons for the markets to fall but for now, let's rock!

Update: This morning is not getting off to a very good start... As I write, the A/D is totally flat.

Note To self (and watchful readers): extreme Tick indications often indicate change in the air... on 3-3-9, the weekly Tick was -576 thus indicating oversold. Odly, there have been several times where the Tick was over 1000 resulting in trend reversals only half of the time.

When the SPY made a Head and Shoulders which failed to fall much, Tick was forming a pendant around the center of the trading range. I had full sized positions in EFU and SIJ... lost WAY too much on that!

AlphaTrends is out of my scope

2009-05-15T07:22:00.000-07:00

Brian Shannon is a professional trader and trade teacher. He authors the Alphatrends videos that are abundant on YouTube. It is good stuff... so good that I paid a lot of money for his book, Technical Analysis Using Multiple Timeframes.

That's where the problem begins. When I bought the book, it was under the agreement that I would have access to his password protected Bonus webpages. Page 184 of the book tells me the URL and password. Since then, Brian has chosen to remove this section from the website. Further, his daily videos are no longer accessable without paying a subscription.

I emailed him with my concerns. He blew me off.

Due to this lack of integrity, I am removing his link from my universe.

Mistake? Maybe.

2009-05-14T19:25:00.001-07:00

Poopy! I made a newbie mistake....
This TZA chart clearly predicted today's bullish Price action.
The two previous days printed a picture perfect Bullish Harami and I missed it.

Click for larger... browser back.

Had I seen that, I would not have owned TZA today.
Fortunately, my position was small due to my concern about the pullback.

So... am I bullish? No! I may not even exit this position. Here's why:

Click for larger... yada yada.

Depending on how the upper trend-line on this 60 minute SPY chart is drawn, our downtrend may still be in tact.

Oops... the SPY daily chart is a Bullish Harami. Bullishness is expected.
On the other hand, today's volume was low. There is a good chance it could be crying "wolf"; One would reasonably expect that large amounts of volume would be required to reverse a trend.

Tomorrow will be exciting... we get to learn things! Bring it on!

Did I explain that well enough?

New ETF's and Market Status

2009-05-13T13:27:00.000-07:00

Direxion has added some new 3x ETF's to their list. I am including two of them here: Mid Cap, and Technology, since they have enough volume to chart fairly well and are so important.

- SPY, Broad Market Index:
(Daily Chart) Closed below up-trend line
- BGU/BGZ, Large Cap Sector:
(Daily Chart) Perilously close to breaking the up-trend line
- MWJ/MWN, Mid Cap Sector:
(Daily Chart) Up-trend thoroughly broken
- TNA/TZA, Small Cap Sector:
(Daily Chart) Up-trend thoroughly broken
- TYH/TYP, Technology Sector:
(Daily Chart) Up-trend thoroughly broken
- FAS/FAZ, Financial Sector:
(Daily Chart) Up-trend intact
- ERX/ERY, Energy Sector:
(Daily Chart) Up-trend intact

Conclusion:
Tomorrow should provide more information.
Before "betting the farm" on a downtrend, I'd like to see all sectors in agreement (well... except possibly energy).

All of these sectors are inter-related. If Large Cap is tanking, those businesses should be doing precious little business with the others. Then (note to self) this places the Real Estate and Financial sectors at risk.

I am holding a small position in TZA, because I think I know which way it's going to go.

Does this help you?

A temper tantrum

2009-05-12T13:37:00.000-07:00

To begin, I must express my outrage... the one minute chart lies!
It only took me a few minutes to find an example 'cause it happens all the time.
Here is the one minute, two hour, chart of today's FAS Price action:

Click for larger image, browser back.

Notice the points identified by the letters A thru E...

A marks the point where Price is highest
A is followed by a higher (than the previous) low, so we can expect a higher high to follow
B indicates a lower high

Therefore we should expect that the rally has ended and a downturn has begun (sell short here)

C This lower low and high confirm the downturn is intact

Now, here is where it gets sticky...

D This is a higher high than the previous
E This higher low confirms the beginning of an uptrend

But does it? No! From there, Price takes a nosedive. (Grrrr)
At point D my short trade stops out at a loss.
Then the stock merrily performs as I expect it to (without me).

Plan B and Oops!
Here is a 60 minute, 4 week, chart of the same ETF:

Click for larger image, browser back.

A Higher high followed by a higher low (add to a long position at the breakout)
B Higher high followed by a lower low (stop out at a loss)

OK, with a lower low, the uptrend is over

C High of the day (Grrr! times 60)

This stuff is tricky!

Conclusions:
Don't be afraid to stop out at a small loss... it happens
Ya can't perfectly pick tops and bottoms
If you want to ensure a small profit, update your stop after every candle, or set a tight trailing stop
Ride out the ups and downs when you know a stock is moving your way on a higher time-frame

Help?

Around The Horn...

2009-05-11T13:23:00.000-07:00

... in several ways.

I need to review the status of my favorite ETF's, and warn about the possibility of a market pullback.

- SSO/SDS, Leveraged broad market index:
(60 minute chart) Bull rally trend broken today. Still above the rising 50 ma but below the declining 20 ma.
(Daily Chart) Bull Rally, rising 50 ma.
- FAS/FAZ, Financial Sector:
(60 minute chart) Bull rally trend broken today. Still above the rising 50 ma but below the declining 20 ma.
(Daily Chart) Bull Rally. Above the rising 50 ma.
- ERX/ERY, Energy Sector:
(60 minute chart) Bull rally trend broken today. Still above the rising 50 ma but below the declining 20 ma.
(Daily Chart) Massive Bull rally. Above the rising 50 ma.
- TNA/TZA, Small Cap Sector:
(60 minute chart) Massive Bull rally still intact. Still above the rising 50 ma but closed at the declining 20 ma.
(Daily Chart) Massive Bull Rally. Above the rising 50 ma.
- BGU/BGZ, Large Cap Sector:
(60 minute chart) Bull rally trend broken today. Still above the rising 50 ma but below the declining 20 ma.
(Daily Chart) Bull rally. Above the flattening 50 ma.

From $14 to $35.60, TZA has moved a lot. More than double... Wow! We have yet to recover the pre-election levels but the run has been exhilarating. I wish I had bought and held for the duration, I'd have done better even with a smaller investment. I'll catch it next time.

----

Now is a good time for me to sit back and watch. The market seems to be indecisive about its future (the next few weeks). Since the rally's trend lines have been broken, this might signal a change coming.

Market Tao: Rules List

2009-05-08T11:33:00.000-07:00

Version 0.2.2
This list of Market Tao (definition) trading rules is a Beta release.
I'll update it from time to time, adding my findings and (maybe) yours. (please help)

Selling:
- Use stops or carry the memory of a bad trade, possibly indefinitely
- Update the stops to protect profits
- Trailing stops work well in certain situations
- Never hold over earnings
- Bollinger Band Sell signals take precedence over the Advance/Decline indicator on shorter time periods

Buying:
- "Stop to buy" is risky but can keep you from missing a rally
- If your entry is late, don't
- Go long or short depending on the 50 day (50 hour?) Moving Average direction and/or the 60 minute SPY patterns
- Daytrade long or short depending on the Advance/Decline indicators (Price and Volume)
- Look for price patterns and volume to indicate a developing trend
- The Adv/Dec line takes precedence over MA signals on shorter time periods
- Buy high. Sell higher
- Never buy on a declining Tick
- Watch for Trade #1 setups, but maintain Situational Awareness (many timeframes)
- Watch for 50 MA crossover setups
- Watch for Trade #3 setups that conform to the 30 minute gap strategy
Hey, What happened to Trade #2?
- When The Stars Are In Alignment, bet the farm (briefly)
- Make four Watch Lists and use the appropriate one
- keep an eye on the Bull/Bear Index and/or the alternate Bull/Bear index

Stocks:
- Why stocks?
- 3x ETF's make/loose more money than 2x'ers for the same time period. Some days they can move 25%
- Since ETF's are watered down by their sheer volume of members, individual stocks can make better short term investments.
- The Tick chart is important and responds much faster than the Adv/Dec line
- Win or loose, get over it
- Take care of the personal needs

Alphatrends update

2009-05-08T10:01:00.000-07:00

Brian Shannon of Alphatrends has updated his web presentation. He no longer lives at blogspot.com. The link to his new home is posted in my right sidebar.

The good news is that his videos are longer and more in depth. Yay!
Sadly, the Bonus section (for book purchasers) has gone away.

QQQQ update

2009-05-08T08:25:00.000-07:00

This hourly chart of the NASDAQ...

Click for larger image, browser back

...shows that the NASDAQ remains below its trend line, but is still outpacing the broad market index. (SPY) Definitely something to watch! Once they cross, I expect an exciting race to a new bottom will be on. I already have a small position in QID which I'll beef up when this thing gets more steam. Further, I'm watching my four favorite bear ETF's for signs of an up-trend... I'll let you know.

I just can't see how all this political news is bullish over the long term. (help me?) Further, with the price of energy on the rise, business fundamentals and expendable income will decrease.
Its a mixed bag though. Financial institutions are still undercapitalized (bearish) but "we the people" are going to inject more capital as needed (bullish). This will have a long term effect on our debt (bearish). When financials are healthy, industry and families will be able to satisfy their banking needs (bullish). Whew! I am not smart enough to get a read on that mess. Methinks few are. Therefore, the resulting fear and uncertainty may drive the markets down.

Which reminds me: With my ERX investment up 10%, I locked in the profit this AM... will re-buy later.

----

The chart above was created at FreeStockCharts.com.

Someday, I hope to interview the web site owners and publish an article for the FreeTradingVideos.com newsletter.

FreeStockCharts requires an install of a Microsoft add-on called Silverlight which is a hassle. I hate to add more stuff into my PC for fear that overall response time will be reduced, mal-ware risk will be increased. Once installed though, I am happy to have access to these charting features.

----

Oops! I just scrolled in to a tighter timeframe (by simply rotating the mouse wheel) and see that the Q's are significantly below the SPY now. Happy trading!

Update: My QID trade stopped out at a loss so I bought a large position in FAS. I'll sell most of it later today and hold some for future gains. At lease for the moment, the market has cautiously picked a bullish direction.

Caution is called for here...

2009-05-06T07:30:00.001-07:00

Here is this morning's 60 minute chart of QLD...
Notice the little red candle under the trend line.

Click for a larger image, browser back.

The NASDAQ has fallen out of its bull trend in a big way.
Further, there is a lower high. A lower low is being formed as we speak.
I recommend extreme caution in placing any long positions but keep an eye on the bear stock ETF's like QID, FAZ, TZA, and BGZ. It is still early to jump into these ETF's IMHO, but their time may be coming soon. It's up to you to plan your risk/reward and thus, entry points.

Well, that's not completely true... The exceptions are things like DXO, ERX, and UGA which I continue to hold.

--

Have you noticed that the price of gasoline is on the rise? I sure did. The price at the pump is an index that I watch. When it goes on the move, I trade UGA. Its so cool! As gas becomes more expensive, I pay more for it but make it back in my trading! Yum!

Note: DXO is up 6% but UGA is only up 2%. Methinks that UGA has some catching up to do.

This just in -- History about to be made

2009-05-05T09:33:00.001-07:00

FAZ has tested the $10.00 line twice this morning. Ya might want to keep an eye on it since there is so much momentum in this month's rally.

Be careful with it though, the internal indicators are mixed. I have been leaning to give the Advance/Decline index a lot of respect. It is slightly bearish at the moment.

Oops. The Tick is also bearish......... we may have to wait a few days (hours?) for FAZ resistance penetration.

Update: SPY made a bear flag, the VIX is in a series of higher highs, The A/D is still bearish, the Bank index is falling, Tick is falling, all my favorite ETF's are under water, yada, yada, yada.

I think I'll take the rest of the day off.

This just in --- History is made

2009-04-30T08:03:00.001-07:00

Due to today's market strength, a line in the sand has been broken.
Google broke the $400 mark just now! $400.01 was the peak. This (in my mind) opens the market up to reach new highs.

I have little hope that GOOG will close the day above $400, but the line in the sand has been broken. Who knows what tomorrow will bring? If this strength holds, goog will soon reach $450.

S & P Downtrend

2009-04-28T15:00:00.000-07:00

I just finished re-watching a video that suggested the market should pull back, form a higher low and then take off. Funny thing, it was an old video and the market has yet to pull back. We need this pull-back before sidelined money will be drawn in.

Since this was our third lower day in a row, one hopes the process has begun. That said, am I still in FAZ? No! During this morning's gap down, I was at a 10% profit so I sold. Yum!

In review of the day's action, I wish I had re-bought later... I am expecting the market to fall more overnight. Today's trading action was confusing. The TRIN and TRINQ were bearish but the A/D was positive most of the day, I thought it best to just watch the show unfold. Therefore, by not being involved, I missed a great chance.

I'll get better.

Update (the next day): Durn good thing I didn't re-buy FAZ! This morning, the market was very strong.

A new trend forming?

2009-04-27T17:59:00.000-07:00

Click for a larger image.

Funny thing, now that I've finally convinced myself that we are in a bullish market, the SPY may well be falling out. Yesterday was a lower high and today was even lower.

Not enough evidence to call it a downtrend, since the lows are higher, but, we may be on to something here: the market is definitely less interested in moving up.

If it is the beginnings of a several day downtrend, I can proudly say that I got in on the peak. I am carrying a small position in FAZ overnight. So far so good! At the close of today's trading, the market internals were mixed, but in my favor and my investment is currently up better than 2%.

I am actually looking for an SPY pull-back to about $78 which could take a week or possibly even two. That would make my FAZ trade well worthwhile, and then make the longer-term bull rally more powerful.

OBTW: I really couldn't find any satisfactory fundamentals in the $CYC index (see my post below) so I'll happily return focus to my list of short interest stocks once the bulls take over again.

Another bullish indication, with cautions

2009-04-26T05:16:00.000-07:00

There is a perfect index to watch in times like these; It is designed to be an early indicator of cycle change! It's called the $CYC, and is made up of 30 stocks. The index does show a rising 50 ma therefore many of its components must have a lot of strength in this market.

Click for larger image, browser back to return.

This list of its stock components is here.

Personally, I am not comfortable taking large long positions when the broad market is not uptrending, but some of these do deserve a place in my portfolio. I'll scour the list of 30 to create a short list based on the 50ma, then check the fundamentals of the survivors and weed out a few more. If the analysts are bullish on the remainders, next week I'll buy 1/4 positions in each for a longer term hold.

I guess this means that its time to start getting into the market.

That concept scares me due to the political-economic climate: I just can't understand how our country accepting unprecedented levels of debt, on mostly unproductive spending projects, most to occur in the out-years, with no plans to repay, printing money so we can spend even more, 300% growth of national debt, 400% increase in the size of government, many large projects still not addressed, the nationalism of many private corporations, increased terrorism threats, potential war escalation, increasing unemployment due (in part) to large businesses going bankrupt, 30% of small business owners working for free... ARRRRGGGG!

Why is this bullish? Because the chart says so. Ya gotta trade what you see, not what you expect.

Bonus Information (terror threat confirmation):
Military troops, National Guardsmen, and and Police guarding the Obamma Inauguration: 42,500.
U. S. Troops in Afghanistan: 31,000.

Have fun!

The market seems to have picked a direction!

2009-04-25T10:38:00.000-07:00

I have been slacking. I haven't looked thru my fav's for a while.

- SSO/SDS, Leveraged broad market index: Bull rally. Above the flattening 50 ma.
- FAS/FAZ, Financial Sector: FAZ, Choppy. Bull Rally. Above the declining 50 ma.
- ERX/ERY Energy Sector: ERY, Choppy. Forming a pendant. Above the rapidly declining 50 ma.
- TNA/TZA Small Cap Sector: TZA, Bull rally. Above the flattening 50 ma.
- BGU/BGZ Large Cap Sector: BGZ, Bull rally. Above the flattening 50 ma.

When the 50 day moving averages begin turning up, particularly the SSO, I'll be placing longer term positions in my retirement accounts. Will you?

Note to self: watch for the SPY to break (close above) $88, TNA at $29, BGU at $33, and FAS at $12.

2009-04-17T07:57:00.001-07:00

Just saying...
I noticed that FAZ, the Financial Bear fund is getting some intense volume. It is likely that some savvy institutions are expecting a market turn-around in the relatively near future.

Let the Bulls beware!

As always, click for larger image... browser/back to return.

Further confirmation: watch some of D7's recent videos, like this one, to see what is really going on the market.

Breaking News

2009-04-09T19:54:00.000-07:00

In this article, we find that our government leaders are considering amnesty and citizenship for millions of illegal aliens. If passed, we can logically expect to find more people competing for a limited number of jobs. When the public has reduced employment opportunity, there will be less spending. Reduced spending cuts corporate earnings. Reduced corporate earnings, reduces the value of companies, and thus, stock Price.

In other news, SPY key resistance levels have broken!

Click for larger image.

This is about three weeks of 60 minute Price action. As you can see, The market has been remarkably flat until today. Finally, the trend has broken and the markets are on the way up for a while.

Does everyone know how to find a list of 'short interest' stocks? They are fun to own! Here is a three day chart of one that I bought this morning/sold this afternoon, GCI.

Have fun!

Link forwarding

2009-04-07T14:08:00.000-07:00

I wanted to point out this webpage.
They have a chart that says we are almost out of the bear market!

I hope that they are rite, this whipsaw stuff is bad for my nerves. I am not a very good day-trader. (yet) I am anxious to return to the days where you could expect almost every stock to be somewhat higher in a month.

2009-04-06T06:43:00.000-07:00

This weekend overview video at FreeTradingVideos.com Points out some major volume action that I missed in my chart analysis. My friend, D7, indicates that it was likely that a bottom has formed. He agrees that a pullback should happen soon, and then its off to the races!

Trade what you see

2009-04-05T06:26:00.000-07:00

Don't risk your money based on my words, any other pro trader, or news commentator recommendations or expectations. (But do stay tuned in -- you can learn stuff.) It is not possible to make a profit on a stock, no matter how highly recommended, if Price goes down (unless you are shorting).

My attitude has been very bearish due to recent political actions but the market has made some truly wonderful returns for those who are well positioned (some of my investments!) That said, be very cautious about long term trades. Even holding a stock overnight can be very risky for numerous reasons. The broad market has been choppy and is down from even late last year and we are due for a pullback, just to name two.

I have made personal improvements in being able to trade what the chart data is saying, therefore, I am allowing myself to return to my favorite sites (i.e. FreeTradingVideos.com) and learn from my superiors. Monday morning, no matter what anyone says, I will be trading the message that the charts are sending, not anyone's recommendations.

The NASDAQ (QQQQ) is making a yearly high and a higher high. That's a Catch 22 situation... Tech stocks are taking off again so semiconductors (SMH) are prospering. Since chip makers are running, the NASDAQ is improving. Now, since the NASDAQ is a leading indicator, the broad market is trying to follow. We win! I suspect that once the Q's puts in a higher low, there will be a flood of sidelined capitol being re-invested. Get ready!

Oops, there I go... don't take my word for it. Keep an eye on the charted data for proof.

OMG! I need more MA's!

2009-04-02T20:41:00.000-07:00

I have been trying to keep my charts as clean as possible, however, I just noticed that one of my "short interest" stocks (MW) has recovered so much that after battling and beating the 50 day Moving Average (MA), it has taken out the 200!

Click for a larger image.

While no one would call the markets "healed", not even Cramer. One must admit that the markets do have a lot of strength. In fact, today Jim said that we are out of the depression, its now just a recession.

Click for a larger image.

The Gann Angles on this six week, hourly, chart of DIA (the Dow 30) show that momentum is slowing, however, there is no reason to think the rally is over (after the gap gets filled).

Please do be careful. Use protective stops. Invest wisely. Buckle your seat belts, its going to be a bumpy ride.

The daily DIA chart is still in an official downtrend... lower highs and lower lows. Both the 50 and 200 MA's are still in a downtrend as well. Watch for a close above $90 before we can go long with a fair amount of certainty and looser stops.

Bounce!

2009-04-02T06:38:00.001-07:00

This AM caught me by surprise... SPY is bouncing off of its 50 ma.
While this is of course bullish, it would have been healthier for the markets if the pullback was deeper.

Anyway, I am enjoying it... I have several small positions with huge short interest... eg: TSL, CAB, MTN, and others. I buy them on dips and sell on the rips like today... Its a brainless way to pick up a few percentage points.

I was listening to Rush Limbaugh a few days ago and made some $$$ from his wisdom...
Since Obummer is the new CEO of GM and Chrysler (facism), he has the authority to take over the job of directing business. Since Obummer does not like trucks and SUV's (the only profitable products) the car manufacturers will be directed to build smaller, more fuel efficient vehicles. Americans only buys these when gasoline is terribly expensive. Since he is also the CEO of the oil industry, all he has to do is raise the cost of a tank of gas to make his little cars sell.

To that end, he has already begun making millions of acres of drillable oilfields off limits.

It's another no-brainer trade, I bought UGA, the gasoline ETF. It popped up 6% this AM!
I think I'll hold for a while longer.

Have fun!

A Look At Some Market News

2009-03-30T18:05:00.000-07:00

"The White House pushed out GM's chairman and directed Chrysler to move quickly to forge a partnership with Fiat if it expects to receive additional government assistance. GM CEO Wagoner forced out as part of gov't plan. Time and time again, General Motors Corp.'s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner"

"Asian stock markets tumbled Monday as downbeat comments from major U.S. banks and mounting woes at American auto giants underlined that recent optimism about economic recovery might be premature."

"However they satisfy their nicotine cravings, tobacco users are facing a big hit as the single largest federal tobacco tax increase ever takes effect Wednesday ... The major cigarette makers raised prices a couple of weeks ago, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01."

"President Barack Obama and congressional Democrats are stepping through an economic minefield and sowing the ground with unprecedented initiatives that capitalize on the recession to rein in Wall Street and broaden government's reach."

"The dollar weakened to 96.70 yen Monday"
----
My view in a word... Change.
In a few words... let's not count on the recession ending any time soon. How can we predict what will happen next?

More bullishness for now... wait a few minutes

2009-03-27T06:43:00.000-07:00

Click for larger image, hit "back" to return.

The chart above, SPY daily, indicates the trendline in the sand has been well breached. Yay for our side! As I write, the index is only down 1.3% for the day and seems to be improving.

I hope to see a pullback to test and prove (bounce off of ) the trendline soon. If that happens, we're good!

I'll be in touch.

Is it healed now?

2009-03-24T07:19:00.001-07:00

Yesterday was a huge day for the markets. The 18th was also huge. Considering all of that strength, and our hopes for an end to this recession, one would dare to consider that the market's woes have been cured.

Nobody hopes that more than me, however, as I study the data, I conclude it is not... Here's why.

Notice the chart of the broad market index above. We recently made a nice V which resulted in yesterday's close above the 20 day moving average -- very bullish. Yay!

Now, notice the volume indicator. The market has made several V's resulting in rallys. They all coincided with extreme levels of volume. The current rally did not.

My conclusion:
Nobody is sufficiently confident in the economic environment to invest large amounts of cash.
Therefore, I am not either.
If there are relatively few buyers, we can expect to see more chop and downside. Sniff.

More on the printing of money, and the AIG bonuses

2009-03-21T07:08:00.000-07:00

This is a partial repost of of a Cato Institute document:

Sparked by outrage over the bonus checks paid
out to AIG executives, the House approved a
measure Thursday that would impose a 90
percent tax on employee bonuses for companies
that receive more than $5 billion in federal bailout
funds.

Chris Edwards, Cato's director of tax policy
s tudies, says the outrage over AIG is misplaced:

While Congress has been busy with this particular inquisition, the Federal Reserve is moving ahead with a new plan to shower the economy with a massive $1.2 trillion cash infusion–an amount 7,200 times greater than the $165 million of AIG retention bonuses.

So members of Congress should be grabbing their pitchforks and heading down to the Fed building, not lynching AIG financial managers, most of whom were not the ones behind the company's failures.

Cato Executive Vice President David Boaz says
this type of selective taxation is a form of
tyranny:

The rule of law requires that like people be treated alike and that people know what the law is so that they can plan their lives in accord with the law. In this case, a law is being passed to impose taxes on a particular, politically unpopular group. That is a tyrannical abuse of Congress's powers.

----

The Cato people are a good reference for me... Their publications are well thought out and clearly written. Often, the mainstream media overlooks certain details and other sources must be consulted for alternative viewpoints.

The act of injecting a trillion dollars into the system would have to have an impact on Price. In fact, our old standard, gold, skyrocketed.

Here is what happened to GLD, a gold ETF...

As the value of the dollar is deflated through dilution, everything that is based on the dollar is also. Our homes, our investments, and our paychecks, all devalued.

Now, if the reaction to this cash injection is inflation, all of us will find ourselves in higher tax brackets and thus pay more for a lower standard of living. That is the reason smart investors moved out of dollars and into other types of investment vehicles, i.e., gold.

----

While this $1.2 trillion thing is going on, the government and news is focusing on the AIG $165 million thing.

$1,200,000,000,000
$165,000,000

While considering the preponderance of digits in the recent flood of dollars. perhaps the AIG thing still deserves some attention. It is rather outrageous that public funds have been converted to government funds, and then converted to corporate profits, only to be converted to personal bonus checks. That was a huge oversight by those entrusted to guard our taxes.

Didn't someone once say: "To you - he’s Mr. Vice President, but around the White House we call him ‘the Sheriff’- because if you’re misusing taxpayer money, you’ll have to answer to him.”

This is a mess!
The government does not really seem to be in control of the economy or its self.
With that, how can anyone expect the economy to improve?

AIG Bonus Update:
I just received an email from Michael Steele the RNC Chairman:

"It was a mystery all week how this happened. No one could seem to figure it out. But then... it leaked out that Democrat Senator Chris Dodd snuck a provision into the massive spending bill that allowed the bonuses to happen. Dodd denied it at first, then changed his story and now admits that he did it, but says he did it at the request of "Administration staffers". Finally, the Democrats have been forced to admit that they allowed the AIG bonuses to happen."

Hmm... What did Senator Dodd say about it?
"Dodd said he agreed to the Treasury Department's request, which made the limits apply only to future bonuses. Dodd's provision, as originally proposed, operated retroactively, meaning that it would have applied to any firm, such as AIG, that benefited from the first wave of federal assistance."

http://www.youtube.com/watch?v=Tz1yeX8Fh30

Hmmm... What did the Treasury Department say about it?
"As pressure mounted on AIG employees to return the bonuses, new details emerged yesterday about what the Fed, the Treasury Department and the White House knew regarding the payments and when. AIG executives said the Fed was informed three months ago by the company that it would pay $165 million by March 15 to employees working at its most troubled division. The Treasury and White House said they learned of the payments from Fed officials only days before they were due…"

Hmmmm... What did Tim Geithner say about it?
"Treasury Secretary Timothy Geithner admitted that he was the one who urged Dodd to make the changes. "

Hmmmmm.... What did Obama say about it?
"President Barack Obama declared today (3-16-09) that insurance giant American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses."

Hmmmmmm.... What was it that Barney Frank said?
"Congress should rewrite a Depression-era law the Federal Reserve used to give AIG its initial government bailout."

Huh? Excuse me Barney, Didn't Geitner accept responsibility? Shouldn't someone in your position be on top of the facts? Oh.. I get it... this is a Red Hering argument so you might deflect attention away from the truth.

Hmmmmmmm... What did Joe Biden say about it?
"It is no wonder that when earlier this week Vice President Joe Biden told local officials in Washington that he was "serious, absolutely serious" about policing wasteful spending in Washington, he was met with the only rational response his audience could muster: laughter."

Hmmmmmmm... What did Robert Gibbs say about it?
"White House press secretary Robert Gibbs attempted to deflect blame for the AIG bonus scandal away from the Obama administration by reminding reporters that Treasury Secretary Tim Geithner inherited a bad situation and had to make the best of it when he took over from the Bush administration."

OK. So what was the Bush policy?
"Despite their deliberations at the time, the Treasury and Fed officials, which were part of the Bush Administration, eventually decided to restrict compensation on just the top 75 company executives".

And Pelosi?
"Pelosi said that House Democrats had been out front for months on the idea of cracking down on bonuses and executive compensation at firms that take federal money. "The CEO compensation issues were completely resisted by the Bush administration, so we are sweeping up after them," she said.

But what about the economic stimulus bill, which included language that permitted the AIG bonuses to be paid? Sen. Christopher Dodd (D-Conn.) is in hot water after admitting that he amended the bill to allow the bonuses, though he says he did so at the request of the Obama administration. The point, Pelosi said, is that the House had nothing to do with it."

----

GeWhiz! Thats a lot of finger pointing. Who would want to invest at a time like this?
Sorry Brian, The best we can hope for is a steady paying job if you can't keep a continuous eye on the market's activity.

SPY pullback

2009-03-20T06:47:00.001-07:00

Any wonder why the market is pulling back? In view of the SPY chart above, there shouldn't be.

To make matters worse, the Fed is printing money to intentionally spur inflation... this could be very bad for America; it has never been beneficial before.

http://www.theaustralian.news.com.au/business/story/0,28124,25212624-643,00.html

Remind me to not go long for another few years.

Charting Ticks

2009-03-12T08:59:00.001-07:00

This site offers a very good description of the Tick chart and provides tips in how to trade with it. The tick is so important that I'll never trade without it again.

As we can see in the chart below, today's tick was much higher than yesterdays, and in a very lovely uptrend. For that reason, and since the market was basically up all day, I traded with a smaller share sizes, and tight stops. ARG! While my profits represent an honest day's work, I failed to capitalize on the huge opportunity today presented.

I was having stress all day and poised to exit my meager positions at the drop of a hat. I couldn't believe what I was seeing; surely a sharp profit taking pull-back will begin any second.

Click for larger image. Use the browsers' back button to return to blog.

Since the tick is so volatile, I add the 4 and 10 period Simple Moving Averages (the values may change as I gain more experience). These MA's were bullish almost all day and so was the market... hmm... I guess it works.

The tick was difficult for me to find. I still havn't found it in Yahoo! charts. My broker's software calls it the $usm/tick (Chicago), $usn/tick (NYSE), and $usq/tick (NASDAQ). Even that was difficult to find so there may be more of them.

The tick is one of the key market internals and tells us in general, if Price is moving up or down. This is a key piece on information in understanding the way the market is -- Market Tao.

Stock Trading Malware

2009-03-10T13:26:00.000-07:00

A dear friend of mine just gave me an important warning; Somebody has created a Trojan that can affect my trading platform.

I did some research (I googled it) and discovered that it is true. in this article, we see that several platforms are affected: "Among the unusually short list of institutions specifically targeted by Tigger are E-Trade, ING Direct ShareBuilder, Vanguard, Options XPress, TD Ameritrade and Scottrade."

My computer was affected by a particularly obnoxious piece of malware last month leaving me only to trade on my backup laptop. We eventually repaired it by converting the operating system to Linux. Sadly, my IT guy could not get the trading software to run so I had to switch back to Windows. Fortunately, we were able to do that, and get everything working, before the backup laptop got the same @#$ing infection.

Now I am afraid to do anything with my computers except trade and train to make better trades. Neither McAffe or Norton were able to discover last month's malware so I think I'll investigate AntiVir which was recommended in the article.

Be safe!

A Beneficial New Law

2009-03-06T09:57:00.000-08:00

I'd like to propose a new law. I think that since America retires on their investments in 401Ks', IRA's, and annuities, this law will be beneficial to all.

Here's how it works; When a politician is placed in office, all of his re-election campaign funds go into a brokerage firm and into the SPY. Now, that politician is very interested in the success of American businesses and their customers.

When said politician monkeys around with a sector, finance for example, a significant portion of his account is shifted to the broad sector's bull ETF. Now, he/she is very interested in doing things that would be beneficial in that specific area as well as contribute to the entire market system.

If the politician sees a particular sector falling, he/she would be motivated (well paid) to reverse that trend.

Should the sector fail, his/her re-election campaign funds evaporate. Yay! the system is self cleansing.

Let's try it. Who do I call?

Trade #1 and Bollinger Bands

2009-03-04T09:52:00.000-08:00

I already had a stellar morning so I pause from trading to document my most reliable setup -- Trade #1.

This morning, the market gaped up. The news was all about being overdue for a rally, which is counter to the overall trend, so I went into the market internals to get a better feel. The S&P was certainly in rally mode. however, the TICK indicator was showing flat/bearish. It seems that something is out of synch in the markets; some important sector must be failing with big-time momentum.

My charts are set up pretty clean so I can observe Price with few distractions. I use volume and Bollinger Bands (settings: 20,2), nothing else (rite now -- it might change later).

BBands are a wonderful thing to me... the center line is a 20 period moving average. When Price is below, that's a quick check bearish indication. Conversely, when Price is above, that's generally bullish. The outer bands encompass about 90 percent of Price action. When Price is outside of the bands, it deserves special attention. Often, when Price exceeds the bands, it is soon to reverse, at least temporarily. This fact is phase 1 of a very reliable trade.

I noticed this happening this morning. FAZ (FAZ is a bear market ETF) bucked its up-trend (as seen on longer period charts) and exceeded the lower BBand on the 1 minute chart, and others. From there, it reversed quickly.

Since the Bband channel is still forming a down trend, I waited. When Price closed above the 20 period moving average, I watched very closely. When the upper band went flat and began trending up, I bought a bunch of shares.

From there, Price rose to hit and then exceed the upper band (1 minute timeframe chart). Since it was out of the bands, it pulled back a bit. I wasn't concerned because that is normal behavior. After forming a choppy bull flag, Price took off towards heavenly profits with renewed momentum.

I sold half of my shares at about the peak, and sold the remainder when a lower low formed. Now, my highest profits of the week are locked in and being readied for re-investment.

Here is the chart:

Obviously, I passed over several buy signals.
I might have bought while Price was outside the lower band. That setup has worked (very well) and sometimes failed. (I reserve the right do this in the future, with just a few shares.)

I could have bought in at each of the three pullbacks during the initial recovery. These are fairly reliable, but since the bands are still displaying a down channel, its safer to wait.

Conclusion
The trade described above is so very reliable that I am comfortable enough to invest lots of shares. Hopefully, you will profit from it too! Start small until you get the feel of it.

PS
I understand that the above description might be a bit confusing, please feel free to comment any questions you might have. I will use those comments to update the description as needed (depending on my caffeine and blood-alcohol levels).

Now I think I might go take a nap!

Update: See also my Situational Awareness Post.... Its important.

2009-03-03T13:43:00.000-08:00

What can I say? Not much going on... Price is still being driven by politics, not the strength of hardworking Americans and seasoned managers. The indexes are all down, peoples IRA's, 401K's, and annuities are being further decimated.

Here's a look at our leveraged bear market moneymakers:

- FAS/FAZ, Financial Sector: FAZ, up 5.25% today
- ERX/ERY Energy Sector: ERY, down 1.12% today
- TNA/TZA Small Cap Sector: TZA, up 6.37% today
- BGU/BGZ Large Cap Sector: BGZ, up 2.43% today

TZA and BGU are in confirmed rally's, and are pretty much oversold.
FAZ is very choppy and not as reliable to hold overnight.
ERY is choppy, oversold, and in a confirmed rally all at the same time.

As long as there are politicians, the markets will have a level of fear. These days, that fear is on steroids. Through these ETF's I am cashing in on it! Since fear levels vary from day-to-day, it is best to trade what you see from hour to hour; no long-term positions yet.

Generally speaking, the market is very oversold; we are now down to second-term Clinton era recession levels now; Price wants to be free to run.

Since the trend is down, we will likely gain from the above mentioned ETF's again tomorrow.

Today's Mover

2009-02-26T14:21:00.000-08:00

Today's top mover ETF in my universe is RXD, the Proshares UltraShort Healthcare Fund. I am curious, why is healtcare 10% more depressed than the market in general?

Hmm... Hasn't healthcare been in the news a lot lately? It seems to me that somebody is interested in monkeying around with it. In a quick check of the news, I see that COBRA is being provided to the unemployed, that should help healthcare industry earnings. Hmmm, the National Institute of Health got billions and billions in the stimulus package and we are doubling their usual cancer research funding, that should help earnings.

Oops, "Reforming the way doctors are paid will also eventually lower costs..." That sounds pretty broad-reaching and vague, it could inject a bunch of fear into the market. Ouch! Here we go: "The budget includes a controversial $1.1 billion measure for the federal government to get into the business of comparing medical treatments." That sounds like the government hopes to be more medically qualified then the medical professionals. That's definitely enough to send waves of fear into the markets.

SO, I guess FAS/FAZ may be be replaced by RXD, and its' mate RXL, in market volitility and savvy trader profitability. Be warned, the average trading volume is lower than I'd like, but, today's charts look to be tradable on the 15 minute and slower timeframes.

A Standing O goes out to Bernanke

2009-02-24T13:19:00.000-08:00

Fed. Chairman Bernanke said at least two things of note today:

1) The recession might end this year
2) Regulators are not going to nationalize the banks

Bernanke gave some details and also outlined some serious risks. The markets loved his news and approach, responding with a huge rally.
The Dow gained 3.32% and many other important indexes gained over 4%.

Being contrary to the major trend, that rally was difficult to trade, but is was enough to get excited about.

A large end-of-day sell off wouldn't have surprised me since there is a big political speech scheduled for tonight. Happily, that didn't happen.

Who knows what will happen tomorrow? All we can do is be nimble and able to trade what we see, rather than what we expect.

Since the market is so choppy, there is no need to review the four ETF pairs tonight; no trend is in place.

What Can Turn This Market?

2009-02-23T12:57:00.002-08:00

Much of my trading day is spent intermittently chating with trading friends.
One friend in particular draws me into lengthy conversations so we jump over to a private chat room. In one of those conversations, she asked "What can turn this market around?"

Well, it seems to me that the market, on average, grows at a rate of about 8% per year. It really wants to go up!

That in mind, one has to ask "What turned the market so sour?"

The S&P (broad market index) and the Dow Jones Industrial index have not been at these levels since 1997. Many parts of the market were in a confirmed rally just a week ago.

" ...but no, its curious that every time the government says 'we're stepping in because otherwise the market will collapse' they step in and the market collapses?" - Ann Coulter quoted earlier today

- FAS/FAZ, Financial Sector: FAZ, up 9.67% today
- ERX/ERY Energy Sector: ERY, up 12.24% today
- TNA/TZA Small Cap Sector: TZA, up 11.7% today
- BGU/BGZ Large Cap Sector: BGZ, up 9.39% today

All these bear funds are in huge up-trends. All would be good to buy and maybe even hold for a while. Compare those gains to alternative investments: Savings Accounts, CD's, Real Estate. We are sitting on a huge pile of gold. Well, gold was down today -- this is better than gold!

Have fun!

Cabella did a beautiful thing

2009-02-20T17:22:00.000-08:00

For some reason, CAB exploded today!
To get the background info, see my post from 7 days ago: Cabella's in a bullish trend

This chart shows a full two weeks of stock non-performance... until today.
The explosion you see represents 35.23% gain; I hope you enjoyed the fireworks display!

It goes like that (Market-Tao!). The market shows some strength after considerable short selling, then a few traders buy to cover their position and take profits. After a bit of buying volume, Price rises and other short sellers cover. Volume increases more. Price rises more and nobody wants to sell. Then Price can rocket to the moon.

Today's Price action was also spurred by last nights earnings report. That must have been a doozie.

CAB is now quite oversold and will likely pull back a bit.

This is definitely one to keep an eye on for further growth since I am expecting an eventual return to $25 at the minimum. Remind me!

Is it a failure?

2009-02-20T08:04:00.000-08:00

First there is:
“The cost of our debt is one of the fastest growing expenses in the federal budget. This rising debt is a hidden domestic enemy, robbing our cities and states of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. . . . If Washington were serious about honest tax relief in this country, we'd see an effort to reduce our national debt by returning to responsible fiscal policies." undated
http://whitehouse.gov /

Than there is:
"Today, I signed the American Recovery and Reinvestment Act into law.
This is a historic step — the first of many as we work together to climb out of this crisis — and I want to thank you for your resolve and your support." 2-17-9
http://trackobama.wordpress.com/2009/02/18/obama-signs-american-recovery-and-reinvestment-act-into-law/
----

First there is:
Obama, who inherits a global financial crisis and wars in Iraq and Afghanistan, has vowed to work with Republicans to try to overcome the bitter partisan divisions that have marked Washington-style politics, including the current standoff over proposals to bail out the failing auto industry. - 11-21-8
http://www.reuters.com/article/newsOne/idUSTRE4AK6DW20081121

Then there is:
"Obama preparing to work around Republican obstructionism, aides say" 2-18-09
http://www.nwprogressive.org/weblog/2009/02/obama-preparing-to-work-around.html

----
First there is:
To reduce bills rushed through Congress and to the president before the public has the opportunity to review them, Obama "will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days." 2-4-9
http://www.politifact.com/truth-o-meter/promises/promise/234/allow-five-days-of-public-comment-before-signing-b/

Then there is:
"When President Obama signed his first bill without posting it to the Web for five days of public comment, we gave him his first Promise Broken." 2-4-9 (Emphasis added)
http://www.politifact.com/truth-o-meter/promises/promise/234/allow-five-days-of-public-comment-before-signing-b/
----

First there is:
"Reform the Political Appointee Process: FEMA Director Michael Brown was not qualified to head the agency, and the result was a disaster for the people of the Gulf Coast. But in an Obama-Biden administration, every official will have to rise to the standard of proven excellence in the agency's mission." undated
http://www.barackobama.com/issues/ethics/

Then there is:
Tax time is right around the corner and I vote we follow the lead of President Barack Obama's Cabinet picks and avoid paying our taxes. I'm truly disgusted at how Timothy Geitner and Tom Daschle avoided paying taxes and Obama stood behind these men with "absolute support," even though Daschle removed himself from consideration for the job of health-care czar on Tuesday. 2-9-09 http://mycentraljersey.com/article/20090209/OPINION02/902090301/1061
----

So...
These days, politics are more a market driver than stock fundamentals; well... that's not completely rite... current politics ARE the stock fundamentals. This condition opens up a significant level of fear into the market. The result naturally is: eliminate risk... sell!

Compound that with the increasing losses observed daily (its mostly a confirmed bear market) many many people just want to get out. Even Warren Buffet, a huge liberal supporter, whose corporate value is now at an all-time low, (ticker: BRK/A) has sold out a lot of stocks and moved to fixed investments.

In comparing the new guy's words with his results (only a few of the ouchies listed above), one is now in a position to judge for themselves whether the administration is a flaming failure or not, whether America has been deceived or not. From there, one might consider the implications on the next three years and eleven months. Will business be in an environment suitable for the creation of earnings?

Party on!

Market Update

2009-02-19T15:29:00.000-08:00

Let's see how today's activity affected our favorite ETF's:
- FAS/FAZ, Financial Sector: FAZ, Every day is a higher high
- ERX/ERY Energy Sector: ERY, Confirmed bull market
- TNA/TZA Small Cap Sector: TZA, Confirmed bull market
- BGU/BGZ Large Cap Sector: BGZ, Every day is a higher high

From the list above, ERY and TZA should be the best choices since the trend has been confirmed by a pull-back and resumption. Funny though, BGZ, instead of pulling back, consolidated. I am not sure what that means except dig deeper!

So, dig we shall
FAZ: Weak resistance to break before Jan. 20 high. Expect some difficulty in making the next $17.
ERY: January 20th resistance not broken yet. Smooth sailing for two dollars gain.
TZA and BGZ: January 20th resistance has been broken. Should be smooth sailing for at least the next five dollars.

Which is best? Nobody has a crystal ball. I plan to hold at least two of them for at least a few days.

Introduction:
The Dow closed at 7466 which is lower than recent lows. In fact, one has to look back seven years to find a lower close. The Dow, the Transports, the S&P, and the Nasdaq are all officially bear markets.

Conclusion:
Ten long days ago, in my post bulls-are-running-nasdaq, I reported that the Nasdaq was in a confirmed bull market. I had over time documented the bullishness of FAS and CAB. That is all gone now, they are all in confirmed bear trends. The bear ETF's are outrageously profitable in this time of "change you can believe in." I am a believer!

Afraid To Trade?

2009-02-18T19:17:00.000-08:00

Corey maintains a really fantastic blog called Afraid To Trade.
http://blog.afraidtotrade.com/
Tonight's posts include a hot stock tip (complete with technical proof) and a link to a free Andy Horwitz eBook. Since the ebook and stock tip are limited time offers, I recommend you pop on over soon and regularly.

Thanks to the New Guy!

2009-02-18T09:43:00.000-08:00

"I'm here to talk about a crisis larger than one we have ever known" - President Obama 2-18-9

I agree and thanks for your part in intensifying it Mr. President! I'd like to take a minute to offer my personal gratitude.

When he signed the spending bill, I expected the markets to drop; it was obvious and inevitable in my humble opinion. As a candidate, he "ripped outgoing President George W Bush for "irresponsibly" doubling the federal debt, then warned that he could preside over trillion-dollar-a-year deficits for "years to come." Now, as President, in demonstrating this repugnance to the Bush deficit, he signs a controversial and partisan spending bill that will cost America over a trillion dollars. Wow! What can we expect him to do in his second month in office?.

Ooh! He is on tv now! The crowd is cheering, they are out of minds in excitement at his presence.

OK. Back to work...

Obviously, the federal debt must be paid some day. The cost of its interest is a crushing expense. Since the government's only source of income is tax, our taxes will have to be increased some day, or the government will have to learn to operate on a much tighter budget. Since taxes move money away from the private sector, taxpayers will suffer burden by having less expendable income. People having less spendable cash will spend less at the mall, thus, business earnings will have to decline. Since stock price fundamentals consider earnings, this bill reduced the value of every business in the market, and the expendable cash of everyone with an income.

Hmm... business values going down... what to do? I took a huge position in a bear market ETF (FAZ) and watched the dollars roll in. In fact, I made about 10% on my investment in less than one day!

Very happy!

And now, he is on TV again, the market is falling again, I bought FAZ again.
Party on!

Update:
That was a quick 3% gain! Many thanks to the new guy!

OBTW: in the name of "transparency" and "full disclosure," what is the plan to re-pay the federal debt?

Nutrition and Hydration

2009-02-15T15:32:00.000-08:00

The only thing I can offer to my in-laws in this trying time, is an ear and a meal. Often, during periods of business and stress, people skip meals and then gorge on anything handy.

While staying on the sidelines, I load the table buffet style with healthy breads and meats, tasty cheeses, lots of fruits, vegetables, and condiments. These are then ready to assemble a feast to their suiting just as fast as they can grab. We are enjoying avocado, tomato, alfalfa sprouts, various lettuces, carrots, broccoli, cauliflower, and whatever else looks fresh and fast at the local market. These goodies, are being eaten out of hand, dipped in dressing, or assembled on a wrap, bun, or slices of bread. Combined with slices of salami, ham, turkey, roast beef, peperoni, and various cheeses, a sandwich is less boring. Now we top with various mustard's, mayo's, hot sauces, a squirt of fresh lime juice, and that wonderful Asian peanut sauce, a sandwich comes alive with flavor and rib-sticking nutrition. With a variety of fruits available on the side, everyone is well fed and happy.

In writing this, I have to laugh at myself. While watching the market each day, I am having periods of business and stress. When I eventually take a break, I grab whatever is fast and get back to work.

Methinks that its time to... well... find a team of attractive volunteer cheerleaders who can can maintain a spread of fresh healthy food. Short of that, I'll have to plan ahead a little, dedicate some storage containers, and keep some of my fav's in easy reach.

Oh, I should also keep a fresh glass of some tasty low-cal beverage or just plain water always available too. Eureka! I can even drink well water if it has a bit of fresh lime juice in it.