FW&A

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.

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

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

"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

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

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

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

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!

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

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

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!

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?

Here is the current SPY daily chart...

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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

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

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

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

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

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...

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

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.