If you follow me on twitter, you may have noticed a theme in a LOT of my charts this week showing a “x^” of some indicator or moving average. After reviewing 50-60 charts this morning, I see a continuation of this movement in many stocks. My scans this morning were full of examples for a Stochastics cross up move. This has been a high probability setup with minimal failures this year, and I am encouraged by the volume of choices to play in the coming week.
If you want to view my chart.ly stream of charts, you can go here. An example for this cross up (x^) in a chart:
The above example shows the Stochastic bottoming and beginning to curl up. An example of a Stochastics cross up in progress:
Certainly the one time that I don’t mind a stock getting cross with me.
A nice look at IBM with earnings coming up next week. Thank you chart.ly for the mention.
Here is a list of web sites / tools that I use to assist in my trading efforts. Although some of these encompass other areas of interest to me, they are included as they add value in preparation, market analysis, or information gathering.
|A site that all traders should use daily. A wealth of information, scanners, market gauges. Did I mention the scanner? LoL
|I use this site a lot when I want to look at detailed candle patterns, etc. If you are interested in candlesticks, this site is for you.
|For newer traders, the Cheat Sheet section may be of great interest. Another site with an enormous amount of information in one spot. Spend time here.
|Site with tremendous amount of information and trade ideas. A must use site for traders.
|Good source of market information, perspective. Dow Jones info. Russell info.
Dow Jones Indexes
|I use these sites primarily to create my charts. There is also educational info available.
|I use these web sites to look for information and trade ideas for pairs or spread trading.
|Good TA information
|I use this site a great deal for my scans. Play around here, you will be glad you did.
|A cool site with a variety of tools available including a Heat Map with filtering & sorting
|Sites for information, events, breaking news, etc.
|Good source of information for PMI data, etc.
|Good source for various ETF categories including leveraged types & Currency
|Good source for Options info
|Miscellaneous Tools I use
||MobileDay Conference Software
For those of you who often scratch your head when you see something in one of my charts or twitter posts – this should help.
||100 day moving average
||10 day Volume Weighted Average Price
||200 day moving average
||20 day moving average
||50 day moving average
|bal of S
||Balance of Short
||Buy to Close
||Buy to Open
||Cup and Handle pattern
||Uh, it is curling up
|Down with the Titanic
||I think you get this one. See “In the Sub”
||Fibonacci Line : 23.6, 38.2, 61.8 etc.
||Just picture fish lips. I use this reference when speaking of Bollinger Bands
||Follow Through Day
||Follow Through Week
||Head and Shoulders pattern
|In the Sub
||I am in my submarine, bottom fishing
||J hook pattern. Pattern formation is a J
||Moving Average Convergence Divergence
|MACD Rocket Ship
||Easy to understand
|MACD Ski Jump
||Just picture a ski jump.
||MACD cross up, a powerful event that preempts a nice up move
||A really long shadow on a Hammer, Inv Hammer, Hanging Man or even a Shooting Star
||Point n’ Figure (chart)
||Rate of Change
||Stake in the Ground
||May sound bad, but just notes there is an emphasis on watching this particular stock VERY closely (including setting price alerts long or short)
||Sell to Close
||Sell to Open
||Check, or Bounce is some situations
||Volume at Price
||Volume Weighted Average Price
||Indicator moving, well, down like a waterfall
I was guilty last week of listening to the rhetoric regarding what the indexes were doing. I found myself adjusting my trading plan too much, instead of just focusing on the stock (and industry for the stock) that I was prepping to trade. Some of my trade executions were too sloppy and my Trading Journal review on Saturday led me to draw that conclusion.
On Monday this week, I elected to “stealth” trade. I stayed focused on my stock setups and did not have any real “inputs” on (like twitter, TV, etc). My “experiment” netted me several fascinating results, a few that were unexpected:
1. I had to fight the desire to monitor twitter looking for information. It has become a habit for me, so clearly I find value there. This was expected. I have to continue to improve how I manage my twitter account, as done everyone.
2. I paid no attention to what the indexes were doing – just focused on each stock setup, and the industry information for that stock. I thought that I was doing a good job with this already, but I felt like I needed more improvement. RED day, GREEN day, who cares. Trade What You See.
3. I got more reading done on Monday, felt more caught up with things. This was expected.
4. My exits on trades were MUCH smoother. This improve was unexpected.
5. I did less charting, ran no scans. I focused on the work that I did during the weekend and kept my setup list nice and tight.
One more comment. I work out frequently at a Lifetime Fitness facility. This facility has several swimming areas and I utilize them every chance I get. Recently I grew a brain and bought some goggles for the lap pool. Amazing how clearer one can see with the right tool.
Trade what you see - just be sure that you can in fact see clearly.
The typical flyer on an airplane possesses a round trip airfare ticket. The intent being that the traveler is flying to a destination, then returning at some later date. In trading however, this is not common at all. The vast majority of trade setups involve a Long position, or a Short position – a one-way ticket if you will. Each position is opened, managed, and then closed.
So, what am I really talking about here: “Going Both Ways”? Let me show you a recent chart of CMG – a stock that I traded in both directions (note the box area):
I was short CMG and noted on my blog here. Once CMG approached the rising 50 day moving average below (even dipped through on one day) I tightened up my stop. Once the stop hit and covered the short, I monitored the Stochastics indicators closely as they were bottoming. Buyers clearly began showing up so it was time to assess the next opportunity.
Now what? Was my short approach wrong? In the context of my timeframe for the trade I had on, the answer is no. However, in the context of other timeframes, this would be viewed as a simple pullback to a moving average.
With that mind, I focused on a setup to go Long – time to go the other way. Based on the move noted on the chart above, the price did work its way back up near the upper Trend Line. It currently is hovering around the 275 level.
So in summary, one needs to always be aware of their timeframe for a trade they put on. This is especially true if you find yourself going both ways.
One of the important aspects of trading is realizing when you are wrong about a trade and making the appropriate adjustment. In a recent example from last week, I had been stalking VHC for several days as it melted up. I keep such over-extended stocks on a “to fade” list – stocks that I intend on shorting when I feel that the stock is “running out of gas”.
I managed to short VHC and cover for a .80 cent profit as it paused for just one day. Although my approach here was in the context of it just being a trade, I wondered if I was fighting the trend too much. I think so, and a few of you sent me messages that I likely was a bit early on the fade play. I am now long VHC as it shows me a measured move to 27. My latest chart is here.
Being wrong is not a bad thing, it is staying wrong that will cost you.