As part of the Simple Approach series of posts I bring you the MACD Sell signal starring $PAYX. Let’s get straight to a Daily chart showing the prior 4 Sell signals as well as the one developing right now (post-earnings):
It appears that when looking at the prior 200 days of trading, it has been a quality short entry anytime that the MACD got above the 0.3 reading. It is once again there so it will be interesting to see if history rhymes after this post-earnings up move in price.
Enjoy the long weekend.
While doing some chart review this morning, I noticed a very interesting Trend Line on the Daily chart for $LNKD and thought I would do some mad scientist work to see how many other perspectives either verified this view, were contrary, or highlighted a unique data point:
As you can see above, price made 2 stabs below the TL, closing right on it on Friday, October 19. Now for another perspective, a Daily chart with Fibonacci turned on:
Wow is all I can say. Price is squatting right on the 50% retracement.
Let’s take a look at one more, just to shake things up. Here is a Daily chart with the Fibonacci Circle turned on:
One of the indicators that I scan with utilizes the CCI – Commodity Channel Index. I have included a few charts below from the results of my scan (with a setting of under -150):
Here we have the Daily chart on IWM showing the CCI indicator has been down with the Titanic lately.
However, previous readings this low have provided a very nice buy entry in the past - so worth noting.
Now on to a few other examples.
The two examples above are WFC and QCOM. Again, previous readings of CCI under -150 have resulted in nice buying opportunities in the past (although I am not a big fan of WFC here).
Buy Low, Sell high.
I have recently added a new Trading method to my collection of simple trading methods that utilizes the Accumulation/Distribution indicator. For reference, this collection includes the RSI Buy & RSI Short trading methods – where you utilize one simple indicator to dictate trade entry & exit.
The following is a chart of ADVS (Advent Software) shown as a 5 minute chart with the Accumulation/Distribution indicator turned on:
As you can see there is a clear moment where the stock should be accumulated (Green Box). Note the Volume change as well during this time frame - a key tell there.
Give it a shot, experiment.
There are many indicators that utilize the number 50 and the RSI (Relative Strength Index) is no exception. During the day I received a few questions surrounding the use of RSI as it ventures into this mid-point of the range (50) and thought I would address it here in a post.
The following Weekly chart is of DB (Deutsche Bank AG) and shows a clean move to 50 and then a rejection:
I also not the recent range in the Green box and how it touches the 50% retracement today and bounces. The pullback today was on Advancing volume so that is worth noting as a side point. Also on the chart is the 50 Day Moving Average above, just one more Fitty to be aware of.
There are different sayings for closing a trade and reversing course (i.e. have a long position, close it, and then go short the same stock). I call this a U-turn trade.
Today I went short LNKD (Linkedin Corp) in p/m (posted on twitter) and rode the stock down towards the 88 level. I covered some and then set a 1% trailing stop. I covered the remaining before the stop was hit but did not give up on the “opportunity”.
I continued to watch the stock on the 5 minute chart and this is what I saw:
I noted on twitter that the stock was drifting back under where I covered the last portion of the short, but that I would be watching the 88 level. Why? Because the RSI was breaching the 30 level, an oversold condition. A good spot to then go long thus starting the 2nd part of the U-turn trade.
So far the bounce has been almost 1% as price is currently arm wrestling with the 20 SMA on the 5 minute chart. RSI continues to rise.
A revisit of PCLN (Priceline Com Inc) today presents itself with another RSI buy opportunity off of the 5 minute chart. Here is what I see today:
As you can see in the chart above, the RSI fell down through 20 before attempting to bottom. A nice bounce up to the 468 level followed (where the shorts got to work again) as the RSI punched up through 60. The stock is currently hanging out at the 463 level.
This does not work cleanly every time (no trade setup does) but is a nice simple approach for those looking for such.
In going through my usual routine on Saturday of looking through charts, one thing that slows down the process is a chart with a lot of mixed signals. Today is no exception as I find myself evaluating the chart of FL (Foot Locker Inc).
In reviewing the Weekly chart you will note several items that appear Bearish.
1) Bearish Engulfing candle for the week
2) Increasing volume on the pullback to the TL
3) EMA 9 rolling over
4) Closed at the TL for the week
Now for some items that appears neutral or Bullish.
1) MACD looks to be bottoming here
2) A LOT of Volume at Price at this price level
3) Closed at the TL for the week (did hold the TL)
Is this a pause in Stage 4, or a beginning of a new Stage 1 move? Building the Right shoulder of a Head ‘n Shoulder pattern?
Time will tell. For now I’ve set some Price Alerts.
One of the key things to look for when planning an entry or exit of a trade is the Trend Reversal. With candlestick charting there are several candles to look for that signal a possible TR event, but all need confirmation from the following candle(s) – based on the chosen timeframe.
I found an example today when looking at the monthly chart of MA (MasterCard Inc.) showing that the current candle for August is NOT confirming the Shooting Star candle from July:
Just a reminder of the importance of a confirmation candle for the TR event to be confirmed.
More info on the Shooting Star can be found below:
The Shooting Star
The Shooting Star is comprised of one candle. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. It is found at the top of an uptrend. The Japanese named this pattern because it looks like a shooting star falling from the sky with the tail trailing it.
The upper shadow should be at least two times the length of the body.
- The real body is at the lower end of the trading range. The color of the body is not important although a black body should have slightly more bearish implications.
- There should be no lower shadow or a very small lower shadow.
- The following day needs to confirm the Shooting Star signal with a black candle or better yet, a gap down with a lower close.
- The longer the upper shadow, the higher the potential of a reversal occurring.
- A gap up from the previous day’s close sets up for a stronger reversal move provided.
- The day after the Shooting Star signal opens lower.
- Large volume on the Shooting Star day increases the chances that a blow-off day has occurred although it is not a necessity.
After a strong up-trend has been in effect, the atmosphere is bullish. The price opens and trades higher. The bulls are in control. But before the end of the day, the bears step in and take the price back down to the lower end of the trading range, creating a small body for the day. This could indicate that the bulls still have control if analyzing a Western bar chart. However, the long upper shadow represents that sellers had started stepping in at these levels. Even though the bulls may have been able to keep the price positive by the end of the day, the evidence of the selling was apparent. A lower open or a black candle the next day reinforces the fact that selling is going on
I have several examples of clean RSI buy candidates today but I’ve chosen TWI (Titan International) as it has provided several opportunities this week. Here is the chart:
As you can see, there was a nice long entry near 10 am EST on 7/26 that would have given you a nice run up the hod at the close. Today it dipped right out of the gate and also hit 20 on the RSI where it then bounced. Price is now hanging out near the 26 level.
The Higher Lows again today look bullish intraday.