Wednesday, August 08, 200710 Minute Chart Update for QQQQ
If you look at the Qs as making a double bottom and rallying past resistance at 48.50, the height of the pattern is 1.50 which added to the breakout point would give us a target above the 61.8% retracement and above the neckline of the head and shoulders pattern from 2 weeks ago. The target would be 50.00 (48.50 + 1.50). As always, targets give us guidance to where a move might go but they should not be blindly followed. Trail your stops higher.
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Posted by Brian at 8/08/2007 01:50:00 PM
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Inverse Relationship?
Markets don't always do what they are "supposed to do". It is conventional wisdom that stocks and bond yields move in an inverse relationship. From the beginning of the year the general trend has been that when yields rise, so do stock prices. And when yields fall, so have stocks. The point is that learning economic theories and models are interesting and will get you a passing grade in Economics classes but in the real world those theories don't always play out. Focus on price, it is the only thing that pays. If you trade bonds, pay attention to bond prices. If you trade equities, pay attention to equity prices. It doesn't mean you shouldn't be aware of the inter relationships between markets, but a pricing theory should have little weight when it is not backed up by price action.
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Posted by Brian at 8/08/2007 08:30:00 AM
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Gen Probe (GPRO)
is the stock on WALLSTRIP this morning.
Here's my view of the chart
Posted by Brian at 8/08/2007 08:28:00 AM
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Tuesday, August 07, 2007Stock Market Video Technical ANalysis Review 8/7/07
After all the recent doom and gloom, the market seemed to be looking for a reason to rally and today it found one. Once the initial volatility that typically follows a Fed announcement was cleared, buyers took control by pushing past the recent downtrend lines on the intrady charts we have been watching and it now looks like the upside targets I outlined yesterday could come into play. The daily charts are still deeply damaged right now which means you need to keep stops in place as volatility is likely to remain high. Remember, DEFENSE WINS THIS GAME!
Posted by Brian at 8/07/2007 03:31:00 PM
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How Effective Are Changes To Monetary Policy?
No predictions here, just some historical perspective.
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Posted by Brian at 8/07/2007 01:54:00 PM
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Fed To The Rescue?
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Posted by Brian at 8/07/2007 11:26:00 AM
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i Shares Malaysia Index (EWM)
I admit I didnt know the exact location of Malaysia, but if you are from India like the cop in the WALLSTRIP video, you should probably know. Whether you know where to find it on a map or not, the country seems to have a lot going for it from an investors standpoint.
Here's my view of the ETF
Posted by Brian at 8/07/2007 08:46:00 AM
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Monday, August 06, 2007Stock Market Technical Analysis Review 8/6/07
Stock market video technical analysis and for Monday August 6, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 8/06/2007 03:39:00 PM
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Cash Is King
according to Donald Trump on CNBC right now. Too bad he didn't warn investors in his stock.
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Posted by Brian at 8/06/2007 02:20:00 PM
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The Buying I Was
looking for never materialized and now the market is about to break below yesterday's low (also Wed high). If the sellers can get the Qs below 4770 it could be an ugly close.
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Posted by Brian at 8/03/2007 02:45:00 PM
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Trading Book
One of the most frequent questions I reccive from readers is "what books do I recommend?" I always start with Stan Weinstein's classic "Secrets for Profiting in Bull and Bear Markets" and now I have found a new book that I think will be a classic reference tool for traders. The book is "Trade Chart Patterns Like The Pros" by Suri Duddella. This book is a comprehensive overview of chart patterns from the perspective of an actual trader, not a professional author. You can review sample pages and see the table of contents or purchase the book directly from his website SURI NOTES A few of the topics of the book include: Pivots, Fibonacci, Gaps, Elliot Wave, Cup & Handle Patterns, Head & Shoulders pattern and a few patterns I have never heard of (Dragon, Butterfly). The book is packed with charts and written in an easy to understand way.
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Posted by Brian at 8/03/2007 01:32:00 PM
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Choppy Trading
continues in the pre-market this morning as the buyers haven't fully regained control of the short term trend. My bias for the short term is higher, but risks are high so be sure to keep your position size within reason and to honor your stops.
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Good interview on WALLSTRIP this morning.
Posted by Brian at 8/03/2007 08:47:00 AM
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Thursday, August 02, 2007Technical Analysis Stock Market Video Review 8/2/07
For the majority of the day, it was very choppy trading, but the market did hold onto the pattern of higher highs and higher lows intraday as it battled with the 5 DMA and the trendline from the recent downtrend. The buyers were able to finally push the market past resistance and we finished with a fairly good gain. For now it appears the buyers are back in control...for now. I think we could see a few days of continued strength but I will remain very suspicious as there are many key moving averages which are now trending lower.
Posted by Brian at 8/02/2007 03:29:00 PM
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Bottoms are a Process
not an event. And it looks like that battle is being fought at the declining 5 DMA right now. Also note the location of the downtrend line. Odds still favor further consolidation, but if the buyers can hold onto control by maintaining higher lows above 4790, the market could see a pop up to 4850 and if shorts from yesterday panic 4900 is even doable. The buyers havent fully taken control back yet, but they are making progress.
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Posted by Brian at 8/02/2007 02:04:00 PM
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Scentific Games Corp (SGMS)
is the stock on WALLSTRIP today. No comment about the video...
Here's my view of the stock.
Futures are gapping higher this morning and I am hoping the Qs find some resistance near the declining 5 day MA (near 48.30 and where I will sell some of the Q calls I bought yesterday) and then pullback to give a lower risk entry.
Posted by Brian at 8/02/2007 08:51:00 AM
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No Edge
I'm not seeing any good reason to do anything right now, I think my best advice was in yesterdays video when I said it would be a good day to take off. Todays weakness doesn't feel panicky, perhaps this is a test of lows and we should not sell short a dull market? I dont know, I'm not seeing it clearly right now. Sidelines til things become clearer.
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Posted by Brian at 7/27/2007 01:13:00 PM
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Upside Trade?
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I am looking for 4925 as the initial target
Posted by Brian at 7/27/2007 09:52:00 AM
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Volatility
peaks at turning points and dimininshes with the trend...that is a quote from George Soros. Today's trading is already starting out with volatile action in the premarket as the market searches for support. Today should offer good action for aggressive daytraders but there are likely to be many failed moves so you'll have to be quick. The chart below is the Nasdaq 100 futures contract from midnight to present, notice how the market is stabilizing above the VWAP.
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Posted by Brian at 7/27/2007 08:50:00 AM
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Another Content Aggregator
from what I can see, the website InfoNGEN looks like a few other sites, I didn't bother to see what you get for the "premium" supscription, but I doubt it's worth $300/month. Here's the interview with the sites founder on today's WALLSTRIP
I had some questions about what "S2" was that I referred to yesterday, here a GOOD ARTICLE from a friend of mine which explains Pivots.
Here's a site that aggregetes finacial video contentProbook.tv
And for those of you interested in the Canadian Stock Exchange visit TSX Trends
Posted by Brian at 7/27/2007 07:51:00 AM
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Thursday, July 26, 2007Battle in The Wild
This is cool
Posted by Brian at 7/26/2007 09:38:00 PM
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Stock Market Technical Analysis Review July 27, 2007
Stock market video technical analysis and for Thursday July 26, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 7/26/2007 04:14:00 PM
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The PPT
Where are THEY?
I cannont remember ever seeing the Advance/Decline looking so poor 230 UP & 3104 DOWN!
Posted by Brian at 7/26/2007 02:01:00 PM
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Comments
ONLY PRICE PAYS!! Obey the trend!
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I have found that the comments below the posts are a big distraction to my trading. What I have decided to do for now is to continue to publish comments (as long as they are not written with malice) but I will not be responding to them.
Posted by Brian at 7/26/2007 11:51:00 AM
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Thursday, July 26, 2007Apple is not THE MARKET
The strength in AAPL is impressive for sure, but one stock cannot carry the market. Yesterday I warned that there were mixed signals in the market and that the proper course of action was to take it easy until the picture became clearer. For the Qs that means trading back above the neckline near 49.70. If the 49.00 level fails to hold as support this morning we could be in for further weakness.
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Posted by Brian at 7/26/2007 08:36:00 AM
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Corrections Corp of America (CXW)
is the stock on WALLSTRIP
The stock has broken its series of higher highs and higher lows and I would not consider purchasing the stock now.
Posted by Brian at 7/26/2007 08:01:00 AM
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Wednesday, July 25, 2007Stock Market Technical Analysis Video Review 072507
Stock market video technical analysis and for Wednesday July 25, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 7/25/2007 03:55:00 PM
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Daily Pivot
Seems to be acting as resistance on the Qs and the market is also back below the daily VWAP. I think a bounce should have materialized by now if it was going to happen. There really are no clear signs, for most participants I think the best position is cash. I am long some QID right now and will cover if Qs move back above 49.39
Posted by Brian at 7/25/2007 01:11:00 PM
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Bounce?
Keep in mind that there are still many mixed signals from various timeframes which tells me there is uncertainty in the market and that traders need to be very defensive. The advance/decline stinks today, the 5 dma is still declining, there is still potential for resistance near 4960-4970, etc.
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Posted by Brian at 7/25/2007 11:38:00 AM
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Go Slow
Pre market, the Qs have traded as high as 49.70 (right up to the neckline) but are now backing off a little. The daily trend of the Qs is still clearly higher but I think the market is due for further weakness in the short term before it can turn higher again. Do not chase initial strength, if the market is able to wipe out yesterdays losses it will be very impressive, but I would wait for the Qs to be able to hold above 49.70 for at least 30 minutes before I trusted a turnaround and then you obviously need to remember your stops. The market continues to give mixed messages from differnt timeframes which means that it is best to keep your trades fairly short term.
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Posted by Brian at 7/25/2007 09:17:00 AM
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Tuesday, July 24, 2007I'm a FRAUD
thanks Ted
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Posted by Brian at 7/24/2007 03:10:00 PM
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Higher Lows & Higher Highs
The Qs have rallied from the neckline and have made a series of higher lows and higher highs this morning. The market is at a critical short term level with potential resistance at the 5 day MA. If you are short for a trade a reasonable stop from this level is near 50.20 A move back below 49.75 could bring about further selling, but remember that with a rising 50 day MA, short side trades should be kept short term.
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Posted by Brian at 7/24/2007 12:36:00 PM
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Bounce
After sucking in shorts below 49.65, the Qs are bouncing from the neckline and the most likely scenario is for the rally to fall short of 50.00 before a break of the neckline that takes the market lower.
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Posted by Brian at 7/24/2007 09:52:00 AM
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Thrown Off
there were signs of a weakening market and for now participants have been flung off the bull. The Qs look like they will open near the neckline (49.65) of the recently outlined head and shoulders top pattern. Do not chase any bounce from that level until the market has shown it can hold support there, a bounce followed by a brekdown could get pretty ugly.
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Posted by Brian at 7/24/2007 09:09:00 AM
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VeriSign Inc (VRSN)
is the stock on WALLSTRIP I would wait for a break above recent resistance (noted in the video below) before considering a new purchase.
Posted by Brian at 7/24/2007 08:55:00 AM
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Monday, July 23, 2007Altera Corp (ALTR)
reported after the close today and it was one I was watching for a trade. After the initial weakness, the stock rallied up towards the declining VWAP so I shorted it but when the stock continued to rally I covered half at break even and the rest with a loss of $0.15/ share. It was a small loss, but I wanted to show a trade that didn't work after showing you a couple of good ones from after hours last week.
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Posted by Brian at 7/23/2007 04:41:00 PM
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Stock Market Video Technical Analysis Review 072307
Stock market video technical analysis and for Monday July 23, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 7/23/2007 03:46:00 PM
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Holding On
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Posted by Brian at 7/23/2007 02:05:00 PM
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Short Sellers
have had a difficult time in this bull market, in fact they have looked pretty dumb in many plays, but to be fair, no dumber than those who buy stocks in a downtrend. The old adage "the trend is your friend" is the premise behind the work I do, more specifically "trend alignment" across multiple timeframes. Right now, the long term still remains higher but the short term trend suggests we be careful, particularly if the QQQQ drops below 49.65 and the SPY drops below 153.00.
The trend is also what rules on WALLSTRIP and today Lindsay walks the streets of Manhattan to offer free hugs for short sellers.
Did you see the squeeze action in TLAB? NICE CALL for a squeeze last Thursday!
QQQQs could have trouble below 49.65, the short term chart below shows a possible head and shoulders top forming.
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Posted by Brian at 7/23/2007 07:53:00 AM
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Google Inc. (Public, NASDAQ:GOOG)
I admit it, I'm scared of trading GOOG after hours on the day they report earnings. That's why I only traded 200 shares when I shorted it after it was down 30 points from the close and that's also why I covered quickly even when it looked like the stock is likely headed to its rising 50 dam moving average near 510. This stock moves quickly and when I can add $535 to my profits with a 2 minute trade, I'll take it!
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Posted by Brian at 7/19/2007 04:24:00 PM
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Stock Market Technical Analysis Review 7/19/07
Stock market video technical analysis and for Thursday July 19, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 7/19/2007 04:02:00 PM
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Stocks I'm Watching Today
CCF
CHNR
DSTI
IIIN
LOCM
SBEI
SGMO
TLAB
WRSP
Posted by Brian at 7/19/2007 09:03:00 AM
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WEstern Union Co (WU)
was one of the original Dow components, that's something I learned on WALLSTRIP today.
Right now if I had to take a position in the stock I think a short sale would make the most sense until the stock can make it back above 21.50.
Posted by Brian at 7/19/2007 08:04:00 AM
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Wednesday, July 18, 2007eBay Inc. (Public, NASDAQ:EBAY) trade
reported earnings after the bell, I have no idea what they were, I was too busy looking at the tick chart to try to determine where a trade might exist. Trading after hours is extremely dangerous and should not be attempted by most individuals unless they are very quick to exit losses. The trade I was looking for was a bounce from the after hours Volume Weighted Average Price (VWAP) represented by the thin blue line on the chart below. When the VWAP is rising, it often acts as support for a trade, fortunately I decided not to take the trade on the next test of VWAP because it failed to hold. Why didn't I take that trade? Because the more times the VWAP (or support or a trendline, etc.) is tested, the more likely it is to fail to hold. It's too bad that EBAY couldn't hold onto the initial gains, it would have made for a great breakout play above multi year highs above 35.41, maybe next time.
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Posted by Brian at 7/18/2007 04:45:00 PM
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Stock Market Technical Analysis Review 7/18/07
Stock market video technical analysis and for Wednesday July 18, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 7/18/2007 04:07:00 PM
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Thursday, July 12, 2007New Highs Imminent in SPY
Look out short sellers! The inverted head and shoulders pattern I have been pointing out over the last week looks to have been completed with a break above the neckline today. Using the measured move, it looks like the SPY is headed for 158.00. For all the emailers telling me to look at divergences in RSI, MACD, Bollinger Bands, Volume, etc. I remind you that those indicators are fine to look at, but they play a small supporting role in the analysis of the only thing that matters...PRICE!!
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Posted by Brian at 7/12/2007 12:18:00 PM
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Takeovers and the 50 Day Moving Average
Below are three stocks that have recently been the subject of takeover speculation. In each of the three cases the direction of the 50 DMA was heading lower when the "news" came out. Of course no indicator is perfect, but trading in the direction of the 50DMA does make sense in most cases, particularly when there is an emotionally driven move in a stock like in these ones.
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Posted by Brian at 6/18/2007 01:42:00 PM
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Is This A BULLISH Sign?
The ProShares Trust Ultra Short S&P 500 (SDS) is a double inverse ETF meaning that purchasing shares of SDS will give you TWICE the percentage exposure to movements in the S&P 500. If the SPY drops 1%, the SDS moves up 2%, but if SPY is up 1% the SDS should drop 2%. The ProShare funds allow IRAs and other qualified money, which is restricted from marging transactions (which disqualifies short sales) to gain short short exposure by getting long, it also allows for leverage! When the volume swells like it did yesterday is that a contrarian indicator? The 50 day MA is still declining which tells me that the SDS is still in a downtrend and I think that eventually many of those purchasers may regret their decision to buy, they're probably regretting it already this morning.
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Posted by Brian at 6/13/2007 09:04:00 AM
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Cut Losers Quickly!!
I hate taking losses, especially right after buying what looks like a nice breakout. Well, from failed moves come fast moves right? I sure am glad I took a quick loss in this piece of crap. CMGI, Inc (CMGI) looks dead now.
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Posted by Brian at 6/05/2007 03:51:00 PM
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Taser International (TASR)
was recommended on Monday at 9.32, it looks like the prudent thing to do is to sell at least half of your position here (current bid 10.40) raise the stop on the balance to 10.18
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Posted by Brian at 5/25/2007 09:49:00 AM
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Wednesday, May 09, 2007Dendreon (DNDN) Chart
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Posted by Brian at 5/09/2007 09:37:00 AM
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Wynn Resorts Ltd (WYNN)
Shares of Wynn Resorts (WYNN) finished the regular session at $101.85 which was down $0.67. After the close the company reported earnings and the stock finished the extended session at $104.75 but as the chart shows, not everyone who bought after the close made money. In fact, the average price that shares of WYNN traded at in the after hours session was $106.67 meaning that the sellers were in control of the session. Notice how the VWAP moving average (light blue line) acted as resistance once the stock broke through it to the downside and the VWAP line was declining. I sold the stock short at a price of 106.70 at 4:58 PM and covered at 5:09 PM with a gain of $0.70 per share, clearly (in perfect hindsight) I didn't hold long enough, I rarely do though. For more detailed information on trading after hours join me tomorrow in a free online session being hosted by Terra Nova Tradingsession will begin at 4:15 PM Est and conlude at approximately 5:00 PM, space is limited.
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Posted by Brian at 5/07/2007 07:10:00 PM
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Texas Instruments (TXN) Earnings
Semiconductor stocks should be strong on Tuesday after Texas Instruments (TXN) and Altera (ALTR) were up in after hours trading in response to earnings reports.
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Posted by Brian at 4/23/2007 06:36:00 PM
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Sunopta Inc (STKL)
is trading just 30 cents short of an all time high and as of March 15 (latest figures available) there were 7.1 million shares that had been sold short and not yet covered, how do you think that feels? Let's see if the shorts panic like in DNDN, only problem is a lack of a catalyst here (besides price).
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Posted by Brian at 4/12/2007 10:09:00 AM
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Dendreon Update
I'm out at 18.58
Posted by Brian at 4/12/2007 10:09:00 AM
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Dendreon Corp (DNDN)
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This has been one super volatile stock lately and I think that it is currently in a buyable area for a quick bounce higher. THe stock is trading at 17.05 right now and I am long at 16.90. My worst case stop is near 16.40 which is just below daily S2. The stock has retraced two-thirds of the entire range since the gap higher and as you can see from the short interest table the company is a controversial one which is why the stock should continue to be extremely volatile. Only the most disciplined traders should atttempt to get involved in this one, it is highly speculative! If you are looking for a more stable stock to trade check WALLSTRIP where the featured company is Kellog (K).
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Posted by Brian at 4/12/2007 08:36:00 AM
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Getting Interesting
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This afternoon could get ugly. Breadth is 542 Advancers vs 2712 Decliners and the market is hammering away at support. If it fails here, look out below!
Posted by Brian at 3/13/2007 01:46:00 PM
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Cash Is a Position
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And for today, cash is the position that I will have. Being consistently successful in the markets is a tough job and there are many factors which contribute to whether you find success or failure. One of the most important factors is to know your personal strengths and weakness and leverage them at the appropriate times. A calm, rational trending (up or down) market is where I can leverage my strengths, but when the markets become wildly volatile I do not trade very well, so I will not be trading today. I am sure that I will come back from skiing later today and look at the markets and see some opportunities I missed by not trading, but the risk of not trading well is not worth the potential rewards if I trade in an environment where I typically do not perform as well. As I'm sure a lot of people were reminded yesterday, it is better to be on the sidelines wishing you were in than it is to be in the markets wishing you were out. With close to 30 inches of snow in the last 3 days and 6 of them coming last night, my risk/reward favors going to Vail for the day. Good luck if you are trading today.
One of the stocks in the video is Garmin Ltd. (GRMN) I started using a Garmin 305 for training in December and it takes the information you can look at about your workout to a whole different level. Below is a chart which depicts the elevation change (a very small piece of the information available) on a recent bike ride. I am not sure I look at this information the same way that most people do.
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Posted by Brian at 2/24/2007 05:13:00 PM
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Amazon.com (AMZN)
Shares of AMZN are trading right at daily R2 and our target of $40.00, i would suggest selling half your position here and raising the stop on the balance to 39.80
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Posted by Brian at 2/14/2007 10:13:00 AM
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SPY- Approaching POTENTIAL Resistance
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In addition to the 144.35-144.50 level being prior important support, which has the potential to become resistance, that area is also the location of daily R2 and the declining 5 day MA. By themselves, these technical observations can be a reason for buyers to become less aggressive and for sellers to start offering out stock, but when we have a "confluence" of these technical signals it makes the odds higher that the market will at least slow down in this area. This is not a call to sell, do not misinterpret. We never know where resistance is in the market until AFTER THE FACT, it is possible for the market to blast past this level. This post is only meant to make you aware of a potential scenario. The market trend is solidly higher this morning and I am not going to fight momentum. Just be sure to tighten your stops and become more selective in any new entries in an area where the supply/ demand equation has the potential to turn.
Posted by Brian at 2/13/2007 11:48:00 AM
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Harley Davidson (HOG)
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if you shorted it below 68.15 I would suggest covering half of your position here for a dollar profit, the stock seems to be finding some support at S2. I would also lower the stop on the balance to 67.85.
Posted by Brian at 2/13/2007 11:00:00 AM
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STOPS
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can be the most important part of a trading plan as the market will often do what is least expected. It looks like the Nasdaq 100 rally is busted for now, time to be more defensive. From failed moves...
Posted by Brian at 2/09/2007 12:55:00 PM
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NASDAQ Strength
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DON'T FORGET A STOP!!
Posted by Brian at 2/08/2007 12:38:00 PM
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First Marblehead Corp (FMD)
is in the business of student loans if you are interested in learning more about their business or seeing my technical analysis of the stock be sure to visit WALLSTRIP
Posted by Brian at 2/08/2007 09:14:00 AM
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Hoku Scientific Inc (HOKU)
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was recommended as a purchase yesterday at 5.20 and it is gapping up this morning. I would suggest selling half of your position at current levels (6.00) and raising the stop on the balance to 5.55.
Posted by Brian at 2/06/2007 08:44:00 AM
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NutriSystem Inc. (NTRI)
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Posted by Brian at 1/25/2007 11:57:00 AM
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[ 本帖最后由 hefeiddd 于 2009-3-25 10:27 编辑 ]
Bulls vs BearsA picture sometimes is worth a thousand words: http://www.kirkreport.com/pictures/sumo_market.gifAfter getting killed (i.e. stopped out) at the open, I'm doing a little buying this afternoon again (partial positions with tight stops, of course). I feel like doing this as much as I like going to the dentist, which is why I'm still firing away. I wish I could say I'm expecting a nice final hour reversal, but I don't. In fact, on the contrary which is ok. In my view, another ugly close would be what we need especially since I have a few stocks that I want to buy that are refusing to pull back to levels I want them at. Boy, what a rough way to start out the new month. Posted by Kirk at 2:50 PM in Analysis | Bookmark | Feeds | Link | www.thekirkreport.com%2f%32%30%30%39%2f%30%33%2fbulls-vs-bears.html%0d%0a%0d%0a%0d%0a%0d%0a]Email This
Tuesday, September 16, 2008Tough LoveBetween dodging the latest "who will save" AIG rumor, the Fed doesn't give in to the market's demands and holds interest rates steady. http://www.kirkreport.com/pictures/sp_9_16_08.gifFirst, it seems that the majority thinks that AIG is too big to fail and is trying to get ahead of another bailout announcement (much like they did with Fannie & Freddie). A nice little relief rally is underway following some very oversold conditions earlier this morning. Second, the Fed's new tough love stance is interesting and marks an important change for the market and the Fed's role in it. While the Fed is still throwing cash to inject boatloads of liquidity, this is really the first time they stood up to the market's demands and said no. Frankly, this is probably a long-term positive as we have to sooner or later break the market's addiction to a friendly Fed, but you have to wonder why they decided to adopt a tough love stance now and whether they had any choice given what we may see in the coming weeks (i.e. perhaps the Fed is reserving their final few bullets for when it is truly needed and they don't think now is the right time). I don't know, but these are good questions to keep in mind as we see some green on our screens. Posted by Kirk at 3:29 PM in Analysis | Bookmark | Feeds | Link | www.thekirkreport.com%2f%32%30%30%38%2f%30%39%2ftough-love.html%0d%0a%0d%0a%0d%0a%0d%0a]Email This
http://www.thekirkreport.com/title.gifOne pro's view of the stock market. Stock screens, market analysis, trading tools, stock research, investment ideas, portfolio analysis, trading lessons, investment commentary, trading tips, and more are provided by Charles E. Kirk.
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Tuesday, March 24, 2009Uptick Rule, The Dollar, & More
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Good morning. Premarket futures are under pressure following yesterday's big rally. Top stories in focus include news that SEC officials are working on an updated version of the uptick rule, Goldman Sachs is interested in buying Barclays iShares unit and is planning to give back its TARP money soon, China calls for the creation of a new currency to replace the dollar as the world's standard, retail chain store sales fell, and Goldman's Abby Joseph Cohen sees fair value for the S&P 500 in excess of 900. Premarket gainers: SEED, ALDN, FMCN, BIDU, SONC, BPL, SFI, HA, ODP, RAX, IM, ALU, NM, BX, MRVL, VVUS, & DRYS. Premarket losers: HUBG, NRGY, AEG, NWL, PR, AAUK, JBHT, AES, FNM, FRE, C, BAC, AIG, ING, SINA, BBI, LTD, SIT, AKS, CPKI, VPHM, STLD, ERIC, FITB, AIG, & SSRI. At 10:AM we have the State Street Investor Confidence Index and Richmond Fed's Manufacturing Index. Bernanke & Geithner are also scheduled to testify on AIG. Given the velocity of the upside recently, I can sense a commonly held view that we're only seeing another vicious bear market rally which is good. The more skepticism and doubt the better as long as the technicals continue to show improvement. That said, there have been only five other occurrences since 1990 where the market has closed up +6% or more and the next day the market is down 80% of the time. So, the key for the day will be simply to retest and hold the S&P 803 level on that pullback. Go make it a great day! Posted by Kirk at 8:58 AM in Premarket | Bookmark | Feeds | Link | www.thekirkreport.com%2f%32%30%30%39%2f%30%33%2fuptick-rule-the-dollar-more.html%0d%0a%0d%0a%0d%0a%0d%0a]Email This
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MSCC update
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MSCC has reached our downside objective, it is time to cover the short position.
Posted by Brian at 1/08/2007 03:23:00 PM
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My Office
is a mess by most people's standards, but it works for me. When the weather is bad outside (like right now) and I want to sneak a workout in, this is the ultimate setup!
Thanks to STAN YAN for the appropriate comic.
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Posted by Brian at 1/05/2007 11:36:00 AM
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The Lighter Side of Wall Street
My friend STAN YAN does some great Wall Street comics on his site and he has allowed me to run a few of them here.
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The websites below do have good trading information but I find some of the pictures and strange article links are what make me click on these sites when I am bored. As for Trading Goddess, I am not sure I believe that the site is written by a woman. One thing trading has taught me is not to accept things at face value.
WALL STREET FIGHTER
TRADING GODDESS
Posted by Brian at 1/04/2007 11:22:00 AM
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Wednesday, January 03, 2007Video Stock Trading Ideas for 1/4/07
Technical analysis video of individual stock trading ideas for Thursday January 4, 2007 including; ArQule, Inc. (Public, NASDAQ:ARQL), China Yuchai International Limited (Public, NYSE:CYD), Discovery Holding Company (Public, NASDAQ:DISCA), Lufkin Industries, Inc. (Public, NASDAQ:LUFK), Microsemi Corporation (Public, NASDAQ:MSCC) and SiRF Technology Holdings Inc. (Public, NASDAQ:SIRF) Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
TROUBLE VIEWING?
Posted by Brian at 1/03/2007 08:42:00 PM
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Video Technical Analysis Review of Stock Market 1/3/07
Technical analysis video review of the stock market and individual stocks for Wednesday January 3. 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), MidCap SPDRs (ETF) (Public, AMEX;MDY), Airspan Networks, Inc. (Public, NASDAQ:AIRN), Genomic Health, Inc. (Public, NASDAQ:GHDX), j2 Global Communications, Inc. (Public, NASDAQ:JCOM) and Dynamic Materials Corporation (Public, NASDAQ:BOOM Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.
Posted by Brian at 1/03/2007 04:13:00 PM
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Dynamic Materials Corporation (Public, NASDAQ:BOOM)
Update on BOOM
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Posted by Brian at 1/03/2007 03:02:00 PM
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Friday, December 29, 2006January Effect Update
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Posted by Brian at 12/29/2006 08:53:00 AM
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AAPL update
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Posted by Brian at 12/19/2006 02:23:00 PM
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American Depositary Receipts
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Today on WallStrip the featured company is Suez SA (ADR) (Public,
New Strategy
From now on, I will be buying only the stock of companys that are involved in bankruptcy.
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Posted by Brian at 12/13/2006 11:22:00 AM
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Cover the FORM Short Sale Here!
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Posted by Brian at 11/28/2006 09:45:00 AM
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Semiconductor Breakout
We have been concerned about a breakdown in semiconductor stocks for the last month or so and last night I pointed out a bullish scenario of the SMH crossing recent resistance at 34.45. Now that the semis have breached resistance we will look for shorts to get squeezed up past 36.00.
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Posted by Brian at 11/14/2006 01:07:00 PM
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The Measured Move
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Shares of Digital River Inc. (DRIV) have come close to attaining the upward technical target from the “measured move”. View the video to see how it is calculated.
Smith & Wesson (SWHC)
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Shares of Smith and Wesson (SWHC) have had what looks to be the best year ever for this manufacturer of firearms. View the video to see what I think of the stock here.
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Sunday, November 05, 2006Stem Cells or Stem SELLS?
You’ve undoubtedly heard the phrase “buy the rumor, sell the news”, right? Well this week we could see that old adage play out and this time you should be on the right side of it. On October 12 I laid out the reasoning for a possible rally in the stocks related to stem cell research. My case was that there was growing talk that the Democrats were gaining momentum. The stem cell debate is one that touches off a lot of emotion, especially for our President who has used his veto power only once and it was to block the governmental funding of stem cell research. This veto was a kick in the nuts for stem cell companies and if Democrats can gain control there is a growing HOPE that there would be enough votes for an overturn of a future veto. The trade I pointed out was based on the “perception of potential change” in the political landscape. On Tuesday we will learn whether that perception becomes reality as votes are tallied.
The “stem cell story” has gained a lot of momentum in the popular press this past week and that makes me think it is getting close to the time to get out of the trade. If these stocks experience sharp runups Monday and Tuesday I would suggest taking profits. SUCCESSFUL TRADERS ANTICIPATE, THE PUBLIC REACTS TO “NEWS”.
I am long GERN and ASTM.
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Posted by Brian at 11/05/2006 09:36:00 AM
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Applied Digital Solutions (ADSX)
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Posted by Brian at 10/25/2006 10:44:00 AM
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Short Term Semiconductor (SMH) Support?
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Posted by Brian at 10/18/2006 11:11:00 AM
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Siga Technologies Inc. (SIGA) !!!!!!
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Posted by Brian at 10/18/2006 09:06:00 AM
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Stem Cell Stocks Updated
I suggested that the upcoming elections could be beneficial to companies involved in stem cell research. I have been most bullish and have "official" positions open in STEM from $2.27 and ASTM from $1.27. The stocks are approaching the target areas at the declining 200 day moving averages (2.70 for STEM and 1.50 for ASTM) and I think it is now prudent to significantly reduce your positions (I just sold the last of mine). Do not fall in love with the stocks, we may revisit them again, but I believe the best course of action is to lock in profits here.
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Posted by Brian at 10/17/2006 10:45:00 AM
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Saturday, October 14, 2006Rams will get the Ravens Next Time!
The Rams undefeated season is over, but they are still in great shape for the playoffs. They remain number one in their division and are likely to meet up with the Ravens again in 4 weeks at the "Turkey Bowl". Final score today was 34-6, ouch! As is often the case, the final score did not tell the entire story. The Rams started out strong, scoring twice before the Ravens, but the TDs were called back due to penalties. I think this drained the kids emotionally? The first half ended with the Ravens up 14-6 and in the second half the Rams acted desperate. They threw 3 interceptions and fumbled twice, they fell apart. It was like seeing a newer trader experience a large draw down and add to the losing position on margin. Fortunately for these kids, they are young and probably learned a good lesson about feeling infallible, much like the share holders of MNCS!
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Posted by Brian at 10/14/2006 11:09:00 PM
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Thursday, October 12, 2006Nothing Goes Up Forever!
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RNWK - Maybe the Squeeze is on Here?
All I know is that it sure would suck to be short such large positions while the stocks are making multi-year highs. If I was short I would throw in the towel and buy back all short shares at the market today, I can dream right?
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Posted by Brian at 10/05/2006 10:42:00 AM
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UTSI Short Squeeze Coming?
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Tuesday, October 03, 2006Screening for High Dividend Yields WIth a Twist
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I have been seeing a lot of differnt screens for high dividend yield stocks lately and while dividend investing is not a bad idea for a portion of a balanced portfolio, I believe that most of those screens are flawed. Here's how, they only take into consideration the amount of the dividend yield (keep in mind that you have to hold the stock for one year to receive all four, in most cases, dividend payments). A lot can happen to share price over the course of the year which is why I believe a better approach is to combine the dividiend yield with what stage the stock is in (see chart above, Stage 1- Accumulation, Stage 2- Markup, Stage 3- Distribution and Stage 4- Decline). To me it seems obvious that share price should be neutral (stage 1 or 3) at the least and even better, the stock should be in an uptrend (stage 2). Going even further, Stage 3 (Distribution) is typically followed by a stage 4 Decline which makes these stocks higher risk so these stocks may not make good purchase candidates.
I created a simple scan on the Profiler (see banner on right hand side) which first included all stages (1-4) on both a weekly and daily timeframe. I also put a price range of $10.00 to $200.00 Average daily volume (last 20 days) had to show a minimum of 500,000 and a maximum of 100 million shares. The list included Nasdaq, NYSE and AMEX stocks. PE was not considered and the stock had to have a dividend yield of at least 4%. This search yielded 82 stocks.
In order to cull this list further, I added a filter for PE ratio. The new list had all the criteria mentioned above and they had a PE ratio between 1 and 50, this cut the list down to 70 stocks.
Once again, I refined the search to disclude all stocks which were in a Stage 4 decline on either the daily or weekly timeframe, the list was further cut to just 53 stocks.
Still wanting the list to be shorter, I also eliminated stocks which were in a Stage 3 Distribution on either the daily or weekly timeframe, only 28 stocks remained.
This is the list of stocks which survived the successively stricter criteria. I have not reviewed any of these stocks and would not suggest that anyone buy them just because of a dividend. As always, you must do your own homework and decide if any of them are appropriate for your objectives and risk tolerance.
SAX AINV ACAS CSE CZN
HRP EPD O HCP PGN
TNE ED EAS TE CTCO
TLT NXL SO VZ SHY
WRI PKG XEL DUK BAC
UST CMA T
Posted by Brian at 10/03/2006 11:51:00 AM
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Hard Landing or Soft Landing?
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As a trader, it is just noise whether the economy has a "hard landing" or a "soft landing". My opinion is that the market is a leading indicator and that the worry warts have been missing out on one hell of a rally because their "economic models indicate....blah, blah, blah). Price is the only truth, it cannot be revised, adjusted seasonally or miscalculated. Price is TRUTH. See you after the close.
Posted by Brian at 9/29/2006 10:21:00 AM
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Mid Cap Concerns
MDY- Weekly chart (click to enlarge)
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I have been warning of potential trouble for the S&P 400 Mid-cap index ETF (MDY) in my videos over the last month or so and now the index appears to be on the verge of breaking down. If this index (which led the market higher) does break lower, there could be severe negative consequences for the overall market. This index represents the biggest threat to the overall health of the market right now and you should keep a close eye on it here. The weekly chart shown above shows the index has had a negative volume pattern since it began its decline in early May. As the index drops, the volume has been increasing. While the index has rallied over the last 8 weeks, the volume has been diminishing, which means the buyers lack conviction. Even more recently is the increased volume of the last 2 weeks as the market churned below all of the longer term moving averages. Big volume without further upside equals distribution. If buyers do not come in and rescue this index this week, there could be a quick and severe selloff that follows, be careful....
MDY daily chart
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The uptrend line on the daily timeframe has been broken and the index has made a lower high and a lower low, but that is only enough to get me into the "extremely cautious" camp. In order for me to become outright negative and convinced of a real selloff materializing, it would take a move (close) below the recent lows at 133.62, 133.63. Closing below that support level would get me very concerned that a longer term selloff has begun. This is a good time to be very careful. Short term, I think we can breath a little bit easier if the MDY can close above 136.50.
Posted by Brian at 9/25/2006 10:30:00 AM
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Sunday, September 24, 2006How 'bout them Rams!
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No, not the professional team. My son's senior recreational league who won another game yesterday and are now 4-0 with a combined score of 164-0! They DOMINATE! It cost me another $15.00 too. For every sack that Matthew makes by himself I pay him $10 and for participating in a sack it's 5 bucks. It's cool to see my son standing out on an excellent team. The coach is a funny guy, one of the things he says is "we don't punt, we make other teams punt!". I don't think the team even has a punter. On the opening drive yesterday, the Rams got backed up to their own 15 yard line and it was fourth and 20, guess what they did? They went for it, and it worked! In fact they scored a TD on the play. If I was the coach, I would have punted. I guess that is why I am a trader and not a football coach :-)
Posted by Brian at 9/24/2006 12:10:00 PM
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When initially entering the trade, the first technical consideration is the location and price levels of support and resistance. Besides making sure we are entering a position that is not too far extended from a decent level of support, the reason we immediately look for support and resistance is to set a protective stop. We place the initial stop to make sure that if the stock does not act the way we expected it to, our accounts are not exposed to a catastrophic loss. For longs, stops should be placed just below the most recent support, and for shorts stops should be placed just above a recent resistance level. Obviously, if it is not a swing trade, a shorter timeframe should be utilized to determine this protective level. In the case of ODSY, the stock was shown after it broke out to all time highs on May 6, with the price at the time $17.60 (adjusted for a 3/2 split on August 12). At that time, the highest preceding low was found at the April 30- low of $15.73, coinciding with the location of the rising 50 day moving average. Whenever we have more than one technical reason for being involved in a trade it adds significance to the level. In this case we had what appeared to be the beginnings of a new uptrend with the prior low and the rising 50 day moving average in the same location. Just below the prior higher low is often the ideal point to place our initial stop because breaking below that level would nullify the trend. In essence, we are exploiting the definition of an uptrend (higher highs and higher lows) to remove the dangerous emotions to be allowed to enter our decision making process.
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Gaps against the prevailing trend occur when a stock in an up trend suddenly gaps lower while you have a long position in the stock. Luckily, these gaps in trading caused by an imbalance to the sell side while the stock is in a solid up trend are not that common. We are not discussing common gaps of 1-2% here, but a gap down by more than 5%. When we do find ourselves in the unfortunate situation of being caught in this predicament, it is often best to sell the entire position. A gap of this magnitude (5% or move) will not typically occur unless there is a serious fundamental development at the company, and since our entry may not have taken fundamentals into consideration, we are now in a position that we were not anticipating. As they say, “When in doubt, get out!” As a general rule of thumb for gaps, liquidate the position if a hard stop (sell event number 4) has been violated. If the stock gaps down 5% but does not violate a hard stop, we need to monitor the stock closely for further signs of weakness. If it looks like liquidity may be an issue for exiting a larger position, it is a good idea to consider selling half of the position so if the weakness continues you will not feel trapped in the stock as it declines and grow reluctant to sell, waiting for a bounce that may never arrive.
We can see in the chart of RSA Security that the stock gapped lower on October 17 and did not bounce. Although it would have been a tough decision to liquidate the position on such a gap, it is clearly better to have sold at the first sign of trouble than it would have been to continue to hold and hope. Sometimes it is best to get the pain over all at once by selling the entire position rather than prolonging the agony of a loser, similar to removing a band aid from a wound, as slowly peeling a band aid only extends the discomfort.
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Price Targets. It is a good idea to have a reasonable expectation as to where you think the stock has the potential to rally to; thus coming up with an estimated area where selling may occur. If our stock is in a solid uptrend that may be approaching a prior level of support, there is the potential for that past area of buying to offer resistance. Assuming you started with a good theoretical risk/reward ratio in your original purchase, taking some of the profits makes sense at the target area. But also be careful not to sell too much of a stock that continues to have strong upward momentum because the biggest gains are likely to still be ahead in this situation. Selling a little at the target also helps make it easier to let go of the stock later because it shows we are not emotionally attached to the stock, and you’ve got to admit it feels good to take a profit and reward yourself a little. Taking a little stock off the position also reduces our overall risk and gives us a little cushion in case something unexpected happens to make the stock drop suddenly. For the rest of the position, hold on tight, and allow yourself to have a big winner. Bulls and Bears make money, Greedy pigs get slaughtered and Disciplined pigs get Rich!
Hard trailing stops require the most skill, but by the time we get to this point, the stock is doing the work while our job is to monitor and adjust our risk levels as the stock moves higher. A hard trailing stop is based on the very definition of the trends we are trying to take money from. As we know, the definition of an uptrend is “a series of higher highs and higher lows.” This implies that breaking the series of higher lows is a violation of the trend and that is a reason to sell. When looking at a chart that encompasses 17 days of trading utilizing 15 minute time increments, we can see how shares of Netflix Inc. (NFLX) ascended over the course of nine days in a perfect stair-step pattern of higher highs and higher lows. Assuming the purchase of the stock at $36.50 on October 2nd, we would have an unrealized profit of $4.41 per share based on the close at $40.91, and this is a gain that is definitely worth protecting. The accompanying chart of NFLX shows how the trader would have raised the stop up under the rising lows with an exit being made on October 8th as the stock traded below the prior low of $42.85. This stop would have allowed the trader to lock in a gain of $6.35 over the course of five trading days. This stop takes some work because you have to cancel and replace orders, but this is work that is fun because it means you are locking in profits. In order to capture the occasional windfall profits in a stock that exceeds the profit objectives, we use a simple methodology that has proven very effective for holding stocks that are showing positive momentum. The method for allowing our winners to run is to use a trailing stop-loss based on the higher lows that the stock is forming in the uptrend. Holding a long stock that is moving higher is done by using the daily chart and placing our stop just below the level of the last higher low. If the stock does not trade below the previous days low then it is showing positive momentum and should be held overnight again.
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RealTick® Trailing Stops are my favorite stops to use on a day trade. This unique stop actually gives control of your order to the algorithm built into the RealTick trading platform. The ideal situation to use a trailing stop is when you buy a stock that finds rapid upside velocity, pushing the stock quickly away from your hard stop. In the situation where the stock may run $1.00 or more in just a few minutes we are faced with the dilemma of deciding whether to sell the position and lock in the gains or to allow it to run further. We’ve all seen the stocks that can run 2-3 dollars in the course of an hour or less, and we certainly don’t want to allow a nice winner turn into a loser. The emotions that can be dredged up from this experience tempt event the most disciplined traders to exit with the profit rather than allowing it to run further. These stops are going to be utilized most often within the first hour of trading, when emotions from the amateur buyers are often at an extreme. Fortunately, technology has taken given us the opportunity to mitigate the emotional decision process with the Real Tick trailing stop.
This stop works in the following way, we will refer to chart four here. On August 21 Semtech started to rally late in the afternoon and I bought 1000 shares for a quick day trade. The stock continued to progress nicely higher, and because it was showing strong positive momentum and displayed a strong technical pattern, I locked in partial profits on half of the position and allowed the rest day to be transitioned into an overnight hold. The stock closed that day at 18.58. The next morning the stock gapped higher at 19.11, and at this point I was tempted to sell the stock for a quick profit of $265, but decided instead to allow the profits to run a little. When the stock was at a price of $19.28 I entered a trailing stop of $.15, which is read on the Archipelago Exchange as a stop market order at 19.13. As the stock exhibited further strength the stop automatically gets adjusted higher, but it will never get adjusted lower. The trailing stop sets an actual stop $.15 (or whatever increment you choose) below every new high the stock makes. Keep in mind that this will turn into a market order upon the stop getting activated and this can cause slippage in illiquid or fast moving markets. As you can see from the accompanying table and the chart, over the next 23 minutes the stop was automatically adjusted 157 times until the trade was finally stopped out $1.79 higher than the original stop. That is an extra $895.00 made on the trade without any further intervention on my part, and a total profit for the day of $1160.00, and to think that I was tempted to sell at the open for just $265.00! Ideally I would love to use a trailing stop on all my trades because it means I have gotten into a stock at a time of maximum upside velocity.
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The most difficult decision for a trailing stop is how much room to allow the stock to have. I think it is sort of like going fishing. If you have a big fish on and you tighten the line too much the fish is sure to break off and you never get to taste your reward. In trading, if you set the stop too tight you might get shaken out of the position before the stock runs its course. How much room I decide to give a trailing stop depends a lot on historical volatility and the price of the stock. The more volatile and higher priced stocks will need to be given extra room to wiggle while less volatile lower priced issues can usually be kept on a tight leash with just a $.10-.15 stop.
Moving Average Crossovers often signal the end of a prevailing trend and that is a good time to take profits on a position. For this example we will refer to the chart (3) of Odyssey HealthCare (ODSY). Referring to the July article, the stock was purchased in early May near $17.50 (adjusted for a 3/2 stock split on August 12) with the hope the market would allow it to be a position trade because of all the positives the stock had, position trades typically last from a week to as long as six months.
Trending stocks tend to stay above the rising moving averages, and ODSY remained in a healthy up trend that would pause briefly at the 10 and 20 day moving averages where it would find fresh buyers to bring the stock higher. On September 22, the stock broke hard down to the rising 50 day moving average. This swift sell off was reason for concern, but not yet a reason to sell as stocks often find support at the rising 50 day MA. Three days later, the stock experienced another wave of selling and that brought the 10 day MA down through the 20 day MA, this action tells us that the short term trend was now heading lower while the intermediate term was trending higher, this indecision tells us it is time to book profits. The stock was at $28.50, well off the high near $36, but still 62% higher than the purchase just four months before. That is how this type of stop can get us out of a position, now let’s examine why.
Moving averages are simple, but often misunderstood, technical indicators. I like moving averages because they allow me to objectively identify trends on all timeframes with incredible accuracy. One of the common misconceptions about MA’s is that moving average crossovers are a reason to enter a position, I have found that moving average crossovers occur in a sideways consolidating market and it is difficult to determine when these consolidation periods will end. Understanding that moving average crossovers represent indecision because there is no longer a consensus of agreement about whether buyers are sellers are in control allows us to recognize the value of the first crossover at the end of a trend as a reason to sell. Usually a moving average crossover occurs after a trend has exhausted itself, and as trend followers there should be no clearer sign that it is time to exit gracefully with our profits before the market relieves us of them.
Time Stops are a way of exiting a position that is stagnant. As traders, we encounter two forms of risk, the previous six reasons to sell addressed the risk of price. This stop addresses our other form of market risk, time. Time can be our biggest enemy in a trade; it can be the quiet killer of our equity. How many times have you neglected a stock in your account because it wasn’t doing anything? Even a day trader will sometimes find himself complacent with a stock that doesn’t show any movement, and then suddenly a sell order comes into the stock and moves it lower by a dollar without us having the ability to react. The time stop takes care of getting out of a position if it is not working as quickly as we would have expected. The general guidelines that I use as time stops for day trades is 15-30 minutes, with more emphasis on 30 minute level if the overall market is moving in the direction anticipated for the stock. For a swing trade, I will typically give the stock 2-3 hours before moving before I consider selling the position out near my cost basis. For position trades, my patience gets stretched easily and I will give the stock no more than 1-2 days to get moving before I start to think my timing is off. When I get stopped out because of time, I will often re-enter the stock if it exhibits signs that it may be ready to move later on.
These seven reasons to sell are not meant to be the only reasons to exit a position, but hopefully it does give you something to think about when you look at closing out your positions. Keep in mind that the there are many different situations that present themselves to us in the markets and the more strategies we have to take advantage of them, the more likely we are to attain our goals being in the elite group of who consistently take money from the market.
Posted by Brian at 9/16/2006 12:52:00 PM
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Inflection Points in QQQQ and SMH
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The Nasdaq 100 Trust (QQQQ) and the Semiconductor Holdrs (SMH) both appear to be reaching inflection points. I consider an "inflection point" to be a level where there is percieved technical importance based on multiple ways of looking at the market. Looking at the two daily charts, you can see that they are both approaching;
[*]Their June 2 highs[*]Their declining 200 day moving averages[*]61.8% retracement levels from the April highs to the July lowsWhile this is not a reason to run out and sell, it is worth noting that with the markets approaching these potential resistance levels it is likely that;
[*]Buyers will become less aggressive in their purchases[*]Sellers will be tempted to take profits[*]Shorts will be tempted to sell into these levelsAll in all, it is a situation where we could see increasing supply and decreasing demand. While I do not think the markets will suffer any major pullback from these levels, I do think we could see a slowdown to the recent uptrend which leads to a few weeks of sideways activity. Fortunately for us, there will still be plenty of opportunities (long and short) in the individual stocks.
Look for more explaination in the video shortly after the close today.
Posted by Brian at 9/13/2006 02:25:00 PM
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RNWK update
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Yesterday I thought the stock was extended as it was at daily R2 ($11.15) when I posted about the possibility of a short squeeze. Nww that the stock has dropped down to the confluence of the rising 10 day moving average and daily S2, it looks like it may make for a good low risk purchase if you still like the story. I would suggest stops about $.05 lower than the low of the day at this point.
Posted by Brian at 9/01/2006 09:59:00 AM
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