US and Canada Stock Markets Closed Monday February 20th, 2012 for Presidents Day and Family Day Holidays
US and Canadian Stock Markets Closed Monday February 20th, 2012 for Presidents Day and Family Day
Are US stock markets closed on Presidents day ?
Yes US stock markets are closed Monday Feb. 20th , 2012
Are Canadian Stock Markets closed on President’s day ?
Canada does not have president’s day but the Canadian stock markets are closed for Family Day for Feb. 20th, 2012
How do US Stock Markets perform before and after Presidents day?
The average pre-holiday results for 50 years , based on S&P 500 index look like this
buy 2 days before , sell at year end ( return of -0.1%)
buy 1 day before President’s Day , sell at year end ( return 12.2% )
President’s Day %’s are usually down the following 3 days on S&P , DJIA , Nasdaq and Russell 2k
You can see the exact # ‘s and data at the link below:
Some of the better holiday stock effects happen Independence Day, Labor day & New Years or pre – Election Day (keep that in mind this year )
You can see all other holiday stock market effects and more detailed data here:
http://stockguy22.com/2010/11/23/thanksgiving-holiday-effects-on-stock-markets/
Why is Presidents Day also known as Washington’s Birthday?
The 3rd Monday of Feb. is officially Washington’s Birthday. But many Americans believe that this holiday is now called “Presidents Day,” in honor of both Presidents Washington and Lincoln, whose birthdays are Feb. 22 and Feb. 12, respectively. It turns out that whether you honor one or the other or both of these presidents may depend on where you live.
If you check the NYSE Euronext site , they still call the holiday Washington’s Birthday : http://corporate.nyx.com/holidays-and-hours/nyse
Hope you found this helpful
Stockguy22
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is stock market open on washingtons birthday 2012?
AMRN traded today thanks to @jgwilson929 +$1300
It was a boring afternoon in the futures market until this excitement. Since momentum/volume trading is an interesting topic, I thought I would post this chart.
Here is the chart for AMRN mentioned in our chat today. @jgwilson929 alerted the room when it was falling initially just above the $8 level, he had a 6/8 call spread.
Without thinking I reacted, $8 level, watch for support. I bought on the bounce around $8.25 and rode it risking a stop on breaking $8 or conservatively on a new low below $8.15. AMRN proceeded to rally back to the breakdown. Score!
I took it off once it broke $8.50 (a bit early) and waited to see where it would top out. Shorted $8.75 with a break out over $8.85 stop just on price action, ended up stopping out $8.65.
No indicators. Just price action and market behavior. +$1300 
. Thanks everyone.
Then Stockguy22 puts me to shame on FIO for 19%. <sigh> Way to go !!
See ya !!
jstantrades
The Week in Crayons
Much to the chagrin of bears everywhere, the markets continued their relentless march up for yet another week as the rally to open 2012 continues. While there continues to be sporadic bouts of selling intraday, there has been a strong and pervasive bid that has supported price action and has consistently thwarted all attempts at selling this market down. From a technical perspective, nothing has changed in about six weeks now as we remain perpetually oversold and extended as we slowly squeeze higher.
This is clearly evident in a chart of the e-mini futures contract for the S&P 500 which shows all of this year’s price action contained within a narrow rising channel. Almost the entirety of this move has occurred with an overbought stochastics reading as well. Also note the preponderance of longish lower wicks on many of the candles during this rally indicating that while there have been some attempts to push price down, it has inevitably been met with a strong afternoon bid.
While this traditionally is a sign of strength, it can also be a hint of future weakness when this behavior occurs after a prolonged rally. However, while it may become tempting for traders to gamble and try to pick a top when the market behaves like this, the more prudent course of action is to assume that the market will continue to behave in the same manner until it breaks out of this channel. Ironically, a breakout above the channel would result in a possibly unsustainable acceleration of the current trend leading to a higher probability short than a corresponding breakdown from the channel which would likely lead to a more benign sideways consolidation. However, while it is prudent to anticipate what the market will do, it is all conjecture until the theories either succeed or fail and astute traders must also recognize the present and profit from it…and the present remains a buy the dip environment until proven wrong.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
The Week in Crayons
Despite ending the week somewhat off their new highs, the markets for the most part continued the slow and relentless rally that began about a month ago. As has been the case during that time, sellers have been few and far between and price action once again occurred on muted volume with relatively little volatility. Not much has changed since last week from a technical perspective and most of the analysis I mentioned in last Friday’s post still stands.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see that we are still in the same narrow rising channel that has contained our rally after breaking out at the start of the year. Price is for the most part in the same range it was in last week except for a failed attempt above 1320 which occurred during the middle of the week off the back of strong eps reports(most notably AAPL). We are now very close to last year’s highs which should serve as a strong magnet for price action as the bulls will eventually try to push price to new highs mirroring the action that has already occurred in the nasdaq composite index.
However, we remain oversold and are beginning to see signs of waning momentum. Notice that we printed a yellow candle on our SG22 momo trend bars on Friday’s close, the first such bar in over a month. This is a hint that upward momentum is slowing down and traders should begin to exercise caution in regards to our current swing up. The first key level to watch if this weakness persists is the 1300 area. This was support last week, and a break below it would also likely take price out of our rising channel. After that, the rising 20 day moving average would likely become the next key area of support which would also coincide with the mid 1280′s which supported price nicely after breaking past our last major pivot high formed in late October. Trader’s should be wary that price dropping into these levels shouldn’t necessarily be seen as a sign to short this market as sellers have been virtually non-existant so far this year and a retracement at this point may end up taking the form of a benign sideways drift instead of a deep price pullback. If price were to remain in our channel and continue squeezing higher, look for the 1340 area to become a major test as we begin to probe last year’s highs.
While this type of slow rise can be frustrating to traders that feel they have not capitalized enough on it can be frustrating, continue to remain patient and wait for the proper setups to appear as we work off our oversold nature very close to some stiff resistance on the longer term charts.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Where does AAPL ( Apple Inc. ) keep close to $100 Billion in Cash and what to do with it?
Where does AAPL ( Apple Inc.) keep close to $100 Billion in Cash and what to do with that pile of cash ?
I was looking over the recent Apple Earnings report and was curious where they park that mountain of almost $100Billion in Cash
I did a pie chart to show the amounts and percentages.
As expected very little of the $97,521,000,000 is actually in cash only $3.9B or 4.06%
The majority of Apple’s money is parked in US Treasury , US Agency & Corporate Securities which accounts for 75.47%
Below is the the breakdown of where the money is in ascending order:
such as , Asset-backed securities, mutual funds, commercial paper, money market funds, certificates of deposits and time deposits, Cash, municipal securities, non-U.S. government securities, US Treasury Securities, US Agency securities and Corporate securities.
Another question that some may wonder is what does apple (AAPL ) make in interest on that massive pile of cash?
Surprisingly not much approx. 1.02% in 1st 2012 Q compared to .75% in the 2011 Q
Even at just 1% per Quarter works out to almost $4B per year or $10Million+ per day ( This is just my estimate but will continue to grow since they keep adding so much cash per Quarter and the compounding effect can get ridiculous)
Continued…
You can read the full Apple earnings report for Dec. 31st , 2011 here: http://sg22.ly/ybzE3Q
I tweeted today what can $AAPL do for fun with close to $100B in cash :
Outside from the boring but smart suggestions of :
- buy out or take positions in #icloud , social networking, or movie content companies to help upcoming #iTV AppleTV launch
- declare a special dividend ( they have over $100 per share of cash on hand) WOW!
- share repurchase
- continue spending on R&D
- reduce the cost of iphones , ipads, Macs, ipods.
- $AAPL could give every person in the U.S. $319.58
- could buy 2,500 Gulfstreams V that Mark Cuban ( @mcuban ) bought or it can buy 40 @mcuban ‘s
- could go to an apple store and buy 500 million + new
#iphone4s with a $VZ contract - could pay the $100B ransom by Dr.Evil (
#austinpowers) if he ever held the world hostage http://sg22.ly/yI4fYs - could buy out $NFLX & $RIMM & still get back $80Billion+ in change back
- by @colindean : With $100B, Apple could put an iPod Touch in the hands of every person in the US and Pakistan, the 3rd and 6th largest countries
- RT
@colindean: With $100B, Apple could put an AppleTV on every TV in China.#applecash - RT
@colindean: Apple could pay off 75% of American farm mortgage debt with its $100B#applecash - by @mmassassin : take wife to the dollar store and tell her go crazy girl
- buy the entire Facebook iPO ( $FBOOK ) which is expected to be worth $100B ( on serious note they should take a part ownership stake.
No. Ticker Company Market Cap 1 XOM Exxon Mobil Corporation $415,906.82 2 AAPL Apple Inc. $414,461.86 3 PTR PetroChina Co. Ltd. $269,864.46 4 MSFT Microsoft Corporation $247,527.72 5 RDS-B Royal Dutch Shell plc $230,287.19 6 IBM International Business Machines Corp. $225,092.84 7 BHP BHP Billiton Ltd. $214,068.38 8 CVX Chevron Corporation $212,271.85 9 WMT Wal-Mart Stores Inc. $208,803.96 10 PBR Petroleo Brasileiro $203,559.42 11 GE General Electric Company $201,328.66 12 CHL China Mobile Limited $200,439.49 13 BRK-A Berkshire Hathaway Inc. $197,092.50 14 PBR-A Petroleo Brasileiro $187,580.40 15 GOOG Google Inc. $184,001.90 16 BBL BHP Billiton plc $181,886.27 17 JNJ Johnson & Johnson $179,416.84 18 PG Procter & Gamble Co. $178,285.54 19 T AT&T, Inc. $174,520.70 20 PFE Pfizer Inc. $166,269.15 21 KO The Coca-Cola Company $154,466.36 22 WFC Wells Fargo & Company $153,196.04 23 HBC HSBC Holdings plc $151,554.43 24 VOD Vodafone Group plc $143,920.56 25 JPM JPMorgan Chase & Co. $142,453.38 26 ORCL Oracle Corporation $142,181.02 27 BP BP plc $141,596.77 28 INTC Intel Corporation $136,211.00 29 PM Philip Morris International, Inc. $132,670.53 30 TM Toyota Motor Corporation $128,593.15 31 VALE Vale S.A. $126,649.60 32 FMX Fomento Econ $125,631.31 33 NVS Novartis AG $125,470.08 34 TOT Total SA $124,813.93 35 MRK Merck & Co. Inc. $118,198.33 36 ABV Companhia de Bebidas Das Americas (AMBEV) $115,701.56 37 GSK GlaxoSmithKline plc $114,739.44 38 RIO Rio Tinto plc $113,144.93 39 CSCO Cisco Systems, Inc. $106,603.30 40 VZ Verizon Communications Inc. $105,712.90 41 PEP Pepsico, Inc. $103,998.03 42 SLB Schlumberger Limited $101,975.04 43 EC Ecopetrol SA $101,646.93 44 MCD McDonald's Corp. $101,482.96 45 SNP China Petroleum & Chemical Corp. $101,269.11 46 BUD Anheuser-Busch InBev $99,399.67 47 SPY SPDR S&P 500 $99,190.91 48 SNY Sanofi $99,144.61 49 QCOM QUALCOMM Incorporated $97,564.78
Hope you found this helpful or if you find any errors ,
Stockguy22
The Week in Crayons
The markets continued their slow march up this week with little to no real pull backs as the bulls relentlessly stepped in to support the markets any time there was a hint of a drop. We have now drifted in one direction(up) with relatively light volume and volatility for about a month on most of the major indices which is in stark contrast to the highly volatile back and forth movement we experienced for most of the latter portion of 2011. While we can’t truly know until we experience a substantial retracement on the current move, it appears that the market has had a change of character recently and is more likely to be bullish to neutral instead of the neutral to bearish undertone that characterized the back end of last year’s trading. In fact, the start to 2012 is somewhat reminiscent of the start we had in 2011 which also began with a slow and steady march up that seemed to defy gravity.
Looking at a near term chart of the e-mini futures contract for the S&P 500, we can see this low volatility uptrend clearly. Notice how the last several week’s worth of price action is confined to a single narrow range channel. As mentioned earlier, this is in stark contrast to the volatile oscillation that occurred prior to this move. We are now clearly above several key areas of resistance including all of the major moving averages and are poised to challenge last year’s highs. However, Stochastics has had an oversold reading for the entirety of the breakout and while we can continue this slow squeeze all the way to the highs, risk reward does not favor chasing momentum here unless your time frame is less than one to two days for a trade.
Of course, action has been completely bullish for several weeks now, and someone looking to short this should realize that the potential for us to squeeze to last year’s highs is very real. In fact, the nasdaq composite has already formed new highs this week and could be a harbinger of things to come from its relatively weaker peers. In addition to the possibility of a continued squeeze higher, another thorn in the short seller’s case right now is the potential change in character in the markets which could lead to a benign correction that drifts either sideways or slightly down and fails to offer proper rewards commensurate with the risk taken at this point.
As we can see on an older chart of the e-mini futures contract for the S&P 500, this exact scenario occurred during the end of 2010/beginning of 2011. Notice the long narrow channel which contained price action neatly for practically three months. Also note that we were oversold for basically the entire time as well.
While this scenario doesn’t have to play out exactly the same(and likely won’t), it should offer traders a hint of what can possibly occur over the next couple of months and serve as a good warning for those that are looking to short this type of action prematurely. On the other side of the coin, looking at the steep drops that occurred at the end of that run should also serve as a warning for anyone looking to chase extended price action into areas of potential distribution.
We are now a few weeks into the new year and while the character of the market appears to have changed, astute traders should keep an eye on price action and wait for the market to conform to their expectations/scenarios, instead of allowing the market to force them into poor trading decisions.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
The Week in Crayons
While the markets opened down on Friday looking tired and ready to roll over after a week of positive gains, they gained traction midday and eventually rallied to close just below the days high’s. Friday’s price action was part of a larger pattern of afternoon strength that has become prevalent during the early stages of the 2012. While this is typically bullish in nature as it shows that sellers are having difficulty in gaining control of the markets from the buyers, traders should also take into account that sellers are consistently attempting to push the market down but are eventually becoming overwhelmed as buyers continue to step in during intra-day pullbacks. Another key factor to consider is that this price action is occuring at relatively strong levels of resistance.
This behavior is evident as we look at a chart of the e-mini futures contract for the S&P 500. Notice the string of candles with long lower wicks over the last couple of weeks. Most of these are some form of doji candle and reflect indecision as the markets attempt to find a fair price. While there are a few hammer candles sprinkled into the mix and the overall pattern looks fairly bullish, context should always be taken into consideration when examining candles for clues on future price behavior. While a hammer candle often signals a potential for a bullish reversal, this must occur after a prior downtrend in order to be viewed as a valid signal. When hammer candles occur after a long uptrend, they instead hint at future weakness as sellers are beginning to appear even if they have yet to truly gain control of a market. While this is not necessarily a bearish signal, it certainly is a warning that bullish momentum is beginning to wane.
Another point to consider is the strongly oversold Stochastics reading we are printing on the S&P futures. We have been oversold for a few weeks now and are certainly due for some sort of pullback as price attempts to find equilibrium at new levels. However, traders should not take these signs of temporary weakness as flat out bearish signals as overall price action this year has been strongly bullish. There has been a consistent bid throughout the last two weeks and price is now clearly above the critical 200 day moving average. We have also just cleared the pivot high formed in late October and are in the process of forming a critical higher pivot high indicating that we are now techically in an uptrend.
One level to watch if we pull back is 1260. This was the scene of our breakout at the start of the year and held as support when we tested the gap created from that breakout. This will likely also coincide with the rising 20 day moving average which should provide additional price support as well. Past that, the next key level would be around the 200 day moving average in the neighborhood of 1242 or so. Depending on the timing, this could also coincide with the bottom trendline of the symmetrical triangle we formed over the last quarter of 2011 which would also likely support falling price action. If those two levels do not hold, 1200 would be a likely area of conflict and would present a critical test regarding the state of the markets.
Looking at the overall picture, traders should recognize that while the potential for a squeeze higher is possible, the odds are not in favor of buying now when you consider that we are at levels of fairly strong resistance while the market is showing signs of becoming tired after a nice 3-4 week rally. Now is the time to identify key levels of support on stocks and patiently wait for them as the markets begin to work off their oversold nature whether it be through a retracement or a slow sideways drift.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Stockguy22 Level 2 Chart Display
Introducing the Stockguy22 Level 2 chart display. This indicator displays the Level 2 Order Book for your datafeed. Chart examples use /TF futures because the ICE provides the full book as far as I can tell. /ES , /NQ, /YM, and most of the CME / NYBOT only provide around 5-7 deep to retail traders. Complete garbage if you ask me.
Showing Level 2 data that is way outside the current days range.
Intraday Level 2 with contract amounts.
Download Here: SG22_Level_2
To import:
1. From the Control Center window select the menu File > Utilities > Import NinjaScript to open the Import NinjaScript dialog window
2. Select the file you want to import
3. Press the “Open” button.
To add an indicator to a chart:
1. Open the Indicators window.
2. Left mouse click on the indicator (SG22_Level_2) you want to add and press the New button.
3. The indicator will now be visible in the list of applied indicators.
4. The indicator’s parameters will now be editable on the right side of the Indicators window.
http://www.ninjatrader.com/support/helpGuides/nt7/working_with_indicators.htm
Join the stockguy22.com Diamond membership to learn how we use the SG22_Level_2 to trade the futures everyday.
The Year in Crayons
The last week of 2011 in the markets was mostly uneventful as price action basically drifted sideways finishing the week right around where it started, capping off a year that also finished right around where it started. Of course, while the action this week was fairly quiet on low holiday volume, most of this year’s sideways action was done in a much more spectacular fashion as bulls and bears both were trapped on several occasions resulting in explosively volatile moves up and down the charts as the markets figured out the edges of our broad range of consolidation.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see that this year’s action was littered with several bull and bear traps as we probed the key levels of our wide trading range. We can basically divide the year into two periods;
(1)The massive head and shoulders pattern we formed in the first eight months of the year.
(2)The two staged recovery during the last few months as the bulls clawed their way out of the huge hole formed during the breakdown from period one.
Dividing the two phases of this year’s action is the slightly rising neckline of the head and shoulders pattern which supported price action strongly during phase one, but ultimately became a key level of resistance as it became a price ceiling during the second phase of the year. Keep an eye on this trendline as it figures to affect the direction of future price action as we open trading in 2012.
In examining the first period of trading of 2011, one important point to keep in mind is the context under which it took place. We had rallied sharply over the previous two years after a disastrous plunge during the back end of 2008 and there was quite a bit of debate as to whether the markets could break past the highs we formed just prior to the 2008 crash on the back of quantitative easing or if we would drop back down to new lows on a “double dip” move. Each of the key points of the head and shoulders pattern were moments where either the bulls or the bears became convinced that their scenario would win out only to see the market “inexplicably” run away from them. Of course, eventually in late July, the bears finally won out after a strong hammer candle fooled the bulls into thinking that the neckline would indeed hold on the “too obvious and easy” to see head and shoulders pattern.
This spectacular fall led to the second phase of our year’s action in which the previously shell shocked bears now dared to dream of a double dip while the bulls desperately tried to recapture the gains they had made during the previous year’s rally. The markets first attempt at stabilizing after the steep drop we experienced in late July and early August occurred during a volatile two month stretch that featured several swift moves as bulls and bears repeatedly fooled each other as price sharply fluctuated between the extremes of the short term range. In late september, price action finally exited this range to the downside, but ultimately failed as the market instead formed a double bottom as price quickly reversed course and headed higher. The bear trap formed during this false break down can be viewed as the sister move to the bull trap that led to the breakdown from the neckline and amazingly led price back to and through the level from which we had initially broken down from to begin the second phase of the year. Even more amazingly, volatility actually expanded during this tremendous squeeze and even continued for another month as price spectacularly failed at the new price ceiling formed by the neckline from the head and shoulders pattern and threatened to break down back to our lows after several days of repeated distribution with no buyers in sight. However, the bulls eventually stepped in and were able to push the markets back to ground zero to end the year and form a big doji candle on the yearly chart.
Below is a yearly chart of the SPDRs S&P 500 trust etf (SPY) showing the action of the last couple of decades. As we can see, this year’s action formed a doji candle reflecting the indecision that marred most of the year’s trading. This was to be expected after three years of strongly trending action (one down, two up) and is likely to be followed by more indecisive behavior as we are firmly in the middle of a fifteen year range that has now had two major tops and two major bottoms defining it.
The two multi-year tops occurred during the overly exuberant heights of the dot-com era and the real estate boom. The two bottoms occurred during the desperate depths this country experienced shortly after 9-11-01 and after the financial collapse/debacle that led to our most recent recession. These are all MAJOR events and traders should keep in mind that price will likely stay contained within these parameters until there is a proper catalyst to push it through. Of course, part of the reason why trading was so erratic this year is because the threat of major catalysts has become pervasive during the current environment. For instance, the last three years of free money can be construed as the third “good times” era of the last couple of decades and may end up culiminating in another major top if we continue to fall back on quantitative easing. On the other hand, the continued threat of insolvency across the world can ultimately lead to a calamitous drop either to or below this multi-year range and ultimately lead to another major bottom at some point in the next few years.
As we close this year and look towards the next, traders should step back and look at the big picture as they develop their game plan for the coming year(s). Good luck as you enter 2012.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
The Week in Crayons
Although the markets opened the week in an ugly fashion, they quickly reversed course and drifted higher for most of the week. Other than a few moments of weakness, there was almost no selling pressure this week as the bulls roamed freely while the bears sat back and let them have their holiday break. However, any illusions (delusions?) of a “Santa Claus Rally” are just that as we have not moved significantly from a technical perspective for quite some time now. The silver lining to this recent lack of movement is that volatility has calmed down allowing the markets to rest constructively as they digest the explosive move they had after making what looked like disastrous new lows in early October.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see the recent constriction in price action as all of this month’s candles are clearly inside of the pivot high and low we formed from late October to late November. Keep an eye on these two areas as there will be significant implications concerning them once they are breached.
A move above them will likely signal a new rally and lead to a retest of this year’s highs while a move below them would invalidate our bounce from this year’s lows and probably lead to a retest and possible failure of those lows as well. However, in the short term, we are now testing the key 200 day moving average once again as we bounce between several important moving averages. Watch for the rising 20 day moving average to support price action if it stalls here as the bulls attempt to clear the recent highs we formed in early December. If the bulls fail here as we close out the year, watch for 1200 to be the first line of support followed by much stronger support at the 1140 level which forms the key pivot we discussed earler.
Next week’s trading will close out the year, and traders should expect action to remain light and mostly muted as the holiday season winds down. Watch the edges of our range this week as price is not likely to move with any real conviction as many of the big boys are on vacation and not likely to return until the start of the new year.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
Merry Christmas and Happy Holidays from Stockguy22
Wanted to wish all my friends , family & traders a Merry Christmas & Happy Holidays.
I want to thank you for a wonderful 2011 and looking forward to 2012.
All the health and prosperity to you and your family
Stockguy22 & Team
Twitter’s Top 2011 Tweets and Hashtags List
Twitter released the Top 2011 Tweets and Hashtags :
Top Hashtags for 2011 were:
#egypt – due to the middle east uprisings also known as Arab spring – link for Middle East Protests http://sg22.ly/vgR2Xg
#tigerblood - Made famous by @charliesheen who made a record of over 1million Twitter followers in 24 hours ( now up to over 5.4mill) Charlie Sheen was also the top Celebrity who people tweeted about in 2011 . Another famous hashtag from him : #winning
What is Tiger Blood? click here to find out
#McLobster – a rumor that McDonald’s was to roll out a new Lobster sandwhich
#itsFriday – Rebecca Black’s hit YOuTube song - click if you dare & get some earplugs first (over 32 million hits on YouTube )
#japan – during Japanese 8.9-magnitude earthquake & 30 foot waves from the following tsunami click here
#superbowl – no comment here but should be a top tweet & hashtag in 2012 , 2013 etc.
Top tweets of 2011 around the world were of:
- Mubarak’s resignation -some say that Facebook & Twitter (social networking) played a key role in the Arab Spring uprising and we saw how some countries like China will/have blocked these sites to prevent any uprisings.
- Raid on Osama bin Laden – many have forgotten that there was a twitterer @ReallyVirtual (78k followers now) who accidently tweeted the live raid – Was very exciting evening on twitter . I remember being glued to Twitter that night & was same night Silver started to collapse
- Japanese earthquake and Fukushima nuclear disaster - just an awful reminder of the power of mother nature but also shows us the courage of how the survivors are coping and how the world was quick to lend help.
- Shooting of Gabrielle Giffords - click here for story of Tucson shootings – good to hear that she is now doing much better
- Gaddafi’s death - you can call me Ghaddafi or you can call me Ghadafi or.. There are actually 112 ways to spell his name but the dogs & rats (that he so passionately called them in his speeches) finally killed him.
- Swine Flu outbreak - something that we all forgot about since was so long ago.
Full Twitter Tweet/Hashtag 2011 list here broken down by Categories : click here
Video of Top 2011 Tweets & Hashtags : click here
Thought this was interesting — I’ll try to post up a Blog this month on the top stocks of 2011
Regards
Stockguy22
The Week in Crayons
After taking last week off, the bulls came back ready to work this week lifting us well off our recent lows in all of the broad market indices. Once again as has become par for the course, price action changed course immediately and quite violently as we surged upward negating much of our recent fall with one huge day of buying. Our current environment continues to be a field of landmines trapping both bulls and bears alike each time setiment suddenly shifts depending on what news item or rumor happens to come up. However, while price action has been extremely volatile, it has been contained within a reasonably well defined range for the most part. While there are still plenty of mixed signals and the possibility of strong moves in either direction, the likely scenario is one in which we continue to probe the extremities of our trading range as the markets continue to find their proper value.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see that for the most part we have actually been in a pretty well sustained uptrend after bottoming out early August. While we actually formed new lows in early October, this proved to be a false breakdown and price quickly reverted back its rising channel. This move up culminated with a false breakout above this channel as buyers got ahead of themselves and eventually cascaded down over the last couple of weeks as supply finally overwhelmed demand. The downward momentum was finally reversed this week as we formed a critical higher low pivot price around the 1150 area. While this channel isn’t perfect and has had trouble holding price action on several occassions, it does give us a rough picture of the strengthening price action over the last half year or so.
As we approach the close of 2011, too reference points that are likely to become key levels of support and resistance are the recent pivot low and high we just formed at around 1150 and 1290. The more immediate area of concern would be the recent pivot low we just formed. A break below that would place us firmly out of our rising channel as well as invalidating the higher low we formed and would almost certainly lead to a retest of the year’s lows. A break above our recent pivot high around 1290 however could lead to several scenarios depending on the action prior to a breakout. If we were to surge past it early next week, it would likely be part of an unsustainable squeeze higher destined to fail. On the other hand, if price action were to consolidate and give demand a chance to catch up with the overhead supply then the chances of a breakout holding above this area increase tremendously. As long as price remains in between these two reference points, the markets can be viewed as being in a neutral state of range bound behavior.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
This kid is good — Marc Martel singing Queen “Somebody to Love” “Bohemian Rhapsody” – Queen Extravaganza
Queen Estravaganza audition video by Marc Martel
if you didn’t hear this kid yet he is pretty good
Take a break from trading.. if you liked the band Queen listen to this Marc Martel sing “Somebody to Love” for the upcoming Queen Extravaganza live tour show done by Queen drummer Roger Taylor as part of Queen’s 40th Anniversary
also hear him sing : Bohemian Rhapsody
Pretty impressive voice :
Enjoy your weekend,
Stockguy22
Queen
QueenExtravaganza
Queen Estravaganza
Marc Martel
Mark Martel
winner finalist of Queen Extravanganza
singer Marc Martel
Bohemain Rapsody
Bohemian Rapsody
Bohemain Rhapsody
US & Canada Cyber Monday 2011 Deals at Amazon, Walmart, Best Buy, Target, Apple
US & Canada Cyber Monday 2011 Deals at Amazon, Walmart, Best Buy, Target, Apple
Here are the top #CyberMonday 2011 Deals & links at Amazon ($AMZN), Walmart ($WAL) , Best Buy ($BBY), Target ($TGT) Apple ( $AAPL ) & others with stock ticker symbols next to each name
Below are the top stocks that should benefit from #cybermonday
In 2010 Cyber Monday sales were $1 Billion
2011 Cyber Monday Sales are expected to go up to $1.2 Billion
Leading up to #cyberMonday online sales had increased 26% which was higher than the almost 7% increase for stores & shopping malls ( sidenote : #BlackFriday sales in 2011 were approx $11.4 Billion still much larger than online sales )
Best Tips to Grab Cyber Monday deals : click here
- AMAZON ($AMZN) - site says will be running specials all week : click here
- WALMART ($WMT) – free shipping over $45 home products : click here
- BEST BUY ( $BBY) – free $10 gift card with $100 + pick up order : click here
- TARGET ( $TGT ) – Cyber Monday all week long click here
- APPLE ( $AAPL ) – iPAD2 should be on sale check site : click here
- other Cyber Monday deals & brochures : click here
- 20 Pages of Cyber Monday coupons from top Retailers like Macy’s ($M ) AT&T Apple, Old Navy , Dell, Kmart , Gap, etc etc. click here:
- AMAZON ($AMZN) - Kindle $109 – Coffee Grinder 51% off : click here
- WALMART ($WMT) -52 Deals for Cyber Monday on this page : click here
- BEST BUY ( $BBY) – Free shipping anywhere in Canada with any $20+ purchase : click here
- TARGET ( $TGT ) -No Stores in Canada but will be in 2013 click here
- APPLE ( $AAPL ) – iPAD2 should be on sale check site : click here
- CANADIAN TIRE ($CTC.to) : last 3 days promoted lowest yearly pricing to compete with US Black Friday but no Cyber Monday deals ( mostly weekend sales Fri-Sun ) click here
- Future Shop ( $BBY ) owned by Best Buy but 10% off online order for Cyber Monday which is not bad for electronics click here
15% Off Compatible Ink
10% Off All Other Products (excludes OEM’s)
Coupon 123FALL
Expires 11.30.2011
The Week in Crayons
I mentioned last week that the bulls would likely be tested this week as the bears attempt to regain control of this market, and while the bulls can use the light trading / short week excuse to defend themselves, the bottom line is that they failed that test this week as we not only closed red on each session, but saw downward momentum actually increase as we followed through on last week’s breakdown. While we are oversold and due for a bounce, we have now negated much of the feel good rally we had in October and find ourselves back in the middle of the trading morass we resided in for several months this year. While a bounce from our current levels would still be very positive step in leaving behind are summer lows, the recent weakness gives us a strong reminder that we continue to chop around in a broad range consolidation and it appears we will be flying the same holding pattern for a bit longer as we continue to deal with the same regurgitated mess in Europe we have been dealing with all year.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see clearly that we are right smack in the middle of the 1100-1200 mess we were stuck in for several months after breaking down from our yearly highs. While we are still well off the lows we formed around 1080, we are forming new lows on Stochastics creating a bearish divergence hinting that we may have more weakness in store even if we can hold these levels and create an important higher pivot low.
Traders looking for a an oversold bounce should keep this in mind and continue to use the hit and run tactics that have been the only option available to swing traders for most of this year as we are likely to stall out on any bounces into the heavy supply just above our current price action. The 1180 -1200 area will likely be the first area of distribution if we bounce next week and traders should watch the action in this area closely as failure to get above our October breakout will potentially form a bear flag, not a new leg up. If we can reclaim 1200 and emerge from our current range, look for more supply to emerge just above 1215 or so as we begin to encounter several key moving averages. However, if we continue to have trouble finding a bid, we will likely test 1100 in short order which would serve as a critical level of support for the bulls to defend. Traders waiting for the Santa Clause rally should be very careful here and wait for momentum to clearly turn upward before getting sucked into any of the fakeouts that have become all to common this year.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Happy Thanksgiving from Stockguy22 with TurkBaconEpic -5 Birds cooked inside a Pig video
For those of you counting calories over the US holiday , here’s a Thanksgiving Epic meal Time
“The TurkBaconEpic”
Too funny for those that have never seen this video
5 Birds inside a Pig with lots of bacon strips & bacon strips etc.
Chicken , Duck , Quayle, Turkey & Cornish Hen inside a 20 Pound Pig
garnished with Wendy’s Baconators ..WOW Too funny these guys !!
only 79,046 calories & 6,892 grams of FAT — OUCH !!!!
Happy Thanksgiving to all my US Friends :
Enjoy the extended long weekend with Family
Stockguy22
The Week in Crayons
We had another week of mostly sideways action again as upward momentum in the broad markets continues to wane. While we finished off on a weak note, the bigger picture remains neutral as we have mostly traded in the same range for several weeks now. We are now at the bottom of this near term range and a hold above these levels would be a big win for the bulls as we approach the typically bullish holiday season. However, price action has been weakening throughout the recent consolidation and needs to firm up in order for us to resume upwards.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see the falling momentum clearly as this week’s close broke the upward trend we had maintained since breaking out of our late summer range. While the markets have shown impressive strength in holding above the key 1200 area as they digest the late October run, we are now below several key moving averages and on the wrong side of a short term trendline.
With momentum still on the decline as illustrated by both the declining stochastics readings as well as the red Momo Trend Bars, odds are that the bulls will be tested yet again next week as the bears desperately try to regain control and push price action back down to our previous range. If we pull back furthur, watch for the area around 1200 to 1800 to become a likely area for bulls to defend. If we fall and stay below that, it would likely signify a win by the bears and a return to the 1100 to 1180 mess we chopped around in from August to early October. If the bulls can regain control and push price back up, the first level that would need to be retested would be the 200 day moving average at about 1259. This would likely coincide with the top of our recently contracting wedge and would probably serve as a stalling point for the bulls.
As we approach the traditionally bullish holiday season, astute traders should continue to scan for strong setups that have begun to develop during our recent consolidation and patiently wait for momentum to turn back up and take price action with it.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
Despite some rather volatile moves from day to day, this week’s action in the broad markets was still basically sideways as we continue to digest the massive gains we made through out the month of October. While volatility is still somewhat high for “prototypical” consolidation, most of this week’s action was contained within the ranges of our most recent price action on all of the major indexes and is for the most part technically healthy. As I mentioned last week, we were likely to chop around this week as we contended with overhead supply while being buoyed by several layers of support just underneath us. That scenario is likely to continue into the near future as we are still basically in the same situation and probably need another week or two of healthy consolidation in order to try and make our way back to the upper part of our yearly range.
Looking at a chart of the e-mini futures contract for the S&P 500, we can see that while we have mostly gone sideways over the last two weeks, we are still technically in the uptrend that we began in mid-October as we broke from our summer range around the 1200 level. While we are still making higher lows at this point, notice the waning momentum now that we are firmly wedged between most of our important moving averages as we well as facing very strong technical resistance at our recent highs around 1280 which coincide with the neckline of the head and shoulders pattern we formed over the first half of the year. Note the emergence of some yellow and red candles on our Momo Trend Bars indicating a likely end to this particular thrust upwards. Also, stochastics is now firmly moving lower giving us another clue that momentum is slowing down.
Of course, momentum is supposed to slow down after the ridiculous pace we had as we shot up from our year’s lows, so in and of itself it doesn’t necessarily mean we are headed lower, but it does give us a clue that we are likely in need of more consolidation. If we were to have a more substantial pull back, look to the area around our previous breakout around 1200 as a likely level of support. A hold around this level would give the bulls a strongly definable higher pivot low confirming that the recent downtrend is broken. Of course, the market does what it wants to do, not what we want it to do, and if it decides it wants to squeeze higher, traders should not chase as any move above our recent highs is probably suspect and likely to fail and return to our current range [unless there is some substantial news event behind it.]
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Traders and Entrepreneurs should definitely read this to succeed!!!
A great quote for Traders / Entrepreneurs ( & all people in general)
Someone in chatroom shared this today & thought would be great to share with other traders since we sit at our desks so many hours in a day and that’s not always a good thing (healthwise).
As some of you know I’ve had my share of health problems so I do follow many of the things on this list, but recently got diagnosed with some higher cholesterol than normal so have to try and balance trading, business, family and my health a bit better.
Remember its not always about the money & you need a balance in the other parts of your life or you will never be truly successful. I find it very helpful to create goals for each of those categories and try to do something each day that helps me achieve & surpass those goals. Its something i’ve done since I was still in university and its worked great for me. Also very critical that you review those goals & outcomes. I try to review my trades weekly & monthly. I also do a Yearly Recap of my goals and how well I did. My goal into 2012 will definitely include more health related goals.
Hope you find this helpful,
Stockguy22
The Dalai Lama, when asked what surprised him most about humanity, answered “Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present.; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”
The Week In Crayons
After breaking out sharply last week from the cup and handle pattern I mentioned a couple of weeks ago, the markets spent this week consolidating those gains while holding some key levels of support in the process. We have now worked off some of the overbought conditions we had built up while rallying sharply from last month’s lows as we head into the typically bullish holiday season. However, not everything is peachy as the markets also regressed back to their recent paradoxical pattern of volatile consolidation with this week’s action.
I thought I would change up things a little this week and share the type of chart I typically look at when watching the intraday action in the futures and forex markets. Instead of the typical candles you would normally expect to see on a chart, this chart uses the Momo Trend Bars our resident wizard @jstantrades designed for the Ninja Trader platform. These candles do a nice job of showing the momentum of the price action allowing the trader to not get too caught up in the actions of each individual candlestick and instead observe the overall swings of the instrument. In this case, we are looking at the e-mini futures contract for the S&P 500. Looking at this chart we can see that momentum has obviously been bullish for the better part of a month now, but has started to wane as we pulled back this week after hitting some stiff levels of supply.
While we were able to hold the now swiftly rising 20 day moving average, we are now back under the key 200 day moving average as we form a broadening rising wedge. This is typically a bearish pattern and hints that we likely have some more consolidation coming as we come to terms with our new price levels. However, this doesn’t necessarily mean that we are reversing lower, only that the recent move up is having trouble sustaining itself. In fact, we actually have now formed higher highs and higher lows as we work our way out of the ditch we dug a few months ago. Now that price is wedged between many key averages, there is a good probability that it will chop back and forth as it comes to terms with this area. This would actually be a healthy sign as volatility would again quiet down in order for true demand to build up for the next move up into overhead supply. The breakout area from our last range (1200-1210) should serve as the first line of defense as it did earlier this week for the bulls, while last week’s highs around 1290 should serve as the near term resistance. If we lose 1200, 1600 becomes a likely stalling point while 1100-1080 become the critical lines in the sand for the bulls to defend. While this market continues to tax many swing traders, it has recently shown signs of improving, and continued chopping in this area should help many charts begin to set up for nice runs into the year’s close.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
Although this week’s action in the markets was relatively quiet as we mostly drifted sideways, it was actually quite productive as we were able to consolidate the rapid gains we made over the last couple of weeks in a rather benign manner instead of the violent swings up and down that have become typical of our current environment. While we are still facing some stiff overhead supply in all of the major indexes, we have now established some short and intermediate term support as we continue to regain the losses we incurred this summer.
Looking at a chart of the SPDRs S&P 500 etf (SPY), we can see that we closed the week breaking a critical price level as we were finally able to eclipse the area around $123.50. This level was the scene of a tremendous bull trap in early August as we fell sharply lower after forming what appeared to be a strong reversal hammer candle. We encountered this level a second time one month later and once again fell sharply as supply completely overwhelmed the lack of demand at these prices. This time however, price action consolidated just below this level showing that the bulls were finally beginning to assert themselves at this area and were able to push the close above it on Friday afternoon.
Notice the bullish cup and handle pattern we have formed over the last few weeks as well. Significantly, it came after what now appears to be a false breakdown earlier this month giving us a good clue that while we may not be ready to press to new highs we have likely formed a near to intermediate term bottom. The critical 200 day moving average now looms over us and will likely serve as a magnet for price action as bulls and bears eagerly await for a retest of this important indicator. If Friday’s breakout fails and we cannot in fact push past our near term ceiling, we now have several areas of support at which buyers will likely step up. The bottom of the handle we just formed around $120 has held up well over the last week and would likely be the first line of defense for the bulls while the $118 area which lines up with both the 20 and 50 day moving averages likely serving as more significant support. If more bad news out of Europe torpedoes our markets yet again, look for $112 to be the key battleground.
While we are certainly not out of the woods yet as the possibility for bad news coming out of the Eurozone could still potentially derail our markets, we are now entering what has seasonally been a good time to buy equities and appear to have formed the bottom of what I consider to be a broad corrective range. Another week or two of quiet action would go a long ways towards setting up some decent charts and swing traders should start watching for potential chart setups to ease their way back into this market.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
It is often said that the market takes the stairs up and the elevator down. While it is somewhat of a cliché, it is an apt description of typical market behavior as our fear impulses usually overpower our greed in a normal environment. However, in the current environment we have more of a crazy seesaw thing going on as each swift fall is quickly followed by a quick rise as bears and bulls keep jumping on one end or the other as we oscillate between the edges of our range. What is happening is that each side’s fear is fueling the 
other side’s greed causing each oscillation to become somewhat exagerrated as they continue to squeeze each other. This type of action is of course indicative of wildly differing opinions on the value of a given equity and illustrates that we are still not sure of where our markets are supposed to be right now. While we started last week staring into the abyss as contemplated a sub 10,000 dow, we closed this week considerably higher and are now looking at the stars as the Nasdaq composite approaches its yearly highs. While the very strong bounce we’ve had over the last two weeks tells us that we have likely found a near term bottom, the nature of this market’s behavior suggests that we are likely still in a broad corrective range as opposed to getting ready to resume the uptrend we formed in early 2009.
Looking at a chart of SPY, we can see just how precarious things were as we started last week breaking down from a channel and forming new 52 week lows. While we zoomed straight back to the top of the channel in very short order, we are now very extended as we come up to some stiff resistance. Volume has been decreasing as we probed higher this week showing that less buyers are willing to step up as we come into our near term price ceiling. On the positive side, SPY was able to convincingly breach its 50 day moving average convincingly, and is now well above its short term averages as it begins to test the upper levels of our recent range.
These should provide support for price action in the event of a pull back. If they do not hold, the $112 level will become the critical line in the sand that the bulls need to defend in order to show progress in reclaiming control from the bears. If we continue to squeeze higher, another important point of control for this market will be the area around $128. This coincides with the very important 200 day moving average as well as the neckline from the head and shoulders pattern we formed during the first half of this year.
Looking at the bigger picture, this market continues to trap both sides as it reverts violently from its extreme edges and traders should keep this in mind instead of getting caught up in the euphoria or despair that seems to appear out of thin air after every move.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Value Area basics for Market Profile
Someone in the VTF was asking about the Value Area in Market Profile. Here it is.
The Week in Crayons
After briefly flirting with disaster during the early part of the week, the markets rebounded sharply, and ran right back to the levels that have contained most of the price action for the last two months. The action continues to be violent and frothy telling us that participants are still very undecided as to what the proper price for equities is at the current time. While price has been somewhat contained in a channel during the last two months, it has been marred by high volatility and cannot be considered to be healthy consolidation at this point.
Looking at a chart of the average true range of the S&P Spdrs 500 trust series etf (SPY), we can see that volatility has actually increased recently after somewhat quieting down. Looking strictly at the volatility, we have now emerged from a “consolidation” phase into a new “thrust” phase in the markets.
The initial thrust was downwards as as we broke down from our channel and formed new 52 week lows, but the next thrust was decidedly up as we rebounded sharply from that move. The million dollar question of course is, which of those moves was the fakeout? While we can guess, the fact remains that we are in a highly charged market that continues to oscillate in an extreme fashion which is just as likely to race down to its recent lows as it is to charge up towards the top of our recent price action depending on what news comes out of Europe each night. However, traders should take note that the market now has a downward bias and must prove it is ready to move upwards before traders can trust it for anything more than a one to two day scalp. One of the keys I will be looking for to show that the market is getting healthier would be for volatility to die down while we hold the current price levels before attempting to break out to the upper side of this range.
The downward bias to our current environment is evident when we examine the price action of the S&P Spdrs 500 trust series etf (SPY). Note the downward slope of all of its key moving averages. Also note how we have failed sharply each we have approached the 50 day moving average.
Watch how we behave as we contend with both the 50 and the 20 day moving averages into next week as they will both likely exert downward pressure on price action as the bulls attempt to push price through the heavy overhead supply. If the bulls are able to win that battle, then a retest of the $122 area would be the next logical step. If we fall back from here, a significant battle should take place around the $112 area. This will likely be a major tell for our near term direction. If the bulls can hold this area and bounce back up to reclaim some of the short term averages they will have gone a long ways towards regaining control of this market. However, if we lose $112, it would tell us that the bears are in complete control now and we would very likely go on to break our newly formed lows as well.
As I have maintained for several weeks now, this remains a day trader’s market, and continues to be a very difficult environment to swing trade or invest in, and traders should exercise extreme caution and patience until conditions improve.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Correlation between price action and VIX
Some background information for new traders about the VIX. A simple Google search has ‘several’ results for the question: “What is the VIX?”
VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. The VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the next 30-day period, which is then annualized. The VIX Index developed by Prof. Dan Galai and Prof. Menachem Brener from Israel, introduced by them to the CBOE at 1987. 6 years later it was introduced in a paper by Prof. Robert Whaley in 1993 while he was at Duke University. Prof. Whaley is now on faculty at Vanderbilt University. ( http://en.wikipedia.org/wiki/VIX )
The VIX is calculated and disseminated in real-time by the Chicago Board Options Exchange. It is a weighted blend of prices for a range of options on the S&P 500 index. The goal is to estimate the implied volatility of the S&P 500 index over the next 30 days.
So what does it really mean to your trading?
Here is a chart of the correlation between the daily ATR(3) of the /ES and the VIX. The /ES is the e-mini S&P 500 futures, btw. The upper area of the chart shows the VIX overlay on the /ES. At a basic level you should notice the inverse correlation between the market and the VIX. VIX goes up, market goes down. It’s not always the case, but let’s assume the correlation holds for our purposes.
The lower chart is the ATR(3) for the VIX and for the /ES. Again let’s assume that the ATR(3) increases in both the VIX and the /ES with a degree of correlation worth noting.
The next chart shows the /ES on the upper area, just for perspective. The lower shows the price of the VIX with an overlay of the ATR(3) of the /ES. If you haven’t guessed as the VIX increases so does the ATR(3) of the /ES.
The chart should tell you that the markets move a larger average amount each day as the VIX increases. Conversely, the markets move less on average with a lower VIX.
I trade intra-day price action using range bars, tick charts, and a larger time frame to play with the general trend. I noticed my stops were being hit much more during higher levels of the VIX and that the swing highs and lows became much larger. The significantly larger price action swings no longer worked with my standard stop of 2.5 points or less. Trading in general became much harder with an elevated VIX.
The easiest solution was to reduce contract size and wait for trade setups around key support and resistance levels. This reduced my % risk to my trading account while forcing me to refine my trading entries.
Think of the market as an engine and the VIX as the throttle, the more you increase the throttle the more vibrations you get. It is also the case with fear, greed, and price. Increase fear and risk going forward and price acts wildly.
I like to keep things simple at first to formulate a hypothesis then, if it’s warranted, expand upon my hypothesis. The VIX is a lot of calculus and voodoo that’s not important to the average trader. I know that many of the people who do statistical analysis of the VIX and the VIX futures will carry this out in excruciating detail. They will also calculate correlations and try to estimate volatility. The correlation is worth noting. So, if you want to do further research there are many articles and research papers at your finger tips with a simple Google search.
So what should you take away from this? When the VIX is up, try to reduce your risk.
There is one last question to think about: When will I finally get around to telling you the simple secret that will make you the next Warren Buffet?
In the Spotlight — DXY0
Over the last few years, the U.S. Dollar has had a strong inverse relationship with the markets and has been a significant factor in determining the ultimate direction equities have taken. One of the most important engines of the bull market rally we experienced from 2009 until a few months ago, was the devaluation of the U.S. Dollar through the actions of the FED which led to a “risk on” environment in which money flowed to the riskier assets capable of providing investors with healthy returns. However, there is obviously another side to that coin and we have seen its effects over the last few months in our current “risk off” environment as scared money has fled those assets in favor of the safe haven the U.S. Dollar provides.
Looking at a chart of the U.S. Dollar index (DXY0) we can see that the dollar has been on a furious rally since threatening to break down to historic lows in late August. It has now broken above a bearish consolidation pattern it had been forming for several months and is back firmly in a long term channel as well as holding above all of its key moving averages.
It is somewhat extended here, and a pull back would give the markets a chance to catch their collective breath as they try to hold their current levels. However, it appears that the U.S. Dollar has broken its multi-year downtrend and is likely to continue to grow stronger over the next few months. Astute traders should continue to keep a close eye on the dollar through instruments such as the dollar index or the eur/usd forex spot pair as it has and will continue to be a very important indicator of our market’s strength.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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On building a trading system
Here are a few guidelines may help make developing a trading system easier.
1. Know what you want to do. Base your trading on a solid theory or observation, and keep it in focus throughout development and testing. This is called the underlying premise of your program.
2. State your hypothesis or question in its simplest form. The more complex it is, the more difficult it will be to evaluate the answer.
3. Do not assume anything. Many projects fail on basic assumptions that were incorrect.
4. Do the simple things first. Do not combine systems before each element of each system is proven to work independently.
5. Build one step at a time. Go on to the next step only after the previous ones have been tested successfully. If you start with too many complex steps and fail, you will have to simplify to find out what went wrong.
6. Be careful of errors of omission. The most difficult part of research is identifying the components to be selected and tested. Simply because all the questions asked were satisfactorily answered does not mean that all the right questions were asked. The most important may be missing.
7. Do not take shortcuts It is sometimes convenient to use the work of others to speed up the research. Check their work carefully; do not use it if it cannot be verified. Check your spreadsheet calculations manually. Remember that your answer is only as good as its weakest point.
8. Start at the end, define your goal and work backward to find the required input. In this manner, you only work with information relevant to the results otherwise, you might spend a great deal of time on irrelevant items.
The Week in Crayons
After spending nearly two months trying to stabilize from the free fall we had in early August, the markets finally broke out from the rising channel that has contained our price action during that time. Unfortunately for many market participants, it was to the downside. The swift move down was felt by most equity classes as the U.S. Dollar raged to the upside on the heels of this week’s FOMC meeting. Keep an eye on dollar strength as it will continue to put pressure on the markets now that the “free money” trade is apparently off the table.
The sharp mid week reversal is evident if we look at a chart of the SPDRs S&P 500 etf (SPY). I wrote last week that the real battle for the bulls would be in holding the now rising 20 day moving average if we pulled back off the top of our range.
Well, so much for that. We blew right past those levels on Wednesday’s plunge and eventually found support at a very important level of support at $112. While this level has held as support on several occasions now, our lows just above $110 now become a magnet that will likely need to be retested at some point in the near future. This week’s action was undoubtedly negative, and any bounce back to the 20 sma(which is now turning back south) should be looked at with suspiscion.
Looking at the bigger picture as we examine a weekly chart of SPY, we can see that we are beginning to fail at our 200 period moving average as we attempt to hold on to the $112 area. Notice that this area not coincidentally is also the site of our eventual breakout from last years multimonth consolidation following the flash crash in early May. If we fail here, the lows of that range become a critical level of support that the bulls must hold. Note that the measured move from the bear flag we appear to be completing here would indicate a drop right to those same levels.
While many have disputed whether or not our recent consolidation was in fact a bear flag, it had many of the characteristics of one and has certainly had the psychological makeup of one. It is important for technical traders to step back and understand what participants are doing instead of getting hung up on the exact criteria that define a pattern. While many declared that the head and shoulders pattern we completed earlier this year was too “obvious” and too well publicized to work, it obviously ended up being a valid pattern that saw its target move completed in a matter of days. While this may or not be a bear flag, and we may or may not ultimately fail from here, traders should be aware that there is a strong potential for a move southward to the key lows we formed last summer and should remain on the sidelines or with significant cash levels until we stabilize. If we are able to hold at these levels, the $122 area now becomes a significant price ceiling that the bulls need to overcome.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
While we continue to remain mired in the middle of a broad bear flag in the markets, each week that we hold the lows of this channel is a positive step towards building a viable base. We closed green each day this week, and now find ourselves yet again at the upper levels of our recent range. We have multiple levels of overhead supply and are likely to stall out as we begin to probe these resistance areas.
Looking at a chart of the SPDRs S&P 500 trust etf, we can see that we are now approaching a descending 50 day moving average as well as some topping candles we formed just under $124 a couple of weeks ago.
While this area now becomes a critical level for the bulls to overcome, the real battle will be on holding the now rising 20 day moving average in the likely event that we are held in check at these levels. If we blow past these levels, look at $126 to serve as stiff resistance as this was the bottom of the head and shoulders pattern we broke down from in early August. If we pull back and cannot hold our 20 day moving average, look for a retest and probable probe below the bottom of our rising channel.
As I mentioned for the last several weeks, we remain in a poor swing trading environment and traders should continue to take very quick trades as we oscillate between the extremeties of our trading range.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
“Despite the bearish undertone to this week’s close, not much has really changed in the markets over the last few weeks. We continue to probe the boundaries of our bear flaggish pattern as the markets come to terms with our new price neighborhood. While many bulls are understandably frustrated or worried that we stalled out this week, as I mentioned a couple of weeks ago it was highly unlikely that we would have a V shaped recovery back to our highs in a couple of weeks.”
That was the intro to last week’s review, and as befits our markets indecisive behavior, it basically still applies to this week’s action as well. We have yet to make any kind of definitive move out of our current price levels and continue to erratically bounce and drop as we approach our near term boundaries.
Looking at a chart of the SPDR’s S&P 500 etf (SPY), we can clearly see that we are still mired in a rather large bear flag. While we were able to find some support into Friday’s close and stay well above Tuesday’s strong reversal candle, it is very important to note that we failed in holding above the 20 day moving average and fell quite short of last week’s topping candles before we turned back down towards the bottom of our short term channel.
This price action has bearish implications and suggests furthur movement to the downside. Tuesday’s lows just above $114 now become the new line in the sand for bulls to defend. If SPY cannot hold that level, it would likely suggest a retest of our recent lows. On the positive side, the markets have seen some reduction in volatility as we continue to slowly meander upwards in this ascending channel. If the bulls can reclaim the 20 day moving average while seeing a further reduction in volatility, this flag could become a nice launching point for a rally back towards the bottom of our previous range.
We remain in a precarious place in the markets right now and traders should continue to maintain a cautious posture as they wait for a better environment to appear.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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The Week in Crayons
Despite the bearish undertone to this week’s close, not much has really changed in the markets over the last few weeks. We continue to probe the boundaries of our bear flaggish pattern as the markets come to terms with our new price neighborhood. While many bulls are understandably frustrated or worried that we stalled out this week, as I mentioned a couple of weeks ago it was highly unlikely that we would have a V shaped recovery back to our highs in a couple of weeks.
Looking at a chart of the SPDRs S&P 500 etf (SPY), we can see we are still for the most part in what appears to be a bear flag. Notice the topping wicks on Wednesday’s and Thursday’s candles as we came up into resistance at the top of our channel. This led to Friday’s swift reversal and drop back to the middle of our near term range where we eventually found support at the 20 day moving average. While there is certainly more room to the downside, traders shouldn’t get to bent out of shape about this pullback unless we were to breach support at about the $112 area.
One interesting thing to note is that while flag continuation patterns typically occur within periods of reduce volatility and volume, our current retracement has still exhibited some rather volatile candles as well as some spikes in volume that are atypical of your run of the mill continuation pattern. While the jury is obviously still out on the state of our markets, this does lend some credence to the theory that we are currently in the process of forming a base out of this flag pattern. Watch the price area around the 20 day moving average as we move into next week. If we can find support here and work our way back up to the top of our channel, we are likely to seek out a test of the 50 day moving average somewhere around $125. If we cannot hold here, then look for support at the floor of our channel somewhere around $114-$112. We remain in a difficult environment for swing trading, and I would recommend for traders to continue to value capital preservation over growth until we see better conditions.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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Futures Trading Hours for Labor Day Holiday
| Global Futures Treasury Department Hours |
|---|
| Friday, September 2, 2011 |
| Early Cut Off – There will be an early cut off of 7:45 AM PT for checks and wires on Friday, September 2, 2011. |
| Monday, September 5, 2011 |
| Closed – The treasury department will be closed on Monday, September 5, 2011. No checks or wires will be processed. |
| CME Group Electronic Trading |
| Friday, September 2, 2011 |
| Regular Close – CME Group Equity Products, NYMEX, COMEX®, and DME Products on CME Globex, TAS/TAM Products, Livestock, CBOT, KCBT, and MGEX Grains, CBOT Ethanol, Dow Jones UBS ER, Weather, Real Estate, TRAKRS, Dairy, Lumber, Eurozone HICP, KOSPI 200 Futures on CME Globex, Bursa Malaysia Products on CME Globex, EUA Daily Futures
3:15 PM Early Close – CME Interest Rate Products, CBOT Financial Products, CME Group FX Products, GSCI, Wood Pulp, Crude Palm Oil, The Green Exchange Products on CME Globex Please note: Modified grain pre-opening between 2:30 PM – 3:15 PM |
| Sunday, September 4, 2011 |
| Regular Trading Hours – CME Group Equity Products, CME Interest Rate Products, CBOT Financial Products, CME Group FX Products, NYMEX, COMEX®, and DME Products on CME Globex, Real Estate, Eurozone HICP, Wood Pulp, Bursa Malaysia Products on CME Globex, The Green Exchange Products on CME Globex, EUA Daily Futures
Closed – Dairy, Crude Palm Oil, GSCI, Weather, CBOT, KCBT, MGEX Grains, CBOT Ethanol, Dow Jones UBS ER, TRAKRS, Lumber, Livestock |
| Monday, September 5, 2011 |
| Closed – Dow Jones UBS ER, TRAKRS, Lumber, Livestock
Regular Trading Hours - Eurozone HICP, KOSPI 200 Futures on CME Globex, Bursa Malaysia Products on CME Globex Trading Halts (Order Entry, Modification, Cancellation Allowed) 10:30 AM – CME Group Equity Products 11:00 AM- EUA Daily Futures 12:00 Noon – CME Interest Rate Products, CBOT Financial Products, CME Group FX Products, Real Estate, Wood Pulp 12:15 PM – NYMEX, COMEX®, and DME Products on CME Globex, TAS/TAM Products, Real Estate, Wood Pulp, The Green Exchange Products on CME Globex Halted Products Resume Trading 5:00 PM – CME Group Equity Products, CME Interest Rate Products, CME Group FX Products, NYMEX, COMEX®, and DME Products on CME Globex, TAS/TAM Products, Dairy, Crude Palm Oil, GSCI, Weather, The Green Exchange Products on CME Globex, EUA Daily Futures 5:30 PM – CBOT Financial Products 6:00 PM – CBOT, KCBT, and MGEX Grain Products, CBOT Ethanol |
| CME Group: Floor Trading |
| Friday, September 2, 2011 |
| Regular Trading Hours |
| Monday, September 5, 2011 |
| Closed |
| ICE |
| Friday, September 2, 2011 |
| ICE Futures US
All Markets Open Regular Trading Hours – Softs, Open Outcry 4:15 PM ET Early Close – Financial Products, Index Products |
| Monday, September 5, 2011 |
| ICE Futures US
Closed – Softs 11:30 AM ET Early Close – Index Products 1:00 PM ET Early Close – Financial Products ICE Clear Credit Closed ICE Futures Canada All Markets Closed ICE Futures Europe 1:30 PM ET Early Close – Crude and Refined Products |
| KCBT |
| Sunday, September 4, 2011 |
| Closed
Electronic Trading |
| Monday, September 5, 2011 |
| Open
Overnight Trading for September 6 trade date Closed Daytime Trading |
| Eurex |
| Monday, September 5, 2011 |
| Eurex is closed for trading and exercise in Hurricane Futures, Brazilian, Canadian, and U.S. equity derivatives. No cash payment in USD. |
Don’t Miss the Free Interview with Steve Nison “Father of Candlesticks” on Power Trader Radio Aug 31st , 2011 7pmEST-9pmEST (and Free Ebook)
Don’t Miss the Free Interview with Steve Nison “Father of Candlesticks” on Power Trader Radio Aug 31st , 2011 at 7pmEST-9pmEST (Also get 2 Free Bonuses & chance for a $2,495 Seminar with Steve)
Here is the Link to Power Trader Radio for Wednesday night : http://sg22.ly/pUtEkW (if you are reading this after Aug 31st , 2011 show will be archived )
Steve Nison is uniquely qualified to help you fully exploit the opportunities candlestick charts present to today’s markets. As a renowned author and speaker, he has the distinction of introducing candlestick charts to the Western world.
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Nison will be revealing some the trading strategies he has taught to some of the world’s top institutional trading firms. He will also reveal his all-time most important trading rule.
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1) Receive handouts of the slides and markets Steve will be discussing during the interview. ($79 value)
2) Enter a raffle to win a free seat (attend live or via Simulcast) for Steve’s new Candlestick Secrets for Profiting in Options seminar for Sept.24/25, 2011. ( $2,495 value)
3) Copy of Steve’s popular trading guide, “The 4 Common & Costly Mistakes Almost Every Trader Makes with Candle Charts … And How To Correct Them Intantly ( $99 value)
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Join me & listen to this excellent live interview Wed. August 31st, 2011 at 7pm EST with Steve Nison:
Stockguy22
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Wednesday Trading Summary – $4980 in profits roughly
Overall I had a good day for trading. A nice back and forth between bulls and bears gave us a wide first hour of trading.
I took a short pre-market and profits at the early AM swing highs.
We were able to grab the momentum off the open for a nice long for a few points.
The one mistake I did was trying to buy the breakout over yesterdays close, trying to anticipate a breakout isn’t ever a good plan. I knew we might try to support near 778 again (prev swing low here I covered pre-market), so I added on the way down at each reversal.
Ended up riding it back up into resistance at 684, this time it broke. Figures.
Caught 2 nice shorts before 11 am and netted a nice profit for the day.
One of the members in our chat asked if /ES was a good short up near 1175. Indeed it was. Nice parabolic buy rolled all the way back to the lows. We found support again near 678-680, and ended the day making new intra-day highs.
I missed some of the afternoon trades managing a GLD options position. Opportunity cost wise I could have made more on trading /TF, but was good to take a break for a bit.
Charts and summary attached. Very nice trading opportunities. These are 3 contract lots.
Tuesday Trading Summary
I was on the wrong side of the market today, but sticking with it and trading the position let me come out with a win.
I would have been much easier to simply buy and hold. My initial long was fast, and I tried to trade the numbers @ 10am. Instead of waiting for the market to show me direction, I shorted the no great econ data. Wrong choice.
I had a stop at the overnight highs and planned to add right up to them, around 665-666.
I added to the short on every swing high, not a bad plan. I had a chance to get out with a profit on the dip at 10am, but got greedy. It gave me another chance when we found resistance at the prev swing high and initial balance high.
I didn’t take the long after 11:30 AM and I have no good reason why. Missed a lot of profit.
I grabbed a short when started to roll over just after lunch. A good trade, but failed to really after that because I got myself worked up from the morning being ‘short in the hole’.
Tomorrow is a new day. Let’s get on with it.
How do you find a stock like $PANL that gapped up today early? Aug 23, 2011
I’ve seen moves like $PANL ahead of news and or buyouts before:
As much as you want to think there is a level playing field for traders , there isn’t sometimes:
1) you get insiders that share information (oops thought they never do)
2) Lawyers / Accountants that share information
3) Analysts that get tipped off on deals like this
4) Upgrades/Downgrades are known ahead of time ( is that info shared?)
5) SEC who is to regulate this type of trading doesn’t have enough man power to go after all them
6) You could complain & say “Geez I don’t know any insiders , how can I get in on these big gaps”
Not Much you can do about the information being shared but there are things you can do as a trader
Rather than get upset when you miss a trade like $PANL here’s some tips that have helped me:
1) I use to scan for unusual trading volume – May do so again since companies have so much cash on hand and we may see more partnership deals and/or do buyouts on these discounted stock prices.
PANL had unusual volume yesterday Aug 22nd , 2011 over 4.94 million shares traded hands ( usual volume is 1.25 million)
Block Trades, insider buying are also a good source of info that you can easily get through most online brokers & or Yahoo Finance.
2) You can see how well $PANL held its gains yesterday. It also broke thru the 20day sma strongly on a bullish engulfing candle yesterday – Usually a good sign the run up continues higher ( next key breakout would have been the 200day sma which it gapped right thru today)
3) I would also look at PANL competitors as sympathy movers and/or other potential companies that competitors of Samsung like $IBM $HPQ $DELL $CSCO will partner up with – These take a bit more work but here are some examples today: $INVE $RDCM $MITK $AUO $INVE $RDCM $MITK $AUO $ZBRA $SYNA $EFII are all up today — INVE is up the most on this list over 24%
PANL is in the Computer Peripherals sector so easy to find competitors here on Yahoo Finance: http://sg22.ly/qBEz3T
4) I also use key levels for upside targets on those stocks and/or a stock that you catch like PANL a head of time . So the 50% retrace from the April highs to the Aug lows takes us right to the $43.15 area – We went just over that this morning & now retraced back to low $41′s. You can also look at these types of gaps as good intraday plays but keep a tight stop in case you start to close part of that gap. A bit more risky play but using key Fibonacci retracements and trends is something that I’ve also found helpful.
5) When I caught that nice $DNDN trade in 2009 for over $100k overnight http://sg22.ly/qT5HXi (I only had an avg size position for my account size ) but what kept me in the trade was the unusual volume I saw the day I bought it. A bit of luck but also a bit of intuition from trading I had seen happen in the past.
So stop getting upset about stuff you can’t control like insider buying or tip offs – Find out what you can do next time to try and catch a move like PANL before it happens.
Here’s a chart below on PANL
Summary of Monday trades …
Just some scalps today – trading a small account to see if I can turn another 25k into 1000% in a year. All shorts.
Had I followed my system gains would be larger, but that doesn’t work in all markets. You don’t shoot for home runs, you shoot for consistency of returns.
QE3-Is it Friday yet?
This coming Friday, August 26th, Fed Chairman Bernanke will speak after he wraps up the annual Jackson Hole Conference. The question for most traders and proactive investors is, will there be another round of Quantitative Easing-QE3.
The way the 10 and 30 year treasury futures along with the TLT (for the equity players) have been rallying the past month, it seems that it is already pricing this in. In fact, I would argue that the rally in the longer end of the curve of the treasury market is already QE3.
One can argue that the demand for US treasuries can be partly attributed to weaker than expected growth in GDP as well as investors seeking the safety and liquidity of US the bond market versus the riskier equities market. Afterall, it came straight from the Fed–” The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased.”
So what does this mean for us? Well for starters, those who have mortgages north of 5.25% who are eligible and still haven’t, it’s time to refinance. A decrease of to 4.25% on a $300,000 mortgage adds about $185/month to the budget. Assuming there are 28 years left on the mortgage, this comes out to about $62,000 in savings. Two things are accomplished: 1) realized savings and 2) the idea of having more money to spend elsewhere. The latter is what I believe what the Fed is gunning for here.
Why? Well, the chart below will show you. It’s an M2 velocity chart. I don’t want to complicate it with long winded economic explanations but basically it shows how much money is changing hands….meaning how much money is not being hoarded to pay off debt or being kept in savings accounts. Low readings show that money is not being transferred from one party to another eg no economic transaction is taking place. Without this, economic growth derived from the private sector will be sluggish and thus no sustainable job growth can occur. Look at how this indicator dropped in 2008-people thought the end of the world was coming, hoarded cash and velocity of money collapsed. The indicator came up slightly from 2009 to mid 2010 but has since been trending down. What does this imply? Households are either hoarding cash or further deleveraging (paying down debt).
The rumors for QE3 is that it will take the form of the Fed buying long dated treasuries. If this is the case, it will push yields further down. Investors who got scared away from the equity markets might have no choice but to get back in after a big sell off especially if the reward of parking one’s money into long dated treasuries isn’t as appealing.
The questions now become
1) Will more money for households translate to actual spending money or will it find its way into people’s savings accounts and/or credit card payments to reduce debt. While one can argue that a good indicator for this are retail sales numbers, I would say consumer sentiment index as a better indicator because retail sales is backward looking while consumer sentiment is forward looking.
2) With yields on long term treasuries further decreasing, will investors continue to find parking their money in safer US bonds more appealing versus the riskier equities market. Basically, this boils down to whether investors are more concerned about capital preservation or capital appreciation.
Last year, with the announcement of QE2, the stock market across rose. Will QE3 happen? My guess is some type of QE will happen. General elections are coming up AND the administration’s hands are tied when it comes to providing more stimulus. There is enormous pressure to give the economy a boost and looks like it won’t be coming in the form of fiscal stimulus.
If QE3 is announced on Friday, we at the stockguy22.com chatroom will be discussing trade ideas off of it.
Questions or comments? You can find me in the chatroom username jgwilson929 or @jdub929 on twitter.
The opinions expressed above are my own and do not reflect the opinions of stockguy22.com or its affiliates.
Economic Calendar for August 21-27 2011
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The Week in Crayons
A poor finish this week erased most of the bounce the bulls were able to manage from last week’s lows and has brought the markets back to the brink of another breakdown as we sit just above those critical levels that held us. While the weak action is certainly not positive, it should have been expected as it is quite unreasonable to think that we were going to “V” bounce right back to the top of our yearly range after such a drastic fall from the top. The lows held for now, and we are basically in no man’s land as the markets begin to assimilate themselves to their new price neighborhood. Several classic fear indicators such as the VIX, bonds and gold have soared this week and indicate that the potential for lower prices is still quite strong, so traders looking to trade to the long side should play it cautiously for now and wait to see if we can hold these lows through the next couple of weeks. Those looking to short this market either just missed their trade or are now booking profits and waiting for better risk reward setups to appear.
Looking at a chart of the SPDRs S&P 500 trust etf (SPY), we can see that we are either in the midst of forming a wide range bear flag, or have just broken down from a narrower rising flag and getting ready to break to new lows. Notice the rising volume on the drop as opposed to the rather light volume as we drifted higher.
The $112 price area now becomes a critical level of support, and if we lose this level, we are likely to retest $110 and probably form new lows in short order. Those looking for higher prices need to see us hold these levels and close the gap we formed on Thursday’s action. One small silver lining for the bulls is Friday’s seemingly negative action. While at first glance it appears to be a bearish candle like a gravestone doji, trader’s should keep in mind that context is very important to candlestick analysis. In this particular case, a gravestone doji or shooting star is formed at the end of an uptrend and hints that the bulls are losing control of the current market. However, in a downtrend such as the one we are currently experiencing in the intermediate time frame, this inverted candle is actually a hint that bulls are starting to push action higher even if they weren’t able to hold it. Of course, without confirmation it means nothing, but those hoping for a bounce should keep an eye on the coming price action to see if we do indeed get some support here. The healthiest behavior for the markets right now would be to continue to back fill these levels as volatility decreases. Even if the bulls cannot probe much higher from here, it would be a decent victory if they can stall out the current flag and turn it into a base.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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$TF_F inside my mind from 10:30 am until close
This isn’t everything that goes into my trade decisions but its a good portion. I also look at how the market is trading, so buyers seem weak. Are the trades mostly firing off on the bid or the ask? What does jul0625 think ? (had to throw that in there b/c he made a great call near 1150 to short today)
Here is my range bar chart for TF, with a 5 min as well. I have 4 screens, 1 screen is a 6R TF, one screen is a grid with 5 min charts, and one screen is a grid with 15 min charts. The final screen is for looking at women stockguy22.com chat and twitter.
So you should be aware that I am looking at ES, TF, NQ, 6E, GC, ZB, and CL on 15 min charts. If you aren’t sure why I do this or you don’t know how these all interact will each other, that sounds like a good topic for you to use http://google.com.
Check out the chart for my thinking. Blame public education for my bad grammar.
$TF_F support at prev swing lows – What we gonna do now?
So far a pretty normal options expiration day, big action in the AM and stagnation in the afternoon. For the most part the market appears weak; will see what the close brings.
$TF_F bottoming wicks and a fib level bounce – op-ex then what? [charts]
Intraday chart – no real buyers to speak of and higher volume – not a good sign considering most of the bounce was on low volume. We couldn’t get back above the open and after a short lived rally, everyone agreed that value is lower.
120 min chart, fib ext level held with some pretty big wicks on the candles. Price probed lower and was quickly rejected near 650 area, which is not surprising considering options expire tomorrow and that typically limits the range.
There is going to be one of two possibilities here, we just made a higher low or we are going to test the previous lows near 620.
I’m long some IWM and SPY and selling covered calls; high premium + time decay = yummy. The indices will always go up eventually, so this is a good income strategy. I am also long XIV, VIX reversion play as a higher risk in case we rally, thanks to the dedicated guys in the chat.
Congratulations are in order to several members of our chat for getting long some SPY puts and selling them for 300-1000% profit, not bad for an overnight play.
For me it was a good day, I got stopped out on one short, but ended the day up nicely. I will post the summary below.
Someone asked what do the people with a long bias in their trading plan do in times like this. My response, as an intra-day trader, was to say that having a bias should not be part of a trading plan. But if you are still long and in the hole, you really have two choices, you can sell calls, or you can wait for a bottom.
I’m not a fan of buying puts in this environment, the premiums are high and the move is getting long in the tooth. Your opportunity to buy puts was when the market made a triple top last month and volatility was low, or even the first day after the downgrade by S&P.
If you are a deer in the headlights, its too late, make sure you are in decent companies and look into options strategies to sell calls against your stock.
EOD Summary
$GC_F $ZB_F $ZB_F Flight to safety in a bubble … [CHARTS]
Shiny metal, 30 year treasuries, and 10 year treasuries all on a rocket as investors find safety.
$TF_F Overnight Fade on New Global Recession Fears [CHART]
Gap fill resistance, and now potentially that 700 as well. Fib ext to the downside added, interesting how they line up at volume composite levels.
$TF_F Range bound or rolling over – small caps are exciting
Can we hold prev lows or are we destined to test below. Support 670 then 650. Resistance 710-715.
As I upload this chart the /TF is testing that lower range and making new lows….
$TF_F indecision on Europe woes
Bias is bullish until we break Friday’s lows near the 23.6% retrace. Lower volume is worry some, along with momentum on the daily chart.
Easier to see the bullishness of the bounce on a 30 min chart. It will be important if the 690-700 level can truly build a base and support on price and volume. If we are unable to hold on either price or news then a retest of lows is inevitable.
The Jademaster
The Jademaster
One cold winter morning a young man walks five miles through the
snow. He knocks on the Jademaster’s door.
The Jademaster answers with a broom in his hand.
“Yes?”
“I want to learn about Jade.”
“Very well then, come in out of the cold.”
They sit by the fire sipping hot green tea. The Jademaster presses a green stone deeply into the young
man’s hand and begins to talk about tree frogs. After a few minutes, the young man interrupts.
“Excuse me, I am here to leam about Jade, not tree frogs.”
The Jademaster takes the stone and tells the young man to go home and return in a week. The following
week the young man returns. The Jademaster presses another green stone into the young man’s hand and
continues the story. Again, the young man interrupts. Again, the Jade-master sends him home. Weeks pass.
The young man interrupts less and less. The young man also learns to brew the hot green tea, clean up the
kitchen and sweep the floors. Spring comes.
One day, the young man observes, “The stone I hold is not genuine Jade.”
I lean back in my chair, savoring the story. My student interrupts.
“OK. OK. That’s a great story. I don’t see what it has to do with making money. I come to you to find out
about the markets. I want to learn about the bulls and the bears, commodities, stocks, bonds, calls and
options. I want to make big money. You tell me a fable about Jade. What is this? You …”
“That’s all for now. Leave those price charts on the table. Come back next week.”
Months pass. My student interrupts less and less as I continue the story of The Trader’s Window.
-from The Trader’s Window,
ED SEYKOTA
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Help you help yourself become a better trader
In my efforts to become a better and more consistent trader, I read a lot of books on trading, psychology, and how to build trading systems.
For the last 6 months or so, I have been reading books on market profile and the auction process. I started with the recommended reads:
Steidlmayer on Markets by J. Peter Steidlmayer
Markets in Profile by James F. Dalton
Mind Over Markets by James F. Dalton
If you strip away the technical aspect of the above materials on the subject, they all focus on the trader really knowing his market. How the players in the market influence trading, how the auction process specifically relates to the psychology of buyers and sellers, and what you can do as trader to prepare yourself to take advantage of opportunities in the market are all important factors in success.
I recommend EVERY trader read them even if you have no interest in trading market profile.
What follows are some excerpts from Mind Over Markets first few chapters:
Market Understanding + (Self Understanding x Strategy) = Results
I can’t stress this enough. Too many people think that trading success comes from a system, when in reality it is but one part of having success. Think about this carefully. Do you understand what you are trading? Do you have control of yourself (emotions,bias, ect) when you are trading? Are you even confident in your strategy or are you following someone else’s strategy because it works for them?
Many perceive futures trading to be a glamorous, high-profit venture for those with the nerve to trade and that, through the purchase of mechanical systems and computer software, you can bypass the time and dedication it takes to succeed in other professions.
Futures trading is not a glamorous or profitable experience for most of the people who attempt to trade. Futures trading is a profession, and it takes as much time and dedication to succeed as any other profession. You will start as a beginner, learning the objective basks about the profile, then proceed through the stages towards the ultimate goal of any professional in any trade—becoming an expert.
Can you confidently say you have put in the time diligently and honestly required to be considered more than a beginner? Would you let someone who bought a $99 e-book on heart surgery operate on you? Seems like that would be suicide. So I guess that means blindly following some system about trading is suicide for your money.
Most people do not want to know the purpose of the market. They do not want to have to think rationally and objectively about the bigger picture. Most market participants, in fact most people in general, would rather be given a set of rules to blindly follow than to have to use personal insight and innovative thought. Again, the majority of the people who trade futures do not make money.
The above goes back to having all the parts that will make you successful. In the chat/teamspeak this week I had a discussion with alexpmorris (http://yourika.com) about my colored bars indicator. It simply colors the candles on my chart with regard to the momentum of the trend. He asked me about taking entries and how I manage targets and stops. We went back and forth about targets and went over a few charts of the /YM.
He was using a 5 range bar on the /YM. While it worked, it appeared that the 5R was not optimal as there were a lot of fake outs. This lead to a discussion about what I consider ‘tuning’ that charts and setting to adjust for the market vibration. So I ask you, do you think he understands the system?
We also talked about what to do if you have a 30 tick target with a 30 tick stop and it only goes 29 ticks in your favor. This became a heated debate because I try my best to never let a trade run back against me. While my stop is not a trailing stop in the mechanical sense and is more discretionary, I asked why he would ever sit and watch a trade come all the way back. You may be reading this and thinking its common sense, but I will tell you now there are people that will let a trade walk all the way back to hit their stop.
Is it because their system doesn’t have a trailing stop? Maybe. Is it because they don’t fully understand their system and the market they are trading? Maybe. More likely it is because they are following rules that they don’t own, meaning they are following something without thinking or understanding even some of the basics of the trading style they are using.
Just because you have a race car doesn’t mean you will win ‘The Cup’. If I gave you the same tools as Michelangelo could you paint the Sistine Chapel ceiling with the same skill? Doubtful, if not impossible.
Failure to recognize and accept that one is in a Trend day is one of the most costly mistakes a trader can make. Several days of trading profits can be lost in one trading session if you are positioned against the trend.
Nothing really needs to be said here other than ‘don’t fight the trend’. Recognizing trend days as they develop is a skill that I have yet to master. Every good system should have a way to recognize a trend day. I use the GMMA ribbon to look at trend strength and the pattern of swing highs and swing lows. Most of the time the trend is apparent, but my short time frame for trading influences my bias.
Trading logic is largely a product of experience, but it is more than just careful observation and practice; it is an understanding of why the market behaves the way it does. This understanding is best gained over time and through a conscious effort to understand the forces behind market movement.
Why does something trade like it does? It is because of the high frequency traders? Is it because of news? Is it because its the hot thing for the day? Do the traders in the pits influence it? Does it even have a pit? Is it a derivative of something else (ie IWM to the RUT, SPY to the ES to the SPU)?
If you would like to discuss things further after you have read the books I mentioned, please join us in the VTF chat and teamspeak.
If you haven’t read the above, or even taken the time to read the first few chapters, don’t waste your time or mine. I have very limited tolerance for those who don’t make the effort to help themselves, mainly because I want to take your money in the market.
EDIT: From my friend http://twitter.com/tbg4321
Your post for new traders was very well written & so true. I would add tho that to follow a strategy of a successful trader in paper could help the trader find out if that strategy is a basis for their own.
The Week in Crayons
After a continued surge lower during the early part of the week, the market finally found some support as buyers started to cautiously step in at levels that hadn’t been significant since the months following last year’s flash crash. The million dollar question now is, are we pausing before a continued fall, or did we find another multimonth bottom here? The great thing about trading is, that we don’t have to guess, we can just wait and let the market show us what it will do.
Looking at a chart of the SPDRs S&P 500 trust etf (SPY), we can see what appears to be a rather wide bear flag forming at our current levels.
While the protypical flag formation is usually narrower, I would not necessarily discount this developing pattern just yet as it seems our current markets prefer to go big or go home. As I mentioned last week, look for volatility to begin to contract as we come to terms with our new price “neighborhood”. A quiet retracement into the middle of this week’s range would be constructive for the bulls, but if we print some fat red candles down to $112 next week, then look for a probe lower as the bears continue to test the dip buyers mettle.
A key signal that we have formed a productive bottom here would be a break AND HOLD above about $119-$120 on SPY. As we can see on a 15 minute chart, this was the level we ended last week at, and becomes a key gap area the bulls need to reclaim.
Watch this level into next week as it was the ceiling for the market this week and could become a key floor for price action if the bulls can get above it next week. If we drift lower, $115 should offer decent support. Another key level of support to watch into next week is the ascending trenline marking the higher pivot lows.
This continues to be a difficult period for swing trading, and my advice is to back off unless you are taking very quick (or day) trades, or are a position trader that likes the current levels of support on a particular equity.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
Bear Food and a Top Down Approach
I don’t think I stress the importance of looking at multiple time frames in a top down approach enough. When I am trading I always have 15 min charts of ES, TF, NQ, and YM up and running. It helps you keep perspective of the direction as well as support and resistance. The volatility over the last week has given many opportunities for some great trades.
2 days ago the world was ending, double dip recession, and the zombie apocalypse was not far off. This evening after quite an intra-day reversal to end green, I am getting emails telling me that this is the time to buy stocks and we have hit a bottom. As one trader in our chat brought up – markets don’t just bottom, they double bottom or more. On the same token markets don’t just top, they double top or more. Parabolic tops are their own topics of discussion.
I thought it would be a benefit to everyone reading this to start with the daily on my favorite instrument and work down through a basic technical analysis.
TF Daily
The daily chart made a nice bottoming candle after breaking the prev low of the prior day. But was unable to get above the prev high. If you look closely, we stopped at the prev low of the last bounce candle. Seems like this 700 price area is going to be an area of contention, what was once support is now resistance. GMMA Ribbon looks extended as well, so a bounce seemed in order.
TF 240 Min (4 HOUR)
This chart shows the are of contention around 700 much clearer than the Daily chart. You can also see levels around 650 on the low side and 720, 770, and 800 on the high side. I also drew a trend line for the drop and as you can see we were pretty extended, so a bounce was inevitable. So it seems we might have some trendline resistance around the 700 area. Mean reversion folks are cheering.
It’s worth noting that the current high to low (if it holds) fibonacci retracements line up with those areas we talked about in our analysis above.
Full disclosure: I am long SPY IWM and have been adding at key levels on the way down and selling DEC covered calls with strikes above my entries. My way of shorting the VIX. 
TF 30 min
Working our way down the line to the 30 min chart the reversal is much more obvious as are the intra-day levels. The 30 min chart shows and interesting resistance area around that 700 level, the gap from Sunday. Trend line resistance still @ 700. You could draw a more recent secondary trend line through 739 and angled down, giving us some support near term around 680.
The chart also shows a pattern of higher lows, from 623 to 636, and if we fall back to 680 and support.
TF 15 Min
Now we are getting down to the smaller time frames, the 15 min chart shows a very similar patter to the 30 min. You can also see some support in the 640 area, we will be liberal on the dip because of the release of FOMC minutes. We can also see a clear break of the 680 area and resistance around 700. Zoomed in like this you can also see that the gap fill could go as far as 714, notice the sideways action of the previous days in that area.
TF 5 Min
Finally a 5 min chart, by now the important levels should be pretty evident to you. If you noticed, the smaller the time frame the more bullish we look. This is the importance of starting at the long term and working to the short term. The long term is still in a down trend, but is extended and has some overhead resistance. The short term time frames have clearly reversed and overcome near term resistance. The 680 level is now support and should act as such on any technical retrace.
I drew several trend lines, the most important is the down trend line at the breakout over 665. If you were short as soon as we broke over that it was time to get long or stop out. You can also look back and see that the sub 700 area was going to be resistance because of all the previous sideways action. And you can also see that if we continue to rally the real area of sideways action is around 720-730.
Food for Thought
Just too keep some perspective, because as Mark Twain said “History doesn’t repeat itself, but it does rhyme.” Compare the 2009 financial crisis with the current debt crisis. The swing drop was just over 3000 ticks on /TF, the current correct is just over 2000 ticks. Is this correction almost over ? History would suggest there is some down to sideways action coming, but there will also be up days.
The point I am trying to make is that as a trader you should stay nimble. The market will surprise you when you least expect it.
2010-2011 Market Crash / Correction
2008-2009 Market Crash / Correction
How much is this tweet worth to traders the past week?
How much is this tweet worth for traders the past week?
If you had read the tweet below on July 14th would you have been lighter, taken some positions off or held off on any excessive buys into August?
One of the many 3,100 + tweets our premium members received since last November both Gold & Diamond members get them all in real time ( along with every chart I analyze or stocks I buy/sell)
I still added some stocks after this but not to the aggressive point that I was adding before. I can’t even tell you right now what its saved me but since we were coming off a resistance point in the market & into an uncertain event I wanted the premium members to be more cautious (i mentioned it often in the chatroom or if you came to any of the many free webinars we have)
If the tweet above was worth more than $2 per day than had you been a premium member even unloading 1 or 2 stocks or lightening up would have save you that money many times over.
I hate to over promote our group & you won’t see me do that on twitter but I believe we have one of the best sites for serious traders on the internet. We’ve done well in the good markets, protected our money now , & will do well once the market bottoms out ( i believe it will & i’ll be here with the other members to do well again).
Hate to see people panicking now that market corrected when with some simple techniques on Money Management, Risk Reward, Hedging & just simple logic they could have saved many $1,000′s of dollars prior to this. Take advantage of the Free Webinars on the site , try the premium membership since we have a team of traders ( not just me) that are also trying to beat this market every day.
You have to take it serious to succeed at trading, biz or life in general. I find those that don’t take the time to learn, or want it handed to them , or try to cut all the corners will not get the results as those who are constantly learning, helping others,asking questions & following Rules.
We had traders in our chat the past week hit all time high profits for their accounts in one or two days. Something all 3 had told me they never thought would be possible when they first learned to trade. Why? since they had practiced and learned & took advantage of the market downturn. ( all the hard work paid off for these 3 traders ). They all made more then me the past week & I could not be happier for them. I told them i’d catch up with them once we bottom & come back up. One trader last month increased their account over 70% in July with options strategies & the best play they had was one I went over & missed myself ( so happy that they got a big piece of it but understood my strategy fully) . Although that person has another bad habits that we are trying to get them to break ..lol
I know I’ll post this paragraph & maybe a few people will actually take action… A book I read almost every year is ”Think & Grow Rich ” by Napolean Hill -Was given to me one Christmas by one of my mentors in life. I thought the title sounded stupid but the person had done well in business so I opened it up & read it. Its had such a great impact on my business success, trading success and life in general. Pick up this book its an expensive way to get started. Then maybe some of you can understand some of the bigger concepts that you can apply to all parts of your life not just trading. Then look to see if you have that Passion, perseverance, surrounding yourself with the right people, faith, a plan, etc. etc. All stuff from this classic book that all motivators have taken info from. All successful people in that book had the same similar characteristics and qualities. When I talk to some traders I can already tell if they have many of those qualities & if they don’t i try to guide them the right way. Read this book you’ll know what I mean. I’ve read it a different success and down points in my life & always got something new from it.
If you want to join & be part of our team:
I had broken up the memberships for 2 types of traders
1) Full Time & More active traders (Diamond Membership)
2) Part Time & Traders that work Full time (Gold Memberships)
Membership signup is here : http://stockguy22.com/members/signup.php
If you want it cheaper then we have options for 6 & 12 month memberships but you will never get the lower rates that original members got since they took the big risk initially to join up with our group & since many did not quit I know we are doing a great job. If you want to know the longer term plan payments then just email admin here :
The costs are ridiculously low for the information we provide each day /week an month- I’ve also done Free Mentoring to premium members that have asked for it. I don’t think you’d find any site on the internet that cares as much for the success of its members. We don’t cut corners & charge for every little thing. As we get bigger be aware we won’t offer Free webinars to the extent we do now — So take advantage while you can. I know we can easily do those webinar & sell them in DVD packages. We’ve kept it cheap for a reason but guess people would rather pay for $299 or more for future webinars.
If you can’t afford to join then send us and email , barter your time or do something that you think can help our site & we’ll gladly give you a free membership. I’ve found if I just give a free membership it won’t mean as much but if someone gives something back in return there is more value to it for them. By they way ,we don’t want your junk from eBay though. If your good at writing articles then maybe you can help add more content to our site. Are you good at site layouts, Are you good at helping setup future webinars or answer questions for new traders? If you are creative then even a paid membership site should not stop someone that is so hungry for success that they can taste it. That’s the type of people I want & have attracted to the group anyway.
Its just a shame that traders want to make serious money but they either don’t care or don’t want to learn the Rules to Trading that can make them last at this long term. They cut so many corners to try to get to the eventual goal but fail in the process many more times. Trading is not easy but its is easier when you surround yourself with like minded and smarter people. Most of the time you will never get that opportunity in life. I’ve been fortunate to have great mentors so I try to give back as much as I can.
I’m just rambling a bit but I hate to see that traders will wipe out in this market & it was something that could have been avoided.
Stockguy22
Flash Crash Black Monday action …
Today’s Bullish Trading
Despite the high levels of volatility and the substantial market losses suffered in August, some individual names continue to see bullish order flow – as investors take positions in options rather than shares of specific beaten-down companies. Dendreon (DNDN), for example, lost $2.19 to $10.37 today and has tumbled 71 percent since earnings were reported last Wednesday. Yet, sentiment in the Seattle, WA biotech seemed decidedly bullish today as about 28,000 calls and 6,200 puts traded in the name. The top trades of the day were part of a spread, in which the strategist apparently bought 2,900 Sep 12 calls at $1.18 and sold 2,900 Sep 18 calls at 23 cents. They paid a 95-cent debit of the spread and are probably using the position to play a bounce in the stock. That is, instead of buying shares, they’re locking in the right to buy or “call” the stock at $12 through the September expiration. They could have it called away at $18 (the higher strike) if shares rally beyond that level through September expiration.
Bullish trading was also seen in Weatherford (WFT), Virgin Media (VMED), and Human Genome Sciences (HGSI).
Today’s Bearish Trading
Bank of America (BAC) saw a surge of options activity today. Shares sank $1.66 to $6.51 in volatile trading after an analyst suggested the bank might need to raise capital. The bank was out with a statement today saying that it has more than enough capital. Yet, given the volatility in the financial markets lately, BAC shares were aggressively sold today and options volume hit more than 3X the average daily for the bank. An impressive 662,000 calls and 969,000 puts traded in BofA Monday. August 10 puts, which are now 34.9 percent in-the-money, were the most actives. 74,530 traded. Jan13 12.5 calls, Jan 5 puts, and Jan13 20 calls were very busy as well. Players are jockeying for position in the options in anticipation of the next move in the bank. Consequently, implied volatility in BAC options surged 69 percent to 145.
Bearish flow also surfaced in Research In Motion (RIMM), Quicksilver (KWK), and Masco (MAS).
Index Recap
CBOE Volatility Index (.VIX) added 16 points to close at session highs of 48. The volatility index made a run higher early and then the rally gained additional momentum in the late-afternoon. The market’s “fear gauge” is now at its best levels since May 21, 2010, when the index briefly touched 48.2. VIX has rallied 200 percent in the past month! The surge in the volatility index reflects the bearish sentiment and high anxiety levels that investors now face. Index option volume has been heavy as well. 1.25 million puts and 643,000 calls traded on the S&P 500 Index today, which is more than double the average daily volume for the SPX trading pit. CBOE Volatility Index tracks the expected volatility priced into S&P 500 Index options and tends to move higher when there is aggressive buying of puts to hedge stock portfolios.
Analyzing the ETF Market
SPDR Oil Exploration and Production Fund (XOP) saw a day of heavy trading. The ETF, which holds shares of major oil companies like Chevron and Exxon, tumbled $5.99 to $47.12 after crude oil prices plunged $6.29 to $80.59 a barrel. Meanwhile, options volume in the fund was 6X the average daily. 180,000 puts and 12,000 calls traded in the XOP today. The top trades were part of a ratio spread, after an investor sold 35,000 September 55 puts and bought 52,000 September 50 puts on XOP. This spread likely rolls a position down in strikes after the big move lower in shares. That is, they’re closing out a position in the 55s to open a new larger position in the 50s. XOP is down 24.3 percent month-to-date and both contracts are now in-the-money.
Some prospective on the US downgrade.
Some prospective on the US downgrade.
S&P AAA Rated
Finland – 61.89 bps (-2.67)
Netherlands – 68.16 bps (+2.63)
Australia – 71.27 bps (+2.92) (After a 12 bps rise yesterday)
Germany – 79.51 bps (+7.09)
United Kingdom – 79.65 bps (+3.38) And they have riots
Denmark – 91.10 bps (+1.76)
Austria – 107.69 bps (+6.84)
France – 159.14 bps (+10.66)
S&P AA+ Rated
United States – 56.33 bps (+1.70)
New Zealand – 87.83 bps (+0.74)
Belgium – 243.35 bps (-1.15)
Looks like the CDS market is pricing in more downgrades.
Insights to Identifying Potentially Lasting Market Bottoms
Back in February 2009, with the markets plunging relentlessly day after day, after day… I still recall how many traders were waiting in anticipation for some sort of crazy, panicky, high volume day to mark a capitulation bottom. This latest market downswing took the DOW down nearly 30% in just over two months from 9,088 to a low of 6,470 on March 6th, 2009.
Many traders whose market analysis and insights I respect seemed to be waiting for some massive “fireworks”-type event that would all but shout “THE LOW IS HERE”; a sign that all the weak hands have most likely thrown in the towel, and that it was now time to BUY BUY BUY hand over fist.
Of course, Mr. Market will never make it quite that easy, even for its smartest participants to figure out what its current “jig” will be. The DOW closed below 6,700 for several days before breaking out higher and closing above 6,900 on March 10th, 2009 on a bit higher average volume. It also marked the first day since this leg of selling began in early February that the DOW was able to close above its downward-sloping trend-line. However, that super-charged high volume capitulation day we were all looking for and expecting to occur never materialized. While in September and October 2008 the VIX volatility index hit highs just over 80, in February and March 2009 the VIX topped out in the low 50’s. This peak was 35% lower than its earlier spikes, even though the market was now trading at lower price levels.
I have long been a student of market behavior, mass psychology (or perhaps I should say mass psychosis), and price action. While I have observed this type of behavior in the past, it disturbed me that I couldn’t quite piece together why this debacle completed its course in such a relatively quiet and unassuming way. Certainly, after such heavy multiday liquidation, it seemed almost necessary that at some point everyone left would throw in the towel and say, “I’ve had enough”! I thought about this for a long time, and remained on the lookout for any insights that could help me better understand the market dynamics that were in play at the time.
Recently, while re-familiarizing myself with an old 1931 trading classic, “Tape Reading & Market Tactics” by Humphrey B. Neill, I found my answer in chapter 5 – and it hit me as if I had just walked into a brick wall:
“Many factors must be taken into consideration when we are interpreting the volume of turning trends. For example, the volume on June 18, 1930, which marked the approximate bottom of a severe decline, was 6,000,000 shares. At the end of the decline in August, 1930, owing to the decrease in the number of active margin-accounts, the selling climax came with only 3,400,000 shares traded. I well remember that day, because I was short of the market, and was trying to decide whether there was sufficient volume to mark the turning point or whether the selling was likely to carry much farther. However, the action had many of the ear-marks of a “clean-out,” of a temporarily oversold condition. Although there was a terrific churning of stocks, little headway was made for approximately three hours. There was no progress on heavy volume. That was our signal.
However, when the market temporarily reversed its trend later in the year, in November, following a decline which had continued steadily for fifty-one days, we did not have the big volume day. Why? Because margin accounts with brokers were at the minimum; brokers’ loans were down to the lowest on record. Actual liquidation had gone on for weeks. Liquidation from strongboxes and necessitous selling by large interests are not dumped upon the market as are stocks held on margin by the public. [emphasis added] (The speed of the crashes in the fall of 1929 was caused by this panicky dumping of margined stock.) Therefore it was necessary to estimate the extent of liquidation already accomplished and to wait for the signs of the turn.”
There was the answer in black and white. First Neill lays out the scenario, which in this case took place about a year after the 1929 crash: “following a decline which had continued steadily for fifty-one days, we did not have the big volume day.” The reason? Because most of the weak hands, along with most of those trading on margin, were largely wiped out in the earlier market panics. As Neill states, “The speed of the crashes in the fall of 1929 was caused by this panicky dumping of margined stock”. This last move was steadily fueled by heavy liquidation day after day for 51 days, and this time around it was the professionals, the institutions, and the market specialists (the strongboxes and necessitous selling by large interests) that were “throwing in the towel”. Institutions holding huge positions in stocks could not throw out their positions using market orders all at once even if they wanted to. They are forced to sell a bit at a time, day after day, in a very meticulous and controlled fashion.
This sounds like what must have unfolded in February and early March 2009. The remaining “smarter” participants and the “big money” funds were liquidating their positions. Mutual funds and hedge funds meeting redemptions, risk managers raising cash and reducing risk, pension funds hoping to preserve some semblance of value, you name it. When big money throws in the towel (so long as the liquidation is not the result of heavy margin selling) it will almost always (and generally by necessity) be a slow, steady, and controlled liquidation process. The turning point will materialize once the heavy selling subsides, and the market finds stability at a price level that once again attracts accumulation by strong-handed buyers.
The book was right on, and I recommend anyone serious about trading to revisit this old classic trading book, as the most valuable market insights are truly timeless. In retrospect, I have observed variations of this pattern unfold many times (even intraday), and have often sought to use it to my advantage. On a larger scale, it is especially noticeable with public companies that receive massive news coverage over highly emotionally-charged issues. Think Toyota Motors (cars driving themselves) or British Petroleum (massive gulf oil leak). One minute, thousands of new headlines and commentary a day. A few months later, nary a mention. Swine flu, anyone? But I digress…
Take the above example from Toyota Motors (NYSE: TM). You can clearly see the height of the media coverage and outrage into the issues revolving around “sudden acceleration” of Toyota cars into early February 2010. Volume well exceeded 10 times its normal average on that last day of panic selling. The first move off that low runs right into downward resistance before turning back down, albeit on much lower volume. In addition, while implied volatility in TM nearly doubled at 44% into the early February down move, it topped out around 37% the second time around before sharply reversing and breaking above the downward trend line on a closing basis. As a side note, notice how the trend line I chose was the least “steep” I could draw (indicating reduced downward momentum). While TM move lower later in the year, it did recover to nearly $82.50 before rolling over.
British Petroleum PLC (NYSE:BP) is another good example. By the end of June, when all the weak hands, the bargain hunters, and the margined players were out of the picture, BP went on to make another new low, taking out anyone left who had not yet thrown in the towel. This new low occurred on much lower volume (as well as on lower option implied volatility) than other recent panic lows that took place on heavy selling. Once BP’s stock closed back above $30/share, breaking its key downward trend line resistance, it fueled a powerful 35% move back up before finding support around the $35/share level.
As a final example, notice the large volume spike that took place in Boeing (NYSE:BA) in late June 2009 when fears again materialized regarding more delays with Boeing’s new 787 jetliner. Notice how the final low again took place on much lower volume as compared to the initial panicked selloff that took place. As with the other examples, implied volatility on BA options was also lower this time around. As price broke above its downward trend lines, BA staged an impressive recovery for a stock that no one seemed interested in at $40/share.
When markets top, they often go out with a roar once “everyone wants in”. Likewise, markets will often find a bottom once everyone’s thrown in the towel, given up, and lost interest. I suppose we can sum it up by saying that more often than not, “markets will top out with a bang, and bottom out with a whimper”.
Alexander Paul Morris has been involved in the markets for over 15 years trading stocks, forex, options, and futures. He is the designer, creator, and programmer of the tymoraPRO tradeSCAN trading platform and scanning system, which received exceptional reviews in both Active Trader and Technical Analysis of Stocks & Commodities Magazines, and was designed to empower traders with a real-time trading edge.
You can directly follow Alexander on twitter @alexpmorris.
Want to know who is to blame for the S&P – US downgrade on Aug.5th , 2011 ?
Who’s to blame for the S&P downgrade? or Who’s to blame for the state of the US economy right now?
Although stocks have made a monster recovery from those early 2009 lows they have moved down so fast since May 2, 2011 and we are now going into a critical week of trading where panic & emotions will be the lead driver to market & stock prices. Could be Armageddon or not as bad as everyone thinks . If you read articles over the weekend you’ll see the wide scope of different viewpoints.
But let’s get back to who we can blame since that’s always a good thing to do with messes/crisises.
1) Blame politicians for wasting time & money
Waiting for last minute to settle major crisis situations. Worrying just about the next election and looking after the interests of their biggest contributors and lobby groups instead of the people that voted for them.
2) Blame lobby groups for putting themselves and those that pay them ahead of the American public
Lobby groups are so powerful that they get oil companies with record profits to get tax incentives ( money that the US could have used). That’s their job I know but has to be one of the worst ways to make a living but i’m sure it pays them very well.
3) Blame Wall street fat cats for only looking after themselves.
Having extreme wages at the top end but messing up the real estate market In the process, getting a bail out without a slap on the wrist. Again money that could have helped the US.
2) Blame US companies for outsourcing and not keeping jobs in US
For avoiding paying taxes in the country that made them great
3) Individuals for buying the cheapest products and imports from China now accounting for 20% of all imports.
For believing their voice will not be heard by politicians. Have you forgot the history of the US how one person can take a stand and a movement starts where politicians have no choice but to change policy or laws? We’ve even seen that around the world recently how the power of Twitter and Facebook is having dramatic change in other countries.
4) Blame the S&P and other ratings agencies for keeping AAA ratings on toxic assets between 2003-2008 that definitely help fuel that 2008 market drop even more. Maybe they are trying redeem themselves with US downgrade on Friday to send a message that they are on top of it this time around. Whatever the reason they’ve had their part in screwing up the US & people’s 401k’s in the past.
5) Blame my dog ( actually he was not even involved in this mess) he also he lost a tooth the other night so be nice to him since he’s under the weather this weekend. But hope the dog tooth fairy is good to him since saw him on the bed this morning taking a peak under the pillow
To conclude EVERYONE is to blame in one way or another.
Instead of finger pointing and blaming the S&P, politicians, wall street, businesses & ourselves would it be too simplistic to look at doing this? :
Expenditures
1) cut all government expenditures by a set % .I’m sure there is enough waste in each Agency that 2%-5% can be cut across the board , not based on the best lobby group. Then won’t be based on who can cut the best deal in Washington but a fair across the board cut. This way no party makes concessions and less time is wasted trying to figure out what to cut.
Taxes
2) have companies & wealthy individuals pay a bit more in taxes -
Also consider a small value added tax , make the tax code simpler so that companies are willing to pay taxes in the US and not looking at best way to avoid taxes.
Wealthy individuals like Buffett are already willing to pay more
US companies have over $2 trillion money just sitting on the side. I’m sure to save the US economy they have no problem paying a bit more.
I know the above sounds to simple but since everyone is partially to blame then everyone should pay a small price in order to get the US back on track.
Won’t be perfect but would set a precedent that the US can make tough choices when it counts.
If it’s not addressed now that it can become manageable then will be much tougher the larger the US debt gets. Its not getting smaller but imagine if the US Debt ballooned bigger then it is now. We would be on track to the same extreme path to put the US on “junk status” like a Greece , then “austerity” would be the only way to fix it and you can see how poorly that is working out.
Some think the US is already on an austerity path since tough cuts will have to be made. We will see what the new appointed committee comes up with by November.
I personally have a lot invested in the US economy both in stocks and real estate and I’m an optimist. But if this is not addressed could be a spiral down of one of the greatest countries in the world.
Lets hope government , business and individuals take this negative S&P downgrade this weekend and use it as a positive step for change.
Stockguy22
Weekly Economic Calendar for July 8-12 2011
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CME & CBOT Rollover
- Rollover is 8 days before contract expiration.
- Rollover is usually on the second Thursday of every month. However, if the first day of the month is a Friday, the rollver day will be the first Thursday of the month.
- Expiration day is the 3rd Friday of the following months: March, June, September, and December.
- The contracy symbol associated with the expiration months are: March = H, June = M, September = U, December = Z. For example, the emini S&P symbol is the ES. So the symbol the emini S&P December contract would be ESZ06. (06 being the year)
- Liquidity of the contract will shift on the rollover date. Make sure you trade the correct contract. You should be able to notice by the lack of liquidity in your underlying instrument.
- If you are swing or position trading several days before rollver, make sure to use the newer contract instead.
Why did S&P (Standard & Poors ) downgrade US Rating from AAA to AA+ – Now what ?
Why did the S&P (Standard & Poors ) downgrade US Rating from AAA to AA+ and what will happen from here?
You can read the actual US downgrade here -was done by Nikola G Swann from the Toronto Office http://sg22.ly/p8ZJPm
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.
It was argued by the US Treasury Department that there was a $2 Trillion error that was missed in the analysis.
Even if that is the case, the underlying problems still exist – Let’s just hope the S&P company never needs a bail out since I’m sure they are not in the Governments good books right now.
So what will happen from here ? & as Traders what should we look for
What does the S&P – U.S. Downgrade do?
1) Sends a clear wake up call to Washington
2) We could expect higher interest rates
3) Some are predicting Armageddon
4) Some are saying its no big deal
Who will this US downgrade affect ?
Individuals , Business, & Government ( so basically everyone) check graph below of who holds that US $14+Trillion Debt and what percentage. Anyone on that list will be affected in one way or another. ( I’ll try to have a future blog where we can break it down in more detail)
Here’s a few examples of how this US Downgrade will affect that list
1)Interest Rates move up which causes borrowing costs to move up and that will affect anyone with a line of credit, loan or mortgage (both businesses & individuals) .
2) Stock Prices should move down — Some experts say Dow could drop another 1,100 points from here — Note: Canada lost its AAA rating in the 1990′s but stocks moved up 15% the following year of the downgrade)
3) Since has never happened to a superpower like the US to lose the AAA rating what will actually happen will initially be based on the fear and uncertainty
4) German Bonds could go up as investors look for safer balance sheets
5) China won’t be happy -read a story this morning that said “China Tells US ‘good old days’ of borrowing are over”
6) Banks -
many other things will be affected & we’ll see this being debated and discussed in Washington & in the news –
We’ll see Sunday Night what futures will do but should be a very interesting week ahead …. Tune in
I will be running live Futures charts Sunday night so check http://twitter.com/stockguy22 or this blog for the link to access the live feed
Stockguy22
What does the downgrade mean to you?
What does the downgrade mean to you?
- Mortgage rates would likely rise at least a half point. That’s a $19,000 hike on the average $172,000 home loan. Businesses would have to spend more money to finance expansions. Costs for borrowed money goes up, effectively raising the price of anything you’re not paying for with cash.
- The interest rates the government pays to finance the growing national debt will almost certainly rise as a result of the downgrade. That increases the amount of money Uncle Sam has to spend each year on “debt service.”
- Overall economy would be hit with 1 percent drop in GNP, translating into 640,000 lost jobs. This slowing increases the risks that the U.S. will have a second dip into recession. It also means less tax revenue, so the potential for additional debt increases.
- As the economy slows, expect the stock market to react. Investors buy shares to get a piece of growing profits. A slowing economy means profits grow less rapidly or go down. The relative value of a share of anything will go down. Some experts predict a downgrade could force stocks to sell-off by 6 percent to 10 percent in short order.
United States of America Downgraded to AA+ by S&P
United States of America Long-Term Rating Lowered To ‘AA+’ On Political Risks And Rising Debt Burden; Outlook Negative
We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.
We have also removed both the short- and long-term ratings from CreditWatch negative.
The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
Rating Action
On Aug. 5, 2011, Standard & Poor’s Ratings Services lowered its long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’. The outlook on the long-term rating is negative. At the same time, Standard & Poor’s affirmed its ‘A-1+’ short-term rating on the U.S. In addition, Standard & Poor’s removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.
The transfer and convertibility (T&C) assessment of the U.S.–our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service–remains ‘AAA’.
Rationale
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see “Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government’s other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.
We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government’s debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.
The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population’s demographics and other age-related spending drivers closer at hand (see “Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now,” June 21, 2011).
Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.
The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.
The act further provides that if Congress does not enact the committee’s recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.
We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO’s latest “Alternate Fiscal Scenario” of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO’s “Alternate Fiscal Scenario” assumes a continuation of recent Congressional action overriding existing law.
We view the act’s measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario–which we consider to be consistent with a ‘AA+’ long-term rating and a negative outlook–we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act’s revised policy settings.
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.
Our revised upside scenario–which, other things being equal, we view as consistent with the outlook on the ‘AA+’ long-term rating being revised to stable–retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.
Our revised downside scenario–which, other things being equal, we view as being consistent with a possible further downgrade to a ‘AA’ long-term rating–features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.
Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government.First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.
When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.–we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.
Standard & Poor’s transfer T&C assessment of the U.S. remains ‘AAA’. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers’ access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.
Outlook
The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently
assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction–independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners–lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government’s debt dynamics, the long-term rating could stabilize at ‘AA+’.
On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.
The Week in Crayons
After half a year of broad range consolidation on slowly expanding volatility, this week’s brutal distribution took most of our main indexes well below our 2011 range while sending volatility levels higher than they have been since the “flash crash” we had last year. From a technical analysis perspective, healthy consolidation should take place in a quiet manner with decreasing volatility, while expanding volatility usually signals an impending reversal. The swan dive we saw in the S&P 500 index this week shows us what happens when volatility cannot quiet down as traders continue to disagree on the proper price levels for a market. Below is a chart of the average true range of the SPDRs S&P 500 trust series etf (SPY). Notice the growing volatility as we chopped around throughout the first half of 2011.
We are now at pretty high levels of volatility, and while it is not completely out of the question that they continue higher, the likely scenario in the coming weeks is that of diminishing volatility as we begin to back fill and retest the levels we have blown through over the last week.
Looking at a chart of SPY, we can see that we almost reached the measured move from the head and shoulders pattern we formed throughout this year in two days. We eventually found some support around the $117 area which funny enough also happens to be the price level we were at just before last year’s flash crash. Much of the fuel for those two days of brutal selling was likely from burned buy the dippers that emerged on Wednesday’s hammer candle that ended up being a vicious bull trap.
Watch for choppy action as we begin to find equilibrium around these levels, with Wednesday’s price action serving as a pretty stiff level of resistance as trader’s that are still involved from that day waiting for those levels in order to get out of dodge. Friday’s lows are likely to be retested in the coming weeks as well, as the bears are likely to see if they can force the market lower now that they have gained control of the intermediate time frame.
Looking at the long term time frame, the bulls are still in control, but their grip is tenuous at best right now. @captkirk888 , one of the great traders in our stockguy22.com virtual trading floor shared this longer term chart of SPX with us. It is interesting to note that each time we have dipped below the 20 period moving average on the monthly chart, we have for all intents and purposes been in a bear market.
This week’s close puts us right on the average, and it appears that the bulls will have their work cut out in keeping us above it in the coming weeks if we are to stop from slipping into the bear market scenario. Also, note the Slow Stochastics readings. They are beginning to turn under 80 which has also been a fairly good indicator of the long term health of the S&P 500.
While the picture is looking quite gloomy for the bulls right now, one small glimmer of hope resides in the Nasdaq Composite. In looking at the PowerShares QQQtrust (QQQ), we can see that the Nasdaq is actually still in its yearly consolidation range and was able to find support at its base on Friday showing great relative strength over its peers.
Of course, QQQ is still at risk from many of the harbingers of reversal that already took down its peers as it is seeing massive volatility growth as it attempts to consolidate and is now well under its 200 day moving average on heavy volume. The question over the coming weeks as the markets begin to quiet down and realign is whether QQQ will follow its peers down as we head lower, or whether it will become the new leader that pulls the rest of the markets up as it recaptures it higher price levels. This is a question that is likely not to be answered anytime soon, and as I have repeatedly stated, traders should continue to trade lightly if at all during this tough environment and patiently wait for better times.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Sign Up for Stockguy22.com Trading Room
Why did the DOW ($INDU) Stock Market drop more than 500+ points today? August 4, 2011
Why did the stock market drop more than 500 points today & will it ever bounce back again ?
I’m sure this will be a major question tonight
For traders, who have been at this for years , we’ve seen market corrections, flash crashes, pullbacks, recessions etc. Its tough for new traders to come to grips or even survive these slight downturns. I say slight since many bigger further drops have been 20%-30% Can you survive that?
So what happened to cause the DOW ($INDU) to drop of 513 points today?
1) Debt Ceiling – although been raised still won’t be resolved till November & then will be due again in 2013
2) Problems in Europe ( Italy , Greece – the PiiGS with two eyes “i’”s – stands for Portugal , Italy , Ireland, Greece & Spain)
3) Ongoing problems with Unemployment
4) Real Estate not recovering
5) It was Japan, no its the Swiss Franc
6) Its all Bernanke’s Fault
7) it was all the politicians fault
8 ) it was Panic Selling
9) People aren’t Spending
10) It was all about Inflation & the price of Gasoline
11) it was all my dog’s fault ( well don’t blame the poor dog )
You can watch CNBC or read articles & the experts will tell you why this happened but they rarely all agree on the exact details.
as a trader its not really important to understand all the details since it could be all or a combination of the above or even other factors. But the main goal of a trader should be when these drops occur to
a) keep calm (don’t panic)
b) Money Management
c) Look for opportunities from this correction or drop
d) Understand that it will happen again so you can plan what ” you will do to protect yourself next time”.
e) Do you have any money to rebuy any further drops from here?
(if you can’t do all of the above then you will never succeed at trading)
Some of the posts I read today on twitter reminded how many times I’ve read the same thing in past market drops/corrections prior to twitter ( on message boards, newspapers or talking to other traders)
like the following messages: sometimes they are jokes but some people are actually hurting badly with this drop & you can see from the posts that they were lacking something ( what is that something? when you find that it will be much easier trading for you).
Then you see some more experienced traders & the tweets today had a different feel or what they had learned over the years to help them succeed at trading & some are still learning ( but different type of tweets from above)
What could a trader do to survive or protect themselves from these market drops?
I posted on twitter earlier tonight some comments that you can see below but prior to this week many traders (that got hurt) did not have a Trading Plan or money management skills, they had no hedge, they didn’t park any profits leading up to today’s drop — You need to start with a Set of Specific Rules that will help you succeed at trading long term, but more importantly survive market drops like today. So if you didn’t handle today well , you will have a much tougher time since this will happen again and again. Not often but it will.
Where will we bottom? Some will watch employment #’ , US $ etc. etc. I like to watch the charts ( I had some great signals in 2009 that helped me become more aggressive after the 2008 market drop ) I used similar analysis buying after the 9/11 Terrorist Attacks in NY City. Different circumstances , different scenarios but some of the same factors like panic selling an extreme drops like we saw today. 9/11 was more of a gap down since they closed the markets that day.
Here are the Tweets I had posted earlier tonight
How did I do today? I actually did not do well today - My swing trades were down . I did have a ZSL position ( which is a short on silver which recovered alot for me ) & did have a hedge by owning SQQQ which were both up nicely –
ZSL was up 14.48% & recovered $8,010 for me & SQQQ was up 13.58% & recovered $17,014.62 for me. Not fantastic since still down on other swing positions today.
What i’m happier with was the $102,502 I took in profits in June & July ( one of my best 2 month run this year) & that I didn’t overbuy into the Debt Ceiling Crisis – with exception of some key buys I kept mostly in cash & didn’t rebuy GOOG AAPL MGM PCX RENN YOKU SINA & other positions I sold in June July –I’ll do a more detailed blog with the % & what stocks I actually sold in June/July this weekend -
My happiest moment today ( & yes there was … ) was to hear from 2 traders in the chatroom & how well they did today
1) one trader made $50k profit ( one of his biggest days ever )
2)Another trader made almost $9k profit
Both traders I know well & they’ve listened to me talk about all the trading rules that have helped me over that years. So I wanted to spend a bit of time and give you more information that I think will help you. On such a bad day like today how could some traders have done so well? Well they both had used shorting futures as part of their strategy today. If you talk to them they both feel as though they had done nothing special than they do everyday. I’ve seen how they both trade and regardless of the price they still trade the same. Today was much easier since we had such a major drop but they already had a strategy.
I know they didn’t get lucky. Why ? because they already had set rules and Trading plans prior to today. The 2nd trader already had done well in the past. Both traders have learned a lot from me & from the other traders in the group. So I wanted to go over what I feel they both have in common & what sets them apart from the average trader.
1) they both have no egos
2) they both have trading plans
3) they are very mechanical in their trading & emotion plays a minor factor for them
4) they’ve been or listened to most of the webinars we have on the site
5) they are constantly learning different techniques outside of the group & from probing other traders in the group for opinions
6) they are very disciplined
7) they are very dedicated ( 1 paper traded for almost 1 year – the other had many setups starting out )
they don’t copy trades but develop their own little system
9) They both hate Fridays ( they don’t say TGIF but say TFIM (ThankGod its Monday) or TGIS ( Sunday if they trade futures)
10) They both are very family oriented
11) They both have a great sense of humor which helps deal with the many ups/downs of trading
12) Not surprisingly , today both knew they could have made more money ( not thought)
13) They were both due for nice profits today since they both worked so hard & have bounced techniques with each other
14) When they do try a new technique they have done it without risking a lot of capital
15) Continously Learning
16) They both understand the Fear & Greed of the Stock Market
17) they are focused on what they are doing
I can keep going on and on — but its getting late
I wanted to post this blog since I want traders to understand that there are successes on days like today. But I’ve seen this before & this is what we will see tonight we’ll hear Leno/Conan/Letterman say jokes about today’s market drop & then we’ll see tomorrow’s newspaper with the “Worst Market drop since…. How Far will it go? & they’ll post that picture of a “dejected trader. & CNBC who will have all the experts tomorrow saying “We told you there would be a major drop ” & if we bounce then they’ll have the experts saying ” We told you we were oversold & we’d bounce” That will only confuse you.
From here : Try to learn from more experienced traders. If you want to do it the longer way , then do it on your own & you’ll get there too if you are dedicated, but you MUST MUST take trading seriously & learn. Some on twitter , may think that I’m the smartest trader in our chatroom or I make the most money in there. Far from it, we have some traders that have done much better and are much smarter than I.
I’m good at what I do but I feel so lucky that if I don’t understand something that I have so many sharp people in the chatroom that I can bounce ideas off whether its an options question or strategy, an oil question,a silver chart i don’t understand, a futures question/strategy, a charting strategy, a certain sector, or someone to tell me stay away from 3x decaying ETFs.. etc.
Prior to the Debt Ceiling Announcement I had a plan . A trader on twitter asked me what I was doing into the DebtCeiling Vote: Here is the twitter chat from July 28th , 2011. I had also gone over market charts & similar thoughts in past webinars & in the chatroom each week.
You can join us in the chatroom daily or come to one of our many webinars. The group is here for you to learn. We try to put as much free info & webinars as possible. If you need personal 1 on 1 mentoring I’m available but its something i’ve limited to Premium members only since I have a family & other business obligations so its not always possible to meet with other traders. If I miss your email or tweet its that I’m very busy. I’m trading, teaching & keeping the wife happy so understand I have some limits.. lol
Sorry if any typos, but was late & if any mistakes or if i add to this I’ll edit & repost link on twitter
Happy 500+ Market Drop Day – Aug 4, 2011
Debt ceiling and economic data hit the markets – today’s notable action in stocks
Today’s Bullish Trading
Manitowac (MTW) shares lost 96 cents to $12.75 and options on the Manitowac, WI farm and construction machinery company were heavily traded today. Total volume was 17,000 calls and 920 puts, which is 5X the recent average daily volume for the name. September 15 calls, which are now 17.6 percent out-of-the-money and expiring in 46 days, were the most actives. 12,865 traded including a 1260-contract block at the 60-cent asking price on the CBOE. About 52 percent of the day’s volume was at the offer, suggesting that some of the action was driven by upside call buyers looking for the stock to perform well from now through mid-September. There’s no recent news to explain the heavy trading in MTW calls today. Earnings were last reported on July 26. Dow Jones Newswires options report today notes that other machinery companies – Pall Corp and Timken (TKR) – also bullish trading today. Some investors might be “call”ing a bottom in the group.
JC Penney (JCP) is seeing a third day of bullish trading. As noted in yesterday’s midday, August 30 calls on the retailer were being bought Monday and August 31 calls were busy on Friday. Today, shares saw a morning spike on heavy volume and are up 28 cents to $30.73. Options volume in JCP includes 18,000 calls and 9,825 puts. August 35 calls, which are 13.9 percent out-of-the-money and expiring in 17 days, are the most actives. 3,530 traded. August 31, 33 and 34 calls are seeing interest as well. The relative strength in the stock and increased call activity in JC Penney comes ahead of monthly same store sales numbers on August 4 and an earnings release on August 12.
TEVA was the subject of an interesting three-legged options spread today. Shares are down 96 cents to $42.80 and have now suffered a two-day 8.2 percent loss after the company announced disappointing results from an FDA trial of its MS drug. Yet, while shares have been under pressure, one strategist seems to view the weakness as an opportunity for a bullish trade and sold 3,000 December 35 puts on TEVA at 59 cents and bought 3,000 December 45 – 50 call spreads at $1.22. They paid a 63-cent net debit on the three-way spread and are apparently looking for the stock to rebound through December. If shares fall below $35 instead they would be on the hook to buy the stock (have put shares at $35) at the strike price of the put option.
Today’s Bearish Trading
Central European Distribution (CEDC) saw a day of heavy put volume today. Shares of the Mount Laurel, NJ exporter of alcoholic beverages touched new 52-week lows and finished down 73 cents to $8.79. Meanwhile, 48,000 calls and 3,425 puts traded in CEDC today. August 9 puts, which are now 21 cents in-the-money, were the most actives. Some investors might have been closing out positions after a 61.5 plunge in shares since February. 14,572 Aug 9 puts traded against 14,507 in open interest. Meanwhile, August 6, December 5, August 8, September 10 and even December 2.5 puts on CEDC were busy as well. The heavy put activity comes ahead of the company’s earnings release, due August 4.
Ten of the top twelve most actively traded options contracts are puts on the SPDR 500 Trust (SPY). The so-called ‘SPYders’ are trading down $1.72 to $127.06 and in the midst of an 8-day 5.6 percent decline. The ongoing slide has triggered a lot of activity in SPY put options. The August 127 puts, which are now at-the-money and expiring in 17 days, are today’s most actives. 137,400 traded. August 120, 125, 126, 128 and 130 puts are heavily traded, as are Sep 105, Sep 125, Nov 118, and Nov 124 puts. Total volume in the exchange-traded fund is 1.73 million puts and 754,000 calls through midday. Some investors are likely buying downside puts on the Spiders on concerns about additional losses for the US equity market in the weeks/months ahead.
Put volume is picking up in William’s Companies (WMB) ahead of earnings. Shares of the natural gas producer are trading down 86 cents to $30.75. Options volume in WMB through midday is 33,000 puts and 8,145 calls. The action included morning buyers of August 28 puts. 24,660 now traded and some of the action might be closing. Open interest is 46,153 and the contract is nearly 9 percent out-of-the-money with 17 days of life remaining. August 27 and 31 puts on Williams Companies are seeing interest as well. The increased put activity in WMB comes ahead of earnings, due out Wednesday afternoon.
Volume Signals
NVidia (NVDA) options volume is running 2.5X the (22-day) average, with 74,000 contracts traded and call activity accounting for 66 percent of the volume.
TEVA options volume is 2.5X the average daily, with 45,000 contracts traded and call volume representing 60 percent of the activity.
Leap Wireless (LEAP) options volume is running 8X the average daily, with 41,000 contracts traded and put volume representing 62 percent of the total volume.
Increasing options activity is also being seen in Hertz (HTZ), Merck (MRK), and JC Penney (JCP).
Volatility Alerts
Ctrip.com (CTRP) is trading down $5 to $39.98 in volatile trading after the online travel company reported in-line second quarter profits, but guided estimates down for the third quarter. CTRP options are heavily traded, with 19,000 puts and 8,000 calls in the name so far. August 40 puts, which are now at-the-money, are the most actives. Volume is approaching 10,000. Some investors might be selling these short-term puts, as 80 percent of the volume has been on the bid and implied volatility in CTRP options is down 17.5 percent to 39.
Index Recap
CBOE Volatility Index (.VIX) dipped in morning trading, but finished the day up 1.13 to 24.79. VIX hit a low of 22.65 early and was in negative territory through midday. However, a late-day sell-off sent the S&P 500 to session lows in the final hour. The volatility index, which tracks the expected volatility priced into S&P 500 options, rallied in the final sixty minutes of trading and closed at its best levels of the day. Meanwhile, trading in the VIX options pits was very busy today. 487,000 calls and 144,000 puts traded on the session. August 30 call options on the volatility index were the most actives. 67,469 traded. August 25 and Sep 35 calls saw heavy trading as well. Some investors were probably buying short-term out-of-the-money VIX call options on concerns that market volatility will remain high in the weeks and months ahead. September is historically one of the more volatile months for the US equity market.
Analyzing the ETF Market
Volume was heavy in the exchange-traded funds today. 6.2 million puts and 3.9 million calls traded across the SPDR 500 Trust (SPY), iShares Small Cap Fund (IWM), and other ETF products, which is 1.5X the recent average daily volume, according to Trade Alert data. The three most actives were puts on the SPY, or “SPYders”. Shares lost $3.29 to $125.79 and closed near session lows. The August 127 puts, which were at-the-money through midday, are now $1.21 in-the-money and traded 194,783 contracts. SPY 125 and 130 puts were the next most actives. Heavy trading was also seen in the iShares Small Cap Fund (IWM) Sep 75 and 77 puts, as well as SPDR Financial (XLF) Aug 15 puts. Some options traders were probably taking bearish positions in puts on the exchange-traded funds on expectations for additional losses in the weeks ahead. Others were probably closing out positions after the 8-day market decline – which is the equity market’s longest losing streak since 2008
Weekly Economic Calendar
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The Week in Crayons
As befits the state of our current markets, we took the elevator down this week to revisit the lower portion of our yearly trading range and pulled the rug from under the bulls that had pressed their longs as we approached the top of our range. We remain in a poor trading environment at this time as we continue to see volatility expand while price stays in an overall static state. As I have mentioned over the last several months, traders should remain patient and trade lightly and take quick profits in this environment while waiting for better conditions to emerge.
Looking at the action for 2011 on the SPDR’s S&P 500 etf (SPY), it becomes clear that although price has fluctuated quite a bit, we have essentially gone nowhere. In fact, most of the key moving averages are now zig zagging sideways as we chop around in search of our next direction. The last moving average that still has some upward slope to it is the key 200 day moving average, and it is starting to flatten out as we begin to really test it.
Friday’s action brought about the second retest of this moving average and gave us our first breach of it although we eventually held and closed higher. Keep in mind, that the more often a market tests a level, the more likely that it will eventually break. Friday’s close also left us below a critical level that had stymied us throughout late June. Watch the price action just below $130 early next week, as it will likely offer up as strong resistance if good news doesn’t emerge over the weekend to prop us back up. If we open and hold below this area, the bears are likely to press their shorts and try to get a retest of our June lows as well as a close below the 200 day moving average. A break below these levels would complete the head and shoulder pattern I mentioned a couple of weeks ago and could be the impetus for a further move down. However, keep in mind that traders that have tried to jump in early on the next major move have repeatedly been burned, and the prudent approach continues to be to wait for the market to align itself properly and prove to us that it is ready to break out of this range one way or the other. If the fools in Congress were able to give us some good news over the weekend and we are able to open above $130, watch for a gap test around $133 and eventual resistance at the mid $134′s as we encounter our most recent pivot highs as well as a descending trendline. Because of the uncertainty surrounding the markets at this time, traders should continue to maintain a defensive posture and wait patiently for a better environment to emerge.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
Bullish and Bearish Options Action and Market Summary
Paul Tudor Jones – Trader
As I try to determine what makes a good trader; I routinely look at what has made others successful in the past. Paul Tudor Jones is a legend, so what makes him successful? Does he have some insight that you and I don't ? Does he have some magical indicator that foretells the future ?
Below is a series of brief interviews and articles where Jones answers questions about trading. If you are a struggling trader, please listen to what he says about money management, taking losses, and keeping your ego and emotions in check. Where have you heard this before? If you aren't doing these things, why do you think the outcome will be in your favor ?
More to the point, if you are struggling right now, why do you continue to do the same thing and expect a different result ?
Someone posted a link in the chat today that detailed where the money had been flowing the last few weeks. There was money selling longs into the strength, and getting short the SPY and QQQ. Imagine that, selling into resistance, not getting greedy and day dreaming where the market could go. Where have you heard this before ?
I can't stress this enough to people. There is no secret to this game. There is no sauce. There is no indicator that will make you $1 million from $1000. What there is is a market that has repeatable behavior that you can learn to exploit.
Why do you think there all these penny stock pumpers out there ? Because people make the same reckless decisions over and over. They buy them on some email, pump, or rumor, then watch them fall all the way back while they dream of what they are going to buy with all the money they will make. We call them bag holders.
So read these interviews, watch the documentary, and pay attention to what the man does.
Then join us in the VTF live.
Linkfest Tuesday
Some useful links for those people who can read …..
http://www.futuresmag.com/Issues/2011/April-2011/Pages/Fiveminute-breakout-solution.aspx?page=1
"You can't have flag conditions when the market is in a trading range.' -LBRGroup
http://coveredcallsadvisor.
http://www.etfcreditspreads.com/
stockguy22 ThinkorSwim Advanced MACD Indicator
Here is an chart comparing my smoothed MACD using Laguerre polynomials. I have seen a few implementations of this using difference indicators.
It performs similar to a faster MACD, but is relatively unaffected by gaps. Remember that even a standard MACD is not to be used for determining overbought and oversold conditions. What it excels at is determing momentum, and divergences in price patterns.
A trader down and out ..
I ran across this on twitter, and thought this might help some of you who are struggling with your confidence. Learn from the mistakes of others.
There are also a few good replies in the thread.
We stress the same things in the VTF chat. Money management. Position sizing. Knowing your instrument. Overcoming fear. Overcoming greed.
jstanford
http://www.mypivots.com/board/topic/6681/5/tradequeen-daily-journal#87017
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Well, it's been a while since my last post. My desire was to start making positive post of how I was doing with details about what I was doing. Sorry to say now, this is not the case…. I'm officially out. For a long while anyway.
I again would like to thank all the regular contributors to MyPivots Forum and even some of the not so regular contributors. My appreciation for your time and information can never be truly expressed. This is such a fantastic web site for new comers like me. Unfortunately it was my own execution and fears that ultimately led to my annihilation.
Fear was and still is my biggest obstacle. I would sit and call one good trade after another… Over and over without the courage to enter the market.
Even if I did enter the market with a good decision… I would exit prematurely on account of panic. Bringing only a quarter to a half point tops at a time! I would feel like an absolute idiot afterwards.
And when my confidence was most strong, like this morning, is when my decisions were most destructive. I failed because all my good decisions never made a significant profit to compensate the bad ones.
Just a final note. Yes, I'm finished here because I failed to exit a few bad trades early. But more importantly… I failed because of my inability to control my fear, to actually enter into those good trades and my inability to stay strong in the good trades I did enter.
I learned to recognize those good trades throughout the pages of the MyPivots Forum. It's the importance of getting a hold on my emotions I still need to work on.
There is so much to learn. It's comforting and just as much discomforting to know some of you who've been trading successfully for years are still refining your skills and still experience some of the same qualms as I do from time to time. Thanks for sharing that insight as well.
New traders… Keep that in the back of your minds, for it's what we'll be up against for years to come.
With all its disappointments, I still love this. The peace of working on my own, being myself without fear of mortification is oh so settling. I only wish I could have experienced that feeling of self accomplishment. Still, this is the goal.
Well… It's back to 60hr work weeks. The good news is I love my job. The bad part is the competition to keep my job. Uh, it's a constant battle. Plus, as mentioned in the past… the, additional, dreaded 10+ hrs a week sitting in traffic to and from. uh.. That's the worst part.
I shall be back again! Someday… much older. Hopefully smarter!
Best of trading for all of you who come through this thread. And such as a skipping record, MANY MANY THANKS to all of you who rule the ES Threads! Again… For all your insight and education… Thank you thank you thank you! Happy lives to you and yours!
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Some ideas from the VTF
I wanted to post a few ideas I heard this week in the VTF. Why? Because I am procrastinating on doing some writing and stuff around the house.
One caveat to any of these charts is the debt debate in Washington. The clowns in the sideshow should offer some nice volatility and break apart any technical analysis.
Other stocks to watch: GMCR SBUX
Kuerig machines will sell like crazy with SBUX coffee, but will it cut into SBUX store sales?
Casinos: MPEL MGM LVS WYNN
They are strong, and thats all you can say. MPEL's move has been incredible since $7, now trading over $15. I thought riding it up and selling near $10 and $11 was awesome.
ABMD
Easy wedge formation.
AKAM
This whole sector getting stomped. Well established downtrend, watch for a breakdown or a potential double bottom.
JNPR
Similar situation to AKAM.
BEBE
This one was mentioned several times and hsa flagged nicely. Stop below $7, potential to $9-10.
BORN
Downtrend consolidation, with a nice bounce so far. Trendline critical.
DAN
Long consolidation and range. Good to set alerts above and below.
IO
Break out potentially and some fib targets.
LRN
Wedge / possible cup forming.
MAKO
Watch for a test of support and continuation.
MCP
Nice breakout after a test of suport. Rare earths see to be getting some action again.
REE
Support again. Easy stop on weakness.
OSUR
Some consolidation, maybe a flag. Could consolidate/test trendline.
PWER
Solars have been and probably will be garbage with oil below $100. Watch for a short opportunity or a bounce.
RAX
Could is repeat previous support bounces? Has been sideways for a while.
ROYL
Nice bounce. Missed it thus far. Can we get to $5 again.
SHOR
The wedge.
XIDE
Double bottom offers a good stop on a long. Or entry on a short.
Weekly Economic Calendar July 25th 2011
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Some finviz.com Scans for the rest of us
Scan #1 Breakout Scan
Over 500k Avg Volume / Above 20 SMA / Above 50 SMA / Below 200 SMA
This scan is good for finding bottoming plays coming into resistance @ 200 day, potential breakouts
http://finviz.com/screener.ashx?v=211&f=sh_avgvol_o500,ta_sma20_pa,ta_sma200_pb,ta_sma50_pa&ft=4
Scan #2 Strong Trend Scan
Over 500k Avg Volume / Above 20 SMA / Above 50 SMA / Above 200 SMA
This scan is good for finding stocks that are in strong trends, or have just corrected and have an established trends – also good for finding stocks coming into resistance price levels
http://finviz.com/screener.ashx?v=211&f=sh_avgvol_o500,ta_sma20_pa,ta_sma200_pa,ta_sma50_pa&ft=4
Scan #3 Coming into Long Term Support
200 day support scan, stock is correcting below 20 day , below 50 day, but still above 200 day
http://finviz.com/screener.ashx?v=211&f=sh_avgvol_o500,ta_sma20_pb,ta_sma200_pa,ta_sma50_pb&ft=4
Scan #4 New High Scan
A very simple scan that just finds you stocks making new 52 week highs. Typically you find breakouts and stock stocks that would be good to look at on a pullback.
http://finviz.com/screener.ashx?v=211&f=sh_avgvol_o500,ta_highlow52w_nh&ft=4
Other Suggested Scans
Value Plays
avg daily volume over 500k, share price over 10, ROE over 15%, PEG below 1, above both 50dma and 200dma
Turds Cirlcing the Bowl
These aren't long for this world.
Are we rotating?
Rotating tires is a basic maintenance procedure all drivers should perform in order to extend the life of their tires while also maximizing traction to insure safer driving 
conditions. A stock market rally does the same thing, but instead of tires it rotates sectors. In this way, sectors that have run too much too fast can consolidate while the sectors that have lagged can catch up while the overall trend remains intact. Over the last few weeks of consolidation, it appears that we may be in the process of a major rotation as the tech companies of the Nasdaq take the torch from the small cap names in the Russell 2000 that have led us for several months.
Below you will find charts of the S&P 500 (SPY), the Russell 2000 (IWM) and the Nasdaq composite index (QQQ). Notice the stark difference between this week's action versus April of this year. During the early part of the year, the small caps were making new highs while the S&P 500 and the Nasdaq composite lagged noticeably. In fact, it wasn't until IWM formed a second pivot high in May that the other two indexes were able to finally clear their February highs (QQQ barely doing so after a furious charge).
However, contrast that to the action this week when QQQ broke out convincingly to new highs while the Russell 2000 and S&P 500 remain close to their initial February highs. While this divergence lends credence to the theory that we are now rotating into tech names, it also shows that the market is still in a bit of a mixed state as only one of the major indexes has been able to eclipse the highs we made in May. With many of the major earnings reports in the Nasdaq composite out of the way now, watch for some quieter action in QQQ over the coming weeks as it begins to realign itself with its peers. Keep an eye on the interplay between these three indexes in the coming weeks as they will give us significant clues as to where the money is flowing as we continue to come to terms with this broad range of consolidation we have been trapped in for most of 2011.
If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren't a member, what are you waiting for?
NYSE:MCP chart Analysis & Key Resistance & Support levels as of July 22, 2011
NYSE:MCP Chart Analysis & Key Resistance Points & Support Levels as of July 21, 2011
Someone in the webinar yesterday asked about key resistance points on MCP
Here are the key levels i'd watch for upside resistance
So if MCP goes up what levels will be key resistance and/or Selling points ?
1) $61.99 ( also similar resistance last December 2010
2) $66.43 (not much resistance over $66.50 to $79+ so much more key point
3) $79+ if ever had a day close over this then considered a breakout point
What if MCP drops from here? where are support levels or Stop Points
1) watch support at 20day sma $55.69
2) watch support at 200day sma $49.58
sma means ( simple moving average) some people use ema ( exponential moving average) Just use what you are comfortable with & what seems to work best
As a trader I always watch these key levels on stocks I trade since I use the key resistance points as good areas to scale out of a stock and take profits there. I also use under support levels as good points to use for stops on positions.
Chart below with my notes Double click it to make it bigger & easier to read
Hope that makes some sense -
Stockguy22
End of Day Charts, US budget deal, and a mess all around
Charts look good to the upside on an agreement for the U.S. debt going forward. Europe is basically considering a default for Greece, more printing but less chance the defaults spread to the rest of the PIGS. Free money, how can you not buy.
I'm cautiously long, only because if it's obvious to everyone chances are we will do the opposite. Also if we rally too much in anticipation, then it will be a sell the news event. Careful consideration will have to be given to what the U.S. budget agreement actually says.
Gold and Silver could be in for a correction as investors have bought into the safety of the shiny metals. Typical mean reversion play.
You'll notice that the ribbons for short term are extended on many charts while the longer term are just establishing a trend. I firmly believe that the market expresses some degree of symmetry and mean reversion in both long and short time frames. It's just the nature of buying and selling; there is a move in a direction and a pull back before another move.
The charts below are 30 min charts, so be aware that I'm not talking about 2 weeks from now. I'm talking a few days maybe a week or 2 at most.
Gold and Silver are the exception, I chose longer term (4 hour) charts only because I think you should be aware of the larger strength of trend in Gold. Silver has some work to do, the margin increases and the previous blow off top will take time to repair.
Key levels are marked by the yellow horizontal lines.
ES
NQ
YM
TF
6E
DX
GC
SI
ZB
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My normal intraday chart for TF. You can see the overnight move move down, following by buying on Greece deal news, and US premarket. Then a sell into European close, 11:30 Am EDT, followed by a slow grid up. The spike was a rumor that Obama and the rest of the clowns have an agreement. This was quickly refuted and faded. I think that linger pop was responsible for the tight action in the afternoon. Who wants to be the guy who is short into a real deal? Nobody, that's who.
I caught 2 nice longs after the open and 1 short into Europes close. The rest of the day was a wash, more made money for my broker than anything. I was short some taking 5 ticks. Same with a few longs. Nothing to speak of.
Broad Based Rally
Correlations and Price Swing Patterns on ES TF NQ YM futures in relation to DX (usd futures)
I am going to try to post these correlation charts more. What I am noticing is the markets while predominantly inversely correlated to the USD, can and do at times move in degrees of postive correlation with the USD.
I bring this up because of the current state of politicis in Washington. I have a feeling that if a debt deal is struck we may see a USD / market rally scenario.
More research needs to be done, but the breaks in correlation seem to be at places of market stress. ie temporary market tops, or some news related issue.
Note: this uses a 100 period Pearson correlation for smoothing
TF [ Russell 2000 emini] – wide blue line is DX correlation – other lines are ES YM NQ TF
ES [S&P 500 emini] - wide blue line is DX correlation – other lines are ES YM NQ TF
NQ [Nasdaq 100 emini] - wide blue line is DX correlation – other lines are ES YM NQ TF
YM [DOW emini] – wide blue line is DX correlation – other lines are ES YM NQ TF
Why does Debt Ceiling/Limit need to be raised by August 3rd, 2011?
Why does Debt Ceiling/Limit need to be raised by August 3rd, 2011? and what could happen if its not raised?
We had a long discussion in the chat about this topic today & here is an easy way to understand the Debt Limit & what could happen if debt ceiing limit is not raised?
I was in the financing field before i did trading full time & came across many people that had to consider consolidation of debts or bankruptcy & seems this is a similar scenario but on a massive scale. Although there are some major differences I'll try to explain to those of you that don't understand the Debt Ceiling Problem and what it means in a simpler way.
- if the US were an individual with lines of credit, mortgages & credit card debts then they are getting maxed out & what they are trying to do is raise the line of credit so they can continue to pay bills.
- once they increase the line of credit (in US case 'debt limit/ceiling) " then what?
- If you raised your line of credit you'd still need to pay those bills so you have 2 options 1) get a higher paying job or more income 2) reduce your bills or 3) a combination of the two. There aren't too many other options available for someone that spends everything that comes in.
- If you as an individual miss your credit card payments then Visa/Mastercard can increase your interest on the amount of money you owe them. Also if your credit score is not good then will cost you more to borrow. This in a way would happen to the US since countries like China would not lend or would need more interest to keep lending the US $'s since there would be a higher rate of default.
- This is the one problem that Congress & Obama administration were debating this past weekend since they have the same issues 1) higher income 2 ) reduce bills — but in the US case see it has to either 1 ) raise taxes 2) reduce services or money that the Federal government pays out or 3) combination of the two
- That's as simple as it gets but deciding what if any taxes are raised & what services are cut is a problem not only affecting the US but we've seen it around the world in more extreme cases lately like Greece (they had few choices left so they are trying to do those 2 main things 1) raise taxes 2) cut costs but you may have heard it as "austerity measures" and that's why so people get upset since affects so many ( and never in a good way) You are going to get paid less & get less services from the government ( who would not be upset about that).
- Most are confident that the limit will be raised but puts more pressure on the US on how that debt will be paid & eventually there will be more pain to US citizens to get the massive debt under control – it can't be swept under the carpet . Unless some bold politicians come up with telling the public that this can't go on & to expect some pain – But those politicians would not get re-elected so that's why we are seeing so much politican chess games being played out.
- Hopefully this is not a band-aid solution and some tough decisions are agreed upon and does not just become a political mess.
- Politicians will likely wait till the last minute as they seem to do with other crisis situations.
The debt ceiling needs to be raised by about $2 trillion to get the U.S. government through the 2012 election based on the current rate of federal spending or would face a government shut down , higher interest rates & problems and …
“The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations,” Geithner said
"Consider a recent report from the Bipartisan Policy Center. It says in the month of August, the Treasury has to make $306 billion in payments, but it will take in only $172 billion. Under one scenario, that's enough to pay interest on the debt, Social Security, Medicare and Medicaid, defense contractors and unemployment benefits. But there would be no money left for active duty military, federal workers, and a slew of other programs.Never before has raising the debt ceiling been so difficult. Congress has done it 102 times since 1917, and 10 times in the last decade. This time, Treasury says there is no room for a last minute deal.As negotiations drag on, credit-rating agencies have threatened to downgrade America's credit. If they do, that will increase the cost to borrow money, adding even more to the Federal debt."
interesting articles on what could happen if the debt limit is not raised and what services would be affected if a government shut down happened :
Updated Articles as of July 24, 2011 on Debt Ceiling
http://sg22.ly/riGkEc US Stock Futures Drop, Gold Up on No US Debt Deal
http://sg22.ly/nbAbkJ ‘Gang of Six’ Plan Derails Boehner-Obama Deal
http://sg22.ly/r8sr5K Gridlock for Debt Talks
Hope this helps you understand a bit clearer what this debt limit means & why needs to be raised but right now its more of a politican chess game. You can start to see that if Social Services , Military payments were delayed and if the US could not borrow the money it needs to function what that would do to the country. You would have a lot of upset people demonstrating ( probably not as violently as we've seen in Greece & other countries but if the problem got worse that would be a major concern going forward).
Again, even if the limit is raised the issue will come up again next year and how much more can the US raise the limit without 1) raising taxes 2) reducing costs?
Not sure what the balance will have to be but that is a politican one and eventually will affect all companies and individuals in one way or another.
Here's a toast to higher debt & lower taxes ( i think that's what the politicians are trying to do but seems a bit opposite of what they should be doing ..no? )
Stockguy22
what does debt celing mean? ceiling
why does debt limit/celiing need to be raised
how much is debt ceiling?
how much does debt limit need to be raised?
why do we need a debt limt/limit ceiling ?
What happens if debt ceiling/limit is not raised?
will there be a US government shutdown?
why do we have a debt ceiling/limit ?
Are you looking for free futures charts?
Sunday Night Charts for Monday July 11th 2011
Here is some fun with the currencies, let's face it, they rule the market. Noticeably missing from this evening's fun is AAPL, GLD, SLV, and /CL, with uncertainty any real technical analysis will be thrown out the window on a european or U.S. default anyway; selective or not. I hear enough about AAPL during the week, it's making new highs until Steve Jobs runs out of cult recruits and they all take a space comet to the next universe.
Back on topic. Watch what the EUR/USD does this week. If earnings and guidance come in strong and that wedge breaks down on the Euro, we could see one of those less than correlated weeks. Notice the cycles on the 2nd chart. The indices are green,blue,yellow,orange, and the red is the Euro. Red line is near perfect negative correlation to the USD.
That means when the Euro [first chart] goes up the /DX [second chart] basket of currencies will go down., mostly b/c of the 60% Euro weighting. (need to check that %)
What you should take away from these charts is, we have previously and will in the future have a USD rally and a market rally. It might not be perfect, but it will confuse and delude.
Also note that that IWM (green line) is somewhat more negatively correlated recently. The small caps have been on a tear with the USD falling, small cap rallies are typically considered a bullish 'risk on' play.
Fun Euro wedge pattern developing — if Euro doesn't get that 1.50 – should test that lower trendline at least. Unless the US Fed can print faster and Europe can burn Euros …..
In case anyone doubts the USD correlation to the markets. Predominantly negative correlation, except for when its not. If you are into visual patterns and believe history rhymes, we might be in for a rally over the next 2-3 weeks with the USD rallying as well. All eyes will be on Europe and the US debt, which one will produce more fear?
\
The indices look relatively the same, sideways to up action. I find the QQQ pattern the most interesting and obvious, with NFLX, AAPL, ect leading the way.
We are up into resistance, if you didn't buy the 200 day when everyone was in panic mode, its probably a bit too late to chase. We have earnings and an early opex this week, best to wait or play small.
AA – Alcoa – Earnings coming up. Some key levels on the chart.
Can the financials put in a base here and get us some lift? We will see. GS key $130 level, JPM, MS, BAC, WFC – all pretty similar charts. Looking range bound and weak.
Will be watching CNO around $8 level, has some good upside from here.
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And now for the OMG WTF did I do to miss this charts.
First up. The Spicy Burrito – $40/lb pine nuts can't stop this. When you sell $9 burritos fast food style, the sky is the limit.
GMCR, SBUX, PEET – Coffee is hot, hot, hot !! SBUX and GMCR team up to bring the apocalypse, seriously. PEET follows along for the ride, just don't spill it in your lap.
AZO – Huge margins, check. Consumers that have to fix the car b/c they can't afford a new one, check. New highs, check.
All American oil company. WTF. That is all. DBLE
LOW – Lowe's
HD – Home Depot.
Who is building? I guess maybe consumers might need to repair stuff since they can't buy a new house without a job ? Let's see what they do at the top of the range.
jstanford649′s simple trading system – Make profits or don’t – its up to you
click for larger image
So why do so many traders lose money? Fear and greed for one. Time wasted trying to find a holy grail to make them millions with $100 is another reason. There is no secret to trading. Why would you do the same thing over and over and expect a different result?
If you can’t follow 5 basic rules, you will lose and continue to lose.
1. NEVER risk more than 1%-2% of your account on a trade. Money management is key to longer term profits.
2. NEVER panic sell, or panic buy. So you missed a setup, so what. The market is always here. Don’t chase. Price will always find some equilibrium and create another setup.
3. ALWAYS follow the trend. Yes, you can fade a market and fight the trend, trying to pick a top or bottom. But if you can’t take risks, or panic sell at losses, then you can’t fade. Fading is fighting, you will get a bloody lip.
4. ALWAYS have faith in yourself and your system. Trading is 90% in your head. Moving averages, trend lines, indicators, fancy pattern, monkey business, and magic lines are easy to learn. What is hard is controlling your fear and your greed. A good system has profit targets and stop losses.
5. ALWAYS remember that losses are part of the game. You are going to be wrong. Trading is no place for ego.
So there you have it. 5 Rules for Trading, follow them or lose.
Now how do we trade the chart above. It’s a system I put together in 20 mins, using ThinkorSwim.
- Use a 200 EMA for longer term trend. Have a rule that if you are unsure, you dont take a short if price is below, and you dont take a long if price is above.
- Use a 20 HullMovingAvg for scalping and entries/exit with the longer term trend. Price cross above (buy), price cross below (sell).
- Use multiple timeframes and understand the scope of your trade. Are you taking a long in a longer term down trend ? If so, then that should give you a different target/stop than taking a long in a longer term uptrend.
The indicator on the bottom is a MACD (moving average convergence divergence) variation of my own. It’s a SMI stochastic, with a linear regression based histogram at its simplest form. It shows you momentum and potential overbought oversold.
What is the best way to use it all?
That is up to you. I have given you an outline and a simple intraday trading system that is profitable to trade. What I don’t cover is how to spot support and resistance, draw trendlines, and price action. Price action is how something trades.
There are things you need to understand about the instrument you are trading.
How does price move?
Does it gap?
Does it move up and retrace repeatedly?
Is there slippage?
On a side note,GOOG’s business is to organize the worlds information. If there is something you dont understand or dont know a term. Google it, take charge of yourself and your trading. Simply ask the question in google.com’s search. GOOG has spent millions and employs Phd’s to make the search heuristic.
http://www.google.com
Some google results …..
http://www.justdata.com.au/Journals/AlanHull/hull_ma.htm
http://ensign.editme.com/t72hull
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_averages
Attached .zip file, unzip and import into ThinkorSwim studies
Free Live Futures Charts- Oil (CLQ1), Silver (SiN1), TFU1, ESU1, & Euro #EURUSD for July 4th & 5th, 2011
Free Live Futures Charts- Oil (CLQ1), Silver (SiN1), TFU1, ESU1, & Euro #EURUSD
Happy 4th of July -
I’ve put up link for Free Live Futures charts to run through the night tonight July 4th , 2011 into July 5th ( its limited to the first 200 people only )
Free Live Oil & Silver Charts – Also Russell & Emini Futures live free charts ( TF_F ES_F) /TF /ES
Here is the info to link into the 1 page live charts -
#futures Charts running all night – Just click here & log in immediately http://sg22.ly/mB0cxi or if you have an #iPad use the Free GotoMeeting app has to be Version 4.8 & type in Webinar iD # 516-826-177
looks like this :
For tonight July 4th, 2011 the futures I have up are Free #silver Futures Charts( SiN1) , Free Russell Futures ( TFU1) , Free live oil Futures Charts (CLQ1) , Free live Euro (EURUSD) & Eminis ( ESU1)
Hope you find them helpful they will be live thru the night – Check back here in our blog if we run them again on different nights.
There is no sound in the webinar but feel free to type questions & if we will check them.
Enjoy Courtesy of Stockguy22.com & tymorapro.com – Ipad1 Ipad2 Friendly live Futures/Stock Charts
free live oil & silver futures
free futures chart
free oil chart
live oil chart
live oil pricing
live silver pricing
what are futures doing premarket
what are futures doing afterhours
live free charts
live free oil charts
Weekly Economic Calendar
Posted by jstanford649 on February 20, 2012 · Leave a Comment
Final
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