Thursday Wraps

What a mean, miserable day. The market players couldn't make up their minds whether they wanted it up or down. This is standard procedure after the beating Tuesday - every body is playing scared. As a result stocks are round tripping and we spend all day long bumping against the pivot point on the Q's -



Five times in six hours it hit the pivot (black line on the chart) - each time to rebound strongly. But as you can see yesterday was the same thing - inability to move through the pivot point. That suggests a difficult day for today.

I bought PAAS this morning and watched it go up and then it round tripped on me and I sold it off for a small loss this afternoon. That was the very first and very last time that I will buy a silver mining stock - I've always considered them to be a waste and I think this one is the biggest waste of all.

I bought TRA this afternoon and GRA and I may scale into DLX and RYI tomorrow. All I will do now is add to the portfolio on dips and let it run for awhile. Tomorrow I think I'll go back to day trading. TIE pretty much round tripped on the day too and if it doesn't get some steam tomorrow I'm going to dump it. I'd rather put the money into winners like AKS or RIO. XING came all the way back to where I bought it but I'm going to hold on to this one for awhile but I won't add to it. It has to prove itself and it couldn't even get to the pivot point today.

The model portfolio is now returning 1.23% and the SPY is returning 1.01% since inception.

The three guys (MSFT, GOOG, and AAPL) went their separate ways today. AAPL did real well, up 2.45, MSFT recovered from being down early and GOOG stayed down. I'll reiterate my message from the past couple of days in various posts - AAPL is going up, MSFT is range bound and will be forever, and GOOG is done. It had huge volume today and went nowhere.

The small caps are back - IWM made it into the green today.



That isn't unexpected the small caps have been taking the brunt of the beat-down because they have been so far ahead of everything else. But once again the pivot point was the line of demarcation. We need a break over the pivot point tomorrow and then we'll see what happens next.

The INDU ATR is above 144 which is always a good sign. I use the ATR as a proxy for volatility. When it is below 80 for the INDU the Dow 30 goes down and when it is above 120 the DOW 30 goes up. Not immediately but within days.

This indicator, NewMoMo is behaving normally - it is now officially really far down -



Any upward movement in the market tomorrow will spin this around on a dime and give 9 cents change.

The up/down ratio retreated to 33% which is violently oversold and the VIX remains more than 10% over its 10-period moving average. It must go back.

I'm calling tomorrow up. Although to be honest I prefer days like today for day trading.

The magic coin meanwhile, fresh off its success in calling today's market, calls tomorrow ... heads - bull market.

The score is now Marlyn 16 - 13 and 5 and the coin is 14 - 15 and 5.

Look at WLT Go

My biggest problem and I've written about this before is my impatience. I could have had some serious profit in WLT if I had just held on to it. It is up .84% today! Sometimes it just doesn't pay to sell.

Of course the people who listened to Jimmy Crack Corn Pone a couple of weeks ago about BHP are looking at this now -



I have a feeling that they are cursing their patience.

I added to my TIE and RIO positions and bought PAAS off the tweezer bottom this morning and XING too. I've been thinking about TRA but I'm going to wait until the DIA breaks through it's pivot point - 35 cents from where it is this minute (10:43 EST). The DIA bounced off its Support 2 this morning after about 20 minutes and is now going sideways up. It would have been an excellent pivot trade.



It looks like it is done for the moment - from here it is setting up to go down or up so if you did buy earlier you might want to set your stop real close.

Wednesday Wraps

As dumb as it gets. Bernake, in an effort to appear a lot smarter than he is, said, "there is no one cause for yesterday's meltdown" and the market responded nicely and went up a hundred points to finish up 52 or so. Marlyn, in an effort to keep from blowing the coffee that he just drank out of his nose, gargled out a strangled, "Bull Snot"! Which caused his Bride to ask if he were OK. Marlyn then attempted to explain what an idiot Bernake is and his Bride just patted him on the head and said, there, there dear - go make us some money. Leave it to the Bride to keep things in perspective - that's why I love her so.

Girls and boys I hope you were all elbows deep today - I know I was - this was truly amazing especially the last hour or so. Everything just turned glorious and life doesn't get any better than this.

I grabbed up a couple of stocks I've been waiting for a pullback to buy - RIO and AKS first thing out of the box this morning. I got into RIO a little early but AKS came along just fine. Both in the green in my account now but it was touch and go for awhile there with RIO. I didn't mind since I'm pretty sure it is going to continue to climb for the next whatever. I'm planning on holding these two for awhile - if they continue to go up.

Also picked up GGB and that was just because it was on my list of 12 candidates. At the end of the day I added TIE to my trading portfolio.

The model portfolio that I spoke about in this morning's post gained 3.18% and SPY (the benchmark) gained 1.48%.

I didn't do any day trading today although it would have been a perfect day for it. I wanted to concentrate on getting some things in place going forward - this kind of opportunity doesn't happen only so often (according to Dr. Brett 5 times going back to '98) and you have to take advantage of the good fortune when you stumble on to it or it stumbles on to you.

I did watch the market though and I tried to learn everything I could about the day after chaos that was possible to learn. That's how you stay prepared learn something new every day. Another thing I did was to build a Proshares inverse ETF list for use in Quote Tracker. Next time the market starts to fall I'll bring that out and watch those charts for day trades.

The three pals (GOOG, MSFT, AAPL) all went up, of course, but GOOG only made 68 cents. If that doesn't throw some warning signs up I don't know what will. AAPL was only a cent behind at 67 cents and MSFT did the best of all with 30 cents (based on percentage gained). I'm not sure if I were holding GOOG that I'd wait much longer for it to hit 520. It probably will but you wasted a lot of trading capital today on a stock that may or may not go anywhere. Now that's not a recommendation to sell GOOG just something to consider when you are making your decision.

I saw a bunch of this today -



That little DOJI suggests caution. And after the smack down yesterday one would expect traders to be a bit cautious. Of course I also saw a lot of this -



- which reader's of this BLOG will quickly identify as a BOB!. The part I like about this BOB is the volume. That suggests some conviction in the move. So we have caution and conviction - I wonder which way it's going to go tomorrow.

The four indices that we follow - DIA, IWM, SPY, and Q's all printed a black/red candle in the last hour. GS printed a DOJI. That is good - shows traders taking a breath. Of course the VIX began its trek back to low-number-land but remains more than 10% greater than its 10-period moving average. And this indicator continues to go down.



That's expected of course because all indicators based on price take a little while to work - if the market goes up again tomorrow - and I don't know why it wouldn't - we will see it turn at that time. And that will be the major indicator to begin buying stocks.

Of course the up/down ratio recovered too and output a 54% or neutral reading.

Given all of the positives I'm calling tomorrow for the bulls - an up day.

The coin meanwhile, fresh off an amazing win today calls tomorrow ... tails - bear coming. Dumb coin, bad coin, stupid coin.

Having nailed today, and who couldn't, the score now stands at Marlyn 16 - 12 and 5 and the coin is 13 - 15 and 5.

I think this is the last post for February - I just noticed that it will be number 113. There are entire BLOGs out there that don't have 113 posts in their entire existence. At any rate that is a record for me and it is unintentional I just have a lot to say. But as long as I continue to enjoy doing this I will continue to attempt to amuse, confuse, but never abuse, you my dear readers. See ya's tomorrow.

Wednesday Trades

I bought RIO, AKS and GGB. Lost LQDT to a stop and sold WLT for a small profit.

I'm profitable in all of the trades but I did buy RIO too soon - I could have been a lot more profitable in it. But I'm holding all of these for several days to several weeks because I'm trying to take advantage of the opportunity.

The Edge

Let's say that the fundamental nature of most of the stocks that were crushed yesterday had nothing to do with their crushing - just that when a beat-down happens during a riot everything gets beat and names are taken afterward.

Let's also posit that the crushing was a bit overdone - as seems to be the sober consensus this morning.

And even though Europe and Asia are still being crushed - Europe is looping back up and the futures are massive green. What does that leave us?

Well let's say that you were to write a filter and what you would look for were stocks that up until Monday had appreciated more than 25% in the past 66 days and dropped more than 5% yesterday. (All of these numbers are totally arbitrary). And if you did that what do you think you would find? A long list of stocks that up until yesterday most every body wanted to own.

Then let's say you then went through these stocks looking for ones with smooth, ever-rising closing prices for the past 6 months or so in the range of 15 to 35 dollars with high average volume and ones that you'd want to own too or maybe even ones you'd owned once in the past - what do you think you'd get out of that? About 30 matches among which we find -

AKS, RIO, TIE, TRA, GGB, PAAS, SINA, RYI, GRA, SSRI, ICON, DLX

And I'm calling this short list "my recovery portfolio" and let's see where it goes.

And if you think I am the only person who is doing this at this time of the morning (4:30 A.M. EST) you are nuts. There are 8500 fund managers out there who have ordered their minions to do the same thing - because we are all after the same thing - the edge.

2 Hour Swing Trade Finder

People who trade for a living know that the day is roughly broken up to the morning session, lunch session, and afternoon session and they are roughly two hour segments. Trading in each segment varies enough that major changes can occur as far as market dynamics but that is a post for another day. I want to talk about using 2-hour charts to inform high probability swing trades.

Many times when you find a trade from a 2-hour chart it can be used for several days running thus it makes a good swing trade finder as well. The two hours go like this 9:30 – 11:30, 11:30 – 1:30, 1:30 – 3:30 and 3:30 to 4. What? - I hear you scream – yes Virginia there are only three 2-hour periods in any given day and the last “2-hour” period is only a half-hour. That’s why the last period is of so much importance – it is the time that is used for book squaring.

If relentless selling continues during that final half-hour of the day you can be pretty sure you are going to have an up day the next day. That’s because the first time the stock shows any change all of those late sellers are going to come flying back. Those late sellers are what we in the business call “suckerfish.” They are either getting out of losing positions or making late day short sales hoping to scalp an overnight gap down. In either instance they are going to be eager to reacquire if they see any movement at all in an upward direction. This is an automatic profit if you are in quick enough.

However, in the other instance where there is evidence that the selling is drying up, I.E. either a dummy spot or NR7 there is a good possibility that the stock will not only go up the next day but also continue to go up over several days. This effect is enhanced if the market at large is also going up during the same period.

Here then are five charts that you could possibly use as models for future swing trade set-ups.

PETM actually bottomed in the second 2-hour trading period, which is indicated by that very clear dummy spot, followed by the doji, which is then followed by confirmation.



RIO also has a dummy spot this one in the third 2-hour period which is then followed by some suckerfish action which is then scared p-less by the next day’s gap up.



ARD, despite what you might think, only really has the one entry which is the NR7 shown in the first 2-hour period after the relentless selling that went on in the third day in the picture. Remember we always wait for a confirmation before committing funds and there was no confirmation until the candle following that NR7.



AM throws off a dummy spot with a confirmation (third and fourth days pictured) While some selling goes on if you have a stop it should be below the dummy spot on the third day and that is never taken out. The AM trade isn’t finished yet although a lot of folks would have gotten out after that steeple on Tuesday’s first 2-hour period.



MLS, not only is this a builder but it is a builder of malls and the worst kind of those, mega-malls. Again there was relentless selling including some suckerfish selling on the third day. Imagine the panic when the stock turned around the next day. Obviously a good place to buy since a lot of shorts had to cover. Note the obvious exit at the peak dummy spot on Monday. Next day confirms and you are out.



And that's how it is done. Again you always trade at your own risk - what I show here are examples only and are not to be taken as guarantees.

Monday Wraps It

Left out the "Sh" in the title - you figure out where it goes. Lost 187 bucks today because I took some dumbass trades. First I managed to dump ISIL which I was holding from Friday for a small profit. Then I grabbed onto some ERS because I figured it was going up - it didn't it went down and I lost about 400 on the exchange because I was too dumb to either hold it or get rid of it sooner. If I had held it I would have made a couple of beans - eventually. But I panicked - so much for disciplined trading. Then I picked up some SAI - based on you ask - nothing says I except I thought it was going up. It did and I didn't sell it so now I am holding it over night. I expect a big day tomorrow - end of month markup and a gap up first thing in the morning - at which point I will sell it. If no gap up then I will probably hold it.

Then I bought some VRSN - this time off a hammer formation with a confirmation - look at the 12:30 candle and the 1 P.M. candle - that's where I bought it - I sold at the 2:45 candle.



Along the way I also bought RIO on a hammer formation but this one failed and I sold it at a 2 cent loss. Almost a break even trade.

All in all what an absolute crap day - 5 stocks 2 wins, one even, one loss (big one) and a holder. Hopefully the holder, SAI, will bounce enough tomorrow to get me even with the board.

In the midst of all of this crap trading I missed AMR and CTXS both of which set up nicely right out of the box and would have provided a healthy return. Oh me oh my - that's what happens when you start looking around for something new. You never know what you got till it's gone - you take paradise ... oh never mind.

For tomorrow I envision an up day - the up/down ratio remains in neutral (45%) and the VIX is also neutral. Two of the three sisters finished in the red but barely and the Q's finished strong. The 20 day new highs added a 100 but the lows only dropped 14. These are all good things for an up day tomorrow - at least tomorrow morning which is all I really care about.

I'm going to leave the coin with 24 and 12 since today was mixed and there is no way the coin can land on the edge - for tomorrow - heads - bull run coming.

Hammer Entry - More Examples

Here are four hammer plays – note how they all appear alike in the entry but we have four different exit clues.

ACI – first the energy sector was going up on this date so ACI was a natural for a play – the coal industry normally participates in the energy rallies. This is a standard white-hammer indicator (1). The next bar in the sequence opened at the close of the white hammer and then descended. It then rallied (2) and the buy point is when the price exceeds the high of the hammer (3). The sell point is at 4 where we see two lower highs.



RIO – a steel play the hammer is only hammer-like but close enough to serve as an entry indicator. The next bar in the sequence opened at the high of the hammer and then descended. It then rallied (2) and the buy point is when the price exceeds the close of the white hammer (3). The sell point is at 4 where we see a twin-peaks top (two highs exactly the same). The twin peaks is generally a good exit point.



ATHR – a telecom play has three hammers in a row and any one of them could have been used for an entry indicator because we will only enter when we get the confirmation where the price exceeds the close of the red hammer. Therefore using the 4th bar as the entry point we wait until a price exceeds that close (3). The exit is based on the “steeples” we see developing at 4 and confirmed at 5. Sometimes when the price gets away from the 8 period EMA it begins to walk sideways back to it. That’s what we might be seeing in bars 10 and 11. But the confirmation comes at 5 and that says – exit now.



PETM - an Internet play – this is a good one in that it does this often. This is a red hammer entry (1) at bar 6. The next bar in the sequence opened at the close of the red hammer and then descended. It then rallied (2) and the buy point is when the price exceeds the close of the red hammer (3). The exit (4) is the large steeple at bar 12. I generally use this upside down hammer (or hanging man) as my clue to exit. Note that the 11th bar on ATHR is also a hanging man.



All of the charts come from prophet.net - an excellent site.