The video above is part of a series of new day trader / swing trader tutorials. Please check the Strategies Tab at the top for more information on the tutorial series.
My favorite technique for trading stocks uses two moving averages, a short term 10ema and intermediate term 30sma. Trading in-between the two averages as they are moving higher is what I commonly use to trade longs. Reverse the slope and with down trending action I use these two to setup a short. Ichimoku is similar in that the periods are 9 and 26.
The setup starts with the 10ema crossing the 30sma. This action starts the count. Long signals work better when the Indices (SPY, COMPQ, RUT, DIA) are bullish short term and work the best when the bias is bullish intermediate and long term. Shorts work better using this technique when the indices are weak. Finding a SPDR sector that is exhibiting relative strength or weakness also helps with this setup. The more things you have working for you the better odds of a successful trade.
One example is the month of June 2013, where most sectors were selling and KRE was moving sideways, showing relative strength. The last two weeks of June 2013 had many box setup longs explode for excellent gains in a relatively short amount of time. CMA, EWBC, FMER, PACW, PBCT, WAFD, SIVB, ZION examples.
Once price action pulls back into the "box" zone, between the two moving averages, I draw a box on the chart and also a box on the stochastic indicator. I set stochastic to 14,3,3.
Once price retreats into the zone or "box" we wait for a green candle with oversold stochastic for a long. This signals sellers have lost control and buyers are resuming their trades.
I have found sideways signals are erratic, therefore nice upward sloping price action is preferred. This is by no means an end-all proposition. I use other indicators like fibonacci extensions and Kirby pockets for targets. I also check Point and Figure support and resistance zones. That said, this technique is easiest for new traders to use while swing or position trading. It also has the added benefit of good risk reward if executed properly.
As always, use stops.
Lots of setups in XLF, XLV and XHB.
Looking for consolidation here as the SPX and COMPQ test this rising wedge. If we break it could be short and sweet, perhaps to the previous pivot high last week of October and first two weeks of November. After an eleven day sideways range we broke out to new highs the week of November 11th.
Watching Healthcare and Homebuilders. $XOM looking good as well.
Statistically speaking we are headed into what would be seven weeks higher on the SP500, if it were to occur. A pullback on the SPX weekly most often follows six weeks higher without a rest. Can the index move higher? The SP500 can certainly, though I anticipate a move lower. I said that last week too…..
The Top Twenty Five Movers and Shakers which traders have focused there attention on during 2013. I like AMBA, for its push higher, BLOX, IGTE, NFLX for their recent pullbacks to moving averages and BITA, SFUN and VIPS which are setting up nice bull flags on their daily charts.
GEOS, EEFT, EDU, LOPE, SKX, KKD, BLMN, RH, WBMD.
In addition, all nine SPDR sectors look bullish, with MACD crossovers late in the week with the exception of XLU. Look to those sector components for trade setups going into the week if the SP500 continues higher. If TNX bounces and moves higher XLF could follow suit as banks benefit from the yield curve turning higher. Builders and REITs on the other hand could get hit.
Also do yourself a favor and read Ukarlewitz Blog as he always has insightful commentary on the markets. In particular, UK's points on milestone round number points 1400, 1500, 1600, 1700 and looming above 1800 on SP500 bears repeating.
As always, Happy Trading - CV
Interest sensitive stocks saw weakness on Friday. Commodities, builders, REITS and utilities moved lower.
Stocks in sectors that benefited; banks, industrial, material and technology saw strength. This video covers what to expect in the coming week.
Have you ever noticed bad news (indices) always seems to occur when least expected?
Most news is viewed as noise, so we filter it out as traders.
We haven’t had any bad news since the government shutdown; even that news was muted considering all of the MBS buying and selling by the FED. The market continues to head higher. Lately, the rhetoric over Iran is reaching a point that even I stopped to listen to this weekend. Kerry, Hagen, Israel and even Iran is getting on the band wagon.
So what Vinny, it’s just political rhetoric and saber rattling. Maybe so, but the timing, along with the underlining action is what I am focused on. Five of the nine SPDR sector ETFs are showing divergence between price and accumulated volume. The XLY, XLE, XLF, XLV, XLU charts are showing divergence between price and accumulated (up volume) volume.
SPY Box Trade Setting Up? ------ 12/03/2013
SPY is setting up for a nice Box Trade if we see buyers step in. December typically plays out like the chart below, dipping first few days and then higher. Will Santa disappoint this year? Odds are he won't.
Chart Credit iBankCoin
Profits stack up nicely as compared to Christmas rallies back to 1959.
Chart Credit iBankCoin
He is a family man, a native of New Orleans, currently residing in New Jersey.
Knowledge is power and with trading, being able to act quickly, with forethought is a critical component to success.
We wish to educate new traders in the process of recognizing and executing high probability setups, entries and exits.
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