The Closing Print live trading and financial blog during market hours.

Using this latest Traders Tip, in addition to those in the Video Library, available only to members, will help increase your “probabilities” of success. Tip Number 12 explores “probabilities” and how identifying and using them will open your eyes to new opportunities. It can also save you much frustration.

This video will help you establish a work flow, that ultimately eliminates unnecessary drawdowns on your account and mental capital.

Traders Tip No. 12

Start by observing the markets. Which index or indices look the best.

Currently, the S&P500, NYSE and Russell 2000 are performing the best, as price action remains above its 20sma. Nasdaq is lagging.

After observing the indices, move down to the sector level and make a note of what is working. Identify the sectors and industry groups where you need to focus your energy. Shun those sectors and the stocks therein, as probabilities suggest the whole group might underperform.

SPDR sectors are exhibiting signs of rotation, as the past week demonstrated a reluctance to break higher or lower. Instead, we saw range bound trading. Sectors like XLB, XLF, XLI show potential. In stark contrast, we see  the NDX100 and the SPDR technology sector exhibiting weakness. It follows that trading technology names require much more confirmation, not to mention conviction on the past of the bulls. At a minimum, stocks like AMD in the semiconductor group have some work cutout for them. Facebook and nVidia are near their 20sma. In order to consider technology this week, all of these stocks needed to remain above or move above the 20sma. (9/20ema as well)

This technique also deals with finding winning stock picks and why we look to certain stocks while shunning others. It’s all about the probabilities.

Happy Trading


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