Nov 18, 2014: 3:52 PM CST
How do you trade run-away markets? Very carefully!
Let’s chart the intraday stock market action and focus on a kindergarten-simple strategy that beats virtually all others when the market forms these sort of creeping-trend patterns.
With the market overextended and negatively divergent into resistance, logic and most strategies suggested odds favored a retracement lower.
However, the alternate “unexpected” thesis planning called for a strong breakout on a trigger to new highs, which would be generated by another short-squeeze and stop-losses triggered by the bears.
We ALWAYS plan a logical/dominant thesis and then buffer it with an equally plausible alternate thesis to be objective and allow us time to adapt to real-time market changes.
That’s what I repeatedly stress and teach to members of the Premium Strategy Planning reports each night.
I also strongly highlighted this “violent, upside break” potential in this morning’s Market Briefing with TradeStation.
Our plan often calls for larger price movement to occur IF the alternate (unexpected) thesis triggers.
That’s because a lot of traders will “do the right thing” according to logic and then wind up trapped, forced to cover losing positions quickly.
That’s how Trend Days like this develop and sustain themselves the whole session.
So how do you trade these rare but real events as they develop? It’s actually so simple – yet hardly anyone does it. Continue Reading…
Nov 18, 2014: 11:18 AM CST
Let’s take a quick fly-by overview of the international ETF landscape to reveal an interesting fact of the current environment.
Here’s our quick 12-International ETF Comparison Chart:
With the exception of Japan – which recently entered an official recession (by definition) – the other country ETFs trade far away from their 2014 peaks.
Of course, the other exception is the United States, represented by the SPY index which trades at another all-time high.
Of these, the ‘weakest’ markets include Spain, Malaysia, and Mexico which are close to fresh new 2014 lows.
All other country ETFs charted above trade near the midpoint of their respective 2014 high and low. Continue Reading…
Nov 18, 2014: 2:03 AM CST
I couldn’t resist the catchy headline to demonstrate the mini-Diamond Pattern forming in the S&P 500.
Let’s take a look and chart a possible course for this developing pattern:
Diamonds are relatively rare consolidation or contraction patterns that represent balance in price.
At the moment, the “Balance Price” is the 2,036 level which reflects the black diagonal line in the pattern.
The green line represents the vertical distance as the “Diamond” or Kite pattern expands and contracts about the 2,036 level. Continue Reading…
Nov 17, 2014: 11:24 AM CST
Apple (AAPL) shares continue to enjoy their bull-run and new all-time highs, but what does the Monthly and Weekly chart suggest about additional upside action?
Let’s take a broader “Triple Timeframe” chart view of this stellar stock and note a key price level target to watch – and plan.
Here’s our Big Monthly Chart:
Keep in mind, Apple split 7-for-1 July 2014 so the price peak into $100 per share during 2010 in real time was $700 per share.
Nevertheless, the price patterns and trend remains the same regardless of the actual price level.
Very, very few trends progress (move) straight up or straight down; instead, they move with pullbacks and retracements along the way higher. Continue Reading…
Nov 13, 2014: 2:44 PM CST
Wow – well that was certainly interesting.
Stocks continued their short-squeezed march higher but stumbled on divergences and an intraday reversal shy of the 2,050 target.
Let’s update our charts and highlight some strong trending stocks for potential candidates to trade:
The trading range developed between the 2,040 level and the 2,035 support (with minor spikes outside it) and we saw this morning attempt a breakout higher as we’ve seen many times in the past.
However, this time bears rebuffed bullish efforts and swiped the market lower, resulting in a short-sell opportunity under 2,040 (the re-entry into the range) and then on the break under 2,035’s support.
Our focus will be the 2,030 intraday support low as our ongoing pivot for the remainder of the trading day.