What is the Arc of Opportunity, you might ask? It’s reflective of the smooth, even transition that’s occurred recently in the Dow Jones Index. You could name it whatever you like, actually, such as the “Arc of Shame,” “Arc of Buying and Selling,” “Arc of Transition” or whatever seems catchy to you. Let’s look at…
Valmont Industries (VMI) has been a steadily rising stock until recently, when bad news destroyed the tranquility of the recent rise. Let’s look at the charts for some clues and educational lessons. First, the stock broke above its downtrending moving averages in late March (double arrows), signaling strength in the stock. The breakout from consolidation…
What do you do when you have a rough day trading the markets? What does a rough day look like? Today was a rough day for me, as my style of ‘scalping’ momentum trading, which relies heavily on impulse and moving averages, totally fell flat today in the DIA – the market I trade most…
Today’s price action was in some ways similar to a trend day, but the price action wasn’t as clean as expected. Let’s look at some of the key trades we could have taken in today’s market price structure. 5-minute chart: DIA First, the market began with an overnight gap of less than 100 points in…
Financial giant Goldman Sachs (GS) reports earnings tomorrow, and while they’re expected to report lower profits, investors see a silver lining in the earning reports, and have been bidding the stock higher. What could happen tomorrow? Let’s take a three-timeframe view of the stock before earnings, starting with the 15-minute chart, which reflects the ‘bid-up’…
Can you be profitable using the simple “Fade the Gap” strategy in Apple Inc (AAPL)? Let’s find out. To recap, a gap is defined as an overnight price move greater than $0.25, in which case the trade is to ‘fade’ the gap and trade against it and exit when price reaches yesterday’s close. The stats…
As I indicated earlier this morning, due to the double-doji pattern, odds favored price expansion today, with the bias being to the downside. How could you have turned that bias into profits and traded the trend day? Let’s take the S&P 500 as a proxy (you would use the SPY or the DIA … or…
I have been discussing trading strategy research I have conducted, which examines the relationship between your stop-loss chosen to the profit target chosen. In the past, I have discussed Win Rate and Net Profit – but let’s pause to view the 3 systems’ total trades taken based on the relationship. Please visit my earlier posts…
The Market Club Blog recently posted a full audio seminar complete with downloadable PDF booklet from trading legend Linda Raschke. Entitled Five Basic Trading Patterns and Their Application to the Market, Linda discusses some of her best patterns she uses in her daily trading activities. In the presentation, Linda describes the following patterns and set-ups:…
With the month of May winding down, it’s now time to see how many days resulted in an overnight gap, and how many of those overnight gaps filled, giving us clues as to whether or not the “Gap Fade” strategy continues to work. Using Excel and daily data for the DIA (Dow Jones ETF), I…