As per reader request, I conducted a quick summary of all gaps in the DIA (Dow Jones ETF) for the month of January to see what would have happened if a trader faded all gaps. The question is the following: How many days in January had overnight gaps in the DIA (Dow Jones index), and…
In trading, we seek to identify small windows of opportunity where we expect one event to occur over another event, given that we can monitor our risk should something go wrong. Take a moment and think about how you define your trading edge and what it means. An edge is simply nothing more than a…
The Sector Rotation Theory is again showing majorly bearish money flow patterns into the most defensive sectors possible. The Utilities, which offer attractive dividends and who also perform well in conditions of falling interest rates, have increased 15% in the last 65 days as the market has turned bearish. Utilities greatly outperforms all other of…
A fellow blogger referred me to the Video Education and Classroom section at INO.com, which contains video and audio lessons complete with workbooks and PDF file lesson hand-outs for over 500 videos available to you On-Demand. I also recently joined the site, so I will possibly be reviewing some of the videos I watch and…
I was reading Mark Douglas’ book Trading in the Zone and came across a most perplexing yet interesting quote I thought I should share. In chapter 7, Douglas is discussing “The Trader’s Edge” and about certainty and writes the following: “[Traders often] crave the sense of certainty that market analysis appears to give them. The…
I cannot underscore the importance of a personally created trading plan to help guide you to success. Plans address a series of contingencies and document your anticipated response when any of these events occur that require your decision, whether to enter, exit, hold, place a stop, or diversify. Without such a plan, or a basic…
Just after noon Eastern, the major US indexes complete the 1, 2, 3, Gap Fade tactic, which has been working extremely well over the last few months. As a refresher, any time a gap occurs on (especially) the Dow Jones (or DIA) that is less than 100 points, the strategy that I find that works…
Ford Motor Company (F) recently completed a compressed Head and Shoulders pattern that exceeded the price projection inherent in the pattern. The Head and Shoulders pattern in Technical Analysis consists of an initial swing (left shoulder) that results in a second higher swing (head) and terminates with a failure swing (right shoulder) that takes price…
There is temporary reason to be optimistic on the US Dollar Index with its recent momentum divergence, which has already achieved its index price target. Momentum divergences are – by their very nature – countertrend trades and often are applicable only for a small target, such as a return (snap-back or reversion) to the 20…
What would be the ideal picture of a technical downtrend? A few names come to mind but let’s examine Pulte Homes (PHM): I have annotated the Daily Chart of Pulte Homes (PHM). Let’s define a downtrend using the simplest two definitions possible: A series of lower lows and lower highs The 20 period moving average…