Let’s See Some Green! And bonus charts
Today’s action was nothing less than stellar. The gap up in the morning led to a bear-flag like correction to the moving average (consolidation) and then it was quite literally off to the races when the Fed Beige Book hit the newswires.
First, two index charts showing price trapped (for now) below the rising 20 period moving average after a bounce off support:
It will be interesting to play the resolution of the ‘box’ in which these two indexes are trapped .
As a bonus, here are two potential impulse buy trades: Google and Apple. Remember an impulse buy occurs after a new momentum high is made (along with a new price high) and the price retraces back to the rising 20 period moving average. You play for a small target, being the most recent price high and place your stop a bit below (depending on your risk tolerance) the rising moving average. Study these charts:
Here is a bonus chart of PotAsh, a company with a stock in a strong uptrend that has doubled in price since last October and tripled in price since December 2005!
Look at this runaway monster on the weekly chart:
For all of you who love strong updays, here is the polar opposite picture of the industry groups from StockCharts. Remember, every industry was down – most by 1% – yesterday. Today, we see the exact opposite picture.
By the way, if you want to see red, look no further than the Bond Yields. My, this is an inverse of the last few trading sessions:
Remember, options expiration is upon us, so consider your strategies and decide how much (or if all) you wish to trade this wild market.
I wanted to tell you how my simple system testing went. It was a tiny bit better to follow the rate of change of 3 weeks compare to longer time frames, but no big difference. I tested a very simple approach: buy the next day’s opening of the ETF with the highest rate of change of 15, 30, 45, 60, …. 120 days, then put in a 2% trailing stop. I am a very bloddy beginner at system testing, though.
Thanks, Joe!
When you are testing, it’s best to use extremely simple systems and test one variable at a time. When testing too many variables, you introduce too many ‘degrees of freedom’ (parameters) and it’s difficult to know which variable causes the results, especially if there is a possible interaction present.
One thing that’s noticed that is anecdotal is that stocks/industries at the top tend to remain at the top for a length of time greater than random chance. Although great ideas often come from those making fresh scores of 95 – 100, I suspect greater gains can be made from stocks in industries reaching into the 85th – 90th percentile on greater money flow. Charts in uptrends should confirm this and provide good buying opportunities.
Sounds good! Keep the ideas coming!
Love the POT chart and also playing MOS. Aug/Jan calls for POT and Jan calls for MOS.
Thanks, Roy!
PotAsh has been great. I have not analyzed MOS (Mosaic) but it looks wonderful from a first glance, as the stock has moved from $20 to $40 (doubling) since February! I will study further. Absolutely amazing. Thanks!