Wednesday, December 30, 2009
Friday, November 13, 2009
Monday, October 12, 2009
The skinnier yellow line that's drawn has been acting as resistance since October of 2007. So, every time the SPY starts to trade around the yellow line, again, one would expect it to be difficult for it to move & trade above it...
Well both lines are intersecting and it 'puts' (no pun intended) things in your favor to take a trade to the downside. Again, your risk to reward is in your favor by going "short" (or trading to the down side). The reason why your risk is reduced is because if you're wrong, and the SPY continues to trade higher from here, your 'stop loss' (or where you should exit the trade) should be right above the yellow and blue lines and that would minimize your loss from being wrong.
I believe we go lower from here...but that's just my opinion.
BTW, the SPY is roughly 1/10th the size of the S&P500 index. And for those of you who don't already know, the S&P500 index is the bellwether for the American economy........and for those of you who don't know what a'bellwether' is, look it up; Wikipedia it or something.
Monday, July 6, 2009
Below is a DAILY chart of the same 'underlying' (ticker 'SPY' (which again, is basically 1/10 of the S&P 500 index)).
My target for the move lower is to the 80'ish level or 800'ish level on the S&P 500; give or take a few points. I base that move on the embedded head & shoulders pattern that started to form since the beginning of May.
Wednesday, June 3, 2009
Below is why I think that. We're looking at a 3 year weekly chart. So each bar represents 1 week of price action (This is ticker SPY...Which is 1/10 of the S&P 500 Index). Where I placed the white circles (going from left to right) is where we previously had 2 instances of support...then it broke support...and now we're on the bottom side of the red-line so it SHOULD act as resistance, forcing price lower.
Just a thought......I could be wrong because I often am.
Saturday, May 23, 2009
Thursday, May 21, 2009
Not my article but worth the read. And there's always 2 sides to every story.
Future historians might well look back on events of the last week and see a milestone of decline in the waning saga of American freedom.
The bridge between the free market and a command economy was likely crossed when, at government demand, thousands of car dealerships all across the country were put out of business. They were profitable, they were legal, they were useful, and the White House ordered them closed. A presidential panel, comprised of everyone except car-industry experts, demanded that Chrysler and GM cut off a third of their dealers' heads.
Hundreds of thousands will lose their jobs. Thousands of businesses will close. Millions of consumers will be affected.
Because the government said so.
If Chrysler and GM want their mandatory bailout money, they must do what the White House says, and the White House says there are too many car dealers. And so, people's lives will be destroyed, massive investments will be lost, family businesses will be annihilated, the life's work of countless honest American business men and women will be flushed down the toilet.
And barely a whimper of protest is being heard. The crown has spoken and the subjects bow and scrape.
The argument is that, in the shadow of bankruptcy, GM and Chrysler need to shed the deadweight of underperforming dealerships. The problem with that is that dealerships are not a financial liability for carmakers and that many of the dealerships that have gotten the ax are among the nation's most profitable.
One Jeep dealer in upstate New York, for example, sells just over half of all the Jeeps in its region. It not only outsells all of the other Jeep dealerships, it outsells all of the other Jeep dealerships combined.
And it has lost its franchise.
Another false assumption is that dealerships cost carmakers money. They do not. They make carmakers money. Even small, low-volume dealerships are a net financial gain for manufacturers. Dealers not only make companies money by selling their automobiles, they have to pay for signs and pamphlets and displays, all of which can only be bought – at exorbitant prices – from the manufacturers.
Further, it is insane for any business to assume that it makes more money by reducing retail outlets for its products. What did Wal-Mart do to make more money? It built more stores. What did McDonald's do to make more money? It built more stores. What did Starbucks to do make more money? It built more stores. What are GM and Chrysler doing to make more money? The exact opposite.
That might make sense in the anti-car fantasies of the ruling regime in Washington, but it makes no sense whatsoever on the balance sheet. It is pure big-government-knows-everything lunacy.
It is also a disservice to consumers.
The Obama dealership closings gut many rural areas, taking away both sales and service. Buying a car, or getting your car fixed, will now require a trip to some far-off city.
Some argue that with declining sales at GM and Chrysler, it is only natural that there should be fewer dealerships. That is true. Of late, some 400 or 500 American dealerships have gone out of business each year. But that has been a function of the marketplace, not of government dictate. Those who can't keep their heads above water have sold out or shut down.
Those who've kept in the black, who have been able to remain profitable, have stayed in business – until now. But now, profitable businesses, which seemed poised to continue to employ people and stay in operation for years to come, are on the way out.
In addition to the impact on owners and employees, the communities they serve are also devastated. In many areas, in states where sales tax is a major part of a community's revenues, the car dealership was the largest single source of local taxes. That loss is huge for municipal budgets. The same is true for the various charities, United Ways, sports teams and school activities that have long relied on the generosity of car dealers.
In one fell swoop, because the White House said so, that is all gone.
Ironically, the government has decided to decimate the only profitable part of the car industry. Not only are the car dealers not operating at a loss, they are the only part of the car industry that isn't being bailed out. So the government is propping up the part of the car business that doesn't work, and attacking the part that does.
It is morally and legally wrong. This is not the way a free country operates. It is absolutely not the American way. This is the first taste of a command economy, of central-government planning of industry and commerce.
It didn't work in the Soviet Union, it didn't work in Cuba, it didn't work in North Korea, and it won't work in the United States. If their goal is to take private transportation away from Americans – and it might be – this is a good idea.
Otherwise it's a horrible idea.
It is an attack on the free market, on the value of investment, on the ownership of property. It is essentially an act of theft.
This is change we can believe in, and will come to regret.
Tuesday, April 28, 2009
To show my observation/thought again....take a look at the 2 year/daily chart below (without all my crap drawn). It might be hard to see it but the same story has happened a few times in the past. Again, the chart below has price action moving up (gray arrow) with divergence on the MACD (black circle(s))...following this kind of divergence pattern, you can see how the price action followed (Maroon arrow - IT WENT DOWN!). Some of the divergences are harder to see than others but the same principle applies. So the questions that pops into my mind is, "Are we seeing this same pattern and should we expect a pullback?". My answer is yes...
All in all, just be careful if your trading to the upside. I feel like there's less risk playing it to the downside but nonetheless, I could be wrong...I frequently am.
Tuesday, April 14, 2009
I'll be back and I'll keep you posted as it develops.
In the meantime, the markets (in my opinion) are over extended and showing signs of divergence. I'm expecting for "it" to go lower from here...
Sunday, March 22, 2009
Notice anything different? Or notice any relationship difference than what I explained above? Everything freak'n shot higher!!! Bonds especially and their yields all made BIG moves. As John Jagerson said, 'when this relationship breaks, you CAN expect volatility'.
That's exactly what I'll be looking for.
Monday, March 2, 2009
Tuesday, February 24, 2009
By the way, we got a pretty good pop up in the markets today. It didn't close above this past Friday's open/high so that's what I'll be looking for...but today's action could just be a dead-cat bounce as well. Wait for confirmation before picking a side...
Monday, February 23, 2009
Sunday, February 22, 2009
Personally, I think we get a bounce from here:
1. The trading day on Friday (2/20/08) generated what's called a "bottoming tail hammer". It's a signal that a possible reversal is coming. Look for a close above Friday's opening price for further confirmation.
2. The MACD indicator barely shows some divergence. Meaning, the SPX (S&P 500) has gone lower on less momentum. 1/20/09 the MACD delta was at -9.15 and SPX closed at 805. 2/20/09 the MACD delta was at -6.34 and closed at 770.05.
3. The Stochastic indicator is WAY WAY WAY oversold indicating that a pull-up in the markets could be soon (I don't personally put a lot of weight on this indicator).
But here's what's important...I could be dead wrong! And I'm ok with that; the point is that I believe there's a low risk entry here to go 'long', because if I'm wrong, I'll lose very little.
Never FOCUS on how much you can make with a trade; FOCUS first on how much you could lose!
Sunday, February 15, 2009
Thursday, January 29, 2009
Tuesday, January 27, 2009
#2. I've revisited a trading strategy and I'm going to focus a lot of my time on learning this system for currency trades. It's called "Ichimoku Kinko Hyo". The picture of the system is below and don't ask me how to read it or what it even stands for because I have no idea. The 'expectancy rate' is high for this so I'm hopeful it'll produce good results. I'll keep you posted and yes, I'm a nerd; an ambitious one at that!
Sunday, January 25, 2009
Below, the S&P 500 chart...I should have listed the DJI but we've following this one so I'll stay with this for a little bit longer. This is/has been sitting on a longer term support with stochastics looking to turn to the upside...This, along with the rest of the markets, kind of consolidated for about 4 days...It has to pick a direction soon.
The EUR/JPY (pictured below) is a currency pair that follows the US Markets. If the US Markets go up, then this goes up...and vice-versa. That being said, from a technical perspective, the "hammer's" that have been forming for the last 3-4 trading sessions is an indication that a reversal could be in order...so if the EUR/JPY goes up; then we could anticipate that the US Markets will too (The EUR/JPY follows the $DJI better than the $SPX)...
Lastly, we have TLT (pictured below). Which is basically Bonds. And as you can see the bond market has been on fire! But, from another technical perspective, the "head and shoulder's" pattern formed up and the trading broke the 'neck-line' (the black line you see). As a general rule of thumb, if the neckline is broke then the movement of that security should fall the same amount as it rose from neckline (black-line) to the top of the head (122'ish). Assuming that is true, we could GUESS that TLT could move to 100'ish.
The thing about TLT and the bonds is that...Apparently, money is coming out of those 'avenue's' or means of investing. Usually, when stock markets get really crappy, institutions will put there money into Bonds (hence why TLT has had such a great run). Conversely, with TLT coming down and the prospect of it going down further, Money is flowing out of bonds and more than likely back into stocks...That being said, stocks haven't really moved all that much which is why I'm expecting a move higher from where we now sit...
But again, just an opinion and I'm often dead wrong.
Wednesday, January 21, 2009
Looking at the SPX now (because that's what we've been tracking), just yesterday I talked about how I thought we were going lower but there was an indicator (Stochastic) that was telling us the markets are oversold and buying should be coming back in. Well today's action sent us higher and almost wiped away Tuesday's losses. From here, I'd feel better if we got above 850 on the S&P to confirm that this recent run lower is over and that a reversal to the upside will likely take place...
Tuesday, January 20, 2009
Monday, January 19, 2009
Now, between Wednesday, Thursday and Friday it moved in the positive direction 300 pips. If you were good enough of a swing trader; 300 pips on 1 mini contract is $300.00 in your pocket...if you bought 1 full contract (10 mini's) that would have been $3,000.00 in your pocket...And finally my friends, if you had 10 full contracts; well that's a good ol $30,000 you would have banked all in 3 days. Can we say SWEETNESS!!!!!!!
That's the leverage of trading currencies and that's why I do it!