Charts and Technical Analysis

Jerryjdsu says that buying the first bar that closes AWAY from the ema of your choice, without a touch, ALWAYS keeps you on the RIGHT SIDE of the market...you may get stopped out but you are ALWAYS on the right side of the trend. The day trader's motto-let the winners run and cut your losses on the losers.

First touch 20ema 5min is a buy, second is a short. Trade the trend until it doesn't work.

Everyone Long Term Stock Investor at TOP

Trader at bottom

Robert Farrell

S&P500 first support is the 10 day ma and then the 20 day ma

S&P support and resistance levels

Near top resistance, If you're bear, you want to see the volume surge. Declining volume favors bulls.

Have you watched AAPL? All the answers are there. TIGHT BB and QQQ's broke down after trying to rally up. It should perform better then the market as it is deeply oversold, but it's inability to rally caused AMZN, QCOM and many others to break down. The narrow BB range really worked well.

Update: Unusual extremely high support/resistance levels are present at 1425 (SPY 142.8) / 3000 / 13200

Other SPY support levels are 140.15 137.57 and 135.49

The SPY 200ema is at 136.73

Chart Patterns are formed by support and resistance levels and by trend lines. The cup and handle is a longer term continuation pattern, similar to an ascending triangle. Double tops are useful reversal patterns in an up-trend, identified by two peaks of similar height, followed by a break below the intervening trough. A powerful reversal signal, the head and shoulders pattern is completed by a lower peak followed by a break below the neckline. Support and resistance are the foundation stone of all technical analysis. Trading Ranges are formed by support and resistance lines in close proximity. Price fluctuates in a narrow band with no clear trend. Triangles and wedges can be powerful continuation or reversal patterns, depending on their shape. Triple tops are similar to double tops and comprise three peaks of similar height.

These three forward looking indicators to help judge future market direction:

1. High Yield Bonds (HYG)

More commonly known as "junk bonds," high yield corporate debt has been one of the favorite plays for investors who want decent cash flow with slightly more safety than stocks. Historically low rates on U.S. Government debt have made junk bonds an attractive way to play in between bonds and equity. That's why junk is the canary in the coal mine. Risk appetites should be relatively consistent across the board. In other words, if stocks are rising, corporate debt should be moving higher as well.

If the market rallies and high yield does not participate that's worry sign number one.

2. S&P 400 Mid-Caps (MDY)

The S&P400 is a measure of stocks not quite big enough to make the cut for the S&P 500. Companies this size tend to be hit harder by economic fluctuations than those with larger balance sheets or more lines of business. This makes the mid-caps a way to gauge the real health of the earnings environment for corporate America.

Traditionally, in bull markets, mid-caps lead. When the S&P 400 isn't leading, or at least playing along with a market rally, it's time to take profits.

3. Dow Jones Transportation Index

As would be expected, the Transports are a collection of 20 American companies in the business of moving things from point A to point B. Railroads, airlines, and trucking basically. Even in a virtual age most traders regard the Transports, or "Trannies" as a good gauge of underlying economic activity. By market tradition, real bull markets only come when both the Dow Jones Industrial Average and the Transports are breaking out together. If the Dow Jones Transports can take out the April highs the Dow jones should rise 5 to 10%.

"The high yield (HYG) and junk bond (JNK) ETFs track the S&P 500 very closely," says Jonathan Krinsky, chief market technical strategist at Miller Tabak, in the attached video. "But when you see them start to diverge, it just brings up a yellow light," he says, adding that it ''just makes you wonder, why is the S&P still rallying?"

"The Trend is your friend" and "Dont fight the FED" are two of the most useful statements I can recall. Being Contrarian can work but not as often as people think. And not forgetting "never short a dull market".. or 80% of your returns come 20% of the time, the only problem is we never know that 20% will strike.

Another guiding statement is "3rd day in play take your pay"

- And dont forget the most important saying "How to make a small fortune in the market? Start with a big one!"

I also like the "down hard on the 60dma average" where on a Stockcharts.com chart the stock price crashes until it hits the Volume 60dma. For example see the chart of Enerplus Corp ERF below:

Here are some very useful tools for turning trading losses into gains

Stay bullish until ^RUT small cap strength ends and until participation ends ie. advance decliners ends. Now the market has turned the intial target is 1390. To hold there participation is required in XLE.

Nothing gets traders more nervous than failed breakouts and S&P 500 has rallied nearly 9% since the beginning of June. After yesterday's action "Book profits and leave early for Labor Day" is the prevailing game plan.

Aug 22nd: On April 10th AAPL reversed mid day with almost exact volume as yesterday and bottomed 10 days later.

Towards the end of a Quarter eg Sep 28th the market is often strong because funds want to claim performance.

Another strategy that some investors use is the Bed and Breakfast approach were an investor will hold the stock overnight and get paid for the risk by selling into early morning strength.

A lot of trading is waiting. Waiting for the best trade to come to you, waiting for your scales to be hit, waiting for final target to be hit, etc. If you are impatient you lack the ability to wait for these things. If you are trading for excitement or thrills then you will find yourself taking stupid trades out of a need for action and in return you will not experience the results you desire. Much better to head to Vegas or go bungee jumping. Before I put ONE DOLLAR at risk I want to be sure that the odds are stacked in my favor. You won't find me trading out of boredom, or taking a low odds trade because I feel the need to do "something". I am fine being flat. You should learn to love the waiting – the waiting is what enables you to make the money.

If you have the patience to wait for your setup then you better have the decisiveness to GET IN THE TRADE once price comes to you and your entry parameters are present. How many people wait for the trade to come and then when it arrives start analyzing if they should take it? When the trade has arrived it is time for action, not analyzation. This is what preparation is for. If you have done your homework there is no need for hesitation – you already know what to do. At the same time trading is not static. There are times when the odds are high that the market will reverse before your final target is hit. Do you have the decisiveness to reverse the position or flatten when this situation is present? It has been said that the number one ingredient to being a great trader is the trading guts to pull the trigger as soon as a reverse is anticipated. Be decisive.

All about gaps:

I used to think gaps had to be filled, which cost me greatly. There is an old saying that the market abhors a vacuum and all gaps will be filled. While this may have some merit for common and exhaustion gaps, holding positions waiting for breakout or runaway gaps to be filled can be devastating to your portfolio. Likewise, waiting to get on-board a trend by waiting for prices to fill a gap can cause you to miss the big move. Gaps are a significant technical development in price action and chart analysis, and should not be ignored. Japanese candlestick analysis is filled with patterns that rely on gaps to fulfill their objectives.

Different types of Gaps and Gaps Analysis

Art Cashin "Sell On Rosh Hashanah (Sep 16th to Sep 18th), and Buy On Yom Kippur (Sep 25th to Sep 26th) (SPY, DIA).."

Dow theory usually gets ignored in September before the effect kicks in October. Transports need to rise.

A very important day trading indicator is the short term TRaders INdex TRIN:

A ratio of 1 means the market is in balance; above 1 indicates that more volume is moving into declining stocks; and below 1 indicates that more volume is moving into advancing stocks. This indicator was developed by Richard Arms

Click for the TRIN chart, one of the very best Stock Indicators ever COVER all Shorts if TRIN hits 2.0

Cashin at S&P 1425 said "Hope is not a strategy"

If a stock splits or reverse splits, sell immediately and wait for the dust to settle, if it actually does.

The 3rd touch of a bull or bear flag usually means breakout..

Great Video on Topping Patterns

-- MACD 30 bars ago peaked and started to fall

-- Price fell a certain amount, MACD fell a certain amount

-- Take the percent the MACD fell and divide it by the percent the price fell

-- A higher value indicates a stronger stock

The intuition behind money flows is that "For every buyer there's a seller, but they may not agree on price, so it's the urgency of the purchase or sale that's the determining factor: that's what encourages the uptick or downtick," says Mr. Moore. Thus, a greater volume of stock changing hands on an uptick indicates the buyers are being relatively more aggressive at accumulating stock than the sellers are at dumping it. The more-aggressive investors can be expected to carry the trend. But as with any indicator, those investors may be wrong and money flows can thus give a wrong signal.

Cobra's Market View

ROBINTRACK BAGHOLDERS :)

Buy the dip when MACD is green Sell the rip when MACD is red

Buy the dip sell the rip RSI

Buy the Dip Sell the Rip RSI 2

$TICK > 0 and $ONE:$TRIN > 1 = Bullish

only EOD data is available for $BPSPX, many people use $NYAD MACD as intaday gauge for it.

Joanne Klein Market View

Tom Clayton SPY Daily

TOM SAYS %B IS THE MOST POWERFUL TOOL FOR PREDICTING AN INTERMEDIATE TOP or BOTTOM..

1. FOR SELLING FIRST LOOK FOR A %B PEAK OF AROUND 1.0,

THEN WAIT FOR AN RSI SELL SIGNAL BETWEEN 70 AND 50, AND SLOW STOCHASTIC WILL BE BETWEEN 80 AND 50.

2. FOR BUYING FIRST LOOK FOR A %B PEAK OF AROUND 0,

THEN WAIT FOR AN RSI BUY SIGNAL BETWEEN 30 AND 50, AND SLOW STOCHASTIC WILL BE BETWEEN 20 AND 50.

Toms Up Down.com

heavens know investments

Only Chart that matters

The Chart Pattern Trader

Chart Pattern Trader Youtube videos

Primary sell indicator is when MACD of RSP:$CPCE crosses zero

Faster VIX sell indicator (if slow sell indicator above does not confirm then buy back)

$NYSI Primary buy indicator crosses 20ema

SH:HDGE Proshares Short S&P500 / Advisor Shares Active Bear

S&P Equal weight index

HDGE Fund

SH Fund

Best Indicator ever for timing the market

$OEXA200R

Short-term Setup according to TradingMarkets:

All bullish setups require SPY > MA200, exit when RSI2 > 65, unless otherwise specified.

1. Buy RSI2 < 5, sell SPY > MA5.

2. Buy 2 day cumulative RSI2 < 35.

3. Buy SPY close at 7-day low, sell SPY close at 7-day high.

4. Buy VIX > ENV(10,5) for 3 days.

5. Buy VIX RS12 > 90, VIX open > VIX last close, RSI2 < 30.

6. Buy RSI2 < 50, TRIN > 1 for 3 consecutive days.

7. Buy 3 day cumulative RSI2 < 45

Bearish setup: Sell when SPY < MA200, up 4 consecutive days, cover SPY < MA5.

The bullish setups below require SPY greater that the 200dma and exit when RSI2 is greater than 65

1. Buy SPY when RSI2 is less than 5, and sell when SPY is higher than 5dma

3. Buy SPY at 7 day low, Sell SPY at 7 day high

4. Buy SPY when VIX is greater ENV(10,5) for 3 days (wait until VIX closes below open)

6. Buy SPY when RSI2 < 50, TRIN > 1, for 3 consecutive days

Bearish Setup, Short when SPY is less than 200dma and up 4 consecutive days, cover when SPY is less than the 5dma

If VIX RSI(2) > 90 and SPY RSI(2) <10, then buy SPY on close, if SPY is greater than > 200 day MA. Sell when SPY RSI(2) >65

Triple ETFs UPRO, SPXU, also SVXY, UVXY

UPRO lags SVXY up to 2% during uptrends and UPRO leads SVXY 2% during downtrends

SPXU lags VXX up to 2% during uptrends and SPXU leads VXX 2% during downtrends

SPY Long Term Trend and support lines

TradingMarkets 2 period RSI calculator

RSI2 chart school

RIMM short term setup

VIX medium term

Stockcharts Chart School

BASIC TECHNICAL ANALYSIS THAT WORKS:

Nasdaq HILO indicator

http://www.financialsense.com/financial-sense-newshour/big-picture/2012/11/10/01/stan-weinstein/markets-lower-next-3-6-months

The TedLines

www.thetedlines.com

Price usually changes momentum or direction at the Ted lines of support and resistance.

No Guarantee as to what will happen, but it is 'where' it has happened before!

The e-book explains the methodology to Objectively define Support and Resistance using any chart in any time frame.

Simply watch what price does at objectively defined support and resistance. These are the numbers for the S&P500:

S&P500 1525 1476 1432 1404 1370 1338 1307 1274 1235 1206 1161 1093 1039 943 987 898 805 770

SPY 153 148 143.6 140.8 137.4 134.2 131.1 127.8 123.9 121 116.5 109.6 104.2 94.6 99.0 90.1 80.8 77.2

Do Pivot Points work?

Testing Pivot Points

Do Pivot/Resistance/Support Points and Levels Work?

This is a very wide ranging question and has many answers ranging from not at all to very well. Trading a strategy that involves using pivots, support, and resistance levels will only be successful if the right money management strategy is used with it. Combining the infinite number of money management strategies into this brief article will make it impossible to reach an end.

This article will therefore, by necessity, limit itself to working out the probability of a reversal happening at a pivot, support or resistance area. This will be compared to the probability of the market reversing anywhere in the range between the lowest support and highest resistance point.

First of all let us simplify the problem to make it possible to gauge the probability of the market reversing close to one of the pivot points. The term pivot points will from now on be used to refer to any of the pivot, support, resistance points.

Formulae used

PP = (HIGH + LOW + CLOSE) / 3

S1 = (2 * PP) - HIGH

S2 = PP - RANGE

S3 = S2 - RANGE

R1 = (2 * PP) - LOW

R2 = PP + RANGE

R3 = R2 + RANGE

A Trending market does not have any S & R

Investment should follow 6 rules.

1.Always above the green line.

2.Always go Relative Strength or SCTR (Stock charts Tech Rank)

3.Always look trend line.

4.Buy signal should be <20 and Turing up.

5.Always use forks.

6.Always use Bollinger bands when stock over BB band we should caution and under BB band buy stock with tight stop.

A. Short term Trader

1. Buy signal below 20 and then turns up.

2. Place sell top under recent low when Slow STO indicator crosses over 50, raise top to entry point remember and over 80 Slow STO caution and always hold your investment.

3. Use 1/5/15/30/6om charts and wait for 2 of 3 buy indicators.

B. Medium term traders:

Take Profit when stock close below 50 day moving average.

C. Long term investors:

Keep investments as long as stock Above Green line and 90 Relative Strength (SCTR)

Megaphone Top on QQQ?

Sell $SPX & XIV and Buy VXX UVXY TVIX. $VIX chart below..notice deep trough %B, just wait for it it to go towards 0.50 trigger,

RSI to cross 30 & towards 50 & Slow Sto to start towards 20.. Sometimes if you jump the gun..won't happen ...

best to BE PATIENT and wait to trip Triggers. No Trade if this does not happen. Also watch MA Guppy tail start to narrow (there is a delay).

If Guppy tail does not 'Twist' just a correction in the Trend and NOT a REVERSAL.& in chart below a reload on short side.

%B to pass 0.5

RSI to cross 30 towards 50

Slow STO to start towards 20

Friday gave us two gap ups that could not be played in the normal way without more risk so here we show again the 15-min gap rule in action for these two. On these charts the candles are 5-min each so it takes 3 candles for the first 15 minutes. During that time you do not buy but only watch. If the stock keeps gong from the get go then you do not trade it. You in your head or on the chart draw two lines. One at the high point of the first 3 candles and one at the low and make you trade in the direction of the break. Usually on a gap up on good news if it does break the lower line and you short it is more often a riskier trade and experience will help you decide on this so it best on gap ups to figure you will play it only long and only if it breaks above the top line.

On the CPB chart there is also the 9-period EMA as it can often be of help in determining support areas. This stock broke above on the forth bar at about $41.40 and promptly pulled back under the bar. This is common as the "break out line" gets tested. In this case it only dropped a bit below the line and the 9-period also and in the next bar ran back up and gave $1 gain in 40 minutes. It never got much higher for the rest of the day. It is your decision how to play ones like this but one way is to treat them as an unplanned for gift so any profit is like free money.

HURC was another that gapped up on Friday and if you were not holding and wished you were you can join in if the rule works out. Here you see (oops a mistake) the line should be on top of the 3rd candles' spike high around $40.75 as that would have been your buy on the 5th candle or 25 minutes into the day. From there it rallied to a high of $43.87 so a possible $3 gain.

The idea of using this rule is it gives you a point of reference and the first 15 minute are often the most volatile as the players decide what to do. If you buy then you at least have some chart history going already and you can sell if it looks like it is not going to hold up. Paying attention to the volume is a good guide as you want to see high volume on the up times and lower on the down ones.

Also on the chart I wanted to point our how the MACD and RSI can be helpful though they are not great timing indicators they do give early warnings. Notice how after 11 AM the MACD was already going down while the stock price was going up. That indicates that a high may be coming. The RSI reached its peak over the 70 level also a bit before the stock peaked. To lighten up on positions at those times is a pretty good idea for short term trading. With the MACD giving such negative divergence then when the stock broke the 50-period EMA at about 3 PM it would have made a good place to sell any remaining shares if you were day trading this one.

Price Target Theory

April 6th 2013: Right Now, Your Risk Is At Least Twice Your Return

The Fat Pitch is about finding the circumstances where your expected return (upside) is a high multiple to your expected risk (downside). This blog attempts to combine a variety of measures to portray the expected risk/return at any given time. In general, the odds on the long side are strongly in your favor. Since 1980, the average annual gain for SPX is 9.5% (median is 13%). Every January 1st, that is your expected return over the next 12 months. The probability of making any positive return each year is 76%.

Also since 1980, the average intra-year decline for SPX is 14.7% (median is 11%). Every January 1st, an investor should expect to incur this level of drawdown sometime during the course of the year. Drawdowns of at least 8% occur more than 80% of the time. Drawdowns of at least 15% occur nearly 40% of the time. If you think that you will only suffer a small pullback of under 5% this year, the odds are very strongly against you; this has happened just once in 33 years.

So, what does this mean for our current situation? SPX has risen 10% year to date. This is already a full year of gains in a typical year. The probability of further gains than this for the whole year are just over half. In other words, it's a coin toss. Strong starts to the year improve the odds of a positive full-year, but the gains after the first quarter are much smaller. Bespoke notes that a strong start like this one leads to an average gain over the next 9 months of just 1.4% (median of 5.8%). If you buy and hold now, that is your expected return thru the end of the year. The big gains for 2013 are likely behind us.

Against this return you should weigh the average annual drawdown. The upshot is this: right now, on average, your expected risk is 10 times your expected return (14.7% drop vs 1.4% gain). Using median values, your expected risk is twice your expected return (11% drop vs 5.8% gain). These are poor risk profiles, especially in comparison to those at the start of the year.

The risk-return does not improve when you only look at positive years either. Assuming you knew with certainty that this year would end with a gain of at least 10%, what would be your expected drawdown? The answer is 12%, very close to average and the median. These results are what we would expect. Last week we looked at strong positive gains in 1Q in the Dow and discovered that many occurred when the prior year was either flat or down. In the other years, like 2013, all of the 1Q gains were entirely given up in 2Q. The probability of a large gain happening during the next few months before a large drawdown is also small. Since 1980, 88% of corrections have happened by the end of May and 85% by the first week in April

2013 is an unusual year in that it is presenting a particularly tight set of circumstances: strong gains and no correction thru the first 3 months. There are never certainties in the market, but the odds are clearly not in your favor until some of the gains from the first quarter have been given back. The chart below shows the calendar year gains and intra-year drops in SPX since 1980. The red line is the average gain; the purple box captures over 80% of the drops.

My Rules:

1) Protect your capital

2) see rule #1

3) don't trade what you think, just trade what the charts say

4) use stops on all orders

5) never let a winner turn into a loser

6) never buy R2

7) never short S2

8) 3 losing trades in a row= strike 3.......shut down the computer for the day. Something is wrong in my head!