Chris

Tradesight Stock End of 2011 Summary

Tradesight has been around for 10 years now. Amazing.
Before Tradesight was a website and subscription service, it was an email newsletter to my managed money clients as early at 1997. Each year since 1997, I write a summary report about the markets so we can all look back and remember what the year was like from a trading perspective. In prior years, I have made a single report covering the Forex, Futures, and Equity markets. This year, with much of our non-trade call stuff going into the Market Blog on the site and with a stronger split between Forex and Equity traders, I've broken the report up into two. This is the Equity/Futures review here.
Ten years ago, at the end of 2001, my end of year report stated that I felt that we were in for a Lost Decade, as Japan had seen in the prior 10 years. I took a lot of flak for that comment. Remember, we were just coming off of the Internet bubble bursting and the Y2K liquidity run-up wasn't too far behind either. Everyone else thought the bottom was in and we were good to go. Interest rates were low. Etc.
Well, keep some of those thoughts in mind as we review not only 2011's market action, but we look back at the last 10 years in the key indices.
Note that on these charts, I've drawn horizontal black lines from the opening of the chart to the end, so if you're looking at a daily chart on the S&P for 2011, the black line is an easy way to see if the index was up or down for the year. If you're looking at a 10-year weekly chart, well, you'll see.
Let's start with a look at the major indices and how they fared in 2011.
The flagship is, of course, the S&P 500, and this is pretty amazing. It closed 2010 at 1257.64 and closed 2011 at 1257.60. It's hard enough for an index of 500 stocks to be "unch" (unchanged) for a day, but wow, lost 0.04 points for the year, amazing:

NDX did a little better, actually gaining about 30 points:

Biotechs were up:

Banks were down (the old expression is that Banks and Biotechs heading in one direction lead the market, but clearly they weren't in sync this year, so the market did nothing):

Semiconductors were down:

Perhaps the most disappointing action was in the Russell 2000, which is an important index for me because I love to play the sub-$10 liquid stocks when they are jumping a couple of points a week, but that didn't happen either. Note that the Russell 2000 usually gains the most from October to April, and it's been stuck since August:

Every day, we analyze the volume in the market after the first 30 and 60 minutes of trading. The reason is simple. When you have good volume, trading works better. Our threshold is that we like to see numbers that typically project out to over 2 billion NASDAQ shares on a day to be "above average," and those are typically the days where trading is solid. Let's take a look at the day-by-day NASDAQ volume data for 2009 to give us a starting point in this conversation:

See how most of the days, volume was over 2 billion? Granted, you always get the volume drop-off for the last two weeks of the year because of the Holidays and end of year tax junk, but 2009 was solid for having trading volume over 2 billion shares most of the time.
How about 2010? Here it is:

Remember that? The first half of the year was great, then summer hit, which sometimes brings us a drop in volume, but it never really came back. We had just as many days under 2 billion NASDAQ shares as over from June until the end of the year, with the usual drop again the last two weeks.
So, how was 2011 then?

Ouch. Except for a spike for a few days at the start of August when the European situation looked bleakest, volume was pretty bad all year. I'd say less than 33% of the days over 2 billion NASDAQ shares. And December was horrible completely.
This is significant. We ended up having a great trading year, and I'll cover some of the numbers in a bit, but we did it without the usual factor that drives good trading: good volume. Interesting.
We always have certain stocks that we play over and over. That's because they are solid movers and good technical traders. However, it is important in trading not to get attached to a symbol and not notice when it's better trading days are behind it. We lost a few favorites this year, so let's have a look.
RIMM dropped off the list. Let me know when it loses marginability too:

GS was in a steady decline all year too and isn't the trader it used to be:

NFLX was a favorite of mine in 2010 and early 2011, but they shot themselves in the foot and probably aren't going to regain the glory days of trading:

What still works? AAPL, despite the passing of Steve Jobs, was up:

GOOG was great:

AMZN closed red but is still a strong trading stock:

We will be adding new common traders to the group in 2012 for sure.
Gold continued its climb this year (here's the last decade) but came back a bit in the back end of the year, the biggest drop it has seen in a while on a percentage basis:

Bonds made new highs this year as well:

Here's 10 years on oil with a clear trendline (even if it has been all over the board during the decade):

Speaking of trendlines, the weekly charts of the S&P and NDX show that we broke multi-year uptrends late in 2011. Here's the S&P:

And NDX:

Finally, as I alluded to at the top of this report, let's have a look at the last decade on the S&P and NDX. These are actually 11-year weekly charts, but I've drawn horizontal lines showing the last 10 and 11 years of action on each.
Here's the S&P 500. 11 years = down 30 points or so. 10 years = up 50 or so:

Here's the NDX. 11 years = unchanged. 10 years = up a few hundred at least:

I would call that a Lost Decade. Class dismissed.
This year, we posted our daily stock trading picks...every single one that triggered...into the Market Blog on the site. You can read them all here. From that, I actually tracked our results.
We averaged just under 5 trades per day that triggered with market support at the time. That's 1238 triggers. 32% of them lost. 36% of them worked enough for a partial and that was it (basically washes out the losers); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES and the rest were all bigger winners. Not a bad result at all. That's how we teach people to trade. You don't need to run 50 trades a day, and if you do trade management right, you don't need to win 80% of your trades (because no one does) to have a solid year. Obviously, the better volume periods are the better trading periods, and this year was a little lighter on those days, but it didn't have a serious impact.
I'm not going to do forward projections about the indices here. That's for another article. This one was just about recapping 2011 and putting it to rest. It was a solid year for Tradesight again. No complaints.

by Chris

Forex Calls Recap for 1/3/12

We ended the year on a positive note and started the year on a positive note. As I said with the calls last night, it's best to get full size in early coming back from a 3-day weekend. Can't even tell you how many times that has worked well. See EURUSD below for the winner which we are still holding, but also see the comments on GBPUSD.
Here's a look at the US Dollar Index intraday with our market directional lines:

New calls and Chat tonight.
EURUSD:
Triggered long at A, hit first target at B, raised stop twice and currently have stop under R3 and holding over:

GBPUSD:
Note how precisely on the move up the GBPUSD stopped at the green tri-star level at A:

by Chris

Forex Calls Recap for 1/3/12

by Chris

Tradesight Forex End of 2011 Summary and Results

2011 was an interesting year for Forex trading. The earthquake in Japan put a damper on trading of the JPY, and the situation in Europe kept the rest of the world watching to see what would happen, although in the end, not much did. We will start by reviewing the current state of the US Dollar from different timeframes, then discuss what this meant for trading month by month in the year, then look at the various pairs and how they moved, and finally wrap it up with our trading results for the year. I'll give you a quick preview. Our trade calls for the year using our strategy of entry, stop, first target, and stop adjustment for final exit resulted in 3096 pips in net gains.
Before we get started, I just want to point out that you can review every trade call that we made during the year by clicking here and scrolling down as far as you want. You can also view our month by month net results by clicking here and doing the same.
Let's start by looking at the US Dollar Index in 2011, which formed a giant cup formation, which is extremely bullish. The construction is outstanding and bodes well for a breakout if it happens. That move should lead to something nice for the bulls. Here's the chart, and you can see that we ended the year about where we started:

Let's also note how some of the months fared in terms of range of movement during the month. You can line this up later with our month-by-month trading results. The best ranges were April, May, June, July, October, September, January, February, November, March, December, and August, in that order. Most years, we see that August is a slow month as much of the big players are on summer vacation, and 2011 was no exception as you can see. December was also slow, as often happens.
If we back out the chart and look at the last 3 years on the US Dollar Index, we get a different view. Early in 2011, we actually broke the two-year uptrend line that had been in place, which looked dangerous at the time, but the years "cup" construction got us back above that line by the end. From this perspective, the low on the US Dollar Index occurred in the middle of 2008 (this is a weekly chart):

Now let's back the chart out even further and look at the monthly chart going back over a decade. Several things are important here. First, the US Dollar collapsed sharply during the decade, especially from 2001 to 2008. The bottom so far is clearly in 2008. In addition, the primary downtrend line (A) broke in October 2008 (point B on the chart). With the low in place and the construction of the "Cup of 2011" as I refer to it, we have two keys to watch in 2012. First, will the US Dollar break out of that 2011 cup, and second, the next major resistance is the line that begins in 2006 but connects through C and D on this chart:

Forget for a moment that this is the US Dollar that we are charting. Any chart that has a breakdown as sharp as that one did over the better part of a decade will take a lot of work to get it turning back up. Whether 2012 is the year that the Index can turn up and breakout after the decent construction of the last few years will have to be seen. If it does, expect better volatility than we have seen this last year, which will be even better for our trading. But again, it could take more work before the real breakout resumes.
Just remember that while further troubles out of Europe might be bad for the US economy in the short-run, they would be positive for the Dollar, and ultimately, that will be a plus for the US, which is no longer anything close to a manufacturing economy and thus doesn't benefit much from a weak Dollar.
I have taken the 2011 charts of each of the ten pairs that we provide Levels for each day. I drew a flat black line from the start of the year, straight across, so you can easily see if the pair was up or down for the year. Let's go through them with some additional comments.
EURUSD, our most commonly traded pair this year, ended up almost exactly where it started, which is interesting considering all of the troubles in Europe all year long. It basically just looks like the inverse of the US Dollar Index:

GBPUSD, our second favorite trading pair, was a little wilder but still ended up close to where it started. Note the Seeker 13 bar buy signal on the weekly chart right at the low of the year, which is amazing:

The USDJPY had some volatility early, but look how flat it became after the earthquake hit the island nation mid-year. It was untradeable after that, with many days of only 20-30 pips of range:

USDCAD:

AUDUSD became a better trading pair this year as the daily range improved sharply, but you wouldn't know it from this daily chart which was pretty flat overall and ended up where it started:

About the same for the NZDUSD:

USDCHF:

GBPJPY:

EURJPY:

GBPCHF:

Finally, let's get to some trading results.
From January 1, 2011, through December 31, 2011, we had 432 trade calls trigger. 219 of those led to winners, which is a 50.7% win ratio. Some months were better than others, obviously, but our system targets a win ratio in the 50-60 percent range, so we hit that number (just barely). The losing trades are always kept to around 25 pips.
So we average about 36 trades that trigger per month. Out of the twelve months, only January resulted in a loss. The other 11 months were all positive, although months like December, where the market was slow, were barely positive. The best month of the year was June with 645 pips of net gains, but October also had 600 pips. Working our way down from there, other good months were August, June, April, and February. The slowest months for results were January (negative), November, and December. It's interesting that we managed to have a decent month of August despite the typically horrible ranges in that month.
Our total net gains including stop outs (losers) selling half at first targets, and managing the trade calls as we did in the Messenger to final exits when they worked was 3096 pips. Not a bad piece of work.
I still feel like we can do better in a year that isn't so net flat, but we have seen worse years when the ranges dip for several months in a row instead of just August and December, so I have no complaints about how this year played out.
According to the Mayan calendar, the world comes to some sort of end in 2012, so I would expect that would cause some volatility. We shall see, but I'm looking forward to 2012 and trying to improve on this years results from the Tradesight Forex service, which is now entering it's seventh year.

by Chris

Tradesight December 2011 Forex Results

Before we get to December’s numbers, here is a short reminder of the results from November. The full report from November can be found here and you can get the last several months in a row vertically by clicking here and scrolling down.
Tradesight Pip Results for November 2011
Number of trades: 33
Number of losers: 17
Winning percentage: 48.5%
Worst losing streak: 5 in a row (around November 28)
Net pips: +75
Reminder: Here are the rules.
1) Calls made in the calendar month count. In other words, a call made on August 31 that triggered the morning of September 1 is not part of September. Calls made on Thursday, September 30 that triggered between then and the morning of October 1 ARE part of September.
2) Trades that triggered before 8 pm EST / 5 pm PST (i.e. pre Asia) and NEVER gave you a chance to re-enter are NOT counted. Everything else is counted equally.
3) All trades are broken into two pieces, with the assumption that one half is sold at the first target and one half is sold at the final exit. These are then averaged. So if we made 40 pips on one half and 60 on the second, that’s a 50-pip winner. If we made 40 pips on one half, never adjusted our stop, and the second half stopped for the 25 pip loser, then that’s a 7 pip winner (15 divided by 2 is 7.5, and I rounded down).
4) Pure losers (trades that just stop out) are considered 25 pip losers. In some cases, this can be a few more or a few less, but it should average right in there, so instead of making it complicated, I count them as 25 pips.
5) Trade re-entries are valid if a trade stops except between 3 am EST and 9 am EST (when I’m sleeping). So in other words, even if you are awake in those hours and you could have re-entered, I’m only counting things that I would have done. This is important because otherwise the implication is that you need to be awake 24/6. Triggers that occur right on the Big Three news announcements each month don’t count as you shouldn’t have orders in that close at that time.
You can go through the reports and compare the breakdown that I give as each trade is reviewed.
Tradesight Pip Results for December 2011
Number of trades: 31
Number of losers: 18
Winning percentage: 41.9%
Worst losing streak: 6 in a row (last week of the year)
Net pips: +20
As is often the case, the market got really slow during the end of year Holidays. In reality, we adjusted for this by going to half size for the end of the year, but under our rules for counting pips in our direct trade call results, we don't reflect that in these numbers. This is just a raw pip count for the month.
We won a lower-than-normal percentage of trades in the month, which, again, isn't shocking. The net results were only 20 pips of gains, our second worst month of the year. Average daily ranges mostly dropped in the month, with the EURUSD's 6-month average range dropping 6 pips from the start to end of December. That's a pretty sharp drop off in a six month number. Several of the days were incredibly thin trading, and I actually didn't count two winning trades in these results because they occurred on spikes that were virtually impossible to get a fill in, something we didn't see at any other point in the year.
I will be putting out a year-end Forex summary soon that analyzes the market action for the year and summarizes our trading results for the whole twelve months, which were great. Check back soon.
On to 2012…

by Chris

Forex Calls Recap for 12/30/11

Winner to close out the year in the GBPUSD, see that section below.
Here's the US Dollar Index intraday with our market directional lines:

As usual on the Sunday report, we will look at the action from Thursday night/Friday, then look at the daily charts heading into the new week with the Seeker and Comber counts (see GBPJPY); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES then look at the US Dollar Index and that's about it.
Look for new entries into the Blog and Messenger in the next week to sum up December and 2011 (separately) and comment on our Forex trading in general for the year.
Happy a Safe and Happy New Year's. Thanks for being the best subscribers in the world, and we look forward to a lot of new things in 2012.
GBPUSD:
Triggered long at A. Under our order staggering rules taught in our courses, you probably stopped out of one leg of the three at B, hit first target at C, closed final piece at D to end the year on a positive note:

by Chris

Stock Picks Recap for 12/29/11

With each stock's recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
No triggers from the report.
In the Messenger, GS triggered long (with market support) and worked:

Not much else to call in this environment.
In total, that's 1 trades triggering with market support, and it worked.

by Chris

Forex Calls Recap for 12/29/11

Another uninspired session with the EURUSD trading half of normal range. See that section below for trades that triggered, one loser and one winner.
New calls tonight and chat, but not expecting much. Here's the US Dollar Index intraday with market directional lines:

EURUSD:
Triggered short at A and stopped. Triggered short at B, hit first target at C, lowered stop and stopped at D:

by Chris

Forex Calls Recap for 12/29/11

by Chris

Tradesight Market Preview for 12/29/11

The ES reversed and posted a first day down losing 16 on the day. Below is a clean chart to better see the failure at the upper boundary of the triangle..

NQ futures lost 25 on the day which puts it bearishly below all of the major moving averages again. The near-term DTL was never broken and is now pressuring price. 4/8 is the key area nearby at 2250 which is next support.

Multi sector daily chart:

The Dow/gold ratio could be ready to make a move:

BTK was a place to hide and top gun on the day and actually registered an inside candle. Watch this sector tomorrow for the real break.

The SOX was down 1.4% and will be below all major and minor moving averages if the 10ema is lost. Note the DTL that was added to the chart.

The BKX is trying to hang onto the triangle breakout. Price remains on the north side of the 50dma.

The OSX was very weak and remains below the 38% fib. The 13 Seeker signal will look very ominous if the Dec. low is taken out.

Oil settled below 100:

Gold make a new low on the move and a new low close. The Gann box is very close to a bearish frame shift down.

by Chris

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