Stock Market Index Preview for 11/17/10
The SP resolved the inside pattern with a vicious down day. Price declined to the first fib. This is a logical resting point for traders to measure the impulse. Note that the CCI is solidly negative but not terminally oversold. The next area of support will be the rising 50dma (red) at about 1162.
Naz broke out of the inside pattern and hit the area of support. The static trend line (red) is the first area of support. The 76% fib will be some support and then the April highs will be the focus area.
Multi sector daily chart:
The BTK is still in the same confounding sideways range:
The OSX was down less than the broad market which is encouraging to the bulls. Price settled above the midpoint of the range.
The SOX lost 5.50and has settled back in the prior range.
The BKX was lower by 2%. Price settled below both the 50 and 200dmas.
The XAU was the laggard. The 50dma at 2015.0 is the next area of support. Keep in mind that after a 3 day drop there is usually some order of bounce.
Oil has declined to support at the 82 area. Note the static trend line just below.
Gold has declined to support at 1320. A loss of the 1315 area puts much lower prices in play and will confirm that the intermediate trend is negative.
Stock Recap 11/16/10
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.
Off of the report, CSCO triggered short (with market support) and worked great (especially for CSCO, which isn't a big mover anymore):
In the Messenger, Rich's GOOG triggered short (with market support) and worked great:
His AAPL triggered short (with market support) and worked great:
His NFLX triggered long (without market support) and didn't work:
His JOYG triggered long (without market support) and didn't work:
Another AAPL call triggered short (with market support) and worked great:
Rich's AMZN triggered short (with market support) and worked for a point:
Rich's JOYG triggered short (with market support) and worked:
GS triggered short (with market support) and didn't work:
And Rich had an additional late GOOG short (with market support); 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 which worked enough:
All together, that's eight trades that triggered with market directional support and seven of them worked great.
Forex Recap 11/16/10
Every night, we call two primary trades. Last week, we were 5 for 6, although none of the trades really extended out to big winners as the market was narrowly-contained. We started Sunday night with a winner, but Monday night was much better. Unfortunately, the long triggered completely at A and stopped, no chance to work, so that cost 25 pips.
However, the short triggered at B, hit first target at C, and I'm currently holding the stop at D for at least an 80 pip winner, but we are more like 150 pips in the money at the moment:
Our system is designed to try to keep half of these positions on when they occur. Note that in the short-term time frame, we had a 13-bar buy signal at the S2 level at the low of the session, but that doesn't mean we can't head lower tonight, and we're going for a multi-hundred-pip winner.
Stock Recap 11/15/10
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.
Off of the report, AUXL triggered short (without market support) and worked enough for a partial:
SGEN triggered short (with market support) but did so little in either direction that I'm going to not count it for or against, which is rare:
In the Messenger, FSLR triggered long (with market support) and worked:
Rich's F triggered short (with market support) and didn't work:
COST triggered long (with market support) and worked enough for an easy partial:
GS triggered long (without market support) and worked enough for a partial:
AAPL triggered short (with market support) and also went dead flat, so we won't count it either way as well:
That's five triggers with market support, but in an unusual set of events, two don't count as winners or losers. Of the remaining, two worked and one didn't.
Stock Recap for 11/12/10
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.
Off of the report, the top short, AEIS (with market support); 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 triggered and worked:
In the Messenger, Rich's FNSR (no market support due to opening five minutes) triggered out of the gate and didn't work:
RIMM triggered long (with market support) and worked fine:
Rich's FCX triggered short (with market support) and worked:
GOOG triggered short (with market support) and worked:
So the total is four picks triggered with market support and they all worked under our rules.
Market Support on Gap and Go Days Educational Blog
This is a report from the Tradesight Educational archives. While the slides are from a few months ago, the point is a lesson that all should learn:
Market Support Even on Gap and Go Days
For those that are new, let me quickly redefine a "gap and go" day. It's when the market gaps up and keeps heading higher or gaps down and keeps heading lower (and I don't just mean a couple of point gap).
A "gap and fill" is when the market gaps up and then pulls back and fills the gap or gaps down and heads up and fills the gap.
80% of gaps on all assets (stocks, futures, forex) fill the same day. But that doesn't mean it is always as easy as "gap up, expect to head down." Remember that you can gap up, head higher, and then come back later and fill. The reality, though, is that the bigger the gap, the less likely it fills, which means the more likely that you get a "Gap and Go" day.
The reason that I hate Gap and Go days is because they tend to ruin the picks off of the report. If you have a gap up, there's a good chance that long ideas gap over their daily chart triggers. It also means that stock will gap out of the range of the prior day or so, which makes spotting patterns for intraday trades tough. It also means that the short ideas are not going to come into play, as they gap up too.
So I tend to groan when I see a big gap up, especially if we head higher shortly after. It just means that I don't expect to find much that day.
But the point of this report is that it doesn't have to 100% MEAN that we won't find something. Standard rules apply. Follow market direction and find trades in that direction. Don't assume a gap fill if it isn't happening. Don't assume more movement in the "go" direction if it isn't happening. Let the futures guide you.
So after the Holiday weekend, we gapped up Tuesday, and after about the first 10-15 minutes of drifting and everyone looking at each other wondering what to do, we headed higher. It was a big gap up, the perfect candidate for a "gap and go" day. Looked like this:
A few interesting points.
1) We did go quite a bit higher after the gap.
2) We still filled the gap later in the day (80% rule).
And.
3) There were clean triggers that were supported by the market OFF OF THE REPORT (top picks).
"Gap and go" doesn't mean ignore them. It just means that usually they don't come into play. But when the do, nothing changes.
The ES was heading up and NTES, which we had been following for a few days for a daily chart breakout on the report, came up early and tested (but did not break) the trigger. It didn't gap over. And market direction was still green when it triggered finally, and it worked great:
Meanwhile, later in the day, as the market did break lower and headed down to fill the gap, with direction clearly red, VSEA triggered short (top short idea off of the report). It gave a good $0.40 move, which is plenty to make some money:
Point is, I don't like Gap and Go days, but the rules don't change. If things align the way we like, we have trades. If not, they don't.
Tradesight Stock Recap for 11/11/10
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.
Nothing triggered off of the main report, which isn't a surprise given the Holiday action.
In the Messenger, AAPL triggered long (without market support, just barely) and worked huge, my big winner of the day and all that I needed on a Holiday:
Rich's AMGN triggered long (without market support) and didn't work until later:
There was an AAPL short but it triggered in the last 15 and didn't have time to do much.
All told, no trades triggered with market support, so even though it was a very nice day for me with AAPL (over 2 points to the final exit at the gap fill area); 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 there is nothing to measure based on the calls.
The AUDUSD with Average Daily Range and the Seeker 9-bar Tool...
Even with the Veteran's Day holiday, there were still opportunities for great setups leading to small winners in the Forex marketplace today. One such pair that saw a classic setup was the AUDUSD.
At Tradesight, we like to look for combinations of key technical tools creating a confluence of events that lead to high-probability play. We use the Average Daily Range tool to determine the extension point that is often a pause or reversal point for a pair. For example, the AUDUSD trades 134 pips per day, based on the average range of the last six months. That means that once the high to low of the day reaches 134 pips across, you often get a pause or reversal.
Another tool that we use is our Seeker tool, which seeks out 9-bar extension criteria using a special counting technique. Often, once a forex pair, futures contract, or stock reaches the ninth bar of the count, it is extended and needs a relief move in the other direction.
When you combine the Average Daily Range concept with the Seeker tool, if you can get them to line-up, it gives you a high-probability entry. So let's look at the AUDUSD in 5-minute bars over the last 24 hours.
Notice the spike at A on news that set the high of the session. The dashed green line anchors to that high as the Average Daily Range high of the day. That then causes the dashed red line to draw 134 pips lower, which gives us a potential exhaustion point based on the range. If the AUDUSD can hit that line, it will often make some sort of move back the other direction.
It does eventually hit that line at B, which is also a 9-bar move down from the Seeker tool (note the green count below the candles). This also represents a shot at reversal.
Going long off of that level based on the combination of the ADR and the Seeker led to a move higher, as we would expect. In addition, with the Holiday, it is even less likely that the AUDUSD could have moved further than the ADR.
Tradesight Market Preview for 11/11/10
On a closing basis, the SP reclaimed 4 handles from yesterday’s tankage. Price is still boxed up in the recent range with Wednesday’s low not quite closing the open gap below.
Naz posted a wide ranging day with little change. Post market, the CSCO earnings and guidance were disappointing and the Globex futures have declined to the Wednesday low. There will be a gap to work with for Thursday’s Veterans’ day session.
Multi sector daily chart:
The XAU was top gun up 2.4%. While this is favorable for the bulls, price didn’t record a new high and there is still a bearish candle at range high.
The BKX was up 2%, the 200dma remains the break level.
The OSX closed at a new high on the move, and just shy of a new high close for 2010. Keep in mind that this could be a double top and need some order of retracement.
BTK remains boxed up:
The SOX remains between fibs and is still badly lagging the performance of the NDX100.
Oil broke to new highs for 2010:
Gold is one gap down away from a selling episode; it’s just a question of from where it happens. Here or much higher after a blow off?
The VIX is now 5 major waves down:
Tradesight October 2010 Forex Results
Before we get to October, here's a short reminder of the results from September. The full report can be found here.
Tradesight Pip Results for September 2010
Number of trades: 38
Number of losers: 16
Winning percentage: 57.8%
Worst losing streak: 5 in a row (September 27-28)
Net pips: +308
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.
This month, we had a "worst losing streak" of only 3 trades, which isn't really a streak like last month had. Here's the raw breakdown, and then we will discuss below.
Tradesight Pip Results for October 2010
Number of trades: 38
Number of losers: 18
Winning percentage: 52.6%
Worst losing streak: 3 in a row (Oct 6-8)
Net pips: +218
One other thing we want to consider in reviewing the calls each month is the overall environment, and we have a very easy way to consider this, which is to look at the ADR (Average Daily Range) changes during the month. Remember that the ADR takes the daily range (high minus low) and averages that over each day for the last six months or so. Whether the ADR moved up or down during the month tells us whether ranges were, on average, better than average or not.
From the beginning of October until the end of October, Average Daily Ranges mostly increased about 3-4 pips. The exceptions were that the AUDUSD increased 10 pips and the EURJPY and GBPJPY dropped.
There are some interesting features about October, however. Halfway through the month, the calls were a net zero. The total for the month was 218 pips gained. However, two of the winners were 100 and 60 pips, respectively (net partial and final). So if you missed those two trades, that's about 75% of the net gains for the month. This was a much less consistent environment than the prior month and really depended on not missing anything for fear of missing the two big moves. Having said that, there were also two trades that we barely got stopped out of that ended up being over 100 pip winners, so just as our system teaches, the key is to keep stops tight and let the winners play out when they happen. Sometimes it doesn't work ideally, but sometimes it does.