Posted on October 12 , 2010 In Daily Updates

Nuggets From A Great Book

Tomorrow’s Plan:

My journal says that outside days are usually tougher to trade. The long side continues to be the right side to trade on, with a few caveats. Most new highs are not being held for very long; we get a new high, and the market is sold off. At the same time, the short side is just not working at all. This type of action is creating this slow stair step higher. This simply tells me that longer term traders are using the highs to liquidate positions into shorter term momentum traders. Any early sell offs are being bought up. So the correct trade for me is buying pullbacks and sell offs, and exiting into momentum. Pretty simple! At some point, the liquidation from the longer term traders will overcome to “buy the dips” mentality, and we will get a turn around in the price. Where will that point be? I am sure that plenty of shorts have suffered trying to pick that point, so I will not try and guess. Suffice to say, I am on the look out for a big stop run day where the market opens lower and trends downwards all day. Until that time, I will be looking for longs.

Today’s stats are mildly bullish, the volume rose, and VIX made new lows. TLT broke an hourly range to the downside within a daily tightening range. That could be the start of a downtrend in TLT, we will see. The amount of calls bought vs puts exploded today which usually means the market will explode in some direction very soon. Usually a large amount of call buying in the last year has indicated some kind of trend day rather soon on the horizon (sometimes up, sometimes down). As I mentioned above, a stop run down day would not be surprising: a gap higher tomorrow that does not follow through might set one up. One last note, financials had a great day today across the board, perhaps there is some renewed life in them?

My Best Ideas:

•LONG SBUX: This went nuts today on huge volume. It broke out of a choppy range it has been in for about half a month. A retest lower of the 26.50-26.75 area would be a strong bid if this is a real breakout. There may be some MATD action in the morning which would offer a buy in this area, which I would take as a very high probability trade.

•B.O. QCOM: Very tight range on decreasing volume between 44 and 45. It had a bit of a false breakout lower today and a rally to the top of the box. I think if it can gap over 45 tomorrow it could test the 45.75 level and beyond.

•SHORT LOW: This stock’s hourly is just starting to turn over. It might be a bit premature as a short, but I think it has potential as a nice down trending stock within the next couple weeks. It is sitting on some support at 22 which will probably give it a little bounce.

•Pretty much everything else is a long, although buying aggressively at these levels does not appeal to me. As I look through a ton of hourly charts, I mostly see rising trends. The bulls are very comfortable in their positions.

Best of Luck Tomorrow

Today’s Trades:

Today’s Journal Entry:None

Last Note

I don’t really want to go into the whole ordeal, but I lost buying power on Friday and Monday, and regained it today after the morning session. Suffice to say, my birthday was sure interesting. I just finished reading Time Compression Trading, and you can find the review under my Amazon Reviews on the sidebar to your right. Was a great book with lots of nuggets of information. Here are a select few I found helpful (all my own interpretation):

•Asking the right questions after observation is key to getting insight into the underlying structure of the market. Leo Divinci was not all that special, but he fully actualized his potential by observing, and asking the right questions.

•Winning on shorter time frames means knowing when to hold against a stop run, and knowing when to liquidate when it is higher time frame order flow. To simplify, the person who can hold longer on a shorter time frame will usually beat the person who must have something happen right away.

•The smallest group of people control the largest size in the market: they did not get that way through losses.

•When I lose, my perspective has been lost, which means I over focus on price and a single time frame. To regain perspective, you remember that the market is not a place of prices, but a process of people doing things. When you look at a chart and ask, what are people doing here, you gain perspective. The more questions you ask yourself that give you insight into how people are behaving, the more insight you will have in what they will do next.

Lucas

Posted on October 11 , 2010 In Daily Updates

Sleepy Day

Tomorrow’s Plan:

Pretty sleepy day. Volume started off higher then Friday before really slowing down after lunch. The late day plunge was indicative of a build up in long positions which experienced a stop run before going right back to where it broke down from. I am sure whoever was long was pretty shocked to see such a surprise move like that. VIX had a serious gap down today. I was a bit surprised at how weak the VIX was given the lack of movement in the market. I do remember other situations in low volume environments where the VIX started acting oddly, and the discrepancy was made up for in the coming days. Otherwise, I would say the VIX is indicating a really strong market. Gold got a nice bid today as well. I think the next few days will tell us whether that buying order flow means business or not. I have two gold stocks in the best ideas list that I think have nice potential patterns.

One last note, the Euro appears to be pausing in its relentless up move. It could put some pressure on the market if it really starts rolling over.

My Best Ideas:

•LONG AUY and ABX: These are two gold plays I like. I like the fact that AUY had increasing volume today on a reversal candlestick. The entry would be a long over today’s highs and an add over the monthly highs. ABX made new highs today, but its volume fell pretty precipitously. It is still a long, but a drop in volume means less of an edge.

•LONG LEN: Still a long from yesterday. Good run up today, volume high, and more room to run. All good signs from this stock.

•LONG LVS: This might have some MATD action in the morning before resuming its upwards trend. This is a perfect long on all time frames.

•SHORT AKAM: This stock seems to be resolving a bearish flag to the downside. It has to take out the 43 support before it can really be let loose.

•B.O. INTU: This showed up in my scans after having increasing volume today. I think this is forming a nice consolidation area that would be a good breakout at some point in the next week or so.

Best of Luck Tomorrow

Today’s Trades:

Today’s Journal Entry:None

Last Note

No trades today, I have had no buying power since Friday. Until that gets resolved, I will be an observer, I will have an update tomorrow.

Lucas

Posted on October 10 , 2010 In Daily Updates

Some Nice Breakouts

Tomorrow’s Plan:

Interesting thing that shadow trader pointed out about the next few days is the lack of news announcements. Monday is also a holiday, but the markets are open. I will be watching TLT to see if it can break its moving average and uptrend line. VIX is sitting right at support; we haven’t seen VIX sub 20 since the beginning of May. Maybe we will get that this week! The trend is still higher, and SPY could easily go another point before coming into major resistance. The stats from Friday were mediocre, but bullish. Volume was higher in about half the stocks in keystone’s list, so I would call that a bit of a wash. Although there were some nice breakouts that I put in the trade ideas below. It might be a slow week with the lack of news and the quasi holiday tomorrow. I wanted to also put in here that seasonally, October tends to be bearish (If I remember the stock almanac correctly). I am not out there shorting aggressively, but I would not be surprised to see some afternoon sell offs, even if they don’t develop into full down trends, as the month goes on.

My Best Ideas:

•LONG SNDK: This stock had a great breakout on higher volume and has some resistance at 40. If it gets through that level, this looks like a great long.

•LONG AKS: This showed up on my scans after a big move on higher volume. Looking at the chart, it has a ton of melted candles over the past month, but this breakout higher might be the start of a nice bull run. Other steel stocks have similar patterns, so this whole sector will be worth watching.

•LONG LEN: This homebuilder broke out on increasing volume. It is above some key resistance levels from the past months and has a bit of room to the upside. Worth watching

•LONG ORCL: This bad boy is running higher after some shenanigans early Friday morning. Volume is decreasing, which is not a great sign, but its a very nice technical breakout.

•B.O. SHORT DAL: This stock showed up on the scans with a large move down on higher volume. It needs to get through some resistance around 11.25, and its daily 50 SMA which is a bit lower. Not a great technical pattern for a short, but the higher volume makes it worth watching.

Best of Luck Tomorrow

Today’s Trades:

Today’s Journal Entry:None

Last Note

Lucas

Posted on October 8 , 2010 In Daily Updates

No trades

No trades today, have a great weekend : )

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