The Student Loan Ranger

AKS analysis.  I’m bearish.  Also I meant SBUX not AMZN in the previous post.

TA for AKS

It has been a long time since I’ve done any analysis or watched the markets.  I can’t believe it’s already November.

Anyway I sat down for the first time in ages and spent a little time looking at some charts.  A few surprises in there, and some decent looking charts.  It feels like it’s going to take me a while to get my eye back in and to regain familiarity with trading.

Been looking at these anyway:

Bear flag on GT

Flag into heavy resistance on declining volume on MON

Predicted consolidation/low vol drop to $48 before breakout to new highs +$50 on NEM

AMZN is also approaching strong overhead resistance at $21 with strong buying pressure.

Trading is the only thing I have a genuine passion for.

Does gold have the plums to get over and above 1000 an ounce before the end of the week.  We have seen a few intra-day spikes over this level in the past couple of years, but it never lasts.

Gold bug

If the indices and economy plummet or pullback significantly, gold will get the run over this price.  There have been a lot of ads on the TV these past 2 weeks with companies asking you to send in “any gold, jewelry or broken jewelry etc for CASH!”.  You would be a fool to do this right now.

Well it looks like the stats spreadsheet I had been working on the past 2 weeks was actually a pretty useful tool.  Nice prediction of this sell off here.  The most important lesson from a technical perspective during this time was the whipsaw consolidation period in the S&P.  The spreadsheet pointed towards a drop from the range, which it did.  During the same day the market rocked out all day, with a surge above the same range the following day.

The surge north was on very small volume.  Here is the chart, and I feel it could be useful in the future to determine the top/bottom of trends.

About time too

I would be more satisfied should we close below 100 2 days running.

Charts that looked interesting on Monday night were: CPB, WY, CX, PCP, AA, CMI, EMC, WHR, MRVL, DAL, CHL, CBS, TWC, WAG & LVS.

EMC, WHR & DAL remain interesting.  I am reminded yet again of just how straight forward the smaller airline trades are just now from a technical perspective (JBLU and DAL).

Strong consolidation range

DAL double bottomed off the 50ema (daily) at support range for a wonderful 3 day candlestick pattern

On the EMC chart, I am watching the $15.40 level which has been prior resistance and is now being tested as a double bottom on the 30min/20day.  The breakout was on strong volume, and the trading has been light the past 2 sessions with a small range.

Inversely, WHR broke out nicely, hit a nice first time retest at $62 but has not dropped below and is testing that price as resistance with a nice bear flag pattern.  The volume is light, and a break below $60.50 would be another nice area to catch a short.

Yesterday was an absolute chop-fest.  Really dull and indecisive day for the first time in a while.  Pre-market the futures are up 2 points at 1028.75.  I’m not really planning on any trades until the following range in SPY has been breached to either side of $102.50-$104.  Statistically, yesterday was really weak and was comparable with August 20th in terms of my stats spreadsheet.  I have noticed a bit of a pattern at the moment, highlighted by the following diagram:

Set to rip today?

Leading days of the 19th and 25th have similar stats; Adv/Dec, ratio, average percentage of DV total, similar R values, similar Up >AR matrix values.  The Av% sector values were slightly stronger on the 25th.

The 20th and 25th shares similar statistics, however the main difference is that the market was up about a percent on the 20th, while barely staying afloat yesterday.  Again the ratios and matrices are similar here.  Elsewhere, look at how weak the materials have been relative to everything else lately, one day of top 2 performance.

The 21st was a strong day all round and has been the best performing day since I started keeping these stats.  If all the stats in the leading days are similar, then technically today should be pretty bullish.  HOWEVER, like I keep saying; in this market, what ever you think is going to happen – take the opposite side.  Therefore I am bearish leading into today but will not be surprised with a bull rally.  The short term range breakout in the SPY should point to where we are heading.

Elsewhere, I am going to have a bit of a cull on the overall watchlist.  Every day I keep finding another 5-10 setups to add to my daily shortlist.  It’s really better for me to concentrate on a list of about 10 all up premium setups instead.  Exposure to tickers has been good for me, but I am looking firstly to narrow the list to about 150 before figuring out where I am best at making the trades.

Speaking of “more setups”, keep a note on AMAT at $14 resistance, LUV setting up nicely on the daily chart in a similar way to FE.  I am waiting for WAG to pullback to the $32 mark (although I think we’ve missed this one), ITW at $42 & EMR to start forming a bull flag.  See what I mean about too many setups to monitor?

Checking the past 10 days of relative strength, I have noticed that healthcare and utilities have performed the best.  If this is such a bullish rally, then why are defensive stocks outperforming financials etc?  In the shorter timeframe, materials have been hammered the last 3 sessions as consumer, industrial and financials begin to wane.

Up or Down?

It is interesting to overlay the stats spreadsheet colour system atop the 10 day relative strength.  Would be more useful if this were done for each specific sector instead.

Charts and intra-day stuff to follow once market open.  /ES now only up 0.25 points before opening in 20 minutes.

Update 09:48US

Futures down 4.5 points in somewhat predictable fashion.  SPY right at the bottom of the range here at 102.50 so expecting a bounce here (to coincide with time of day).

JBLU featuring my favourite short term trading pattern (ascending wedge):

Easy trading

Update 10:00 US

We have slipped out of the short term trading range in SPY and are looking very bearish across the board.  Market top as indicated by contrarianism.

Update 12:00 US

There is absolutely sweet F all volume in this bounce – again.

I’m really hacked off with trading right now.  Last 3 trades in the red, including yet ANOTHER tos limit order issue and a horrendous trade in RDS.  The market maker on this stock has been taking the mickey for the past 2 hours, I even recorded it with camtasia with intent to post on here.  It was just like FTSE stocks used to me.  He’d narrow the spread to a cent, get a few, then widen it up to 15 cents at points – as soon as someone filled at market he’d move it the other way and lock it back into 1 cent.  I shouldn’t blame anyone or anything for the errors and I take full responsibility for my trading, but something else has happened in the past few days in terms of motivation.  Lately it seems (RDS, RTN, ITUB, ERTS) that every time I get into a trade with a nice chart, it goes nuts and just chops around.

I was well pumped last week and enjoying the trading, but this week I just haven’t gotten into the swing of things, and spending day after day in front of a computer (11am-10pm UK time) grinding out tiny winners with a micro account just isn’t satisfying.  Particularly when you consider the amount of work I have to put into it.  Neither is the fact that 2.5 months after finishing a college course, I still cannot even get an interview because EVERY company around here has a recruitment freeze on at all levels.  All of this is having a seriously negative effect on my positivity, and trading is impossible when your not mentally in the game.

Anyway the markets are just ripping at lunchtime at the moment on the back of zero volume, and it’s almost impossible to trade when it acts like this.  Especially when the participation by the big movers is minimal and particularly when were are testing overhead right now.  I don’t have a clue where these markets are heading and nobody else does either.  But some people are just being straight up retarded with this action right now (ie sales data yesterday).

Anyway with the last 3 trades being negative, these have negated all the gains of my previous 5 successful trades.  The ITUB one is just an absolute killer.  I knew the bounce yesterday was total BS, but you can’t change your stop level – ever.  Anyway the stock went back down to Yesterdays lows on a weak double bottom.  About the only stock doing what it should at the moment is JBLU which itself if pretty much a junk stock.

My main issue is lack of capital.  I can only have 1 or 2 trades open at any one time (and also the 3 trade rule), and all too often I am simply picking the wrong trades.  If I could have 4-6 open at any one time, I would be absolutely owning this market right now and be much more capable of absorbing these small losses.

For this reason I’ve decided to stop actively trading until I work up to save the $25k required to day trade.  I estimate this will probably take 3-5 years so let’s hope there is still a market then.  I will try out ideas on the paper system at TOS just to keep the trading brain oiled, but until I have saved up $25k, this blog will be pretty sparse in reading material.

Happy trading.

Stats from yesterday:

Tuesday stats

There were a lot of stocks making new “10 month” highs yesterday, which for me really isn’t that encouraging.  I would much rather see 12 month highs and good strength.  The numbers show some strength, but underneath the stats above I am seeing a bit of weakness and indecision particularly in techs and financials which have been fuelling the fire lately.  Services and consumer were strong yesterday on the back of consumer spending.

As the market grinds to new highs it is interesting to note that yesterdays participation was significantly weaker than the up days on the 19th and 21st.  The ranges in a list of 10 stocks I keep advanced stats on were insightful: higher on materials on the drop (all with increased dollar volume too), narrower in financials (also with shorter DV) and much lower in techs.

Interesting DV action in these stocks at the moment:

Dollar Volume changes of note

WAG, EXC, HD, ITW, EMR, ITUB, OI and NKE looking interesting going into today, but I will continue to monitor my core list of swing stocks from this weeks Crystal Balling post.  Market about to open up with futures up 1.75 points at the moment.  Charts will actually follow today (got sidetracked yesterday with physio and football).

Update 10:45 US

This market is a total chop fest this morning.  Very weak looking opening before home sales and oil numbers causing a big hard bounce on small volume for most stocks before the market started to stall.  Same thing happened today with these numbers as the consumer confidence numbers yesterday.  At the moment there seems to be no bad news, and when all the news is good and the market either edges up slightly or sells a little; imagine what will happen when some bad news hits the screens?

Statistically, yesterday was pretty poor and that showed in the opening.  Breadth was bad until the numbers came out.  Good job I don’t trade oil at all as I would have been chopped up.

Airlines have been performing well the past few sessions, but I spied this on JBLU:

Bearish wedge on JBLU

My RTN and ERTS trades cancelled each other out yesterday.  Covered ERTS by accident on a planned “make it and take it lower” limit order.  I stopped out on RTN for a small hit after the sector showed relative weakness.  Good exit on RTN as it has been dumping since.  Bit peeved on ERTS but c’est la vie.

I’m short ITUB, was up nicely this morning and was all going to plan until the spike in the markets.  I was stopped out flat for a half and continue to hold a half position short at $18.82.  The setup was from this:

ITUB short

I was actually planning to short this yesterday at $19.30 yesterday, but I had to leave for a physio appointment at 1700BST.  Double top forming with negative divergence with little buying demand.  Secondary pattern of ascending wedge was broken this morning at the open where I shorted.  Realistically looking for someting around $17.50.

$18.60 is a short term support level as shown by the candlestick formation and former flag breakout last week.

I like this bounce on declining volume, and the divergence continues to be negative.  Let’s see if this starts to show some weakness.

Industrials are the weakest sector by quite a bit today.

Update 19:20 US

This JBLU trade was so implied it wasn’t even funny.  Ultra high probability trade.  Time to cover half.

Trades do not get easier than this

NYSE breadth today

NYSE breadth has been weakening since the “oh wow it’s summer and people buy houses in summer so new home sales are up wow what a shock” news earlier in the day.

Futures up nicely with 30 mins before the open, however I’m expecting these to pullback a few points to the 1022-1026 range (currently 1032). Slightly higher open from what I can see in the financials. Today I will be managing my trades in RTN (long) and ERTS (short) while also watching the rest of the stocks on this weeks watchlist.

Elsewhere on my larger tracklist, VALE and PX look quite interesting. Vale with fairly strong overhead at $21 with support levels at $20.40 and $20. Check the daily and 15min charts on that one.

PX is looking very choppy at $79 and I’m waiting for a sell-off or breakout here.

In the shorter timeframe, BTU at $36 and MEE at $40 are also catching my eye, so I will be watching the materials and coal sectors today. Let’s also see if the short term double top in MOS pans out. Charts and intra-day analysis to follow after market opens.

Belter of a day for the bulls in terms of the numbers.  Very strong internals all day after good housing numbers and feelings about economy resulting from that.  Options expiration too for a bit more volatility about.  Of a list of 361 stocks on my watchlist, only 27 are in the red, with only 11 of those at a loss greater than 1%.  Perhaps the most interesting thing of the day is C above $4.50.  You have to be bullish with a close above this level with no real overhead until $6.50.

On the stats end of things from yesterday, we have more interesting numbers:

Stats from Thursday Aug. 21st

Heavy declines in advance decline volume, wondering if this signals a short term change in direction (up).  MON is the only stock to have had 4 days of decreasing downward volume.

On the technical side of things, most of the stocks I mentioned yesterday have performed well over the past 2 sessions.  It is nice when good economic news ties in well to key technical levels – this could have gone the other way quite easily.  It is not just technical analysis that a trader has to be good at, and the past few days have shown that.  In particular KB, CAKE, DOW, DIS, SPG and ITUB look excellent on the dailies.

I traded DAL at $6.80 yesterday and closed out this morning.  I cashed at $6.94 because I wasn’t at my computer when the market opened, and having heard oil was at year highs with the Bernanke announcement pending – it was a safe play.

DAL entry and exit

DAL is currently trading at $7.08.  I am now on a 4 trade winning streak with 6 of the last 9 being profitable.  There has been a real turnaround in my performance the past 2 weeks as I continue to learn about internals, relative strength, timing and luck.  I have also reduced my account drawdown by 450%  in the past month (which has stemmed from an error in a trade entry/limit order in DRI earlier in the year).

Right now I’m watching ITUB at $18.80 for a 1-2-3 at support.  DIS is testing a triple top on the daily at the moment on nice recent volume, any bull flag type pullback from here would be a seriously implied long.

Above are a few setups for the next few days.  I continue to watch FSYS and PCU for potential trades, as FSYS started the bull flag nicely yesterday, but has opened strongly.  PCU is a slight weaker up 0.5% and is really in limbo just now – however it has just started to move up with a strong opening candle so far now at 1.77%.

I will exercise caution with the PCU trade given that overhead is at $26.50 – but the potential gap fill resistance is a point higher in the $27.50 range.

Sectors at the open

Industrials and materials showing nice strength this morning after a bad day yesterday.  Who would be trading utilities and healthcare in this market?  Market goes down, they don’t go down as much.  Market goes up, the go down a bit.

I’ve set alerts in a few stocks, so until those trigger I’ll work on the charts for the swing trade setups I mentioned earlier.

Potential swing setups:

I have removed IP from the list after some quality control measures, the setup was a breakdown of $19 for a short, or bounce for a long depending on market conditions – but I don’t feel there is enough justification on a technical level for this trade.

Caterpillar short at $45.50

I would like to short CAT at about $45.50 which has been an important support resistance level lately.  The chart above is the 30min.  Support at the moment in the $43.50 area.  Let’s see how this pans out after a triple top at $48.  The price target is $43, after this, there isn’t much supportive action until $40, however watch out for this being a bull flag setup on the daily.  Before shorting at $45.50, I would like to see a rise on declining volume, a weak industrial goods sector and a bearish day internally for the markets.

Disney each way

This setup is similar to CAT, however this hasn’t given up $25.  Target on a breakdown is $23.25 in this.  I would also consider a long here too, and with the 50EMA a slight below, there is good reason to consider it.  This is a two-way setup, and depending on how the market feels, this could go either way.  One to watch closely.  DIS is also pretty stable when it comes to S/R, as lately it hasn’t wicked dramatically at the $25 or $28 S/R levels.

More of the same on GG

Looking to short GG at around $35 in what is a fairly simple setup.  Offload 1/3 at $34 with a view to $32.

Have we missed the action at ITUB?

This opened a lot stronger than I thought it might today, meaning we could have missed the bus here.  Overhead EMAs might give us a slight pullback back to the $17 level which I would like to see (with 50EMA support), however $16.66 is the real important level here.  This has sold heavily and consistantly over the past week and could be due a bounce.  I would wait for some good buying pressure and a continuation signal on the 15min before entering here, as this could give it up and go back to $16.50 first.  $18 also potential overhead.

Bear flag at PG

Bear flag on PG daily with all EMA overhead that I look at.  No major decline in advance volume which is what I would really like to see.  Narrowing day ranges and topping candles would be a boost to the probability.

/swing trades.

Whoosh!

Unreal move in AXL this morning on a brilliant bull flag setup.  Textbook move really;

17:00BST update:

Internals have been strong all day, with stocks finally realising this about 1.5hrs ago.  This internal strength meant I didn’t open a short position in FSYS (which has now broken out), PCU (not at hit price yet anyway).  I am hesistant to short GG now at $35.85 due to this strength also.

It was only a month ago where I probably would have opened these positions, but I am exercising caution based on stricter broader market criteria for executions these days.

Check the 5min/15min of AXL too.  Perfect replication of the daily pattern on both of these timeframes also.  Good declining volume and a really strong breakout.  Great trading in stocks like this.

Watching SPY at 99.50.

Update 17:20BST

GG is outperforming GLD and /YG today.  Should the price of GG be around $35 when /YG is $945 and GLD is $92.50 then this will be a premium short.  It has sold off a slight at $34.90 here, however there is some inra-day support at $34.50, and with 15min 20EMA support I am not going to short it just now.

GG temptation

FSYS Breakout - new support at $32 flat

Close of market update featuring statistics:

Spent the close manually entering some data into the spreadsheet.  It’s pretty interesting so far, but it will take a while before I can start to understand how the numbers affect the stats.  Looking for where the money is going in and going out, strength of moves based on dollar volume changes and identifying when sectors are starting to get stronger.  It would be interesting to combine this stuff with short ratios or floats etc.  I will probably pick about 10 stocks to track with advanced analysis, but here’s a table that coincides with my sector hitlists:

These might mean something in a while

Dollar volume = volume * close price

C = number of stocks in sector included in analysis

R = ratio of DV/C

Up = ratio higher (more money in sector if Y, not = N)

>AR = if the days R is greater than average

DV Adv = amount of shares with a DV higher than the previous day

If this is combined with technical analysis, sector strength charts, market internals and the following type of table, then I should be able to understand the market better and get a better idea of what’s really happening behind the numbers.

Financials did not really compete today

I do not include techs and financials in the first table, as financials are so heavy they’ll always be on top.  This shows that the market was up an equivalent percentage today as yesterday, but with about 72% of the involvement in financials from yesterday.  This doesn’t really mean anything yet, and a larger sample pool of data is essential before I can begin to draw any worthwhile conclusions.  This table will also give me a numerical view of pullbacks (ie 3-6 consecutive days of a lower DV percentage approaching supportive technical level).

Despite not having any positions today, I’m feeling quite upbeat about my trading abilities.  Since I’ve returned to the game my knowledge and understanding of how the markets really work – and how different stocks interact with it – has really improved.  I absolutely love trading and everything about it.  But there is something I enjoy just as much as trading itself: statistics.  I love stats, and in particular I love making stats easy to interpret and easy on the eye.

One of my weakest points in trading is the specifics of each sector, and a lack of ticker exposure.  I have started watching the stocktwits stream, just for the tickers.  When I see one, I type it in and check out the chart and try to remember the name.  For the past few hours, while sitting out of the meltdown today, I’ve been working on a spreadsheet with data courtesy of Finviz.  The basic scan is pretty simple: +Small cap, >1m average share, > $20m average daily dollar volume, price over $5.  From this I’ve reduced it down to a list of 432 stocks (not including healthcare stocks).  There are no stats in this spreadsheet, it’s the info I’m keen on, ie;

• Find out where the money is going
• Finding relative strength in sectors and sub-sectors
• Finding liquidity
• Cross referencing my trades to find out which sectors I prefer or am consistent with
• A reference for my relative sector strength scans
• Ability to determine which stocks might be suitable for pairs trading
• Actually knowing some tickers for a change

Getting to know you

I have not included healthcare because basically I have no interest in that sector at all.  I have also discounted oil stocks (services, drillers and refiners) because from analysing my past trades in the sector, my win rate is 0%.  I have also realised that outside of AAPL and RIMM I have no interest in technology stocks.  At present I prefer to trade and watch materials, industrials and financials with a little bit of interest into services/utilities (thin).  The document uses Fridays data, so a more accurate version would have to be compiled using the data over a longer timeframe, to reduce the effects of earnings or news from that day.

Rotation

I’m not at all sure that this little widget on the page will tell me anything of value.  It’s just there for the moment to track where the money is going based on the dollar volume plus the amount of participants in my list.  Basically all it says just now is that people are heavy financials and tech, and nobody cares about utilities or consumer and industrial goods right now.

A bar chart of these values for the next week may be interesting to compare to the relative strength sector performance graph to see the where the cash is going.  I would have to negate financials and tech (heavy nasdaq) from this though.

In terms of strength for this particular Monday morning, the market is junk with the healthcare not dropping as much as the rest.  Materials continue to sell off hard.

I’m not really trading today as I’m only waiting for two setups at the moment:

FSYS bear flagin range

Really like this setup on the 10min 15min chart.  Support at $30 and resistance at $32.  Big drop down this morning and the stock is bear flagging on declining volume with short term overhead at $30.80.  Nice setup for a short today provided the market remains bearish internally.

Bearish action at PCU

Looks best on the 15min, but here’s the hourly.  Gapped down to a previous high this morning with current overhead at $26.50.  I’m looking for some bearish continuation.