Thursday, February 11, 2010

Trend-line breaks versus Channel Breaks

As much as we love the trend-line break trade, the best and least messy moves are straight up channel breaks.

Out of all our triggers (around 12 and counting) from last night the two strongest moves were WLT CMI channel breaks and not trend-line breaks.

Why is that? Because while you don't want a trade to be too crowded, you do want it to be on enough traders' screens for it to get momentum; trend-line breaks are just harder to spot for most traders. It's a fine balancing act between obvious but not crowded.

WLT 73 long alert

CMI 53 long alert

Another Example

AAPL great move today through trend-line but heavy resistance and congestion ahead.

Market Talk

Trend-line breaks worked well today but if you're looking for continuation you will have to be patient.

PCX found support on the 100 SMA, broke trend-line today for a nice move. But look at what's ahead in terms of resistance: 50 SMA, 20 SMA and lots of daily congestion. Nevertheless still bullish -- if you're a swing trader this is a hold with stop on today's lows.

Last Night's Triggers

Alerts that have triggered thus far into the trading day.

Arrow is entry point alert from last night's newsletter:

Wednesday, February 10, 2010

Position Update

We went long a few shares AAPL at 196.21 swing as it keeps bumping up on the trend-line. In retrospect we should have waited for trend-line to actually break rather than anticipate it due to bearishness of the market.

On the upside we like 198 and 200 targets for partial exits and on the downside around 194 (2 day low) and we'll probably eat the 2 points loss.

Update: Sold AAPL for 1 point loss this morning. Will try again long on trend-link break.

Tuesday, February 09, 2010

Position Update -End of swings

We don't often blog/tweet all our real-time trades but if we lead people in, we will lead people out. And since we posted our entries, here are the exits.

As posted in the account today we sold into this gap-up with best profits being (from Friday buys) CENX FCX TC 7-8% profit to lowest being SMH NUE XLE 2.5-3% profit.

Our focus for rest of day will be day-trades.

Monday, February 08, 2010

Position Update

We were expecting a consolidation day but the market gave back a bit too much for our comfort. Nevertheless the big levels are still holding but the range is tightening and we should get some real direction soon.

Here's what's left of our swings (at 3:50 PM):

As we tweeted today we sold ANR for 3.4% profit from Friday swing (earnings tomorrow) and sold SQM for 1% loss and MOS for 3.6% gain in front of AGU earnings tomorrow.

We gave back a chunk of the remainder of the positions from Friday but at least having these swings kept us from trading in today's chop-fest.

DT misses the bottom!

Guest Post by amigo Dinosaur Trader:

For Those Who Missed The Bottom

I’m not sure how Friday went for you but for me, it sucked. No, I didn’t lose money, it wasn’t that bad, but I missed the bottom in a big way. While HCPG and a bunch of other people I know were stacking money faster than you can say “comparative analysis” I was at a friend’s house, drinking some coffee and musing over what a shitty year 2009 was.

I thought I was being smart because I had made good money on Friday morning and then had dribbled it all away picking “the bottom” too soon. At around noon, I made my last losing trade of the day, in PCU. I decided when it started to pull back yet again that “the bottom” just wasn’t going to happen on a Friday afternoon. I congratulated myself with having the restraint to walk away instead of churning myself negative on the day and I head over to my friend’s house.

On the way I stopped off at the local hardware store to pick up some paint. I asked the guy mixing the stuff, a surly old man named “Kenneth” to use the “low VOC” stuff. He rested his hand on a nearby gallon of paint, looked down at his shoes, took a deep breath and looked at me, shaking his head ever so slightly.
“You’re not going to die of paint fumes, son” he said.

“Yeah, I know, it’s just that I have a small kid…”

Kenneth interrupted. “Your kid’s not going to die of paint fumes either. Look, let me tell you a story.” He drew in a hoarse breath. “You know how Mickey Mantle died? His father had some disease, Hodgkin’s disease, or Huntington’s disease, one of those.” He waved his hand in the air as if swatting away some imaginary mosquito. “Anyway, Mickey Mantle thought his entire life that he was bound to die of the same disease his father had, and so he used this as a rationale to go out and party. He figured, who cares if I have a few drinks, I might as well enjoy myself before I die of this awful disease.” He looked at me with a flash of impatience as he could tell I had yet to make any connection between his story and the “low VOC” paint. “Well, you want to know what he died of?” Here, Kenneth paused for effect and then he practically yelled, “He drank himself to death!”

“Okay, fine,” I said. “Give me the regular stuff.”

As I shuffled away with my toxic paint, he left me with one final bit of advice. “Just eat whole wheat bread and drink plenty of water and you’ll do fine.”
The story had shaken me up a bit. Perhaps Kenneth’s lesson was that I was too focused on certain details, and missing the bigger picture in life. I congratulated myself again on having the perspective to walk away from a crappy day in the market. “Maybe I’m beginning to see more of the big picture,” I told myself. I smiled.

The talk at my friends house over coffee was of perspective and how, as parents, aging parents, we had gained a lot of it in only the past few years. I left feeling good. It was 3:30 and I wanted to get home to see the last few minutes of trade.

I clicked on my monitors and sat down. My Tweetdeck was full of new messages including a direct one from HCPG, “You missed our epic bottom buys, all in real time. Dick!” “What assholes,“ I thought. I scanned through charts… everything I was looking at only a few hours earlier had ripped, simply ripped. All of that perspective I thought I had just gained went right out the fucking window. I was disgusted.

I clicked off the monitors and went downstairs to psychologically abuse my cat.
Over the weekend I did all kinds of research, calculating pivot points, drawing trendlines, etc. I told myself that I would get back in the saddle today and make up for missing the bottom. Instead, the market is fucking around, displaying less direction than Clay Aiken surrounded by a circle of men. I’m down a little bit and pissy. I told my daughter to steer clear of me, “Daddy is in a bad mood,” I warned. She looked up at me unafraid and said, “You better steer clear of ME Daddy, I’m in a bad mood too, my doll is sick.”

“You have a lot to learn about perspective kid,” I mumbled, wondering if the paint fumes had sickened her doll.

Anyway, if you missed the bottom, don’t go “drinking yourself to death” today. Go get some nice whole wheat bread, drink some water, and bide your time waiting for a better opportunity. What’s done is done. Don’t prematurely “off” yourself by letting anger and frustration rule your trading.

Consolidatory Action

Very good digestive action by the market (as long as we stay in this range) and we haven't made any trades. We're still long and strong CENX TC FCX ANR MOS MEE BVN NUE XLE SMH SQM.

Why do we like this action? Take a look at the following charts and see how today we're basing right under resistance. Sharp moves up would be sold but a base and stair-step higher would be much more effective in trapping the bears.

Sunday, February 07, 2010


We would say that 80-85% of the time writing the HCPG newsletter is relatively easy and a pleasure. A few break-out candidates stick out to us on the daily charts, we highlight them, and then review the trades the next day. Right now we're in the other 15-20% of the time where writing this newsletter is a struggle. Why? Because nothing is clear and even the first factor, usually a given: what strategy are you focusing on?-- is tough to answer. We're primarily break-out traders but there are no break-out candidates. Charts are broken.

However if Friday's low indeed is a near-term bottom then we need to find longs. The best we can do is find target longs to resistance. These don't have the same success rate as break-out longs and tend to be more messy/choppy so adjust accordingly. To add to the complexity we have to be aware of the fact that the trend is broken and therefore need to be cognizant of resistance shorts on any rally. Of course "not easy" doesn't equate to "not profitable" as there are many opportunities in the market thanks to the increased volatility. You just have to climb higher up the tree to get the fruits.

Refusal to Die

What's interesting to us about all the following charts? Their refusal to die in the market plunge last week -- all of them held last Friday's low (Jan 29) while their respective sectors (tech, gold, financials, oil, Ags, etc) all went lower. If market bottom is for real (no matter what the time frame) then watch these stocks to lead. Also if you feel that Friday afternoon was a head-fake then watch for new week lows on these stocks. This is the kind of analysis we constantly do to find new "tells" that will give us edge in predicting market movement.