Wednesday, June 16, 2010

Trading Talk

Similar to our copper tell for market bottom  fertilizer stocks have also proved to be great tells for us in the past.    We posted the first chart last week on just as POT was breaking the trend-line:

Look how the stock successfully tested the trend-line/20 SMA before going higher.  Text book.  Next target 50SMA.

This brings us back to the super-focus theme of trading.  We focus on two patterns (bases, and trend-lines) only, no cup and handle, no head and shoulders, nothing else.  We only use a few indicators (moving average on daily and intraday, Pivot lines, volume).   We only have a few intraday set-ups we use and all our trades can be contained within the strategy of buying breakouts/shorting breakdowns and buying support/shorting resistance.   We have followed the same bulk of stocks now for over a decade.  We've traded together for over a decade without any additions/subtractions.

Everything we do is contained in a small trading universe.  But we know every nuance of our world.    We don't spread ourselves thin and we are experts in what we do.    You've heard it a thousand times -- find something you're good at and then get better. But nothing could be more true in trading.  Biggest mistake of new traders is going into a chat room and following different trades by different traders using different strategies.    Find your voice and then learn to sing.

Tuesday, June 15, 2010

Market Talk

A lot of shorts got suckered into yesterday's fade.   Before the close we posted:

As we wrote in the newsletter this weekend, we would short the first test of the 200 SMA but buy the second.  Yesterday was the first test of the 200 SMA which offered great opportunities short at SPY 111 and today was the break-out.    As we wrote yesterday and today, we like the market long but we do want stuff to set-up, something that is not happening due to the quick nature of this rally.  The best thing that could happen now is if we stay above but close to SPY 111 for a day or two and set-up some nice longs.

Everyhing these days happens in fast motion:  we go down quickly, we go up quickly.   This market is making daytraders out of all of us (well, we are mostly daytraders to begin with but for the rest of you!).

Monday, June 14, 2010

Resistance short triggers

Here are the daytrade alerts that triggered short today from last night's newsletter (short alert on rally to resistance).

ATHR 32.8 short on trend line:

SU short at 33.4 alert from last night's newsletter:

SCCO short at 31.5 alert in last night's newsletter:

CHK we liked long over 25.5 if it could base, if not we wrote to watch for resistance short 25.2-25.5

And SPY short 111


One of our favorite tells in the market is copper.    Here are our two posts in the last week on copper (via JJC etf) on StockTwits

We traded intraday long all last week on the bottoming pattern:

And today we traded intraday short against resistance on the above pattern (including SCCO 31.5 short alert from last night) as copper hit the top of the trend-line.

One of the best advice we can give to young traders is don't spread yourself thin.   Find a niche and focus on that instead of trying to stay on top of every facet of the market.  We like following commodities -- it's our guideline  for how we trade.    Everything in this market is inter-connected, you don't have to watch everything to understand market movement.  Focus on one important sector, be it commodities, financials,currency, bonds, etc and get to know every wrinkle and crease on the map.