Back to support buying

There are a couple spots still buyable on the SPY even though we're cognizant of the fact that the more support is tested, the weaker it becomes. Nevertheless we're looking for intraday reversal patterns near the 20 and 50 SMA on the SPY.

Chart

Note how FWLT is basing under 34 with declining volume. We'd love a return of volume as the stock breaks out of the base through 34.

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POT breakout

From last night's newsletter. Text book breakout today on excellent relative strength and volume

Price is only part of it.....

Excerpt from newsletter:

And for those of you who can't help but to stare at the alert price and count the pennies up and down -- here's something that might help. Take the grid lines off the charts. This will keep your eye a little bit less focused on the price and more on other parameters that are just as important like volume, and EMA (base).

When you take the grid off then it's easier to see what's actually happening than worrying about whether your stock is a couple pennies over or under the alert. Take the grid lines off and you'll start seeing more clearly -- a stock basing nicely near the number and on top of the EMA. Stop worrying about entering at the alert price -- enter wherever the stock sets up around the alert price, be it 50 cents under or 20 cents over. Don't just use price -- use Price /EMA(and pivot lines)/ Volume combined together to better your entry and exits.

Lots of triggers today from this weekend's newsletter. If you want to see a review of the trades and tomorrow's triggers sign up for a free 2 week trial.

Today's triggers

All these stocks triggered today from this weekend's newsletter. Sign up for a free 2 week trial for the review and more picks for tomorrow.

Resistance shorts working

The daily charts out there are a complete chaotic mess --- what seems to be working more than break-outs are resistance short trades. Here are the two from last night's newsletter:

We wrote last night "Watch for possible reversal tomorrow near 41.9 resistance" and IYR came without a nickel of resistance and reversed and sold off for the rest of the day.





We wrote last night "Keep an eye on possible intraday reversal at the 50 SMA tomorrow near 45.5" and the stock reversed exactly at 45.5. Resistance shorts often work well on Fed days as traders are nervous on buying break-outs.

The chart that tells the story

It really is all about the USD.

SPY talk

The market is broken (trend-line and 50 SMA gone) but also deeply oversold. We'll be looking short but only after a decent bounce. Next support on SPY is 102 -- we get there on Monday (while deeply oversold) and we'll be buyers of this area.

How to Daytrade Support

AU had been on our newsletter (Thursday newsletter) as a support buy on 36 near the 200 SMA on a deeply oversold/extended daily.

On Friday it set-up intraday. One of the most important things to remember when buying support is to stay away from the intraday base. In this case the intraday base was at 37 -- 1 point above our buy spot. Perfect. The stock accelerated into our buy zone as panic started taking over -- a steep descent into a major support zone is exactly what you want when you buy support. Entry was on the reversal of the candle into 36 (low 36.05) with fill around 36.2.

Where do you exit? By definition if you are buying the reversal of a deep speedy descent you will be buying away from the 5 min/20 EMA. The first partial exit is on the EMA. Now what about the rest?

Look at what the stock is doing on the EMA. Is it basing above, on, or below? If the latter two then start lightening your position even more -- if its basing above then hold to see where the stock can go. AU rallied straight away from the 5EMA and into resistance of S1 -- a perfect exit as the stock rallied away from the EMA . Rule of thumb when buying support or exiting against resistance -- buy the spike down away from the EMA and into support (on reversal so you have a stop and don't get blasted) and sell the spike away from the EMA and into resistance.

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Excerpt from last night's newsletter

MON 70 short from last night's newsletter:

Interestingly enough we were more interested in this short today with the market rallying than if it had been selling off. Why? Because had the market had been selling off, while very oversold, we'd be looking constantly for signs of reversal. Instead the market gapped up and ran while MON showed excellent relative weakness. Set-up at 70 was excellent and worked for over 1.5 points.

Market Talk

Trend day down through major support lines -- we're too oversold to short and we're still looking long into panic selling tomorrow. However the 50 SMA and trend-line are broken and technically the rally from March is over for now. A new range now has to be created.

We had a good day mostly due to our SPY trade. Here is the excerpt from today's newsletter:

We wrote last night "If we can get to the SPY 105 area tomorrow (while in an oversold state) we feel that it would be a very good risk-reward candidate. We would be buyers, in size, of the first touch on trend-line tomorrow near SPY 105 and would be willing to spill some blood in order to stay in the trade in case of panic selling beyond the number." SPY broke the base, crashed through 105 and reversed for a bounce before taking it out again later in the day. A 50-60 cent bounce might not seem like much but remember, it's all risk-reward. If we're risking 20 cents then 50-60 cent profit is very good.

If you held of course it would have been a different ending. We've been having a lot of success lately buying the move away from the EMA (5 min/20 EMA), into support, and then selling into the bounce back into the EMA.

Oversold

Market is heading into major support while deeply oversold -- we have over a dozen support buy alerts in our newsletter and will be buyers of any weakness/panic selling tomorrow.

The plot thickens

We're oversold and heading into the trend-line and 50 SMA on the SPY. We'll be buyers of this area if we can hit it tomorrow. On the other hand if we work off our oversold status in a few flat days then we will be short into support. One of the most important things about support buying is to know how oversold a stock is by the time it hits support. In practical terms: If we hit SPY 105 tomorrow we will go long. If we base here for a week and hit SPY 105 next week we will go short.

Market Talk

We've been talking about this SPY 110 gap-fill area for months and now that we're finally here the market seems stuck. We have formidable resistance above and a solid trend-line below. One of them has to cry uncle soon. For now we've switched from break-out trading to buying support. If SPY 110 finally successfully breaks to the upside then we'll go back to break-out trading. If the trend-line breaks down we'll switch to shorting support. But for now what has worked very well is buying support, on daily, and also the 50 SMA.


November should be a very interesting month.

Today's Triggers

Good day for us (weak USD/strong commodities helped of course). Here are all the triggers:

WMS 45 alert blasted from the open but gave another entry later on

MELI alert 40 worked

GS pulled back to the EMA for an entry at 188 for a good daytrade

EOG base and break 84

EAC 40 worked well






AIG 44 was our alert spot from last night -- worked very well.

And our one short against resistance even worked as CMI reversed on the 50 SMA.