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What would you do now?
No secret that I'm seriously considering a major short position (between 5-10 percent of the portfolio) in NFLX.
There are over 70 followers of this board, the majority of which I haven't heard from. C'mon folks, let's have some real fun. Game this one with me.
No fancy trend-lines, no geometry. Based on today's chart, would you go long, short, or stand aside? Not exactly an easy call to make, is it?
Watching the monitors.
Even as I'm bashing one stock (I don't want to mention the name again because I don't want to be accused of promoting in reverse) BLOAQ goes up with obvious buy signals.
Let me say that again - obvious buy signals on the 60 minute chart. I could have doubled my money on that play if I wasn't so busy working!
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=bloaq&x=0&y=0&time=3&startdate=1%2F4%2F1999&enddate=9%2F2%2F2011&freq=8&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=4&maval=9&uf=0&lf=1&lf2=4&lf3=8&type=4&style=340&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
> I'm loving this whacko market. The volatility is a daytraders heaven
We have a nice property for sale, and I'm dumping a fist-full into this market when it sells. Chart Addict may sound like a cute "handle," but I'm tellin' ya that I can sit here all day long doing this. There have been some weeks this year I've been up nearly 50 percent. Find me a mutual fund manager that can give me that kind of return in a year!
Now that I am finally overcoming my long bias, I may do even better than that. EK was a relatively small short-term short position that played out flawlessly for me. NFLX will pan out, too, though that may be a longer-term short. Mind you, I won't bet the entire ranch on it, but that stock is going to die.
The key is sitting at the monitors and working the game. Two days in on support - three days out at resistance when selling pressure begins to outdo the buying.
Man, how many books and DVDs did I buy to learn that simple lesson?
ITNS – Drew some lines on it.
I've been reading Technical Analysis of Stock and Commodities magazine for some time, and I've tried to draw some lessons along the way. Many have been conflicting lessons, to be sure.
I don't remember exactly who said it, or exactly how he put it, but the gist of it was that one trader's rising wedge is another trader's falling triangle.
You get the idea. Charting is subjective. That's what I'm digging about chart.ly. The different perspectives on the same series of events.
Here, for what's it's worth, is how I see this setup.
WAVX. What about now?
Looks like a real breakout to me. I'd say ride it up into resistance at the 200 day moving average (around $3.00 - a nice round number) and get out. You're also facing resistance there on the weekly at the 40 MA.
You can always buy back in on a pullback if it continues moving in the right direction.
For whatever it may be worth, that's how I'd play it.
No warranty express or implied. :)
http://stockcharts.com/h-sc/ui?s=wavx
Buy support - sell resistance.
I like the pat on the back that I got from our gracious host on my EK play. Really - I do. It's nice to be right. But the news today is mixed.
http://www.bloomberg.com/news/2011-09-25/u-s-stock-futures-slump-as-europe-fails-to-take-steps-to-contain-crisis.html?cmpid=yhoo
Buy support, and sell resistance. To hell with the company behind it. Buy the chart, and then sell it. Forget about investing! Don't even try to make sense out of this market. Buy support, and sell resistance. If you can afford it, go short on some stocks. There's still room for that, believe it or not.
WAVX - Renko says no go.
I almost never take on trades without consulting a Renko chart, anymore. As long ago as 2009, "Mr. Swing" himself wrote of his "increasing levels of confidence and respect" for this particular charting technique.
http://www.mrswing.com/articles/Intraday_Renko_Blue_Wave_Signals.html
Looking at the Renko, it's perfectly clear what the trend is.
There's the stock tip of the day.
NFLXQ - Reprise
"Amazon is expanding its licensing deals to stream content as competition heats up. Netflix Inc. recently came under fire from customers for separating its streaming and DVD-by-mail plans and raising the price for subscribers who want both."
There's some good news.
Still too early to call it the actual demise of Netflix, but it's getting harder and harder to justify its' price (relative to, say, Blockbuster) with each passing day.
Hey - look at all of those smiling faces on the Amazon boxes!
NFLXQ - Shorting it into the single digits.
Now Netflix plans to use Facebook to save itself. O.K. Promoting yourself on Facebook - there's a novel idea!
"Watching content because my friend did really trumped the algorithm," (Netflix CEO) Hastings told his audience.
The algorithm he's referring to tracks your preferences, just like Amazon does. Hey - you like science fiction, so you may like this. Your friend likes this movie, so you may like it better than our algorithm thinks that you do.
I may like Star Wars because I like Star Trek.
Absolutely brilliant.
http://barchart.com/headlines/story.php?id=1703855
I'm expecting a counter-trend rally this week, at the peak of which I'm laying out my first major short position with real money on the table. Yes, it is counter-intuitive to bet downward, but the market moves in two directions.
http://chart.ly/symbols/NFLX
NFLXQ
Thanks for turning us on to a really cool site! I'm really enjoying the different takes that people have on technical events. No two people seem to have the same read on a chart. Can't tell ya how much I'm loving it!
Until I figure out how to post there, I'll toss out my proverbial two cents worth here. And, that is to say that NFLX will be worth about that on the Pinkies about a year or so from now unless and until it performs some serious reinventing of its' business model.
The price has leveled off over the last few days, and there will be some counter-trend rallies along the way - probably one coming this week - but this is the ultimate short.
I'm riding this one down beyond the single digits. I'm riding this one down to "Q."
http://stockcharts.com/freecharts/gallery.html?nflx
http://chart.ly/symbols/NFLX
> Just found a new obsession: http://chart.ly/users/ShawnAtCMS
I don't often subscribe to things online, but that's one cool web site!
Gold overbought, due for correction.
The chart went parabolic, and a critical Gann angle was hit. An obvious double top formed, even as the RSI declined. And, Gold went down, dragging Silver along with it for the ride. That's the technical side of it, plain and simple.
The two metals have historically moved more or less in lockstep with one another, with gold being the leader. This short term correction notwithstanding, it is possible that we may have another major bubble.
Bubbles are possible because people either panic, or become greedy.
The technical trader in me says to buy this dip when the charts say that the timing is just right. (To put it another way, to wait it out until the dust has settled.)
Whether it be in tulips, or silver, or gold, there may well be another bubble in the making as scared inventors run toward safe haven.
Rising stocks appear to outnumber decliners.
The numbers aren't yet in for the end of the day, but it's obvious what the trend is!
Looking for a free utility to do screen grabs? Here's what I use. (Thought I'd toss in a plug for it because I've been using it so much, lately).
http://www.mirekw.com/winfreeware/mwsnap.html
Markets stable as precious metals nosedive.
Quite predictability, the overall market today found its' footing on long term support.
What comes as a surprise is the huge tumble that precious metals – typically considered as a “safe haven” in times of uncertainty – are taking today.
It's too early to call any of them a “buy” at this point, as there's no telling how far they may fall now that critical support boundaries have been breached. For the moment, I'm standing on the sidelines in anticipation of adding some precious metals to my portfolio.
The charts:
I have a friend who swings between FAS and FAZ as something of a hobby. He says all he uses are the moving averages.
Look at these two 60 minute charts and tell me that it can't be done.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Fund&symb=fas&x=0&y=0&time=3&startdate=1%2F4%2F1999&enddate=9%2F2%2F2011&freq=8&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=5&uf=0&lf=1&lf2=4&lf3=8&type=4&style=340&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=faz&x=0&y=0&time=3&startdate=1%2F4%2F1999&enddate=9%2F2%2F2011&freq=8&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=6&maval=5&uf=0&lf=1&lf2=4&lf3=8&type=4&style=340&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
Shorting the New Global Economy
Everything American is down today. The Dow, the Russell 2000, the Nasdaq, the Transports. At this point, most are testing critical support levels. The NYSE Composite Index, however, has fallen so far as to have clearly violated support.
International iShares are down in lockstep with American markets as well, today.
As of 3:30, even silver (SLV) had broken through its $35.00 support level. You've got to get a little bit nervous when a precious metal crashes through support along with the broader market, because it generally doesn't happen that way.
For a couple of days, I've been thinking out loud in this forum about going long in a short market with inverse ETFs. Right now, I'm wishing that I'd have taken my own advice, cashed in my entire portfolio, and loaded up on these things.
Up until about three years ago, FXI was the way to play China. People literally doubled and tripled their money on that play until the chart went parabolic, telling technical traders that a bubble was about to burst. Today, FXP, the ProShares UltraShort FTSE China 25, seems to be the better play.
RUSS, the Direxion Daily Russia Bear 3X Shares, looks rather attractive as well for playing shorter term swings.
BZQ, ProShares UltraShort Brazil, looks as if it's breaking out of an extended base as well.
Then there is the Direxion Daily Latin America Bear 3X Shares (LHB) which tracks (in reverse, and with leverage) “emerging markets” in Latin America that up until a couple of years ago were all the rage.
FAZ, the financial bear, did rather well today. Damn, this ETF has an almost uncanny ability of predicting major market turns!
At this point, I'd say that anything is possible in the overall markets. I'm buckling my seat belt for Mr. Toad's Wild Ride, and restructuring my portfolio completely to allow for more short-term swing trades involving leveraged ETFs.
Look at FAZ go. It blew right out of the spout!
Long plays look scary today. Broken trend-lines, moving averages going in the wrong direction, support violated...
I'm having to make an adjustment to this, but there's money to be made regardless of whether the market is going up or down.
Time to play inverse ETFs, and to go short, methinks.
Markets are nosediving today!
http://stockcharts.com/freecharts/candleglance.html?[US]
The ultimate short.
I always take on long positions - even if that means buying into an inverse-long ETF. That is to say, even if I'm betting the market will go down, the value of my leveraged ETF will go up.
I'll admit it; I have a long bias. It strikes me as counter-intuitive to go short on a stock. That involves "borrowing" shares from your broker, holding on to them until you think they've hit bottom, and cashing in the difference when you close out the position.
Though I understand the concept, it still feels weird to me.
In an effort to counter this feeling, I've been reading Tim Knight's blog. (In a deck of cards, Knight is the King of Shorts).
I have enough margin in one of my accounts to take on a major short position. Never done it before, but I'll probably do it today. This one is just too good to pass up. I'm betting that I can ride this one down into the single digits:
http://stockcharts.com/freecharts/gallery.html?nflx
Hey - Tim Knight (no affiliation - honestly) has a brand new book out!
http://slopeofhope.com/chart-your-way-to-profits.html
There are quite a few robust automated trading systems out there, and many of them have impressive long term equity curves.
http://www.striker.com/En0305_trading_systems_actual_performance.php?webpageID=10&webmainID=3
Colby has the Metastock formula for every technical indicator in his book "The Encyclopedia of Technical Market Indicators."
I went through a phase in which I considered trying to set up an automated trading system, but I came to realize that I enjoyed charting so much that I just couldn't allow myself to do that.
I continue to believe that the human eyeball and a good chart are better than any automated system could possibly be.
FAZ did rather well today.
Amazing how you can look at these things and know what's going to happen "with no subjectivity, no sophisticated technical analysis, and no judgement," to borrow from Robert W. Colby.
Once again, hats off to the guys who invented these things!
In case anyone's wondering who Colby is:
http://www.robertwcolby.com/
Good stuff to be found there, and in his book, as well.
No affiliation.
SPXU looked so pretty this morning.
I really should have followed my instincts and just bought in as a one to two day hold. It was as plain as day that the entire market was going to soften today when I looked at it, and that I could profit on the inverse-long side. I don't know why it is, but the ProShares UltraPro Short S&P500 is among the best for playing short term market cycles.
Hats off to the people who invented these things!
GARB – Lesson on Failure Avoidance
It sure did look like a nice setup. But it failed to follow through.
Don't you just hate it when that happens?
I do.
I'd like to emphasize at this point that as nice as a setup looks, never buy in until you have clear buy signals. Let's look at this issue a little more closely.
On the conventional candlestick chart, linked to directly below, you'll see that the PPO never crossed over to provide an entry signal. Volume didn't follow through to turn the stock through another upward cycle because the market didn't believe in the stock. The chart was all that you needed to know that.
http://stockcharts.com/freecharts/gallery.html?garb
Curiously, the Renko chart provided false entry signals, however it also provided more than ample warning that the setup was failing, and it provided the warning in timely enough a manner as to have graciously bailed you out at or near break even.
http://stockcharts.com/h-sc/ui?s=GARB&p=D&yr=0&mn=6&dy=0&id=p66979636664
By using both charts, the trade could have been avoided completely. Indeed, I never entered it myself. Always wait for confirmation. The crucial point is that even the best of setups can fail, and take your trading account down with them.
Here is a frozen-in-time Renko chart of GARB with but one significant trendline.
WAVX – Mr. Toad's Wild Ride.
Mr. Toad's Wild Ride is a popular ride located in Disneyland. It's one of the few remaining attractions that was operational on the park's opening day in 1955. Part of its' appeal lies in just how wild and unpredictable it is.
So, too, is WAVX.
I can't tell you how much I hate this stock's chart, and others like it. (Mind you, there are far, far too many worse ones out there to be found.) I'm sure that if this was the only stock left to trade in the world, I would decipher it. Surely on one time frame or another the RSI works consistently. Surely a trendline break has meaning.
Winding down after a long day, I just had to rise to the challenge of trying to make some sense out of it all. Let's begin our journey with a look at the daily, which clearly depicts a short-term downtrend caught in a channel. As tempting as it may be to go long at the bottom of the channel, and short at the top, I hate counter-trend trading.
Now let's look at the weekly. The RSI works well enough to warn of a trend change. So does a break in the trendline right at a critical moving average. Maybe it isn't so hard to trade after all? The price then hunkers down to find support above a barely rising MA 200. Hmm.... I don't know. This just doesn't quite make sense.
Now, let's look at a 60 minute chart. Looks like a clear uptrend to me!
Now, you want to further complicate matters by buying puts and calls (which may expire worthless) on a wild ride like this one?!
Kinda reminds me of Playland's Dragon Coaster, in Rye, New York.
You haven't lived until you've taken a ride on that thing! I did it, as a kid.
Never want to do it again.
While it's true that Toni doesn't play penny stocks, I do not recall her imposing either a minimum price level for entry, nor a specific admonition against trading them.
The same principles apply to trading stocks in any price range. Toni relies rather heavily on moving averages. (I have a CD of giving a lecture in which moving averages are all that she discusses.) Are these simple devices any the less effective in identifying the direction of a trend when a stock is priced at under $1.00? I don't think so.
Look at how little more than a simple divergence between two moving averages could have got you into BRGO early. Note also that the recent pullback to MA 200 may well serve a good entry point.
Now let's look at LBAS. Is this stock in an uptrend or a downtrend? Where is price support?
Want to know how I nailed a big move in Libbey Glassware (LBY)? With nothing more complicated than a bullish engulfing candlestick on a weekly chart.
Now have a look at how I nailed TEN.
This may be a good time to revisit three stocks that I like to monitor the shipping industry with.
Day trade alert: YRCW plummets to $0.07
This trucking company has seen its' stock in a downtrend for a long time. Seeking to avoid bankruptcy, shareholders agreed to an increase in the number of shares. A reverse split is planned to increase the price in the future. The price leveled off at around $0.07 during the last six hours of trading on Friday, however a NASDAQ delisting notice has been issued, which means it may wind up on the Pink Sheets. When that happens, the price may plummet even further.
All of this news makes for some very good potential technical day trading opportunities. $0.07 to $0.12 in one day wouldn't be too shabby at all. Longer term investors should sit this one out on the sidelines for a few months – possibly longer. (This does not rule out the possibility that I may, myself, become a longer term investor in the company over time. However, I'll wait for a clear bottom to be carved out first).
Just be patient. Watch it and wait for the chart to tell you when to go. Sell it when the RSI tops out over 70, and starts dropping. Then buy it again. There's no law prohibiting you from buying and selling the same stock time and again.
I can't display a 60, 30, or 15 minute chart here from Stockcharts.com because they require a paid subscription for you to see them. (These time frames are very helpful when it comes to day trading.) But there are some free alternatives. Here's one:
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=yrcw&x=0&y=0&time=3&startdate=1%2F4%2F1999&enddate=9%2F2%2F2011&freq=8&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=4&maval=9&uf=0&lf=1&lf2=4&lf3=8&type=4&style=340&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11
Standard Stockcharts Gallery view:
http://stockcharts.com/freecharts/gallery.html?yrcw
Re: PDOS moderators wrong
Toni Turner, in her book "Short-Term Trading in the New Stock Market," notes that stock prices move for technical reasons.
That observation took some time to truly sink in.
I'll take a moving average crossover, a Fibonacci retrace, or a bounce off of trendline support over a company potentially sitting on a blockbuster movie or a billion gallons of oil hands down.
It doesn't matter how good the news is. It's the chart that counts.
Want to play PDOS? Use a Renko chart, and sit and wait patiently for the signals. That's how I'm playing it.
http://stockcharts.com/h-sc/ui?s=PDOS&p=D&yr=0&mn=6&dy=0&id=p22231307908
EGOC – Gorgeous setup
There's a lot to like here. EGOC appears to be rising out of a multi-month rounded base. The 200 day moving average has come to the rescue on the daily chart, with two consecutive price closes over this critical average. Volume increased on Friday to reach over 53 million shares traded. Price also closed out the week over the 40 week moving average on the weekly chart.
Web site:
http://www.energy1corp.com/E1/Home.html
Standard Gallery view:
http://stockcharts.com/freecharts/gallery.html?egoc
Choicetrade also penny friendly.
Flat $5.00 per trade, and they say: "No penny stock surcharge up to 500,000 shares. Beginning December 1, 2010, add 1% of the total dollar value of the order to the normal commission of $5 per trade to all stock orders of more than 500,000."
They do like to charge for data feeds, but presumably these are optional.
I'm finding all kinds of alternatives that weren't available a few years ago. Thank you Charles Schwab for groundbreaking this industry!
http://choicetrade.com/public/why_choicetrade/commissions_fees.php