Saturday, November 24, 2007

Gold - At the Crossroads

The trailing stop we had on the short gold position looks now to have been an excellent move.

While I did not anticipate a counter trend rally of this magnitude, the fact of the matter is that gold is at a turning point and I mean right on a turning point.

If the yellow metal turns south right now and I mean not 1 dollar higher, then we can expect the decline to continue and continue with a vengeance.

If gold rallies just $1 more, then we can expect new highs.

The fact remains that gold is in the process or already has put in a top of major proportions and the odds of the next major move being a break in prices.

So, the next trading session in gold is key to the next major price move.

Weekend Equity Market Outlook - 11/24/07

The hourly chart continues display a very positive framework with price moving lower and momentum refusing to confirm.

This type of market action builds up buying pressure and once these divergences are resolved, they will be resolved in a big way as it is a general rule that the longer divergences are present, the larger the counter move will be to those divergences.

Not only is the hourly chart, or ultra short term looking very bullish, but the short to intermediate term is getting very bullish as well. This is an impressive feat, considering the fact that not 2 weeks ago there was some legitimate concern about how the bullish sentiment was holding up in the face of sharply lower prices. It looks now as if these factors have completely reversed and most investors have jumped the fence to the negative side. You will recall that the last time we had such a sudden shift in sentiment was in early October with a shift towards the bullish end. This was promptly followed by the current decline we have appeared to have finished. So in keeping with this theory, the market should have quite the exceptional year end rally.

The intermediate term model is also flashing some very bullish signals and called the November 21st low as the low for the year. Although the market price wise was lower in mid August, the intermediate term model takes 4 other factors into account other than price alone. This model is calling for the S&P 500 to finish the year at 1587-1593 and the last 2 weeks of December being an absolute blow-out to the upside. Of course the intermediate term model is a neural network so it will continue to evolve as the trading continues this year, but as of now this is what the model calls for.

We continue to buy weakness and have completely removed our hedge from the long term core position equity holdings. For those who wish to take a little more risk, you might want to consider some February 2008 SPY options about 10-12 points out of the money. If the intermediate term model holds true to its current outlook then these options should have the best bang for your buck and a risk level that is above tolerable.

I look forward to next weeks market action as it should be a strong indication of what we should expect in December.

I am also just about finished with the 2008 equity market outlook and should be posting this outlook sometime in December. A sneak preview of the outlook is for a great 2008, but a weak 1st quarter.

I hope all of you had a great holiday and lets all have a great trading week coming up and remember, the Day Trading Posts and the Charts posted at the end of the day can all be used on daily and weekly charts as well. So even if you do not day trade, they offer an excellent glimpse into the technical side of the market.

Patterns On Indicators

The chart below tells quite a story about the short to intermediate term potential of the S&P 500 and it needs to be monitored closely as we have once again reached a crossroads where equity prices have the potential to break either way!

Although the odds are pretty heavily favored in the direction of an upside breakout, we need always be prepared for what the market throws our way.

Patterns that we can draw on indicators are very very reliable, about 3 times as reliable as patterns that are related to price only. This wedge pattern that is drifting lower has about an 87% probability of breaking higher and price will come along for the ride.

Day Trading Notebook - 11/21/2007

Day Trading Overview for Friday 11/23/2007

Thursday, November 22, 2007

No Posting or Day Trading For Friday

I sincerely hope that all of you are having a great Thanksgiving!
I just wanted to send out a quick message that I will be taking the rest of the week off
from Day Trading as well as blog publishing.
When I return, I will update all sections of the blog in a timely manner.
I anticipate this updating to occur either late Saturday or sometime Sunday.
Have A Safe And Happy Holiday Weekend!

Wednesday, November 21, 2007

Stopped Out of Short - Small Loss

Stopped out of short yet again, for a 2 1/4 point loss.

So far today we are ahead 6 3/4 points.

Intra-Day Update

Short from 1430 on the stochastics cross.

Close 2 point stop in place

Intra-Day Update - Cup Pattern 1 Minute

Nice cup forming on the stochastics via the 1 minute chart.

Very high probability pattern that once it crosses again there is the tendency to see sharply lower prices.

Stopped Out of Short

Stopped out of short at 1429.50 for a 1 1/2 point loss.

To be honest, it is so quiet in the last half of the day here that I might just call it a day
and wait for next Monday to begin anew.

We will see what set-ups come our way in the last hour.

Intra-Day Update - Potential Short Trade

Pretty much directionless, but I do see some light at the end of the tunnel and I will try and squeeze 4 or 5 points on a short trade from 1428.

It should break in a hurry so if the move is going to be legitimate it needs to break now.
If not and it continues to chop around I will get out and probably wait for the last 45 minutes of the day.

Set Up Forming

Getting ready to break one way or the other.

Look for a test of the pink line. If it fails then we should come down to the days lows.
If it holds we should rally to at least 1430.

Stopped Out With 5 Points

Stopped out at 1419 and looking to get long in here.

Not quite yet, but getting ready.

5 Points Profit

Lock In Profit

Move stop to 1419, and lock in 5 points profit

Move Stop

Move Stop To Breakeven

Go Short

Short it right here at 1424

Target 1417 1/2

Intra-day - Look For A Short

Look to go short on a break on the blue uptrend line, the market looks very weak here

Intra-Day Update

The fact that we have traded under the 1427.90 Magic Number for so long now and the weakness on the stochastics have delayed going long to fade the open.

We will have to await further developments before any action is taken.

In all actuality, the market should work lower yet based upon the move below the magic number

Pre-Opening Comment - 11/21/07

Globex futures are currently down 14 points and at their worst overnight they were calling
for a retest of the Cash Low in the 1420 area.

There are a couple of key numbers to watch today

1454 - 1455 Should prove strong resistance
1420 - 1421 Should prove strong support

I will most definitely be looking to fade a lower open.
Not right away mind you, but if all looks good in the first 3 minutes or so then I will
pull the trigger on the long side.

MAGIC NUMBERS - If the S&P 500 cash can trade above or below these numbers for 3-5 minutes, then there is very strong odds of a tradeable move forthcoming.

1441.30 - Staying above this Magic Number will signal a move to 1451.35
1427.90 - Staying below this Magic Number will signal a move to 1417.85

Pivot Points for today
PIVOT - 1437.21
Resistance - 1446.17.....1455.13.....1462.85.....1470.57.....1487.25.....1503.93
Support - 1429.49.....1421.77.....1412.81.....1403.85.....1387.17.....1370.49

Tuesday, November 20, 2007

Day Trading Module For 11/20/07

Yet more valuable information for your notebook.


Happy Birthday - There is some GREEN in the Aggressive Trading Account

The title is in jest, but in all seriousness even with all the Red that you see in the
account, I have yet to even begin to worry about the positions and with our stop
losses in place we can rest easy at night.

Granted, this is not the way I like to begin an aggressive campaign, but then again this is The Aggressive Equity Trading Account and draw downs come with the territory.

I rather look at these paper losses as an opportunity to average down the positions.

Once again, a very aggressive move, but these strategies are 90% of the reason the account has had such a stellar return since August when I first began to post the account.

So if you are holding some or all of these positions for that matter, make sure you have your stops in place and rest easy with the idea that probability is strongly on your side.

Daily Equity Market Comment - 11/20/07

The market put in quite the performance today with multiple swings that produced some very trade able prices.

The low on the day was 1419.28 and the ultimate low target we had was 1420, so I will take this as the target being satisfied.

The wedge that is forming will also play a vital role for the next major move for the S&P 500.
With the downside target being satisfied and the bullish price pattern today, I would look for this wedge to be broken to the upside, with a minimum target of 1523 on the S&P 500 Cash.

Add some strong seasonal strength over the next 3 weeks and you have a serious recipe for a substantial intermediate term rally.

The probability model calls for a continuation of the rally, with a high odds on favorite for a very strong day. Being the day before Thanksgiving however will really make the market thin after 11:30 or 12:00 so there is some potential for more volatility.

I suspect my Day Trading day will be over by noon tomorrow as fills tend to get terrible as the market thins out.

So, we have some very high odds that a major intermediate term low was put into place today and the next major price move should be higher.

Continue to Buy On Weakness

Quite A Bit Of Stop Out Action On Commodity Positions

There was quite the flurry of stop outs with our commodity positions.

Some good, some bad.

Gold - Stopped out with 110% R.O.I.
Coffee - Stopped out with (-18.6%) R.O.I.
Bean Oil - Stopped out with (-19.3%) R.O.I.

Tighten the stop up on the Short Dec. Cotton to 61 even.

Move Stop on Short Mar. Sugar Position to 9.82. Market is simply too quiet.

Intra-Day Update - A Monster Trade..21 Points Plus

The long position from 1421 turned into a monster trade capturing 21 S&P points and getting stopped out at 1442 with our trailing stop.

The high was 1446, but with the quick reversal from that level it caught the trailing stop at 1442.

So the stops did what they were supposed to do and as usual they were our best friend.

Trading without stops is close to financial suicide and I cannot stress enough the importance of not only loss prevention stops, but also the trailing stops that lock in profits and let the market take you out of a trade.

All totaled for the day, we captured 28 1/2 S&P points and are very pleased to say the least.

It looks as though the pre-market call of a great day for day trading was right on the money and quite beyond even what I had anticipated.
I do sincerely hope that some of you caught some of the action today and I will be thrilled if you caught it all. It is days like these that simply put you on cloud nine and trust me I have been through the gamete of emotions through the years.
Lets see if we can keep the streak going tomorrow, although I think my trading will be rather limited due to holiday trading. Thin markets are always frustrating to play.

Intra-Day Update - Go Long

Getting long right in here with a stop just under 1421 even.

It is Put Up or Shut Up Time!

Intra-Day Update - Long Set-Up Forming?

There is a strong possibility that the market is setting up for a strong final hour rally.

I will be looking to go long upon a pullback in the 1 minute chart.

With the downside volatility so far today keep the stop not more than 2 points away from your fill just in case the market goes the opposite way.

Intra-Day Update - Stopped Out

Stopped out of long with a 1 1/2 point loss.

We are on the verge of making a double divergence here, so stay alert to the long side!

Intra-Day Update - LONG.... Tight Stop

Looking like it wants to make another run higher with the positive divergence on the 1 minute chart as demonstrated with the Green Lines.

A Very Reliable Pattern On The 5 Minute Chart

Intra-Day Update - Stopped Out

Stopped out of short with 10 points profit.

Getting ready to go long on a pullback basis the 1 minute chart. The 5 minute
has already given a buy signal.

We have 8 1/2 points profit so far today.

This 10 pointer and the 1 1/2 stop out of the early fade we attempted.

Intra-Day Update - Move Trailing Stop

Move stop to 1441 even basis the S&P 500 Cash to lock in 10 points profit!

Intra-Day Update - Finally Broke Down

You should have 5 points profit locked in with a stop at 1446 even, if you sold short on the 5 minute crossover.

We are very close to moving the stop again to lock in 7 1/2 points at 1443 1/2 basis the cash S&P 500.

Weakness On The 1 Minute Chart

Intra-Day Update - Keep the Powder Dry

Get ready to rock and roll on the short side with a crossing of the stochastics on the 5 minute.

We are not there yet, but very very close.

Keep an eye on the angle of descent also as a weak angle will not bode well for a short position and will require us to keep an even closer stop than usual.

Take a look at the angle of the last crossing this morning and you will see an angle that we DO NOT WANT. We want it to be steeper.

What To Look For Next

If we get a U pattern or cup, saucer, whatever you wish to call it, on the stochastics then we will have a very reliable set-up for a short position.

The trigger will be nothing more then the crossing of the lines after the cup has completed forming.

Stopped Out of Short At Breakeven

Intra-Day Update

Short from the 5 minute crossover @ 1447.50

Stop has already been move to breakeven.

My apologies for the delay, I was unable to update the blog.

CFC Opening Fade

Very nice fade on CFC from the open.

Look to move your stop up very tight and lock in 75% of the profit.

Wait For The Cross

In the face of this type of strength, I am going to wait for the 5 min stochastics to cross before I get short once more.

Short the 1445.50 Area

S&P stayed above the magic number for more than 3 minutes and made a run towards its upside target of 1445.82.

There is also a Pivot at 1445. so I will be getting short again right in the 1445.50 area.

Stopped Out of Gap Fade

Stopped out of the fade trade with a 1 1/4 point loss at 1440 basis the cash S&P.

I will be looking to fade it again here very soon.

Fade The Open

Time to fade the S&P!

Here is another good fade in the opposite direction.

The CFC December 10 calls look like the way to play it.
Of course a tight stop is always a must!


Look for the S&P Cash to open 4 - 5 points higher.

We will be looking to fade this open as I do anticipate a non-trending day at least
until the FOMC minutes are released at 2:00 PM.

The Pivot comes in at 1440.13, so I will be looking to fade the open from 1438.5 to 1440.

I will update the blog once I have executed the fade, but if things do not seem right for the fade
then I will abandon the trade and wait for the first hour trading range to be put into place.

Today should prove to be a great scalping day for 4-6 points on either side all the way until 2 PM.

Lets Go Get'em


PIVOT 1440.13
R1 - 1444.99.........S1 - 1431.85
R2 - 1449.84.........S2 - 1423.56
R3 - 1458.13.........S3 - 1418.71
R4 - 1466.41.........S4 - 1413.85
R5 - 1479.55.........S5 - 1400.71
1440.47 - SHOULD RALLY TO 1446
1432.97 - SHOULD SELL OFF TO 1427.34

Gander Mountain

After a major double bottom GMTN looks like a buy on a pullback.

Monday, November 19, 2007

Fording Coal Has Completed The Correction

You will recall at $40 we suggested that shareholders of FDG hedge their positions for a potential correction.

This correction appears to have completed itself, both on the daily charts and the weekly charts.

Therefore, it is prudent to lift the hedge on the stock, or if you were waiting for an area to get long the stock, now appears to be a good time.

Adding fuel to a potential strong rally in the stock is the very likely prospect that the Canadian dollar has peaked and should begin a major decline. This will help Fording to keep their prices in check and allow their growth to continue.

Questions Lead To Answers and Answers Are Our Gold

What The Hourly Chart Is Telling Us

With some telltale signs that the market is at or near an intermediate term low of some substance, I thought it only fitting to show how bullish the hourly chart has become.


Day Trading Lesson 11/19/07

Some pretty darn good items to look at today.

Print it out and add it to the notebook.

New Scalper Trades Executed Today

Two new scalper trades executed at the close today.

We are:
Short Dec. Coffee from 121.65 with a tight buy stop
Short Dec. Soybean Oil from 44.80 with a tight buy stop

As is usually the case, a scalper trade should begin moving in your favor right away and ideally
we look for a quick 2-4 day move in prices. Of course in the event the move continues in our favor we will stay in the trade and continue to move the stop lower to lock in profits.

An example of such an event is the current position in Cotton, which is paying off very handsomely!

Daily Equity Market Comment 11/19/07

The violation of the lows in today's trading calls into play the risk level of 1420 on the S&P 500 as the new downside target.
The upside of this set up is that number 1 we are very close to this target right now and number 2 I am sure this violation of the lows will bring about yet more short to intermediate term bearish sentiment.

I continue to buy on weakness and although I am a bit behind the eight ball, the fact that I hedged all my long term positions in July and covered late October has given me a huge cushion from which to operate.

The action of today certainly was not what I expected, but then again the market is never one to argue with as it will always have the last word.
I took the day off on day trading this market, but this does not mean that there was not more to learn and confirm about our processes. I will go more in detail with the day trading post, but the first thing you will notice is that the opening gap was not filled in the first hour of trading. This told us that today would be a trending day and it was very safe to sell rallies. While these types of signals do not always pan out, they do operate with more than 80% probability and this is certainly good enough to take notice and utilize.
Near the close, the market did seem to be setting itself up for an upside opening tomorrow and one that could very possibly be faded. Of course we will have to take notice of exactly how the market opens tomorrow and also how the Asian and European markets trade overnight, but trying to stay one step ahead is always a good idea.

If we do get to the 1420 area on the cash S&P 500 and are able to stabilize then I will be averaging down some of the positions in the aggressive trading account as I continue to look for a strong end of the year rally.
The commodity account has been going strong and has more than made up for the weakness in the equity positions. Particularly Gold and Cotton have been stellar performers and I will be moving my stop up even further to lock in potential doubles on both positions.
For those of you that are under the misconception that commodities are riskier than equities, I encourage you to look back through the blog and see why this simply is NOT true and has been proven time and time again through real time.
The reason so many are not able to stay in the commodities markets is a money management issue, not a trading issue. About 95% of the time, the cause of futures traders demise is the taking on of too much leverage. In other words, looking for the big score quickly with very limited capital. This is a great recipe for disaster. Patience and being very selective in your trading will bring you success, but you MUST be willing to put in the time to build your account up and take only trades that offer high reward with little risk.
Well I am going on and on about things that are not even relevant to the equity market comment, so here is where I stop.

Sunday, November 18, 2007

When You Hear The Long Lost Choir Sing

Many times, all that is needed to really get a feel for where specific markets are in their respective cycles is to simply listen and notice the huge increase in promotional material.
I remember when I first got into the Financial Markets the firm and all firms for that matter were promoting Oil and Gas Limited Partnerships. The sky was the limit on these gems as client after client clamoured to get into whatever partnership they could get their hands on. The year was 1981/1982 and we all know what happened to that sector in that time frame. CRASH CITY!!! Unfortunately I was very young and new to the business at the time and I had this naive notion that the firm I was working for actually had our clients best interests at heart. Well I learned that lesson quite well and very quickly and so did many many clients.
I realize at times it is hard to weed through all of the negative press and the many perma-bear analysts and market letter publishers. Remember if you call for a market meltdown long enough at some point you will be right. Of course once their predictions that they have been holding onto for 15 years comes to pass they cling on to it like a golden calf and use it to market, market, market. One primary group of these people are the gold bugs that have been sitting on their gold positions since the early eighties and watched as their investment crumbled for more than 20 years. Of course, now that gold has made a pretty sizable move they come out of everywhere promoting their huge profits and the huge profits yet to come. This to me is a tell-tale sign to take the money and run in the precious metals markets. The Commercial Traders seem to agree with this exact scenario.
Now, I do not want to say that gold prices are going to crash, but we do have a weekly sell signal, Commercial Traders selling more than they have in 20 years and Gold Fund Managers buying more than they have since I have the data on them.
The pattern on the Commercial Traders activity is eerily opposite to what developed just before gold made its final low in the mid 250's and I get at least 2 pieces a week in the mail about $1500, $2000 and $5000 and ounce Gold! Lets also add the currency markets showing a massive long term low being put into place for the Dollar and a top in the Euro, Pound and Canadian Dollar and you have a true blue recipe for a major top.
I have a short position in Gold at the $833 area and I do await a mini crash as buyers dry up very quickly. This last leg up in gold had all the earmarks of the smart money letting the small investor have as much of their long gold positions as they would like, even putting on some sizable short positions to quench the thirst for the metal from the small investors.
I do believe that there will be quite a bit of money to be made on the short side of gold and the first leg down could very well get ugly as there are very few who are looking for anything like this and once it begins there may very well be a massive exodus.
We shall wait to see what happens.

Pivot Points For Monday November 19th

PIVOT - 1454.97

  1. 1460.46
  2. 1465.95
  3. 1469.56
  4. 1473.16
  5. 1482.26
  6. 1491.35
  7. 1500.45


  1. 1451.37
  2. 1447.76
  3. 1442.27
  4. 1436.78
  5. 1427.69
  6. 1418.59
  7. 1409.50

Day Trading Mapping For 11/16/07


New Long Positions in the Short Term Aggressive Trading Account.

Scalper Trades


See Sidebar For Details

Trend Analysis LLC Headline Animator