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Doji Means Indecision

9 Jan

SPY Week 1 Doji

The markets formed a doji in week one of 2012. This is a sign of indecision and could be expected at the onset as traders and hedge funds begin to pick up trading again in the new year. That being said it is the long term investors which drive the long term trend of the markets.

Aside from the intraday and a few small daily trends, we have really gone nowhere in the past year. We saw a few longs fire off last week with a couple shorts from our watch lists.

Nothing significant showed itself over the weekend so we will sit tight with our current positions and patiently wait for the setups to occur. I would rather maximize my profits on the trades I do take rather than try to increase my number of winning trades.

Here are a variety of trading videos for you to enjoy! Everything from swing trading analysis, to intraday price action, the NYSE Tick, live trades, and examples of different indicators.

Check back tomorrow for some stocks to watch this week.

2012 Look Forward – Market Forecast

2 Jan

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The #1 thing I learned about the markets is that anything can happen. No matter what the data says should happen, doesn’t mean it will happen. There is no one on the planet who can predict the market to 100% certainty so I won’t claim to do so here. What I would like to do is take a look at 2012 and look at some possible scenarios for the year ahead.

As talked about on the Dec 19th watch list, we have been in a wedge formation on the daily chart for the past few months. If we can break this wedge to the upside we should see a nice trend develop which would make for some fantastic trading opportunities.

S&P500 Wedge Fall 2011

Three Scenarios for the 2012 Markets

Scenario 1: If a breakout does occur, we will be targeting prior 2007 highs at the 1575 level on the S&P500. It is also an election year so draw whatever conclusions you like from that piece of data.

Scenario 2: If we fail to breakout to the upside, but instead drift sideways while the Euro Debt crisis continues to unfold, trading opportunities will not be as cut and dry and we would continue to see smaller price moves. This would be the most unlikely scenario because the market has been converging on the apex of the triangle. Building pressure if you will.

Scenario 3: This brings me to the 3rd possibility a sell off. There are a lot of factors that could cause such an event, one of them being the slow growth of GDP in the US. We have seen much small growth levels out of this recession as compared to others. If investors continue to sit on the sidelines and European fears spook investors already in the markets, we could see a move lower back to the S&P 1000 level.

Stocks to Watch on 1/3:

Longs: HSTM, MSG, RNR

Shorts: CRM, ESI, RUE

Whether you trade stocks or options, you can use the TJMacTrading watch lists as a place to gather trade ideas. We archive all the old watch lists for you to look through as well.

Help in Understanding the Bigger Picture

Regardless of each scenario, the market has shown to rise on average of 8% per year dating back over 100 years. Will this time around be different? We really won’t know, but if the markets go to zero, we all lose therefore, I still hold long term positions in the SPY, DIA, QQQ, and IWM. With a small weekly contribution to this portfolio and the continued reinvestment of dividends it’s pretty amazing how a flat year as we saw in 2011 can still have a very positive impact on your bottom line.

I see value in investing, but I also find it profitable to trade a portion of my portfolio as I do with stocks, options, and futures. At the end of the day though it’s about making money and generating an asset base to draw income from in the future. Make 2012 the year you really take control of your finances, limit necessary expenses, take advantage of any 401(k) matching opportunities at work and contribute to (or setup) a retirement account.

What to do From Here in 2012

So, Why am I talking about investing on a trading blog? All these little mechanisms of building our net worth contributes to our ability to trade objectively. The larger our net worth grows, the smaller our risk capital per trade becomes. This helps us trade better in a number of ways the most important being the comfort and security level we feel having our finances in control. Not depending or hoping that THIS will be the trade that makes you rich.

Trading is all about managing our emotions and it is a very challenging game. Keep things simple, minimize your expenses, and don’t forget about the bigger picture. Trading is just another way to bring in $ which we will then use to pay for the things that help us live a fulfilling life.

 

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Small Rally on Low Volume Signals More Downside

17 Aug

Heavy Selling on Heavy Volume, What’s Next?

8 Aug

We saw heavy selling these passed two weeks on increasing volume. Look to sell into any rally if we see a decline in volume. A true rally will coincide with a massive drop in the VIX.

Above we have the four top line figures, SPY, DIA, QQQ, and IWM (from left to right). Notice the increasing volume noted by the darker green and the incredibly large percent down days in the markets.

All Signs Lead Higher

11 May

As talked about in the April 28th post we are targeting 1390s on the S&P500. You can see that we’ve pulled back once again halfway back and the old resistance has acted as new support.

ES 1390 Target

Option max pain for the SPY is 134 as of May 10 (prior highs) so we have a clear line in the sand if we should fail out of our move higher.

Option Max Pain 134

 

Next up 1390 on the SP500, but first we could…

28 Apr

ES Futures

We’re looking for a rally to 1390, however before we do so we may pullback into the next daily halfway back setup.

New Target for the SP500, Higher or Lower?

21 Apr

The ES, or the E-mini S&P Futures hit a pivotal level on 4/18 which has sent the market screaming higher. As we continue to drive higher and break prior highs, more and more stops will be hit which in turn sends the market high.

We need sellers at highs to make new highs and buyers and lows to make new lows. This is because the stops that the sellers place at highs (just about the highs) will be fuel for the market to make new highs at which point these traders will reverse their positions and chase the market long.

ES Target 1358

Our target for the S&P500, 1358. It’s straight up, or nothing.

Wk35: Mkt Forecast

30 Aug

Well spaced news for the upcoming week. We are anticipating a rally this week at least in to the 1082s on the /ES. If we move up and break 1093 then we will look to buy the first major pullback. The top traders and hedge fund managers should be coming back from holiday after Labor Day and the market action should really start to pick up again.