11.06.15 Market awaited jobs report came in a large positive gain- above expectations- Assessment is this may give the Fed the will to implement a rate hike- the boogeyman in the closet for the past year- Sold 50 shares of Hack -still holding 30 and fortunately they closed higher- FEYE also closed higher on the day- so much for the Fear reaction. There was an article on SA http://seekingalpha.com/article/3658006-fireeye-earnings-illustrate-why-youre-more-secure-with-hack Along with the additional market weakness, PJP sold $70.45 for a small gain, and XLE sold for a small loss. Dollar is higher - i purchased TBT at the close $46.08. after it's gap higher. It's times like these that reinforce taking small profits and tight stops- Hoping for the market to trend better than that, but perhaps that will not be the case. stops were essentially set to protect a winning trade from becoming a losing trade- and that worked- It feels like going back to square 1 though- Considering a more aggressive approach with splitting the position with a portion with tighter stops and the remainder with wider stops- this would seem more tactical in a market that is less tyhan trending.
You may find this is along the lines you are looking for-and worth further study. Goes back to 1963-From stockcharts: "Interpretation Granville theorized that volume precedes price. OBV rises when volume on up days outpaces volume on down days. OBV falls when volume on down days is stronger. A rising OBV reflects positive volume pressure that can lead to higher prices. Conversely, falling OBV reflects negative volume pressure that can foreshadow lower prices. Granville noted in his research that OBV would often move before price. Expect prices to move higher if OBV is rising while prices are either flat or moving down. Expect prices to move lower if OBV is falling while prices are either flat or moving up." http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:on_balance_volume_obv You may find that applying an indicator to study volume to potentially identify a potential price move makes it more graphic than solely using one's intuition- Attached is a daily chart of MCD- with 2 indicators below- CMF- Chaiken Money Flow OBV- oN bALANCE vOLUME Definitions and examples can be found at stockcharts http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators it is worth while to study the examples given at stockcharts before employing indicators. Indicators lag-price action- That said- If an indicator is becoming more bearish, or more positive- it may suggest underlying weakness or strength- or a divergence with what you think price is telling you. Note that while many indicators can suggest one thing- Price can do the opposite for an extended period of time. RSI is a good example - it has levels termed oversold and overbought- but strong momentum moves in either direction can keep price in oversold conditions for weeks or months- The point is- you cannot simply take an indicator reading by itself- Look to Price to see what that Price is actually doing- and don't make a Buy or Sell decision solely on an Indicator value.
a Look at BABA- stock-Not my position. An exploratory look at what "indicators" can perhaps suggest- Friday- Baba declined sharply intraday, but saw some buying in the afternoon- reducing the severity of the decline from -5% to -2% on the day. The question becomes whether this high vol sell bar is reason alone to exit a position if one had one. Something to be said for taking a profit- and not allowing a winning position to become a losing position. The stock has had a nice upside since october- moving up 20% in 3 weeks, with a few red pullback bars on modest volume- followed by additional moves higher. If one had a position from early in October, the Oct 20,21 decline was over -4%, looked pretty bearish and set the stage for the next higher momentum move higher-and an additional 15% move- What happens Monday? If I owned it- would i be a seller or would i tighten a stop-loss- thinking it may possibly recover and move higher? Would i split a position? Tight stop & wider stop at B.E. ? As I try to hold positions for a longer period-Desiring a larger net gain over fewer trades- It can get frustrating to let a profit slip away- or to have an initial entry go against you. It is also frustrating to get shaken out of a trade on a minor down move and miss the much larger upside gain. How much do you Risk to stay in a trade? Each chooses his own level. The trader's adage is keep your losers small and allow your winners to run. The simple concept is that one good winner will offset the small losers. What can be determined by the recent chart-? following the 10.20,21 pullbacks (-5% swing high to low) a small inside bullish bar on low volume is followed by a gap up higher move on moderate volume 71-77 and then 10.27 price gapped higher on very high volume. Succeeding days showed good buying volume until 11.5. OBV - Note that a trend line applied to the chart shows that the trend is positive, and the pullbacks have all been progressively higher- until Friday- OBV went into a higher range based on the gap moves- In that higher range, there were 2 minor pullbacks- still uptrending- But Friday's sharp move down on high volume has the indicator line making a new -below trend- lower high. The fact that price closed much higher than the intraday low is a positive - but perhaps the indicator value will prove to show that a bit of further decline may be forthcoming. Another possibility could be that this higher momentum move was unsustainable, and a reversion following a pullback to an up continuation on a more modest slope may be what develops- The gaps between the moving averages and decline in momentum would also be apparent using MACD- still well into positive territory CMF- CMF is still in positive territory- Interesting to note that CMF showed a decline on the big gap day because price opened higher, but closed lower on that day- This is an exercise- not a position
Hmmm- All cash presently- I found myself considering a Buy-Stop in SDS- but it so resembles just a 1st rally attempt-and it suits my negative Bias- but, trading my negative bias - has not served me well in a market that has been propped up by Fed policies over the years- It is likely that this will also be a similar temporary decline- but I'll take the trade here and see how it reveals itself- I'm looking at the recent swing high as a level i want to enter on a move higher- so I'll allow an entry Buy- stop $19.80- limit $20.00 with a stop loss of $19.40 What is the rationale? SPY is rolling over a bit- and dropped below the last month's up trend line in OCT. - even the financials - which initially gapped higher at the "good labor" meaning Fed raises- have pulled back- A lot of "IF's and earnings concerns- The very bullish labor report is finding itself under scrutiny- but the FED has almost boxed itself into the corner- - They've been crying Wolf about raising the rate for a LONG time- and if the US market can't stand an overdue modest rate increase- we are likely in dire straits and worse shape than we recognize. OK- Plenty of net cash- but No Free cash to place this order-tonight- Perhaps this will work out best- see what the futures indicate and if cash clears tomorrow am
SDS trade would have worked as expected- I did not have time to enter any trades today- but will keep the initial order parameters open- as contra trend trades often see retests. Contra trend trades are to be suspect as they are usually manipulated by the Fed policy makers releasing some reassuring statement- or the Gov't coming to agreement in the final hours of a debt budget negotiation. At some point- Disciples of Peter Schiff will be rewarded-and feel justified- but it could be light years away. For the moment- I will consider the trade on a smaller scale and tighter leash.
SDS moved higher and did not pullback to give me a lower fill. At the close on Friday- I chose to buy SDS,up again higher- UUP on a pullback in the uptrend, and UVXY-already moving higher- but potentially more so if the markets weaken further. - representing a bearish outlook on the S&P, The Dollar moving higher- and Volatility possibly increasing over the next week. Friday pm I watched the horrific news reports from France -as they came in -of what is now the world we ALL live in-Organized Islamic terrorists bent on disrupting and destroying those societies that do not believe as they do-Slaughtering Men, Women and Children - Possibly some of those killed were humanitarian supporters of the Open door policy to refugees seeking to escape the brutal conflicts in the middle East. Giving Aid to those in need is the hallmark of humanity at it's best- Naively allowing Open Borders abroad or in this Country is an invitation to allow elements of this type of radical scourge to enter freely and easily, and to plan to wreak havoc on innocents when they deem the time is right- or when they are called on to do so . I had a conversation this past week with a professional person who was discussing how she wanted to move closer to one of the local running areas-that is also prone to what seems to be increasing crimes- particularly against women- and i suggested that she should consider getting her concealed carry permit- She responded that "OH, You are So OLD School" .She doesn't think it is ever likely that she could become a random victim at some one else's hands- Who is naive? She is correct of course. I hope no ill ever befalls her -or this country- But Hope is little deterrent against those wanting to cause us harm as individual victims or as a society . It is our responsibility to take protective actions as individuals-We take out Life insurance policies, Health insurance, and Driving/Auto insurance . We drive defensively, we lock our doors- we teach our children to watch out for strangers and when crossing the road.We watch where we go- and the types of people and places we associate with. We have our health check ups, and - even though we think we have done what we can to "protect" ourselves- We know that in spite of taking these steps, Random can happen to any of us at any time. If you choose to go run in a park after dark by yourself- You likely improved your odds of exposure to becoming a statistic of crime- particularly when such things have befallen others in the same area. The Same is true for our Country- and it's Policies- We have a large undocumented population from S America- and likely other countries equally as well, including those that sympathize with the radical islamists. A strong border- North, South, East and West is essential- Like getting immunizations- A pathway to entering this Country should set High standards and background checks. CLOSE and seal off those entryways that are used by illegals and criminals and drug dealers, and potential terrorists. Registering and work permits for those already here should go through a review process and for those that "prove" they are productive -law abiding members of society, they and their families should perhaps find there is a pathway for citizenship-One that would take years- but could be achieved over time. The great majority of those that are here illegally sought to provide a better way of life for themselves and their families. I understand that clearly- and empathize- I likely would have made a similar choice if our situations were reversed-That acknowledged- They came illegally, because a Decades weak border policy allowed them to -Now, it is time to have a policy of Registration & E-verify for employment- and pay your fair share of taxes- Don't claim 6 dependents . And- Possibly after years- proving you are a productive ,law abiding contributor to America, there is a pathway to eventual citizenship- beyond a work Visa. This cannot continue unabated- But neither Republicans nor Democrats have come up with a comprehensive and enforceable policy- This must become a priority for the next administration to finally address. America cannot HOPE it just works out fine for all. And Americans- Prepare that a safer society will come with a cost that civil libertarians will cry out for- "Profiling" will stop having a negative connotation , and will once again be regarded as a tool for law enforcement to effectively narrow the decision making process that if someone walks like a duck, swims like a duck, quacks like a duck- well, then they are likely a DUCK! a separate note- America is so easily becoming the "America, I'm Offended" Only in a society with this kind of open freedom could you express the concept . My sentiment would be to NOT think you are Entitled-Instead- get off your perpetual student sniveling Ass and get a job or start a business and become a Contributor to society and effect change by the example you yourself set and the principles & policies you establish in that same business! My Journal- venting- reinforces the need that any American (Who agree or disagree) should support the candidates they believe in and Vote their convictions in the upcoming elections - well.....I'd honestly prefer that those who choose to disagree- wait home expecting a limo to the voting booth and HOPE their candidate wins. VOTE! FOR A STRONGER AMERICA! That will have an effect on the stock market you choose also!
Back to present trades- Held back due to waiting for cash to clear on my intended SDS entry- on Thursday, i chose to go ahead and enter long Friday pm - along with UUP & UVXY- Of the 3 positions- UVXY has the potential leverage to be a sharp loss or very large gain. UVXY was as much an at the close trade as it was also perhaps impulsive- Trading widely volatile price action is perhaps best left to those with plenty of experience, money, and a hand on the trigger. A bit of Buyer's remorse on my part in taking a 50 share position-- Certainly, if it gaps $10.00 - as it easily could- in either direction I could see a decent gain or a substantial loss-. The Weekly chart i am including suggests some positives for taking the long position- Primary trend has been down- In August, Price had spiked higher for a few weeks- all starting with a bullish engulfing weekly bar -on good volume- This week's closing bar is also a bullish engulfing on high volume and comes off the prior low- essentially a possible dbl bottom. Since UVXY is based on volatility & market sentiment- This bullish move suggests a bearish sentiment is increasing after some weeks of market rallying- This week of selling has challenged those with long positions in the wider market indexes looking at the return for the Year. SPY has now closed just slightly above it's Jan open, with this week's bar a bearish drop wiping out the gains of the prior 3 up weeks. Does it also test the August lows? Posting the weekly chart- UVXY with a view to whether volume and Price bars and trend are indicative- I would point out that not all Bullish Engulfing candles lead into major moves higher- but i tend to be more positive that this week's move- coming off a bounce off the prior downtrend low (DBL Bottom) . This week's positive close indeed occurred with large volume- Had I been intending to track UVXY as a possible trade -perhaps I would have been proficient enough to have recognized the higher move turn off the daily chart and gotten into this trade closer to the dbl bottom and would have had a well defined Point of Failure and some nice profits at this point- This is acknowledging this as a late entry that likely I should not have taken because I likely cannot justify the amount of the position taken with the potential RISK . If i find time later this PM, I will look closer at this trade on a daily chart to see where I should have considered an entry- and where do i set my stop for Monday's open. Yes- I failed to consider that stop-level in evaluating taking the entry- That should have been Trade criteria #1 before pushing the Buy Button. I would have likely found that I would have had to reduce the position size to a much smaller potential amount at RISK. If i want to do some trading psycho analysis- i would likely attribute this trade as a possible reaction to jump in positions as the awaited cash cleared- It's like getting to the Auction late and possibly over bidding on the Buy side- and paying more than what you normally would have intended. It could work out that i will find buyers willing to pay more on Monday- But that will simply be a measure of LUCK -and not a well planned trade.
Checking Out the daily chart - Purchase at the close Friday -50 shares -avg cost incl commission $37.55 at the market close. A view of the Daily tells me- in hindsight- that i would have had a much better Fill had i been able to execute a day earlier on the initial breakout . Love Hindsight wisdom- it's so accurate! What looks promising for the trade are the 2 days of substantial moves through the recent base- off the dbl bottom range. I've included Volume-& OBV red line - as one indicator to study- but i suspect that you find what you seek to believe in when it comes to applying various indicators- There's likely a good rationale that Volume is necessary to sustain a considerable up move- The time to enter the trade is just ahead of the considerable up move- UVXY daily chart shows an extremely High volume with a very bullish close Friday- I will consider this quite Bullish since the close was very near the absolute high, vs a climax volume- where price fails to hold the upper ranges and closes lower on high volume. My problem with this trade is that this is such a volatile instrument, a "normal" stop loss is as likely to get taken out on volatility- and since the prevailing trend is one of decline- the odds that this will be a continued reversal of the down trend is presumptuous- but hoped for . Let me share the reasons this trade- even if it happens to work out in my favor- is a Bad trade on my part. Account value is $13,000 +/- and if a typical position trade - $2500- $3,000 should use a 2% position Risk Max- This trade value is $1871- and so it is not even a Full position entry. A 2% Risk on the account would be 1% = 130.00 and 2% = $260.00- with a possible high Risk to Reward. Assume I allow a 2% Risk on 50 shares- that would mean each share could lose about $5.00 and be within that 2% range. $5 x 50 shares = $250.00. That means i would need to set the stop-loss just below Friday's low. I simply cannot tolerate a $250.00 loss on a single trade-despite the "potential" reward being substantially higher- but quite suspect as it is a counter-trend trade and these have typically been short-lived moves. I may try to adjust this trade based on pre market data- but i doubt that my schedule will permit that- Although i did find that I can access my trading account during market hours- my work schedule often would not allow that much free time. So i will set up the trade as follows- I will be selling 1/2 the position at the open, and set a stop-loss for the remaining 25 shares . Why sell 1/2 at the open? - I'm trading too volatile a product- IF it goes and opens in my favor on a higher move- I capture the gain for 25 shares- If it opens lower,the 25 shares sell at the lower open and my remaining 25 shares will execute at the 2% level.