Here is my setup for tommorrow. You can see that the indexes made what looks like a double bottom. Yields and the VIX seem to be at point where they might turn. So basically we have two ways we can go. If I see a big drop in the VIX and interest rates rising combined with an upturn in the indexes then I go long. If the reverse occurs then I go short. Another index I pay attention to is oil. When oil gets cheap, everything seems to sell off and it seems like the market is dependent upon it. If oil were to sell down 10 dollars tommorrow, then I can almost guarantee that Appl will be selling down too. At least thats my observation. There are a few ways to draw this graph. In this graph the box slants up, but it can be slanted down and the candles fit well. The trick I found is to get in at the start of the trend and then when you are up well enough then it becomes easier to make a decision. Lets say you get in on something at 3 and it goes to 8. Then it starts trading sideways. You can afford to wait and see what happens. However, if you got in at say 7.75 and it starts fluttering at 8 then basically your at an impasse. A good example is those gold stocks. Gold is something you have to keep your eye on. You could tell it was kind of coiling up and then it broke upward. CNBC wont tell you that it broke up until late in the day. Those guys are players in this poker game too and by the time they announce it then its too late. They probably have some buddies in some funds who loaded up on gold stocks and they were distributing them to the crowd later in the day. If you saw gold break upward, then you have to think quick. I didnt know any gold mining stocks so I went to seekingalpha and read up on some. Got into some mining stocks early in the morning. Im still holding them as I believe they might have one more swing up in the morning and then I'll pull the trigger on that last swing. So in this graph. If price starts moving up (or down) tommorrow, then I want to pull the trigger in the direction of the play. My gut feeling tells me we are going to surge tommorrow. It seems to obvious that we will sell off and I think everyone is prepared for that. One more surge upward to shake everyone out and then downward. Whatever way it goes Im ready. BTW, take a look at TYH as its sitting right on a trend line since March.
The $XII is not a widely followed index. Its basically the top 75 most widely held stocks at the institutions. We might be at the low of the range and the start of another round up. This might be the chance to get in at the bottom and let it sail north for a day or so and sell before it makes it to the top of the channel. I noted earlier the QQQQs were right at a major trendline.
Solar stocks pulled back quite a bit to key supports and formed reversal candles today. STP (doji), YGE (engulfing), SPWRA (doji). Solar stocks can run up/down agressively. I use oil as an indicator to trade commodity stocks such as FCX X MOS. UCO is ouside the lower part of the daily bollinger band. $10.50 $10.20 support. If oil is going to bounce tomorrow, it will bring the market up. Financial stocks killed the market in the last 3 days . I use BAC as an indicator for this sector. Watch for retail numbers tomorrow too. Your journal is great. Thx.
I looked at the solar plays. I think money can be made on them, but Im too unfamilar with the charts. I see the doji, but think some of the charts show one picture and some show another. Basically, I dont have that level of comfort to throw some money at it. So I stick with what I know until I can get a better grasp one what I dont know. Im up tonight a little later then usual because I cant sleep. Sometimes I take melatonin to get myself to sleep, but it gives me this hungover feeling in the morning and I cant have that clouding my decision making. I drew this chart of the QQQs and the following is my plan. Im going to trade through this grid tommorrow utilizing the QID/QLD if no other opportunities present themselves. Take note, this grid I believe to be a consolidation area either for a larger up move or larger down move. When it gets to the top of the grid, someone is selling and the bottom someone is buying. Eventually one side will win and when it falls out it will do so very quickly. It might resemble a waterfall selloff or a shoot the moon. Some guys roll their eyes when they hear that because they want a decision to be made as to which way it will go. Hehe. Well, you will be the first to know which way it goes when the casino opens up in the morning... The guys on television, remember, they are guys at the poker table with us all. They are not your friends, but simply opponents and you have to figure out what is truly going on. Before you go by anyone's charts on the internet, recreate it yourself and look at it objectively. Remember, Im just a guy sitting next to you playing poker. Its your job to protect and grow your bank and its my job to protect and grow my bank.
I am oftentimes wrong with my timing and many other things. So, with that said, I got out of my shares of NG in the pre-market. What spooked me out was the price of gold itself. It did a good surge this morning, but it doesnt seem to be clearing the last swing high. I read that same Chapter in the book as you all. As well, the only indicator I use, which is Bollinger Bands, tells me that this thing is a little over the top and ripe for a pullback. Now Im partially sure that NG will probably go over 5 today, but I have been on the other side of the stick quite a few times in life and this time I want to walk away with a healthy profit. I made 4-5 grand on the trade which I am happy with and am fully aware that I could have made 4-5 grand more. Maybe it will go to 6-7 from here or 20 Remember what I said before about getting into a trade early. Had I gotten in at 3.75 in the AM yesterday, then I would have stayed until the open to see how things went. However, I got in at 4.24 and this could easily lose 50 cents in a half hour on a good pullback considering yesterday's rise. The odds would have been better for me if I had gotten in early. Im going to take these winnings and find a play in which Im not white knuckling and can make a humble profit on the day. Now Im not going turn my back on NG and spot gold, but keep it on the radar. Lets see how it pulls back and it may be a good entry in the near future.
If you havent figured it out, I go by the Darvis box theory. Its a simple theory which states that stocks tend to move between boxes or channels. Stocks spend time in the boxes (channels) until its time to break to the upside or the downside. Darvis would buy a rising stock when it got stuck in the box. The stop-loss would be placed right under the box. When price escaped to the north, then he would lever down until price went north of the box. I dont trade like this, I trade through the box whereas Darvas would trade it only when price came out of the box. So, with that said, I can see 3 different boxes for Solf. The trick here is to be patient. You know that gap up in the pre-market probably wont last. Its going to pull-back to the previous close at 4.79. It might test that level to see if its support. This is how things usually go up. If you look at a candle chart, you can see where the previous close acts like a support or resistance. So if your stock doesnt open up over the last close (and keep over it) then you might as well sell it. Its important to note here what happened when price escaped out of the boxes. When price gets down out of the box, it either rises or falls fast, very fast.
Im going to step out for a little bit and get ready for labor day weekend. I believe we have hit a short term bottom in the market. The small caps do appear to be dragging though. I think the SPX hits 1017 in the near term and the $CZH is headed for around 250. Im positioned in a few trades that I will reveal in a few days Good luck.
Watch the $VIX. Each time its gotten over the top band, its rebounded back down. This is one of the reasons I believe we will spike to 1017. This wasnt my idea, I read about it in an article on another site.