Friday, January 29, 2010

Junk and Options Analysis

Newbies might like this, as well as experienced options traders.

Comments appreciated.

Using yourself as a contraindicator, funny

Fear Factor

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Fear Factor is a new indicator I discovered way back in, well, last week.

I plot what I call Secondary Fear divided by Primary Fear.   And it makes a neat chart, it predicts big downs, and confirms rallies.

It's new.   Some fellow bloggers are going to try to help it by peering further back into history, which I cannot easily do on Prophet charts since I am using SLV and UUP, and SLV has only been around a few years.

So we will see what happens.

Sure appreciate your comments.  This stuff takes alot of time.  If you are looking at the same old indicators as everyone, you will probably get the same results that 90% of retail traders know what that is.

Picture lifted from Red Dragon Leo who does some Photoshop and is always entertaining!

Go visit and tell 'em steveo sent you.

Right now on Fear Factor (aka FF), I am only watching for a break of the lower channel line.

Guest post on the Chart of Charts 012910

Little Dog has this to say about Chart of Charts:

You know I like the moon, but it is really weird that the eclipse marked this turn down precisely. Also the 5 DMA flipped down right then, and the yellow line for "high levels of stock ready to make some pattern move" also showed us the potential for a turn. AS PREDICTED by your humble dog last week, the 20DMA did flip bearish on Monday,  and then stayed there.

The 5, 10, and 20 DMA are all bearish. That is rare. Betting short on the 20DMA going bearish is "safe" you just have to close the trade-- no matter what-- when the 20 comes back up bullish.

Also, with the number of banks failings increasing, and now they aren't just closing them on Friday's, they did a bunch on Tuesday also! This is bearish.

The consumer is 70% of the economy, and the consumier has been misled and is being crushed. Even if you default on a loan, or EVEN if you do a short sale....they can still come after you and garnish your wages...while you are living in a freakin' tent already!

Banks Dropping Like Flies

And banks keep dropping like flies....kind of like it is a normal weekly event.

And here is a cool link, can't wait for the 4Q data.

Freedom of Lots of Cash

I flattened most of my trades as posted prior.

Then I had a "no work" day so I could day trade.

The difference being, I had good amounts of buying power and the ability to make decent money with small market moves.

Played SDS, QID, QLD FAZ FAS in 2000 to 3000 share blocks.

Took a loss by closing my JCI short on the morning bounce, that was only losing ticker of the day.

But by far my best "trading" day ever.  

Closed one of my TOS accounts up a solid 10% on the day, 42% on the year.   Very nice, I think I will like 2010.

Chime in with some War Stories.

Ended the day with SCHN still short.   That is tying up some serious cash.  Their drop has been so sharp, seems a little greedy to expect more drop.  Tried to close out as shown below, but no bites.

See above, the SEC like to beat up on the small guys....must make them feel good, while they turn a blind eye to the Grand Theft World unfolding weekly and obviously before our eyes.

Flatten trades and it's a full moon!

I covered some shorts, most of them.

Only positions are

SCHN short, full position

TBT long, full position

UUP long full position

UNG long full position

Long term index puts.

And so it shall be for the weekend.

My goal is to start next week with a fresh trading ledger, and a fresh perspective.

Thursday, January 28, 2010

Total Gut Feeling, well based on 100 charts

My trading style will be based on--

Within 2 to 3 days...

USD find a temporary top and goes down.

Gold is on its trendline and may bounce up sharply, silver also

Eur may stage a good bounce.

SPY also bounce and beat up on new bears....this drop is about equal to others in this "rally",

DBA commodities at a trendline

Enough bear excitement out there....take them for a ride again. 

Fear Factor hasn't broken down, even with the original drop today.

Chart of Charts -- WELL do you feel lucky punk?   This one has 5DMA 10, and 20 all crossed over to bearish.  This is rare.   This market "should" go down.

Below a couple of "lifted" charts

How about a short sharp spike (3 to 4 days and 50 ES points) up to rip the bears and re-encourage the bulls...."haha I knew the bull was just trapping the bears" haha, before the path to SPX 200....hmmmm I like it, diabolical. 

One last visit to the Fib Fan from the Great Depression

The Great Fib Fan, the Powerful 38, Reaches up like Dirty Harry from the Great Depresssion and Swats Down the S&P 500....Ya got to ask yourself one question, do I feel lucky, well do ya punk?

OK one last visit to the Fib Fan then I will shut up.  At the bottom is the current Fib Fan.

Personally if S&P stops above 300 I will consider myself just plain wrong.

You know....if you type plain wrong, get Palin Wrong.  Just Saying.

Contraindicator to Short Silver

Everytime I get an itching to short silver, usually bolstered or created by an EW interpretation that "Silver will have a major decline"....I am wrong.  Whether on silver futures, SLV, or PAAS....just wrong.

I have killed on one night silver futures in the past.  3 contracts is like 15,000 ounces. 

Anyhow...silver has taken a beating lately, and I have that itch to short it.

So, I think I will go long!

IWM perspective

The Russell tends to tank fast when it does.

The smaller companies of the Russell may be hurt more by economic downturn (or realization of one), than bigger companies who will weasel their into Government contracts.   Big multinationals, MAY, be helped by diversification, But the "All One Market" theory by EWI should not be forgotten either.

Sure, I give EWI a hard time sometimes, like when they deserve it, but also respect them a lot too.

Fear Factor plotted with SPY and EUR/USD still short

What conclusions can you draw from the chart above?

The EURO short has been a fantastic trade.  Target is approaching....once it gets past the top of the circle, I plan on setting the stop to above the circle, exact point depends on where in the wave count I think it might be.

Intraday Fear Factor -Bear Flag in Play

Wednesday, January 27, 2010

Secondary Fear Ratio divided by Primary Fear

This is a cool chart.  It is linear based.  And has more animals on it than you can shake a stick at.

Secondary Fear

Divided By

Primary Fear

The formula is shown embedded in the chart in the black rectangle

Maybe I should have done the ratio the other way....but I like making money when the chart is going down, and I have so many darn critter pasted on here, its too late to change.  :-)

Comments appreciated.   Better yet, post your own ratio charts if you have the wherewithal,or unlimited time.

Guest Post SPY:VIX Chart

Really cool chart posted by a visitor.  I like it.

In this could be different.  After the fact it will look obvious.  The trick is gleaning enough confidence to place trades, and knowing when to take a small loss like 3 to 10 percent, rather than having your head handed to you.

Tim Knight take lots of risk on many 100 or more....I have no idea how that is even possible to manage that many trades.  But with strong chart interpretation, and diversity, he can do well unless of course he has the main trend wrong.

I have increased my account about 12% since the first of the year.  That is not bad.  A good target to manage monthly goals while controlling risk to reasonable levels.

Monday, January 25, 2010

Japan -- Straight Scoop

Supposedly S&P cut Japans debt rating to AA, still good, but hasnt been cut that low since 2002....hmmm, since the last recession (PS we are still in the 2007 recession, duh!!)

Lets lay it down, my 12 year old nephew in Japan is doing math work that Big 10 college students students.  Japan has a work ethic, and view of "what is right". 

Certainly they have corruption in politics, as everywhere.   But they know how to play golf and they keep their eye on the ball.....the economy, STUPID.   Bill Clinton had that one down....if the economy is good, you have options....if the economy is bad, all the oratory in the world will not get you more will be run out of town.

Japan has industry...making real products that people want to buy.  

In this coming period of me....come up with a name for "it there will be changes...and countries that produce actual products, will do "OK".

Countries that just produce lying financial bullshit, will have some serious problems.....I mean serious

How about "the GREAT RESET"

Any other suggestions for the coming "episode".  

And with out further ado....some charts.

Jim Rogers -- He May Not be Right, Deflation could kill his commodity bets

Inflation could make all hard assets as valuable as gold....almost.    Amazing that a dichotomy such as this can exist.  

Humans are based on deception...after all...hard work only gets you so far.   Then you can be decieved by someone with "social skills".

Futures Shenanignas --- and Euro Being Pounded

Ramp Job, The Old Play Book Seems to Work

That is a real picture of children and the bear. Maybe you can see some water spots on the 9MM of glass that separates them. It's an unusual waterpark.

Whilst futures are ramped overnight, a $5.4B housing bust is a sign of things to come. Mania sweeps all sorts of people into making stupid deals. This was a real stupid one, fueled by unrealistic assumptions and greed.

Sunday, January 24, 2010

Video - Thinking Without Words

Shameless Plug for HawaiiTrading

Of course, we do shameless plugs for ourselves all the time, but it's nice when someone else does one!

If you like this site, sign up as a follower, it's just a click after all.   And that makes it easy to add this site to your news don't have a feed aggregator....but your abacus down and do a Google search.

If you are an idea generator....go visit Trading to Win.

If you are a troll....don't tell them I sent you, you will get nicely run out of town though.

Great link for generating trade ideas.

Diverse Visitors

Since I added the translation feature, seems like lots more international visitors have dropped by.

Over 68 countries have visited in the last week.  Thats pretty cool!

I am looking for feedback from foreign visitors....does the translate function work pretty good?  Or should I search for a new one to try?

Write back even in your native language and i will translate.  Let me know what language it is, as I may not be able to recognize all of them.

Ratio Chart, Short Idea (lottery puts), Shorts on Rental Cars, and upside target on ES

Tool for linking TOS and Excel

From the Land of F'n Brilliant

OK, let's do the Pollyanna routine that somehow there is even an ounce of fairness involved in all the Shenanigans going on this decade.

But c'mon now.  This new rule banning short sales would be absurd.  The idea that short sellers force the market down is absurd.

Short sellers force the market up, at least at the retail level.   At the Goldman and bed buddies level....sure they make the they take heavy short positions and then pull the has no where to go but down.  Read this synopsis of short selling.  I think it rings true.

But all that aside, the real issue is how are we to make money as the market collapses.  Because the game will be changed on the fly.  No doubt about it.

Consider Single Stock Futures.

And definitely have your accounts set up for Futures, and paper trade them.
Futures will let your emotions take over, the leverage does that.  Its a dangerous tool.

Shorts and puts may be made illegal.   But the big boyz won't let their tools of profit be eliminated.

Quantitative Squeezing

"Quantitative squeezing- the act of putting the USA's lemons in a vice."

Quote from Waterdog on ZeroHedge

Zerohedge has an awesome data filled post today, check it out if you have 2 hours to spare.   I like to keep my posts to little snippets that attention challenged Stainless Steel Critters can consume in one gulp.

Clearly another round of QE will fit the known playbook.   However, this could wipe the smirk off the USD strength, so we will look for signs of "Sneaky QE".

Total Market at some interesting historical lines

Other's are indicating that VIX could also be predicting a bounce.

Candlestick Trading

Candlestick Trading started in Japan.   Rice traders used it to simplistically capture the emotion of the market.   Candlesticks do a good job of taking the noise out of the market.

Here is an example from last June.

I also like doing Candlesticks on a 3 day timeframe...that really takes the noise out.  TOS supports this timeframe.

Fib Fan Line Took 6 Hits and then rejected the SPX

This is a test to see if any of you are paying attention.

What is the bottom point of the green line, which is a Fib Fan?

Hint, use the search box at the top of the blog.

Sign up as a follower, its free, look over on the right hand side of the blog.   Put us on your Google reader or other "news" aggregator.  If you have a blog yourself, please put us on your "blog roll"

Charts of Charts with some explanations

Sign up as a follower, its free, look over on the right hand side of the blog.   Put us on your Google reader or other "news" aggregator.  If you have a blog yourself, please put us on your "blog roll"

For aggressive traders, the Chart of Charts called this downturn last Friday.   For conservative traders, the 20DMA is still at 2, a neutral range...signaling don't go bear quite yet.  There could be a bounce next week, that would be expected, which is why we should also expect the opposite...a continued plunge.  Sunday futures may indicate whether the Pres and his "advisers" still want to pump taxpayer money into the future to ramp them up.

New feature in the Chart of Charts

Green Arrows Mark the 20DMA Crossover.  Trading the 20 DMA is "Safe"--Any drawdowns are minimal and good percentage of trends are captured.  I have seen annual returns between 20% and 30% following the 20DMA. 

Existing Features of Chart of Charts

Heat Map--A custom indicator that adds "feel" to the root data of number of bearish charts and number of bullish charts.   It uses some back-tested weighting factors that change based on various breakpoints.   These were all back-tested to produce highest returns.  Red is bear, Blue is bull, Amber is neutral.

Scatter Chart -- Shows the total number of broken out chart counts.  Extremely low numbers portend an upcoming big change, similar to low movements in the NYSE McClellan Oscillator.   This chart looks cool, but is not a "Prime Indicator".  Perhaps next week I add a moving average to the scatter chart.   Maybe an oscillation period will be noticed, and perhaps coordinate with other timing based cycle approaches to stocks.

5, 10, and 20 Day Moving Average DMA.  The 5 and 20 DMA are charted.  The 20 DMA is near the top, and the 5 DMA is at the bottom.   The custom "Toggle Chart" which is at the middle, and composed of thick Blue, Orange and Purple lines depicts CROSSOVERS of the 5,10,20 DMA from bullish to bearish and vice-versa

Link to prior Chart of Charts -- I will say this though, although I was giving EWI a hard time about getting gamed, and they did get gamed and get their stops blown out....they came back resolutely on the 21st, Thursday, with another call to be highly leveraged short....they got gamed on Monday, but they didn't get scared off.