Apr 232014
 

A follower of the site asked if there are any Long-Term Trades that stand out to me at this time. As my focus has been on the shorter-term price movements of the market lately, I will take some time this week to update both the existing Long-Term Trade ideas (which are geared towards longer-term swing traders, trend traders and investors) as well as scanning for some new Long-term Trade ideas. In looking at the trade setups in that category, I noticed that TNK (Teekay Tankers Ltd) had not been updated in quite a while.

TNK was added as a Long-term Trade Setup back on May 21st of last year as a possible entry at that time but with my preferred entry criteria as to: “…wait for a close or very solid intra-week move above the weekly downtrend line, preferable on above average volume.” It took four months from there but TNK finally did print a solid weekly candlestick close on about 2x average volume in late Sept. From there, the stock went on to hit & exceed the first weekly target (T1), climbing about 80% before coming back in to backtest the T1 level on two separate occasions. The originally weekly chart from that post is shown below, followed by the updated weekly chart. Continue reading »

Apr 232014
 

So far the Q’s have reversed after hitting T3 and have backfilled Tuesday’s gap, the bottom of which (86.84) is support. If that level is clearly taken out (at least two 5 minute candlestick closes below), the chances for a continued move down to at least the 86 level would be good IMO. Below is the updated 60 minute chart along with a 15 minute chart showing my best “guesstimate” of what the near-term path of the QQQ might look like from a micro-perspective.

QQQ 60 minute April 23rd

QQQ 60 minute April 23rd

QQQ 15 minute April 23rd

QQQ 15 minute April 23rd

Apr 222014
 

The Q’s have now hit my 3rd bounce target (T3) where I have removed the last of my QQQ long hedge position taken around my T4 final near-term target level. As the T3 bounce target has now been reached, my preferred scenario (yellow) would have a resumption of the current intermediate-term downtrend from around this level (both the short-term & long-term trends in the QQQ are bullish). My alternative scenario (purple) at this point would be a continued move higher to the yellow downtrend line which, if hit soon (ideally Monday afternoon), would come in around the 61.8% Fibonacci retracement level of the prior move down from the early March highs. The near-term technical picture on the $SPX/SPY is a little obscure at this time and as such, I continue to keep things light for now, i.e.- establishing or adding to positions only on the most compelling trade setups & even then, using below average position sizing.

QQQ 60 minute April 22nd

QQQ 60 minute April 22nd

Apr 212014
 

One of the most simple yet effective methods for determining the intermediate-term trend in the US markets would be the posture of the 20 & 50-day exponential moving average (ema) pair. When the 20-day ema is trading above the 50-day ema, the trend is bullish & bearish when below. When a faster moving average crosses below a slower moving average, such as the 20/50 pair, 50/100 pair, etc.., that is referred to as a “Death Cross” while the term for a faster moving average crossing above the slower average is referred to as a “Golden Cross”. Different traders and investors use different moving average pairs, depending on their own unique preference & trading time frame. Some also prefer simple moving averages (SMA) over EMAs.

My preference is to use what ever pair (13/39, 20/50, 50/200, etc..) and whatever type (EMA, SMA, etc..) best fits each chart and time frame that I’m trading on. In other words, if the 20/50 daily ema pair, as shown on the charts below, has done a poor job of defining the trends over the last several years then I will try different moving average pairs until I find one that has. With that being said, here are the daily charts of the SPY (S&P 500 Tracking ETF) and the QQQ (Nasdaq 100 Tracking ETF) highlighting the periods where the 20 ema was trading below the 50 ema, excluding a few very minor whipsaw signals. The QQQ went to an intermediate-term sell signal on Tuesday April 8th with the 20-ema closing below the 50-ema and the 20-ema remains solidly below the 50-ema today. The SPY on the other hand, has yet to signal a death-cross with 20/50-day ema pair although the 20-ema remains precariously close to the 50-ema at this time. Therefore, the intermediate-term trend for the US markets, as least as defined by this metric, remains unclear at this time. As such, I continue to keep things somewhat light for now although I have removed most of my short hedges as the Q’s have essentially my preferred bounce target (as per the most recent 60 minute scenarios).

QQQ 20-50 ema intermediate-term trend

QQQ 20-50 ema intermediate-term trend

SPY 20-50 ema intermediate-term trend

SPY 20-50 ema intermediate-term trend

Apr 182014
 

Here’s some interesting time symmetry that I noticed while looking at the very long-term charts of the US markets. This is a 20-year chart of the $OEX (S&P 100 Index)*. I decided to use the $OEX vs. the $SPX on this chart mainly because at the end of the 2000-2002 bear market, the $SPX managed to eek out a marginal new low in Mid Oct 2002 following the Mid-July reaction low while the $OEX bottomed on that July low, ending the bear market and kicking off the 2002-2007 bull market. I drew a horizontal line from the beginning of the steep bull run that kicked off in Dec ’94, which defined the most powerful leg of the ’90-’07 secular bull market. That final 5.25 year run was essentially it’s own cyclical bull market that kicked off following a yearlong deer market. The line terminates at the end of that bull market in March 2000. I then copied two exact replicas of that line (which would be identical in time, of course) and placed those at the beginning of the ’02-’07 bull market and the ’09-current bull market.

$OEX Bull Market Durations

$OEX Bull Market Durations

Interesting to see that not only are these three bull markets defined by clear uptrend lines but the previous two were essentially identical in duration. If history were to repeat itself, this bull market would have about 5 more weeks before printing the final top. I will say that is not Continue reading »

Apr 172014
 

Not much new to report as the market continues to bounce after hitting the initial downside targets on the daily charts. With prices quickly approaching my second & preferred bounce target, I plan to book partial or possibly full profits on the long side hedges and possibly start strategically adding back short exposure. Although T2 (86.80) is my preferred bounce target, I am nearly as open to a continued move up to my 3rd and final bounce target (T3 at 87.60), although I would expect a decent reaction off the T2 level before we get there (assuming that we do). If & when prices manage to take out the T3 level by a decent margin, I will share my thoughts at that time.

QQQ 60 minute April 17th

QQQ 60 minute April 17th

For those with a long-term bullish view who added long exposure around the T4 level, consider raising or trailing stops in order to let your winners ride while protecting profits, as new highs in the market is certainly a possibility. For those who share my longer-term bearish outlook, there are plenty of Active Short Trades that will be offering objective short entries or add-ons to an existing position as they bounce back to resistance. Finally, for those not sure which way to be positioned during all this recent volatility, staying on the sidelines (in cash) is probably the best trade that you can make at this time.

Apr 162014
 

AUY (Yamana Gold Inc) will be added as an Active Long Trade & Long-term Trade idea around current levels (8.10ish). As this is an attempt to catch a bottom in the stock which has now fallen over 60% from its peak just over 6 months ago, AUY should be considered an aggressive trade. That, coupled with the inherent extreme volatility in the gold mining stocks, favors a downward adjustment in position sizing on this trade (as little as 1/2 – 1/4 my typical position size).

What I like about AUY, other than the fact that I continue to believe the gold mining sector may still likely be in the early stages of a new bull market that began in late December, is how the stock has broken below this key weekly support line. This breakdown may likely prove to be a bear-trap (i.e.- a false breakdown), with prices moving sharply higher if it does not stick. It could take a week or so for prices to close back above the weekly support line and if so, a higher probability, more conservative entry (or add-on to an initial position taken here) would be on a weekly close back above that level (roughly 8.40). Another technical development supporting the bullish case is the fact that we have positive divergence either in place or forming on the weekly, daily & 60 minute time frames.

Once again this is a potential high risk/high reward long-term trade idea. With the first target (T1) 24% overhead and the final target (T3) about 55% higher, one must factor in the total dollar loss if the trade does not work out. Using a preferred 3:1 R/R ratio, that would allow for a stop about 8% lower if targeting T1 and about 18% lower if targeting T2. Of course tighter stops can be used but when trading the mining stocks, I find that trading a smaller position size to accommodate for more liberal stops significantly reduces the chances of being prematurely stopped out on trades that go on to hit their profit targets as the daily price swings in the mining stocks are unusually large.

 

Apr 152014
 

Just to clarify or expand on the previous 60 minute QQQ chart & comments, we did get a 60 minute close below the recent lows in the Q’s but by the slightest margin. Much more importantly, the three broad US indices that I focus my analysis on; the $SPX, $NDX, & $RUT are all still sitting essentially on or above key support (my long-standing first downside targets on the daily charts). Of course support is support until broken and although I still favor prices ultimately breaking below these support levels, at this time I continue to favor a bounce off the initial tag of these levels. As I’ve also repeatedly stated over the last several trading sessions, my degree of confidence on the near-term directions of the markets (and hence, any possible bounce) is not very strong and so my preference remains to keep things light by hedging up close to a market neutral portfolio (taking some long exposure to offset a large number of swing short trades that have yet to hit my preferred targets).

The daily charts of the $NDX, $SPX & $RUT below show the $NDX basically still trading at my first target level with both the $SPX & $RUT still slightly above their respective first downside targets, which are likely to be tagged before any meaningful bounce. If that happens, the $NDX would likely go slightly lower & thereby overshooting this support level by a relatively small margin. Only a solid break below these target/support levels on all three indices would convince me to remove my long hedges as that would likely open the door to a move down to the next target levels. As always, the live links to these charts are accessible from both the sidebar on the Homepage as well as the Live Chart Links page.

Apr 152014
 

The Q’s continue to bounce along support with bullish divergences in place. Until/unless we get a solid break and 60 minute close below the recent lows, this is still an objective area to book some short-side profits and/or take some long exposure (pure-play or hedging).

QQQ 60 minute April 15th

QQQ 60 minute April 15th

Apr 142014
 

Based upon further review of the charts, I have made a slight adjustment to the profit target on the HIMX (Himax Technologies Inc) short trade. Although the actual support level comes in around 8.18, T1 has been changed from 8.20 to 8.30 in order to help increase the odds of a fill when covering this trade as the possibility of a powerful oversold bounce are rapidly increasing.

HIMX is trading down sharply today and is down about 30% since the last posted entry less than 3 weeks ago. Although I may still ad one or more additional downside targets to this trade, my preference will be to book full profits at T1 and possibly add HIMX back as a new short trade if we get a new objective short entry following a decent bounce off the 8.20ish level.

Click here to view the live daily chart of HIMX

HIMX daily April 14th

HIMX daily April 14th

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