All Entries in the "Technical Analysis" Category
Trading Against Key Levels
June 9, 2011 at 8:17 am
Pattern traders, technicians, and active traders in general love to watch for key levels. To some, it’s obvious to expect a reversal if that level is reached, while others expect a break.
Both sides have their case, and frankly, that’s what makes a market!
Today I wanted to point out an example of a stock I’ve been watching which has yet to do either. A key level – which has been tested multiple times not only in recent months but also in recent days – is the focal point right now, and one way or another I think there’s going to be a play. Here’s the setup:
DOW is clearly not in great shape here, as we’ve seen a steady slide from the May highs with every little bounce attempt getting sold. Plenty of distribution too as volume has spiked numerous times on recent selloffs. For the past 2+ weeks, the stock has lingered right near key support, looking like it could crack any day.
And yet it hasn’t.
The market overall has been very weak. The stock itself has yet to bounce, but it’s also ignoring a textbook breakdown opportunity here to really crack. And that has my attention.
At the start of this post, I mentioned how some traders are predisposed to watch for reversals and others watch for breakouts/breakdowns. I’m in the latter camp most of the time, and especially when the stock is consolidating against that level. DOW has been on my watch list for a breakdown in recent days, but I have yet to take an entry (since it hasn’t happened yet).
Currently, with the market oversold and this stock hanging tough like a NKOTB, I’m now open to a trade in the other direction (upside reversal). Isn’t that one of the huge advantages of trading the market? It’s like putting money on a horse when it’s running the back stretch, well after the race has started. The willingness to switch directions or modify (or reverse) an opinion is something flexible traders must have. This is one of those chances.
How I’ll approach this one is to use $35.50 (multi-day high) as a pivot for getting long, and $34.50 (breakdown) as a pivot for going short.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Archived Webinar
April 20, 2011 at 12:47 pm
Good news! Last night’s webinar in conjunction with Worden was recorded and is now available. If you missed out in real-time, there are still a TON of ideas worth taking note of.
The run time is under 1 hour, and I promise you’ll learn something on top of all the trade ideas presented. Here’s the link to the archived webinar.
Enjoy!
Trade Like A Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
What Are the Leaders Doing?
April 13, 2011 at 11:15 am
The market has been resting for a couple of weeks now – and who could blame it? After a run of more than 7% off the March low, some kind of digestion was in order.
Initially, we just saw indecision as the indexes flip-flopped around key levels (NAZ 2802, S&P 500 1332, DJIA 12400, etc.). Since then, however, they have weakened a bit. That isn’t bad, and the pullback could quite easily result in a higher low on the daily charts (vs. the March lows which are well beneath current levels).
While the broad market grapples with where to go next, perhaps a more pressing issue is what are the leading stocks doing? Let’s take a closer look and see how they’ve fared of late, as well as some key levels to keep an eye on in the days ahead.
The best thing to do right now is allow the market digestion to continue and allow the chart patterns you’re watching to fully mature. Forcing entries out of boredom isn’t the secret, so maintain your discipline and let the market generate signals before you take action. If you choose to play at the wrong times, it’ll cost you. Once somebody else starts the move, then you can hop on board for a ride.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Trend Line Entries: Tilted or Flat?
April 5, 2011 at 2:00 pm
I take a lot of trend line trades, as they give me a clear indication that price is either clearing an important level, or that it’s making a meaningful turn.
Recently I was asked why some of those trend lines are flat (lateral), and others are tilted. Additionally, I was asked how I determine my entries on each. Here’s what I said:
Whenever a trend line is slanted, I go with a break of the trend line itself. In the case of a bullish trend line break (a move above a descending trend line), I’ll place a buy stop just above the line itself, perhaps only a couple of pennies above it. These tilted trend lines are themselves the resistance for a stock, so once they’re broken, the stock tends to be free to move higher.
Whenever there’s a flat trend line of support or resistance, it’s evident that price is bumping up against a key zone which remains constant. Sometimes this is at a round number, like $100, but it doesn’t have to be. The way I trade these flat trend lines is to set a buy stop 10-15 cents past the resistance zone, as that will help to confirm I’m entering upon a true breakout that’s taking place rather than a brief penetration of only 1-5 cents which could prove to be a head fake.
When you’re drawing your trend lines, consider the overall situation. Is price struggling to clear a constant level? Use a flat trend line if so. If price is simply seeing a counter-trend pullback, then the pace of the pullback is better seen with a tilted trend line .
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Charting App for Android – Finally!
March 11, 2011 at 12:31 pm
I became a smartphone user back in 2004, and for all this time I’ve waited for a charting app that was suitable for me. I’ve long been able to manage positions and place trades from my phone, but what’s been lacking has been a customizable, high-quality, dedicated charting app – until now.
Worden has delivered excellent charting products for decades (I’ve been a Worden user since the 90’s), and now they have a charting app in the Android Market (iPhone app coming soon), TC2000 Mobile.
I downloaded it today, and it instantly exceeded my hopes for what it might do. I had expected to be able to punch in symbols and pull up a chart or customize the look of the chart or timeframe, but was blown away when I realized it has all of MY watchlists from TC already in there – AND all my chart templates!
A few of my favorite features:
- View your personal WatchLists in real-time
- Run your EasyScans with your custom settings on the go
- “Spacebar” through your WatchList charts by swiping right & left
- Read the evening Worden Reports
The newest version of TC2000 is a go-anywhere, access anywhere (desktop, browser, and now mobile app) version that’s getting better every week with added features and regular improvements. It’s just coming out of beta, and I’m thoroughly impressed with what it already offers.
Screenshots of the new TC2000 Mobile charting app:
The TC2000 Mobile charting app is available through Gold or Platinum service levels, so if you’re one of the many thousands of TC2000 users with an Android phone (or soon on the iPhone), this is a must-have trader app!
**Update:Â iPhone app now available in app store.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Trading Scene Still Great
December 8, 2010 at 12:30 pm
On Nov 1, I mentioned the scene was set to improve, and since then we’ve seen exactly that. I didn’t base that post on the notion of higher prices necessarily, because UP does not equal GOOD – just as DOWN does not equal BAD.
I’m a trader, so for me it’s all about the movement. It’s volatility that makes for a great trading environment, especially when the technicals are playing such a prominent role. We’ve seen a pick up in volatility of late, which simply delivers faster moves for us as traders.
Lately, we’ve seen exactly that. Individual stocks and the indexes alike have respected trend lines and important resistance and support levels, allowing for some excellent trading opportunities for the astute trader to capitalize on.
Taking it to the Charts
For example, the indexes have been textbook in their respect of key levels. The S&P 500 has been range-bound between 1173 support (with numerous tests of that level in recent weeks) and 1227 resistance (tagged a few times but no close above it yet). That’s perpetuating the short-term trading range, which could easily serve as a stepping stone for another advance if it’s resolved to the upside.
The DJIA also has been highly respectful of key levels. The mid-May post-flash-crash bounce carried the senior index up to the 10920 area, and since then that level has been revisited. Currently it’s serving as support over the past few weeks, while the early-November high at 11451 was tested and held on Tuesday.
Individual stocks have also made exceptional moves through important trend lines as well as out of well-defined patterns. Here’s a look at a few examples:
So the general trading scene continues to improve, which means there’ll likely be ample opportunity in the weeks ahead to capitalize on. But the market won’t give you money – you’ve got to know where to find it and how to extract it. If you’re preparing daily with several if/then scenarios, and you’re managing your risk appropriately, you’re positioning yourself for continued success.
Trade Like A Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
One Intraday Setup That’s Working
September 28, 2010 at 9:38 am
In a world dominated by algo’s and machines, the astute trader can still turn a profit. It’s true, despite what many losing traders might tell you.
It takes adaptation, some ingenuity, imagination, and of course, thinking outside the box. For the creative trader though, new patterns will emerge from which profitable trades can be made.
So today, I wanted to point out to you one such example. I won’t name the stock, because it doesn’t matter, but here’s the chart from the opening 50 minutes or so:
As you can see, this stock gapped higher, ran a little more initially, and then began to roll over. The selling intensified as new lows were made on the session, and the gap began to fill before a brief period of rest set in. But that wasn’t the end of the story. Conventional day trading wisdom says this gap keeps getting filled, but only if another new low is made with a break of that intraday support.
Lately I’ve noticed this kind of setup – and you can reverse it with a downside gap if you’d like – offering some good plays. I had one finger on the trigger to short sell this one upon a break of that support, but it held just above the whole number. As the stock started to catch a bid, I went long with a very tight stop – only $0.06 from my long entry. And only 10 minutes later I was flipping out my shares for a quick $0.50 winner.
** For those wondering, that’s a reward-to-risk ratio of better than 8:1.
This setup offers two things I really like…
First, it offers very minimal, defined risk. If support (or resistance in the case of a morning gap down) gives way, I’m out quick for a small loss.
Second, it offers a great pivot area where emotion is building. The battle that took place at support was really something, and once one side began to win out (in this case the buyers), it sparked a quick move away from that level.
So, keep an eye out for this setup – it’s been a great one to trade. Gaps which only partially fill before hesitating at a level just might offer you a quick, profitable reversal play like this one.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
