Yesterday in my paper trading account I bought 9 Oct Put options for .40 cents a piece on AKS and 6 October call options for AMD at $1.19 a piece. When you include FCX I have 3 open positions. I am about even on FCX but looking to do much better expecially since FCX dropped below its 20 period moving average yesterday and is currently holding barely below it. Obviously my new positions will take some time to produce results. They currently show very small losses.
After doing my charting today possible entries to look out for include DNR that is at -.2 on my indicator and is a possible buy if it goes above the center line especially on heavy volume. Also CBG is looking like a possibility for the purchase of Puts. It is currently at .2 on my indicator. I may take a position especially if it drops below the centerline on heavy volume. Lastly there is NBR, which is showing Bullish tendencies. It is currently sitting at -.2 on my indicator after briefly breaking through the centerline at a positive .03. I am waiting for another break above the centerline on high or moderately high volume and above .03 to actually take a position. The only stocki that had especially high volume on this charting is EXEL but there is no clear buy signal.
Hopefully I will have time to post again tomorrow.
I was hoping to write for this blog more than once a week, but here I am, about a week after my last post. At this time I have at least a couple of things of importance to report. First CIE produced quite a reverse signal last Thursday that helped me decide to exit my position on Friday. I did so with more than a $300 loss. FCX on the other hand has not produced such a signal and seemed to be headed lower, so I am keeping that position for now. On Friday I have a new signal of some import. AKS crossed below the centerline on my indicator on heavy volume. When you look at the chart for AKS there is every indication that it will go lower still. AKS clearly broke beneath support of a little more than 5 dollars per share. The next support level is about 4 dollars per share. I intend to enter a position in AKS using my paper trading account tomorrow. I will discuss later exactly what position I took. I also need to decide whether I should take a long position in CIE. I must say however that I do not like taking opposite positions in the same sector, which is what I would be doing given that I am short FCX. I notice that FCX has not yet broken below its 20 period moving average. I am looking for this to happen to really make a profit on this position that will overcome my loss on CIE. I do not want to compromise this possibility by going long CIE, at least until there is a better indication that FCX will be turning up as well.
Another interesting development from Friday is that the stock AMD went up for the second straight day on major volume. The current position for AMD on my indicator is .97, a new high. When you look at a chart of AMD there is a clear break above the resistance level of about $7.10 to $7.15 per share. According to FINVIZ AMD is part of the Technology Sector. When one looks at this sector using XLK as a proxy it is easy to tell that this sector is doing very well and is indeed wanting to bounce off its 20 period moving average short term. Even though my indicator did not produce a signal as such, it is still very positive to have two back to back days of high volume increases for this stock. I need to consider getting into a position using AMD tomorrow as well as AKS. Let me just comment on one other thing. I notice that the Stock MRO, Marathon Oil produced a buy signal a while back. It produced a buy signal, but not on impressive volume six days ago. Perhaps that is why I did not choose to enter the position. four days ago the stock exceeded all prior highs on my indicator with a position of 3. I could have entered the position then but failed to. All I can say for now is that MRO keeps heading up. Most recently it is at a position of 6 on my indicator I do not like entering a position so relatively late. If I had only gotten in when I should have I’d be making a lot of money now in my paper trading account. That is all for now. I hope to discuss my decision regarding AKS and MRO tomorrow.
This is my second attempt to post this weekend. My first attempt was somehow deleted after I fell asleep. I just want to say that I spent much of Saturday charting the stocks that I am using with my indicator. So far no new buy or sell signal have come up. My short position in FCX was affirmed as the signal line crossed below the center line again as I expected it would. While CIE maintains itself below the center line it is tending to hover too close to this line rather than making new lows. When I checked my paper trading account I noted an overall small profit of $81 as FCX is creating a greater profit than the loss for CIE. If CIE maintains a losing stance for the rest of this week I am inclined to get rid of it. On the other hand I am looking to sell at least 3 shares of FCX for a $1.40 which gives me about a 1/3rd profit on those share. If things work out as I think they might I can then sell 3 more shares of FCX for $1.75 and the last 3 for $2.10. I would thus get rid of my entire position that I entered into for $945 by getting out of it for $1,575.00. This is about a $600 profit.
The stock SDRL had heavier than usual volume as it maintained below the center line. Should the signal line cross above the center line it may be a good idea to buy calls on SDRL since most of those shorting the stock probably got out.
Ive just done an anylisis of various exchange and sector charts. These are long-term weekly charts for 900 weekly periods. Following is the breakdown of those charts. Of the 4 major exchange charts SPY(The S&P 500), DIA (Dow Jones Industrial Average) & QQQ (The Nasdaq) all have A chart rankings. Only IWM (The Russell 2000) has a weaker B ranking. Moving on to the Sector Charts XLY (Consumer Discretionary), XLK (Technology), XLI (Industrial), IYK (Consumer Goods), XLU (Utilities) & XLP (Consumer Staples) all have A rankings. The sector XLV (Healthcare) has a B ranking. The sectors XBI (Basic Materials), XLB (Minerals) & IYT (Transportation) has C rankings. Finally sector XLE (Energy) has an F ranking.
The reason it is important to know the rankings of all of this Index and sector information is to know where it is more helpful to go both long and short the market. For instance I have put in orders to take trades in my paper traking account to buy puts on both CIE & FCX. Both of these stock are in the Basic material sector tha has no more than a C ranking. A close look at the 900 period weekly chart for XLB also indicates a possible stallout for this sector which had been in an uptrend. This could easily indicate a reversal of trend and possible excellent profits for my 2 stock picks to short. The point is I should resist shorting stocks in Sectors showing a clear long-term uptrend such as A or B ranked sectors. I should also avoid going long in stock that are in downtrending sectors that have F or G rankings. I can make a rule in my trading plan that takes these things into account. How about making a rule against going long in a stock that is in a sector or index that is two or more letter grades below a long indication. Also never go short a stock that is in an index or sector that is two or more letter grades above a short indication.
Buy the way I successfully entered CIE at 50 cents per option with a total of nine options. I successfully entered my FCX position at $1 per option with a total of 9 options. In my next post I will discuss the stops that I need to set on these positions.
Hey, everyone. I’ve collected 8 days of full data using my indicator. I’ve worked out where 20 stocks that I follow stand using my indicator & I can give out initial trade suggestions on at least 2 stocks. First, the stock symbols CIE, which stands for Cobalt International and FCX, which stands for Freeport Mcmoran are both showing signs that they should be shorted by either outright shorting the respective stock or by buying puts.
First let me tell you about each of these stocks. CIE is essentially a penny stock and the cheapest of the stocks I follow. The last price for CIE is $1.04 and its options are measured in 50 cent imcrements. Through my paper trading account I choose to input an order to buy 9 options for no more that .90 cents. These options do not expire before October giving my trades plenty of time to work out. In order to purchase them at the price I am requesting the stock must rise first to a point where I can get in at a price that minimizes my risk. The reason CIE looks so weak on my indicator is simply that the indicator is dropping below the position of a recent heavy volume indicator, which is simply and asterisk below the plot line. Earlier the indicator went above the centerline and then right below the centerline indicating weakness. By the way CIE & FCX are both in the basic materials group. When I look at a long-term chart of the group I find that it has no more than a C ranking and it appears that the group has stalled and may be on a downwards trajectory. This seems to validate my position in shorting each of these stocks by selling put options.
On my paper trading account I decided to buy 9 Put options at $1.10 a piece expiring in October. This is because FCX cut through the centerline of my indicator like Butter. Although it did not do so on especially high volume the fact is that my indicator has been pointing downwards almost since the beginning. This is clearly a weak stock. There is clearly one problem here. The stock is clearly resting on its 20 period moving average, but given the status of other indicators that indicates this stock is weak, I feel confident in predicting a downside to come. Again I am setting my entry so that it minimizes my risk.
Except for the above two stock most stocks are moderating their downward trends or are trying to reverse trend, but are doing so on extremely weak volume. This may indicate that the market is weaker than it seems.
I’ll be back with another blog post tommorrow which will deal more with my overall trading plans.
Well my vacation is over and this is my first blog post since my vacation. I now have 5 full days of complete data on my indicator and am ready to share the results. Out of 20 stocks that I am following 14 are above the center line and in every case are trending downward towards the centerline. Six stocks are below the centerline are also trending downward. Three stocks: CIE, VX & ODP have seen excessively large spikes in volume as defined by my indicator. Two stocks: CIE & MRO have crossed the centerline in both directions, above and below. CIE is too cheap to trade right now. It is essentially a penny stock with its last price at .98 cents per share. MRO is resting on its 200 day moving average with a bottom tail that indicates the stock may go higher, but the current market environment seems to be down so it is too risky to trade MRO to the upside. My strategy for this position is to see MRO drop between the 200 day moving average and then run-up to touch that moving average before bouncing off to the downside. The stock MTW is barely above the centerline, registering in at just .03. Should this stock drop below the centerline, especially on heavy volume and the price itself goes well below the 20 period moving average it may well be worth buying puts or outright shorting this stock since the price is still well above the 200 period moving average. In this case one should use the 20 period moving as a possible stop loss when one enters a position. This is all I have to say for now. I’ll try to be back tomorrow with more information and explanation as to how I intend to play this market.
Just 1 more day before I can start releasing the results of my indicator. I will be going to Maine for vacation though, so I may not post anything for another 2 days from my Hotel room in Maine.
I now continue my letter grades for long term Index & Sector charts. I posit that a C chart shows an overall increase from the left side of the chart to the right side of the chart of less than 45 degrees that has 2 or more major inflexion points in price that are above the current price. An inflexion point separates a series of higher bars where the 5th preceding weekly bar or greater has a lower high and lower low than the current inflexion bar low and following bars to the 5th following bar or more has a lower high and lower low than the current inflexion bar low.
A D graded chart is basically a sideways moving chart from left right showing a minimal angle from the opening bar and price to the closing bar and price. Any angle should be no more than 10% positive to less than 10% negative and there should be multiple inflexion points both above and below the latest price within about the same distance.
An F graded chart should simply be the opposite of a B graded chart. This chart should have a clear downward bias between negative 10% and negative 45% with two or more inflexion points below the current price.
We are unlikely to see a G graded chart since any such company should simply be out of business, but it would be opposite to an A graded chart. It would slope downward at a negative 45% angle or more.
In a future post I intend to rate the long-term charts of at least 4 major Indexes and about 9 sector charts.
In only two days I will be ready to start showing the results of my indicator. In the meantime I think it is a good idea to start work on a trading plan, which is a major purpose for this blog. When thinking of building a trading plan I think it is helpful to look at long term chard for the purpose of not only finding the most important trends in the market. We also want to find major support and resistence points that we can work off of. Let’s start by grading long term charts. When I think of a long-term chart I think of the 900 period weekly chart from off of Stockcharts.com which is a website that I use mostly for my research. Right now the long-term charts that I woll be mostly interested in are the Major indices chart and sector charts. The major indices are thing like the Dow Industrials, the NASDAQ, the S&P 500 and so on. Examples of sector charts are the consumer cyclical sector, the Technology sector or the Utility sector. Sectors group together industries by the function these industries serve in out society. I want to be able to grade the long-term sector charts for these indices and sectors so that I may better be able to drill down on where the best trades are to be found. I propose giving long-term Index or Sector charts letter grades just as we received in School. I will be using this blogpost to begin talking about these letter grades.
Let’s start with letter grade ‘A’. A letter grade ‘A’ long-term chart is essentially a chart that has been going up at about a 45 degree angle or better over the course of years. There have been pullbacks of course, but nothing significant and the chart is either at new highs or close to maintaining new highs.
A letter grade of B is a chart that is less than a 45 degree angle where current price is lower than at least one major pullback. A major pullback is defined on the weekly chart as one where the high and low of the weekly bar is lower than the high and the low of a bar at least 5 bars back.
I will talk about letter grade ‘C’ and so on tomorrow.