Wednesday, May 28, 2014

Trade Update: Taking Profits in CODE

A free 7 day trial to my nightly Trade Report, perfect for swing and part-time traders

I took partial profits in CODE today and have moved stop to entry level.  An alert went out for this entry in the Trade Report.


A free 7 day trial to my nightly Trade Report, perfect for swing and part-time traders

A 17 Percent Gain From Trade Report Stock GDP . . .and Counting

A free 7 day trial to my nightly Trade Report, perfect for swing and part-time traders

On May 15 I posted my entry setup for GDP in the Trade Report:
GDP bounced exactly off the support line we talked about yesterday.  If looking to enter, a slight bounce still  provides entry.  I entered today near the support line (posted on twitter)
gdp 5-15-15

GDP today, good for +17% gain.  Still holding a partial position with stops moved up to "let it ride".



Tuesday, May 27, 2014

My 10 Most Profitable Swing Trade Setups

Sign up for a free 7 day trial of my nightly Trade Report

Here are ten setups that have made me the most money.  Those that follow me in the blog or Trade Reports will be very familiar with these setups.

1.  Break-out pullback to gap fill

2.  Rubber band short

3.  RSI divergence at highs short setup

4.  Breakout pullback to bottom of breakout bar

5.  Trend pullback

6.  Trading range resistance short

7.  Trading range support long

8.  Rubber band long

9.  50 day moving average bounce long within a bearish pattern

10.  Anticipatory moving average cross

I have partnered with the guys at BullsonWallStreet.com. Sign up for a free 7 day trial of my nightly Trade Report, which has everything the swing and part-time trader needs to get ready for the coming trading day.

Friday, May 23, 2014

35 Important Trading Tips To Make You A Better Trader

Sign up for a free 7 day trial of my nightly Trade Report
I have compiled a list of tips that turned me into an above average trader. Feel free to add to this list in the comments section.

1. Enter strong stocks when stochastics are oversold.

2. Make sure volume confirms entries.

3. Analyze the top and bottom 20 sectors every Sunday.

4. Keep a daily list of stock breakouts and breakdowns.

5. Do not let your watchlist get too big.

6. Weed out your watchlist on a weekly or monthly basis.

7. Keep it simple. Complexity leads to wasted time and subpar results.

8. Watch for RSI divergences.

8. Make sure uptrends are on strong volume.

9. Always journal why you entered a trade the same day you enter it.

10. Review completed trades monthly.

11. Pay attention to market sentiment.

12. Check S&P support and resistance levels daily.

13. Do not confuse breakouts of support or resistance with breakouts that are within a range.

14. Manage risk with stops and targets, and stick to the plan.

15. Master a basket of 5-10 different trading setups that will work in different markets.

16. Never chase a stock.

17. Ignore the pundits, news, media and dare I say it, some bloggers.

18. Stick with your own analysis, so long as you have well tested setups.

19. Create a "daily prep report" for each trading day.

20. Become a slave to price, volume and support and resistance levels.

21. Unless you daytrade, do not watch every tick.

22. Let your stops and targets work for you.

23. Do not "micro-manage" trades.

24. Understand your own trading psychology.

25. It gets a bad rap, but I believe in "paper trading" as a learning tool.

26. Read everything, but accept nothing.

27. Do not get discouraged by a few bad trades.

28. Manage risk by position sizing.

29. Only take your best trades

30. Learn when not to trade.

31. Never allow fear or greed to consume your trading.

32. Trust your setup.

33. One last time: PRICE, VOLUME, SUPPORT and RESISTANCE

34. Stocks do not go up or down in a straight line.

35. Study past market winners and losers
 
I have partnered with the guys at BullsonWallStreet.com. Sign up for a free 7 day trial of my nightly Trade Report, which has everything the swing and part-time trader needs to get ready for the coming trading day.

AAN is a Classic Fill the Gap Example

This chart is a textbook example of a Breakout-Pullback Gap fill setup:

 
 
I have partnered with the guys at BullsonWallStreet.com. Sign up for a free 7 day trial of my nightly Trade Report, which has everything the swing and part-time trader needs to get ready for the coming trading day.

Wednesday, May 21, 2014

How to Watch PETM Breakdown

PETM was hit hard today on earnings.  The stock not only has a huge down bar, but also has a big gap to fill.  I will be watching this stock in the coming weeks to see if it "fills the gap".  If it does, that could provide a good short entry.  This is one of those stocks that will be watched for a while before setting up.

 

I have partnered with the guys at BullsonWallStreet.com.  Sign up for a free 7 day trial of my nightly Trade Report, which has everything the swing and part-time trader needs to get ready for the coming trading day.

Follow me on twitter twitter.com/PaulJSingh

POT on the Weekly Chart

POT is heading into some major resistance levels, as it heads into a range that developed over two years. Why is this significant?  There are longer term position traders who have been waiting for POT to bounce back up to their entry levels so they can avoid taking a loss.  Expect these guys to sell when they have the chance.

It pays not only to see where support and resistance levels are, but to understand the pyschology behind those levels.


I have partnered with the guys at BullsonWallStreet.com.  Sign up for a free 7 day trial of my nightly Trade Report, which has everything the swing and part-time trader needs to get ready for the coming trading day.

Tuesday, May 13, 2014

The New Trade Report is Back Better Than Ever!

I am back!  After moving to California and trading full-time the past two years, I have decided to start putting out the Trade Report again.  I am working with Kunal at BullsonWallStreet.  Subscriptions to the report should start in a week or two.  In the meantime, check out the first sample Report.  Contact me or BullsonWallstreet for more information.

Quick Summary
SPY is at all time highs, but volume and divergence is a concern.  Good low risk short, even if probability is only 50/50.  NFLX and JAKK are long setups to focus on in coming days.  Watchlist is mostly green.  Market leaders more than doubled market gains, but like market on low volume.  ETFs show money is flowing into new sectors short term.  Watch oil and India for positive money flow, while natural gas could break down.  No current trades.
The Market
Key Pivot Levels:
189.79: new high resistance
187.20: 50 day moving average
181.31:  recent low
181-184: plenty of buying in this range.
 
SPY 5-12-14a
Under the Hood:
Price action is positive and at a record high.  Pivot levels still maintain the “higher high, higher low” pattern, which is necessary for an uptrend.
However, the volume pattern shows distribution.  Notice that during the uptrend positive volume was stronger than negative volume.  Now, negative volume outpaces positive.  Notice that today’s price bar, while up strong, is on average volume.  We would have preferred to see volume pick up today.  The volume pattern, along with the RSI divergence, is cause for pause if thinking of going long.
Does this mean price can’t break this resistance level?  No.  However, it does increase the probability of either 1) price stalling at resistance  or 2) a failed breakout if price does push through resistance.
T2108 and A/D line are neutral.
 Trading Game Plan:
Market ETFs can be played in either direction.  I am leaning toward shorting SPY at these levels.  The easily defined risk parameters, along with what’s taking place under the hood, provides a better than 50/50 probability of success along with great risk measures.  A short entry under $190, with a stop at 191 and target near the recent low at $182 provides a 4:1 risk ratio.  If I short SPY with 100 shares, I am risking around $100 in order to make $400.  Even with a less than 50 percent probability that’s a trade I want to take.
If price breaks 190-191, we re-evaluate.  Key points will be strength of price and volume action at breakout and breadth indicators.
Individual equities and sector ETFs can be played according to setups without regard for the market.  I will try to have a few shorts and a few longs.
 
The Focus List
Here we find actionable setups culled from “the watchlist” for the coming trading day.
JAKK has been trending strongly toward the late July breakdown gap.  These types of gaps tend to eventually get filled, and JAKK recently did just that in April (a textbook short term short setup).  A pullback here is good for a long entry.  I will place a stop under the recent lows at $8.15 with a target at the recent high of $9.40.  An entry at $8.55 provides a 2:1 risk ratio.
JAKK 5-12-14
NFLX is a setup that, while not classic, shows potential for big gains.  We see a “W” style bottoming formation and a strong positive RSI divergence.  The volume pattern within the trading range is positive.  This is a tricky trade for two reasons.  First, the 200 day moving average is right above the current price, and 25 points away is the 50 day moving average.  This could provide resistance.  Second, zooming out to the 1 year chart shows a larger topping pattern.
However, with proper risk and trade management, this trade provides great upside with minimal risk.  An entry on pullback of today’s up bar (say $337), with a stop around $310 and initial target near the 50 day ma at $370 provides a risk ratio at around 1.4:1.  I usually like to be at least 2:1, however here I make an exception because of the potential if the 50 day ma breaks (which would also break the right shoulder of the longer time frame head and shoulder formation).  If that happens, there is a possibility of nearing the high at $460.  This is where trade management comes in.  At $370, I exit half the position and move my stop up to entry.  We now “let the trade ride”, as we have locked in gains and have the potential for much more.  That possibility here makes the low 1:4 to 1 risk  and the bearish pattern on the larger time frame okay.
NFLX 5-12-14
Longer time frame shows head and shoulders top formation
NFLX 5-12-14a
The Watchlist
It is no surprise that on a strong day like today the watchlist was mostly in the green.  A whopping 58 of 69 watchlist stocks were postive today, and only 2 were down more than 1 percent.
Watchlist 5-12-14
 Market Leaders
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market (TSLA and NFLX certainly haven’t in recent months).  Today they did lead.  Notice that while SPY was up .97% today, all but CAT at least doubled SPY’s gains.  Is this a good sign for the market?  It could be, though like the market itself, gains were on low volume.
Market Leaders 5-12-14
Sector and International ETFs
This list of “watchlist” ETFs is used a number of ways.  Most are market leading ETFs that I use to find watchlist stocks using a “top down” approach.  You’ll notice in my watchlist that a number of stocks come from healthcare. materials and energy, sectors that are represented here.  I also trade ETFs that have good setups.  Finally, following sector ETFs can give you an idea of where money is flowing and an overall gauge of the market.
I carefully watch the 5 and 30 day price trends versus the market.  This gives me an idea of where money was and is flowing.  For instance, over the last 30 days India is slightly lagging the market, while over the last 5 days it is leading by a big margin.  This lets us know that money is flowing here.  The oil ETFs, OIL and USO are good examples of this, having a 3o day number at negative.07 while the 5 day is .13.  It is time to watch OIL more closely.  On the opposite side of the spectrum, UNG (natural gas) was a big leader, but over the past five days money has flowed out of the sector.
ETF 5-12-14a
 Current Trades
Since this is the first report, there are no current trades.  However, I am short SPY near close today and long UA.
Trader Education
WINNING short term swing and momentum traders are patient.  A big reason so many traders fail is because they over-trade and micromanage there positions.   A trader must be patient with your entry points and give positions the time they need to work.

I know it sounds like a basic principle, however, due to human greed and evolutionary psychology it is a tough one to master. Early in my trading career, I spent many evening researching my watchlist and identifying the perfect entry points, only to jump the gun the next morning and enter before my entry point hit. Inevitably the stock would end up reaching the entry point I originally identified and take time to get back up to my buy-point, if at all.  A trader must not fear missing out on a trade.  If the buy-point is not hit, that’s okay.  There are always more trades.  WHEN USING STOCKS IN THE FOCUS LIST, ONLY ENTER IF THE PARAMETERS DISCUSSED ARE HIT.  ONCE IN A TRADE, UNLESS SOMETHING MAJOR CHANGES, STICK WITH YOUR PREDEFINED TARGET AND STOP BEFORE EXITING.

There’s likely a very good reason that I identified a certain entry point, possibly a pullback to breakout level or a trendline tag of support. By succumbing to emotion and entering early, you will  lower the reward to risk ratio.  Over time, these lower risk ratios will take you from becoming a very successful trader to an at best average trader.

A good trader must also exercise patience once in a position.  I can’t stress enough how important it is to let your positions work for you. Just as with entry points, there is a logical reason for setting your stop just below support levels, and targets that are 2X bigger than the stop level. By “micro-managing” your trades, you will end up losing out on big gains.  You will also fall into the trap of having small gains and big losses.  I’ve always said small losses are great.  Small gains are not.  Embrace small losses.  
Many average and unsuccessful traders are great stock pickers.  Trading is not stock picking.  A good trader identifies setups, finds good entries,  manages risk, and enters and exits according to plan.  Risk.  Trade Management.  Setups.  In that order.
Enjoy this post? Over the next two weeks we will be rolling out a new swing trading service with Paul Singh. To learn more, emailinfo@bullson.ws!