Archive for January, 2010

Swing Trading Week in Review – January 29, 2010

Friday, January 29th, 2010

And the SELL OFF continues!

Another week of selling left the DOW closing just above 10,000 on Friday and by the looks of the charts there were not many sectors immune from the downward push.

Some of the biggest hit sectors were Technology, Steel, Semiconductors, Oil Services and Energy.

The Financials, which some think will be hardest hit due to recent news, held up relatvely well this week.

This could be just a pullback before selling once again comes into the sector sending it lower.

As a swing trader it has been very hard to be LONG anything but INVERSE ETF's.

DXD, SKF,and SRS (just to name a few) have traded up nicely during the past 2 weeks and could be ready for their next move up soon.

Our swing trading newsletter, The ETF Swing Trader, has kept our subscribers informed of these recent profitable trades in these inverse ETF's.

As far as individual stocks go, the chart patterns are setting up nicely for entering into new SHORT positions.

We will continue to look for stocks that are not extended to the downside for SHORT trades.

We are long overdue for some short of pullback in this market after last years run up.

Where we go next week no one knows for sure but but fight the trend and try to out guess the market.

Analyze the PRICE ACTION and VOLUME on the charts and left the market tell you want it wants to do and simply follow along.

Good trading to you!

Swing Trading Week in Review – January 22, 2010

Friday, January 22nd, 2010

The DOW fell over 4% (over 400 points) this week closing at 10172.98.

The S&P 500 and NASDAQ followed suit also selling off around 4% each as well.

After last weeks price action (see last post) we took notice of the potential down move in the market.

When the market opened Tuesday, after being closed for the holiday on Monday, the market rallied strong and turned in a positive day closing near the highs of the day.

Traders had to think that the market could possibly be making another attempt towards the recent highs.

Our job as traders or active investors is to look for clues that the market gives to make our trading decisions.

Our clue that Tuesdays market action was a possible "fake out" was once again price action AND volume.

Even though the market had a nice up move on Tuesday the volume was light.

The volume clue was not only evident in the overall market but in the sector ETF's and individual stocks as well.

Lets look at the charts we posted last week to see how they played out.

First we take at look at the XLF (Financials ETF).

XLF ETF

Tuesday's light volume reversal day as followed by a lighter volume day on Wednesday with price closing near the mid point of the day.

Price action AND volume then follow through to the DOWN side nicely on Thursday and Friday.

Here is the OIH (Oil Servies ETF) chart.

OIH

You can see how even though the sector had a nice up day on Tuesday the volume was light.

Wednesdays price action (down) on increasing volume confirmed that price was heading lower (even if only temporarily).

The selling accelerated on Thursday and Friday pushing price lower closing near the lows of the week.

And finally lets look at the SLX (Steel ETF) chart we posted last week.

SLX ETF

This one was a little tricky for a few reasons.

The Steel sector has been on fire recently so when Tuesday's price and volume action showed a possible run towards the recent highs we entered into a new LONG position.

By Wednesdays open we knew we were probably wrong on this trade but as always we stick to our trading plan and dont try to out guess the market.

Wednesdays gap down and lackluster price movement on low volume was quickly followed by increased volume and downward price movement as selling finally came into the sector Thursday and Friday.

Yes we were stopped out for a LOSS on this trade but it happens and will happen again.

Our SHORT positions more than made up for this one losing trade.

One, for example, that played out perfectly was our SHORT SWING TRADE in ANF.

ANF Short Swing Trade

ANF triggered a SHORT SWING TRADE for us last Friday (1/15/2010).

The sector (retail) has been weak and ANF was showing signs of obvious weakness as well.

Notice how ANF did not participate in the markets UP move on Tuesday as price "stalled" on lower volume.

Wednesday ANF quickly followed through by trading lower on increased volume and the rest of the week was more of the same.

At pivotal times in the market we frequently find ourselves having a few LONG positions (in stocks showing relative strength) and a few SHORT positions (in stocks showing relative weakness).

Once the market gives us a clear signal (like it did this week) we can take the appropriate action and get on the right side of the market.

Until next week…Good Trading to you!

Swing Trading Week in Review- January 15,2010

Friday, January 15th, 2010

What a way to end the week!

The indexes all closed DOWN on HUGE VOLUME today…The Dow closed down -100.90 (-0.94%), while the S&P 500 lost -12.42 (-1.08%), and the Nasdaq finished down -28.75 (-1.24%).

Some of the strongest stocks (CREE, MRVL, DE, RIG, APC, X, CAT) followed suit also trading significantly lower on heavy volume.

We were able to lock in our profits from last weeks swing trades by being prepared for a move we somewhat anticipated.

So what were the clues?

Well take a look at this weeks price action.

After last weeks strong up move you have to expect a pullback in the market.

Monday and Tuesday saw they S&P and Nasdaq pullback a bit while the Dow held pretty steady.

Monday we did note that some of last weeks strongest ETF's (OIH, XLE, SLX) gapped up on Monday and then sold off to finish near their lows.

The strong stocks also pulled back a bit as expected.

Nothing too alarming but a clue to POSSIBLE things to come.

The next few days painted a different picture from the previous up move.

One of the things we noticed that really stood out on Wednesday and Thursday was the amount of stocks and ETF's that were pushing higher on DECREASING VOLUME!

Take a look at the chart patterns to see what we mean.

Here is XLF (Financial ETF)…

XLF - Swing Trading ETF

And the OIH (Oil Services ETF)

OIH - Swing Trading ETF

And finally the SLX (Steel ETF)…

SLX_1152010

Now you can see how they all attempted to move higher on DECREASING volume.

Dominant moves (UP in this case) on LOWER VOLUME should turn on the CAUTION light for you.

If you pull up some of the individual stocks you will notice the same chart patterns.

Stocks like DO, RIG, APC, MEE, WFC, JPM and X all have similar stories.

Once we noticed the signals that PRICE ACTION and VOLUME gave us we were a little cautious getting overly LONG.

Now, no one can predict the future, and POSITIVE volume could have come back into the market the next day so we were prepared if that would have been the case.

We held our remaining LONG positions and actually added 2 more during this time however we DIDNT LOAD THE BOAT!

When todays (Friday) sell off happened we were well prepared.

We tightened up our stops on our LONG positions and when we were stopped out of some of them today we were able to hold on to our hard earned swing trading profits!

Now that being said the market could do an about face on Monday and head right back up.

But at least for now we locked in our profits and have no problem entering into new LONG positions if the market take off again.

When you see LOWER volume UP moves it means you need to start paying very close attention!

It does'nt mean to EXIT your positions or start shorting strong stocks in a strong market but it does tell you that things MAY, and I repeat MAY, change.

Once you see the warning sign it prepares you to TAKE ACTION if price action confirms the change (like it did today).

We like to see price action AND volume working together we we enter into our trades.

UP moves (in this case) on strong volume and pullbacks on lower volume.

When the two dont match up they are telling you something…WARNING WARNING…Sentiment MAY change here (even temporarily) so HEADS UP!

By learning to read and interpret price action, volume and chart patterns together you can see the "big picture", that way you are always prepared to take whatever action the market calls for.

Until Next week…Good Trading to You!

Off to a good start for 2010

Saturday, January 9th, 2010

So the New Year started off with a bang!

The markets continued to show tremendous strength during the first trading week of 2010.

The Dow opened the the week at 10,430 and never looked back, closing up 1.8% at 10,618!

The S&P 500 was up 2.7% for the week and closed at 1144.

Some of the sectors were absolutely on fire!

Steel stocks were on a roll and stocks like X, AKS, STLD, and NUE all had a big  week.

SLX, the Market Vector Steel ETF, finished up almost 10% for the week.

Energy and Oil stocks also continued to rise with stocks like BHI, DO, RIG,and APC having great weeks.

OIH was up over 11% for the week while XLE finished up almost 6%.

The heavily watched financial and home builder sectors also show some very nice upside moves.

The home builders had some great swing trade set ups.

XHB closed up over 7% for the week after breaking out from a nice pattern on the daily chart.

PHM, LEN, DHI and MTH all finished the week up nicely.

Swing traders should have capitalized on the financials as GS, JPM , and WFC all had BIG weeks after breaking their respective DOWN TREND lines.

Casinos, Airlines and Solar stocks also had a great week

Some of the other sectors, however did not fare very well during this strong week in the market.

The retail sector had a weak showing with a few exceptions like RL and BBBY.

The Real Estate sector also had a weak showing with IYR only up a tad over break even for the week.

There were plenty of opportunities for Swing Traders to profit from last weeks action and we hope you were able to do just that!

We look forward to see what next week brings and Good Trading to you!

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