Archive for April, 2010

Swing Trading Week in Review – April 23, 2010

Friday, April 23rd, 2010

NEW HIGHS…YET AGAIN!

Last Friday when the news came out about Goldman Sachs a lot of traders (including us) started to wonder if the market would finally pullback after a bit of negative news.

Well this week the market spoke LOUD and CLEAR by finishing a strong week at NEW HIGHS for the year.

That makes this an almost 1400 point rally since "that reversal day" which happened on February 5th.

DJIA 1400 Point Rally

As far as individual sectors go the FInancial ETF's (XLF, IYF, IAI) all had a strong week but DID NOT make news highs with the market.

The Semiconductors ETF (SMH), which broke out last week, had a lackluster week but we will continue to watch for follow through to the upside.

The Oil services (OIH) and Energy ETF's (XLE) finally broke to the upside this week.

OIH ETF - Swing Trading Break Out

A few weeks ago in this blog we posted about the relative strength we were seeing in the Homebuilders ETF (XHB).

This week XHB setup another very nice swing trade opportunity.

We posted the details about the trade HERE but lets look at the chart.

XHB - ETF Swing Trade

With the market being this strong there were a TON of individual names that were UP strong this week.

The Retail sector was particularly strong with stocks like JWN, SKS, TIF and several others having a great week.

So will the incredible strength in these sectors and the overall market continue as we move into next week?

Of course no one knows for so just continue to listen to the market and position yourself accordingly.

DO NOT get complacent and let your guard down.

Follow your plan and your trading rules and be prepared for ANYTHING.

Until next week…Good Trading to YOU!

Swing Trading Week in Review – April 16, 2010

Friday, April 16th, 2010

Does it take bad news about Goldman Sachs to cool the market off?

Goldman Sachs Bad News

After four more days of the continuation rally the market finally ran into a speed bump on Friday.

News came out mid morning that the SEC sued Goldman Sachs in U.S. District Court in Manhattan, claiming the investment bank "committed fraud by misstating or omitting key facts about a synthetic collateralized debt obligation tied to subprime mortgages."

The news sent the market sharply lower, selling off over 150 points intraday, as sellers came out in droves after the news hit the wire.

After such a spectacular rally over the last 2 months this may be the catalyst to finally bring this market back to reality.

Time and time again we advise our students to "be prepared for ANYTHING" as this is a great case in point.

But before we go any further lets take a look at what the market did for the first four days of the week.

DJIA Swing Trading

You can see from the chart above that the DJIA had another strong first four days of the week and hit another NEW HIGH for the year on Thursday.

One sector that took off like a rocket this week was the Semiconductors.

Here is a look at SMH (Semiconductors ETF)…

SMH - ETF Swing Trading

This chart is great combination of Swing Trading using price action, volume and price patterns.

Here is the same chart with annotations.

SMH - ETF Swing Trading Breakout

After consolidating for the last 3 weeks the SMH finally broke out of its price pattern on Monday.

As swing traders this is one of the most popular chart patterns we look for.

Horizontal resistance and an UP trending channel line gives us an ASCENDING TRIANGLE chart pattern.

This chart pattern gives us a LONG trade signal when we see a BREAKOUT above the overhead resistance area.

Notice the VOLUME increase during and after the breakout.

This is exactly what we want to see when we enter into and manage a position.

Indications of strong volume in the direction of our trade when the signal is generated and a continued increase in volume as the trade moves in our favor.

Now lets get back to Fridays trading action.

Being prepared for "anything" is essential if you truly wish to become a successful Swing Trader.

If you were "prepared for ANYTHING" going into Friday you would have a watch list that includes weak stocks, sectors and ETF's.

Our list included several stocks like DVN, SOHU, CAGC, CAAS, MOS and STLD that were showing signs of relative weakness lately.

And depending on your skill level as a swing trader, when Fridays news came out, you could have capitalized on several stocks with "weak" chart patterns.

Stocks like CPRT, NUE, FCX, T and GOLD.

One stock directly influenced by the news with a nice chart pattern was Morgan Stanley (MS).

MS Swing Trading Chart Pattern Break Down

After MS formed a short term DOUBLE TOP on Wednesday (at $31.45) it was followed on Thursday by an INSIDE BAR.

INSIDE BARS basically indicate a "stall" in price action especially when LOW VOLUME accompanies this formation.

After Thursday's price and volume action had you taken notice of this temporary "stall" it may have made your "watch" list.

Then when Fridays news came out you would have looked first to MS to see if price action gave you an opportunity to enter into a new SHORT position.

Friday morning MS BROKE DOWN through Thursday's low in the first 5 minutes of trading.

This was your "heads up" since price was now BREAKING DOWN from this pattern.

The entire financial sector was weak all morning and when the news broke around 10:30am MS gave you a great SHORT setup near the $30.50 price level.

Again this is an aggressive trade that should be taken only by experienced swing traders.

Hopefully though it shows you how, with the proper mindset (being prepared for ANYTHING), you can profit when the unexpected opportunity presents itself.

Until next week…Good Trading to YOU!

Swing Trading Week in Review – April 9, 2010

Saturday, April 10th, 2010

After briefly touching 11,000, the DOW ended the week at 10,997…the highest close since September of 2008!

As the market continues to rally there have obviously been some great swing trading opportunities for you to capitalize on.

A few weeks ago in our Swing Blog and also in our Swing Trading Newsletter we noticed the increasing relative strength in the GAMING SECTOR.

This week stocks in this sector WERE ON FIRE!

Take a look at the charts for MGM, WYNN and BYD

MGM WYNN BYD

Sticking with our swing trading strategy of locating STRONG STOCKS in STRONG SECTORS these charts are great examples of identifying LOW RISK/HIGH REWARD swing trade setups.

Another sector that continues to rally is the RETAIL sector.

Here is the chart for RTH (retail ETF)…

RTH Swing Trading ETF

We have been trading stocks in this sector for weeks and notified our blog and newsletter readers that last weeks "pullback" could lead to great potential LONG setups in this sector.

Several retailers made nice moves this week including M, BBY, ANF, RL and HOG.

Financials (XLF) and Real Estate (IYR) are still strong with GOLD (GDX), SILVER (SLV) and ENERGY (XLE) showing signs of wanting to play "catch up".

So will the DOW finally break through 11,000 with conviction next week?

Only time will tell so as always…be prepared for ANYTHING!

Until next week…good trading to YOU!

Proshares New Double (2x) Leveraged Biotech ETF’s

Friday, April 9th, 2010

Proshares is now offering 2 new DOUBLE LEVERAGED ETF's covering the Biotech sector.

The funds are:

Proshares Ultra Nasdaq Biotechnology (BIB) and

Proshares Ultrashort Nasdaq Biotechnology (BIS)

The new funds, which began trading April 8th, track the NASADAQ Biotechnology Index which includes AMGN, TEVA, GILD, and CELG as its top holdings.

Just a reminder….These are LEVERAGED (2x) FUNDS in a very volatile sector so make sure that these funds do not excede your individual risk tolerance levels.

Swing Trading Blog Update April 9th, 2010

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