Archive for May, 2010

Swing Trading Week in Review – May 28, 2010

Friday, May 28th, 2010

Gap DOWN and roll over, Gap DOWN and RIP, Gap UP and roll over!

After all is said and done the roller coaster came to a stop and finished down about 60 points for the week.

Not bad considering that we gapped down HUGE on Tuesday and traded down to new yearly lows intraday.

DIA - Swing Trading ETF

All in all the week was a rather boring one for our Basic Swing Trading strategies.

If you were not already short coming into the week it was a little late and difficult to initiate any new SHORT positions.

Most of our basic bread and butter strategies are "with trend" strategies which means that we focus on swing trade setups in the same direction as the overall market and sector.

If the market is in a DOWN trend or DOWN channel these strategies focus on SHORT Swing Trading setups (or LONG Inverse ETF's).

If the market is in an UP trend or UP channel then of course we look for LONG Swing trades.

Some of our more advanced Swing Trading strategies are actually designed as "counter trend" strategies.

These strategies are designed to trade and profit from "bounces", pullbacks and retraces and trade in the opposite direction of the dominant trend.

An example of this would be buying into a LONG position in a DOWN trending stock as it comes into a possible area of support.

The are of course other factors to consider when using "counter trend" strategies and these should strategies should only be used by experienced swing traders.

I mention these advanced strategies because this week we saw a good opportunity to use them.

On Tuesday we noticed that the HUGE gap down brought us down to levels in the S&P and Dow that we saw in the beginning of February.

After such as extended move DOWN over the past 2 weeks you had to think that there MAY be some support in the area.

We did NOT blindly buy into the GAP down but instead we waited to see how the market traded around this level.

By mid morning on Tuesday the strength in the market was obvious…there were buyers picking up stock at these new lows.

As the market started to follow through the rest of the day we were able to initiate a few LONG trades.

We looked for relatively strong stocks that were either OVERSOLD or showing signs of holding a support level.

Stocks like ATVI and MCHP.

ATVI - Swing Trading Setup

MCHP - Swing Trading Setup

Both ATVI and MRVL were SHORT TERM OVERSOLD as they traded into their LONGER term support levels.

Tuesday's GAP and RIP gave us any opportunity for a low risk trade in both stocks.

We exited ATVI today (Friday) for a nice gain as it reached SHORT TERM OVER BOUGHT levels into the close.

MRVL was not yet OVER BOUGHT as of the close so we exited a portion of position and are trailing the rest with a tight stop.

We did stay away from some of the other stocks with similar patterns due to their recent weakness.

AXP and X come to mind as well as some of the other financial stocks.

We put these stocks on our "DO NOT TRADE" list because both sectors have been the leaders to the DOWN side in recent weeks.

The recent "bounce" in the market could simply be a pullback before the next down move.

If so we have a bunch of stocks that are setting up nicely to the SHORT side.

If the market finds some legs and continues UP from here we have a few positions on and we will trail our stops accordingly.

We will also look for opportunities to get into some of the strong stocks like FDO, SNDK, ALK and WSM.

No one knows for sure which way we go from here but by being able to trade the market by using some advanced strategies you should be able to make profitable trades in any environment.

Until next week…GOOD TRADING TO YOU!

Swing Trading Week in Review – May 21, 2010

Friday, May 21st, 2010

The SELL OFF continues!

Another volatile week in the markets this week as the sellers came out in droves driving the Dow back down near the lows we saw on May 6.

DJIA - Swing Trading Strategies

In last weeks Swing Trading Blog post we notified you of the numerous SHORT Swing Trade setups we had on our "Watch List" for Thursday (May 13th) morning.

Our strategy was to locate weak sectors and individual stocks within those sectors that were giving us LOW RISK setups.

We also advised that when the market followed through to the downside we entered into several new positions.

In our Swing Trading Newsletter we highlighted the Semiconductor ETF (SMH) and several of the stocks (KLAC. LLTC, MXIM) within that sector that had nice SHORT trade chart patterns.

Some of the other stocks on our list included AXP, FDX, MET, ALL, and SOHU.

We also got LONG trades off in the Inverse Energy ETF (ERY) and the Financial Inverse ETF (FAZ).

ERY - Inverse Energy ETF Swing Trading

FAZ - Inverse Financial ETF Swing Trading

Well needless to say these trades played out nicely this week as the market made its way lower.

We were able to scale out of our trades on the way up and when the market gapped down again on Friday we tighted our trailing stops and were taken out of most of our remaining shares.

The sellers were relentless this week taking down almost every sector along with it.

The Steel (SLX), Solar(TAN), Oil (OIH), Energy (XLE) and Agribusiness (DBA) ETF's all made new yearly LOWS this week.

Some of the previously strong sectors also came down with the market during this weeks sell off.

Retail (RTH), Real Estate (IYR) and the Homebuilders (XHB) finally broke under their 50 day SMA's and headed lower.

The Gold (GLD and GDX) and Silver (SLV) ETF's came off of their recent highs to put in a lengthy and somewhat concerning pullback.

Fridays "bounce back" tells us that a retrace could be in order going into next week.

We are currently watching some stocks that have shown signs of relative strength during the down move this week but until the obvious negative sentiment changes we will continue to look for additional SHORT trading opportunities.

If you would like to learn more about our Swing Trading Strategies and Techniques please feel free to join us at any one of our upcoming courses or webinars.

Until next week…GOOD TRADING TO YOU!

 

 

 

 

 

Swing Trading Week in Review – May 14, 2010

Friday, May 14th, 2010
DIA - Dow Jones 30 ETF

As we notified you in our last BLOG post we were mostly flat at the end of last week due to the extreme volatility we witnessed on Thursday.

We also advised that we would be sitting on the sidelines until the LOW RISK/HIGH REWARD opportunities presented themselves.

When the market GAPPED UP HUGE on Monday were sure were glad we were flat!

We actually continued to mostly watch the market while the week unfolded.

With the Dow, S&P, and Nasdaq all hovering around their 50 day SMA's we started looking for clues to tell us what the market may do next.

On Tuesday and Wednesday we noticed several stocks and ETF's that were creating almost text book SHORT Swing Trade setups.

It appeared to us that these stock and ETF's (as well as the overall market) were simply putting in a "retrace" and could possibly resume their downward movement.

It seemed that our LOW RISK/HIGH REWARD trading opportunities were now presenting themselves.

When Thursday morning finally rolled around we had a ton of potential SHORT Swing Trading setups on our watch list.

Our Swing Trading Newsletter subscribers received a very lengthy list of the stocks we were watching.

As the day progressed on Thursday several of our triggers were hit and we entered into some new positions.

Fridays price action followed through nicely to the down side and we were able to cover some of our STS shorts in the process.

One example is semiconductor equipment maker KLA Tencor Corp (KLAC).

KLAC - Short Swing Trading

On the chart above we see how KLAC gapped up with the market on Monday.

Tuesday we see how price spiked higher only to close the day near the middle of the candlestick.

On Wednesday we noticed how KLAC could not trade through the previous day's high despite a strong up move in the market.

Wednesday's price action actually created a LOW VOLUME INSIDE BAR (or candlestick).

This type of "stalling" price action is a sure sign of indecision and relative weakness.

The stage was now set so here is how the trading plan for this trade looked.

Our initial SHORT entry price was set at $32.55 just below the low of the day on Wednesday ($32.61).

If price traded down to this level and triggered our entry a new "Swing High" would be in place so we would set our initial STOP one penny above this high at $33.30 for a risk of 75 cents.

Due to the potential support in KLAC near the $30 level we decided to make this an STS (Short Term Swing) Trade and set our profit target at $31.05 or 2 times our initial risk.

On Thursday morning our entry price was hit and we entered into our SHORT position in KLAC.

KLAC continued to trade lower throughout the day and ended up closing near its low for the day on a slight increase in volume.

Friday morning KLAC gapped down with the market and we were able to cover our SHORT just after 10am at our profit target ($31.05).

KLAC did trade a bit lower during the day before closing just below $31.

The market closed out the week looking like it was heading lower from here.

Could KLAC continue to trade lower for the next few days if the market continues to sell off?

Of course.

Will we be upset that we "left some profits on the table" or second guess our decision if that happens?

Absolutely NOT!

This specific trade was set up as a SHORT TERM SWING TRADE (STS).

We set it up this way for a reason and once we set our plan in place we follow it "to a tee".

Some of the other trades we entered into on Thursday have a bit longer time frame and we will manage these trades "to a tee" as well and exit when our rules tell us to.

As we go forward into next week continue to look for the price action and volume clues to get a "heads up" on what the market and your stocks may do next.

Until next week….GOOD TRADING TO YOU!


 

 

 

 

 

 

 

Swing Trading Week in Review – May 7, 2010

Friday, May 7th, 2010

Can you say Volatility?

Wow!

What a roller coaster ride we had in the market this week!

After the dust settled we ended the week with the NASDAQ down 8%, the S&P down 6% and the DOW down 5.7%.

This highlight of the week was of course the historic intraday sell off in the markets on Thursday.

The DOW fell almost 1,000 points (due to a trading error?) in the early afternoon but staged a comeback and the late day rally brought the market up to finish the day down only 347 points!

DOW JONES SELL OFF - May 6, 2010

Wow…what a crazy day indeed!

Last week we advised our Swing Trading newsletter subscribers to go into this week on "High Alert".

This alert was due to the market putting in its first significant LOWER HIGH since the rally started in February.

He is a a similar chart that we posted with our "alert".

Dow Jones Lower High April 30, 2010

The S&P and NASDAQ 100 charts had the same chart pattern which was a "triple heads up".

When the market opened up on Monday and rallied right out of the gate finishing just off the highs a lot of traders thought Fridays price action had to be a "fake out".

For us though Tuesday's price AND volume action kept us looking more to the SHORT side for Swing Trading opportunities.

When we have a strong move (like the DOWN move on Friday) followed by a LOW VOLUME "inside day" it is only an indication that price is "stalling".

DOW JONES SWING TRADING INSIDE BAR

When price "stalls" we simply wait for the market to tell us what it will do next.

Then on Wednesday the market spoke LOUD and CLEAR and confirmed that the dominant direction was to the DOWN side by gapping down and selling off on INCREASING VOLUME.

DOW JONES - Inside Bar Continuation Pattern

Going into Wednesday there were several stocks and ETF's that had nice SHORT Swing Trading setups.

Or for those of you who don't feel comfortable SHORTING yet we recommend you focus on the Inverse ETF's.

DXD, SKF, FAZ, and DUG (just to name a few) all had nice LONG setups since they are Inverse ETF's.

If you were SHORT (or LONG the Inverse ETF's) going into Thursday everything was good to go until the excitement started in the afternoon.

Then things got a little tricky.

If you use intraday data in your swing trading the extreme volatility Thursday afternoon gave you a chance to lock in some nice profits.

If you are able to only use end of day data then the situation was obviously a little different for you.

We use intraday data so we did a complete post on how we handled yesterday's extreme volatility HERE.

We exited most of our positions yesterday as our trailing stops were hit when the market rebounded after the massive sell off.

If you werent prepared or didnt have a plan then you probably gave back  some profits.

We had no problem being almost flat even if the market would have continued significantly lower today. (the DOW was down today but still higher than the LOW of yesterday).

We followed our trading plan and exited our positions when our rules told us to.

Today (Friday) was simply a day for us to watch the market to see how things would finish for the week.

We aren't looking to chase this market down at this point.

We will sit on the sidelines and patiently wait for our next LOW RISK/HIGH REWARD trade setups to present themselves.

A few sector ETF's we will keep a close eye on as we move forward are the SILVER (SLV), GOLD (GLD) and the GOLD MINERS (GDX) ETF's.

After such a crazy week in the market don't get over anxious and start trading just to trade.

It can be tough when the market is moving the way it did this week.

It creates "excitement" and sometimes you may feel like you are "missing the boat".

BE PATIENT!

There will be plenty of opportunity in the very near future for you to get back into the market no matter which way it goes from here.

Until next week…

BE PATIENT, PROTECT YOUR CAPITAL and GOOD TRADING TO YOU!

 

 

 

 

 

 

 

 

 

 

© Swing Trading Boot Camp 2017