Archive for June, 2010

Swing Trading Week in Review – June 25, 2010

Friday, June 25th, 2010

Swing Trading Blog Post-

Well after the markets last "mini" rally off of the February lows that market finally put in long awaited and much anticipated pullback this week.

DIA - Diamonds ETF

The two "weak" sectors, Retail (RTH) and the Homebuilders (XHB), we highlighted in last weeks BLOG POST (and in last Friday nights webinar) sold off nicely and actually made NEW LOWS as the market pulled back this week.

RTH - Retail ETF XHB - Homebuilders ETF

Coming into this week there were several SHORT Swing Trade setups in some of the stocks the these "weak" sectors.

WSM, WMT, JCG, ANF and many others were on our SHORT Watch list this week and they all moved nicely to the down side.

The "strong" stocks we talked about last week (AKAM, ALK, NTAP) all pulled back with the overall market this week.

The strongest sector we discussed at the webinar last Friday was GOLD and the GOLD MINERS.

After a nice run up last week you saw most of the stocks and ETF's in this sector put in a short retrace from Monday through Wednesday this week.

GDX - Gold Miners ETF

On Thursday we got our entry signal for several stocks but lets take a look at Newmont Mining (NEM) since this stock seemed to be the leader of the pack in the last UP move.

NEM - Long Swing Trade

NEM BROKE OUT to new multi-year highs last week so were "stalking" this stock waiting for another opportunity to GET LONG after a decent pullback.

Here is how the chart looked last Friday.

NEM - Long Swing Trade

After this nice strong UP move through the previous high (black line) we waited for the first pullback.

That pullback started on Monday and we watched price firm up a bit by the close on Wednesday as it traded around the area of the previous high.

We were watching this previous "resistance" level to now become the new "support" level.

NEW - Long Swing Trade

We still need price action to confirm that this area would hold as "support" and we received this confirmation on Thursday morning.

Right out of the gate on Thursday NEM traded through the high of the previous day ($59.43) giving us an entry signal at $59.45.

NEM moved up for most of the morning only to close the day well below the open.

Another intraday reversal!

Here is how the chart of NEM looked by the close of the trading day on Thursday.

NEM - Long Swing Trade

Price and volume were both increasing but the end of day reversal made it a little tougher for us to determine if the volume was bullish or bearish.

The next day we needed to see the signs that NEM was going to move higher.

Today (Friday) we got exactly what we needed from NEM.

Price moved higher on increasing volume throughout the day.

NEM - Long Swing Trade

Early this afternoon we were able to piece out of some of our position in NEM at the $61.67 level.

We are trailing our stop in NEM based on our BREAKOUT strategy rules and will exit the rest of our position just as our plan and this strategy dictates.

NEM is breaking out to NEW HIGHS once again and the sector as a whole is showing some tremendous strength so we are hoping to see some nice follow through next week.

Speaking of next week it seems that we are really at a pivotal point in the overall market.

We have taken out the last "swing high' and rallied up to (but still under) the 50 day SMA.

We are now in the process of pulling back from the high of the recent up move.

Another run up towards the 50 day SMA wouldn't surprise us at all.

On the flip side though there are still a lot of "weak" looking chart patterns and a some stocks and sectors making NEW LOWS.

So what is a SHORT TERM TRADER to do?

Be prepared for anything!

You have heard that somewhere before right? (this BLOG over and over and over)

As always we will have a list of STRONG and WEAK stocks and sectors on our Watch list  for Monday.

That way no matter what the market decides to do we can take the appropriate action and get ourselves on the right side of the market.

Until next week…GOOD TRADING TO YOU!

P.S. Feel free to join us Friday July 2nd at 6pm for our next "Weekly Wrap Up" webinar.

You can click HERE to register!

Swing Trading Chart Patterns – Double Top

Wednesday, June 23rd, 2010

Swing Trading Blog Post – "Double Top" Chart Pattern

Last week, in the midst of the 9 day "mini" rally, we notified our Swing Trading Newsletter subscribers of several stocks and ETF's that were forming interesting chart patterns.

As the market became short term "over bought" we noticed LRCX approaching at level that it reached in late April.

Here you can see the chart that we posted to our subscribers (and the hint we gave on Twitter) last Thursday.

LRCX - Swing Trading Chart Pattern

Thursday was the first day we noticed LRCX "stall" as price action created an "inside day" on decreased volume.

This was just a heads up to our subscribers that a "double top" MAY be forming but to wait for CONFIRMATION before entering into a SHORT position (if their trading strategy called for shorting in this context).

On the chart below you can see that on Friday (the day after our alert) price creates another "inside day" this time on increasing volume.

This type of "stalling" price action is something we would expect near an overhead resistance level but just because price "stalls" it is NOT a signal for us to take action (get LONG or SHORT) just yet.

LRCX - Swing Trading Chart Pattern

When the market GAPPED UP big time on Monday you will notice that LRCX did NOT gap up nearly as much.

LRCX stayed within the prior days range even though the market (and several other sectors) gapped up way above the prior days HIGH.

The market quickly rolled over on Monday and by the end of the day LRCX triggered our SHORT entry (BLUE ARROW) as it traded down through Fridays LOW ($41.89), confirming the "double top" pattern.

Just a reminder that since this "counter trend" strategy we consider this an advanced swing trading strategy that should only be taken by experienced swing traders.

That being said we typically use the HIGH on our ENTRY DAY as our initial stop level for this strategy.

Our entry price for the SHORT trade was .02 below Friday's low…$41.87.

The HIGH of our entry day price bar was actually exactly $1 above at $42.87 so we set our actual stop .02 above that at $42.89 giving us an initial risk of $1.02/share.

Using our standard PROFIT TARGET of 2:1 for this type of trade we set our target at $39.85 ($41.87 – $2.02).

Below you can see how the trade turned out.

LRCX - Swing Trading Chart Patterns

Although we like to see confirming VOLUME action when we enter into a trade we always put PRICE ACTION first.

Often times we will see VOLUME follow through the next day (after entry) just as it did here on Tuesday.

This morning LRCX traded down and hit our PROFIT TARGET ($39.85) before turning around and closing the day basically "mid-bar".

Price could continue LOWER from here but this type of strategy ("counter trend") calls for "precise" entries which allow for smaller profit targets.

Being alert to the potential "double top" that was forming we were able into a profitable short term swing trade once we received confirmation that the pattern was in place.

 

 

 

 

Swing Trading Videos

Sunday, June 20th, 2010
Swing Trading Videos

Just a reminder that we are posting new videos our Youtube Channel.

We have posted several Swing Trading Videos already that will give you an idea of the strategies we use each and everyday.

We will be adding new Technical Analysis videos in the near future so be sure to subscribe to our channel to view the latest videos.

Swing Trading Week in Review – June 18, 2010

Friday, June 18th, 2010

As the market continued its recent up move our "short term" LONG swing trades turned out nicely.

After bouncing off of the February lows the market has moved up for the last 9 days straight.

DJIA  Daily Chart

As you know from our last few BLOG posts we entered into some LONG swing trades (in strong stocks) as the market confirmed its "bounce" off of the February lows.

Strong stocks like ALK, AKAM and NTAP (chart below) hit their profit targets this week.

NTAP - Swing Trade

One of the strong stocks the we did not take a trade in but also turned out nicely was MELI.

MELI - Swing Trade

MELI made a nice run to new yearly highs as the market made its "bounce".

In tonight's webinar we discussed how we determined which stocks and ETF's to trade during this last move in the market.

One of the biggest "clues" we look for is when a stock or ETF shows strength or weakness in relation to what the overall market is doing.

Look at the stocks we listed above.

All of the stocks above were showing signs of strength as the market was trading down to the February lows.

As the market confirmed its "double bottom" price pattern these strong stocks and ETF's were putting in a higher low prior to taking off to new highs.

The strongest stocks were also trading above their 50 period SMA, a basic filter we use to determine strength or weakness, while the market was trading well below it.

In contrast the weaker ETF's (and individual stocks) were the ones that made new lows or lower lows as the market "double bottomed".

Take a look at the chart of the DOW (above) and compare it to the RTH and XHB (below).

RTH - Swing Trade

XHB - ETF Swing Trade

You can see how both sectors made new lows as the market put in the "double bottom" on June 8th.

We steered clear of these sectors during the recent up move and will continue to do so until they show signs of becoming at least as strong (and preferably stronger) than the overall market.

By locating the "clues" that these stocks and ETF's were giving us we were able to make some profitable LONG trades in a then down trending environment.

If you have any questions about the trades we entered into this week please post them below…we would love to hear from you!

Until next week…Good Trading to YOU!

 

 

 

 

© Swing Trading Boot Camp 2017