Archive for August, 2010

Swing Trading Week in Review – August 27, 2010

Saturday, August 28th, 2010

Buyers at the 10,000 level in the DJIA!

As the market drifted lower early in the week we saw a lack of follow through to the DOWN side as buyers stepped to hold the DJIA near 10,000.

DJIA

In last week's BLOG POST we said that we were seeing some signs of the market holding up and questioning the strength of the recent move lower.

Although the Nasdaq did finally confirm it's lower low the move down consisted of a GAP lower and more sideways trading rather than a nice orderly sell off.

QQQQ

The good news for us was that even though we saw sideways trading in the overall market some of the weak stocks we had positions in continued to move lower.

The is one of the benefits of identifying the weakest sectors and stocks when the market is showing signs of losing strength.

SLB, NBR and BHI all ended up being nice trades that drifted lower until they began to retrace on Friday.

We also posted about the GOLD sector last week.

The GOLD MINERS have been strong and the stocks we listed in last weeks post all had a very nice UP move this week!

GDX - Gold Miners ETF

EGO, ABX, NEM, AEM and of course GDX (Gold Miners ETF) offered some nice chart patterns to trade.

Looking forward to next week we see a few interesting chart patterns in some of the other sector ETF's.

The Agriculture ETF's (DBA and MOO) continue to outperform the market.

They could be ready for their next move UP after this recent pullback.

Stocks to watch are POT, ADM, DE, MOS, MON, AGU and CF.

The Semiconductor's (SMH) remain weak and have started to retrace off of the previous year low.

Here is the WEEKLY chart for a better view…

SMH - Semi's ETF

The troublesome Financial ETF's (XLF and IYF) also moved down back down to the lows of the year.

Here is the WEEKLY chart of the XLF

XLF - Financial ETF

Do these weak sectors bounce off the lows and rally or simply put in a retrace before the move to NEW LOWS?

Well we are now trading back below the 50 Day SMA in the DJIA, S&P and the Nasdaq.

Although this is surely a sign of weakness we know how indecisive the market has been lately.

Do we get a nice retrace back up to the 50 Day SMA next week or do we continue the SELL OFF and head down towards the July lows?

No one knows for sure but as always have a plan in place for either outcome.

Until next week…Good Trading to YOU!
 

Intraday Swing Trading Strategies

Wednesday, August 25th, 2010

After receiving numerous inquires about the day trading techniques we use to "Swing Trade" on an Intraday chart we thought we would post a few examples from today's trading session.

Although "Swing Trading" in generally used to define an overnight strategy you can view this article to understand how we define "Swing Trading" for day traders.

Although the overall market (DJIA) finished up a mere 19 points today the intraday price swings and volatility offered plenty of opportunity for "Swing Trading" on the 5 minute chart.

Here is the 5 minute chart of the Diamonds (DIA)

DIA 5 minute

You can see from the chart above that the overall market GAPPED DOWN a bit and rolled over into the 10am number.

After the number came out the market attempted to push lower but ended up putting in a higher low just after 1030am.

After this higher low we rallied to NEW HIGHS for the day only to stall around lunch time.

Just after 2pm we again pushed to NEW HIGHS for the day and then had nice afternoon rally until the last 10 minutes of trading when we saw a the market retrace into the close.

So now that you see how we viewed the price action and chart patterns for the overall market let's take a look at some of the individual stocks and ETF's.

Since the SHORT TERM trend in the overall market was DOWN and we GAPPED DOWN we were looking to the SHORT SIDE as we rolled over on bar 3 (9:40-9:45am).

As always though we are constantly scanning the market to see which stocks are showing relative strength and which are showing weakness.

The first trade we put on this morning was in St. Jude (STJ)…

STJ - 5 Minute

Due to the daily chart and recent news in this sector we had STJ on our Watch List this morning.

As the market moves higher on BAR 1 you can see how STJ reverses intrabar and closes near its low on the same bar.

On BAR 2 the market moves to NEW HIGHS temporarily only to rollover and close near its low and STJ creates a small "inside bar" and hardly ticks ups at all.

A good sign of relative weakness (for now).

As the overall market continues to rollover to NEW LOWS on BAR 3 we had a nice SHORT setup in STJ.

For this 3 bar chart pattern we set our INITIAL STOP .01 above the high of BAR 2 at $35.

Our entry price was a few cents below the low of BAR 2 at $34.90.

We set our profit target at $34.70 and we were able to cover our position as STJ pushed lower just prior to the morning number.

STJ

Another stock that showed some obvious relative weakness this morning for us was Mosaic (MOS)…

MOS - 5 minute

MOS rolls over with the overall market right into the 10am number.

After 10am MOS and the overall market put in a 2 bar retrace until the 10:10am bar.

We are still looking for SHORT trades at this point since the market has pushed to NEW LOWS for the day and has now retraced.

As the market stalls and trades sideways MOS starts to head lower.

This is a classic INTRADAY SWING TRADE!

The text book lower high in MOS offered us a nice opportunity to get SHORT in an attempt to profit from the next DOWN SWING in price.

MOS

Our INITIAL STOP placed .01 above the lower high at $56.28.

Our ENTRY was just below the LOW of the bar that created the lower high at $56.02.

This set our initial risk at .26/share for this day trade.

We covered our SHORT at $55.36 (for a little over 2.5/1 reward/risk ratio) as the overall market confirmed its higher low on the 10:35-10:40am bar.

MOS

As the market confirmed it's higher low we had several strong stocks that we were watching.

Notice how the price action of these stocks differ from the weak stocks above.

The first stock on our LONG list was Research in Motion (RIMM)…

RIMM

Notice first how RIMM GAPS UP on the open as the overall market is GAPPING DOWN.

Also unlike the overall market RIMM heads straight up until the 10am number while the market is headed straight down.

A good sign of strength wouldn't you say?

At 10:40am as the market is confirming its higher low RIMM has retraced off of the high and is now set to possibly head to higher highs.

RIMM gave us a nice setup on the 10:55am bar as the market took out the 10am high and started to head up.

RIMM

Our INITIAL STOP LOSS was placed  .02 below the LOW of the 10:50am at $47.70

Our ENTRY PRICE was .02 above the HIGH of the same bar at $47.84 for an initial risk of .14/share.

We were able to EXIT our trade at $48.24 (2.85/1 R/r) as the overall market and RIMM began to retrace.

This is another classic example of day trading the INTRADAY PRICE SWINGS in the market!

And for our last example let's take a look at the chart of Harman Intl (HAR)…

HAR

Notice the relative strength in HAR this morning as it never traded to new daily lows as the market rolled over on BAR 3 this morning.

The first LONG opportunity in HAR came during the bar at 10am.

As the market began to retrace at 10am HAR created a bullish engulfing bar and traded to a NEW HIGH for the day.

If a stock moves to NEW HIGHS for the day prior to the market doing so it is a sure sign of strength and a stock to watch if the market continues to push higher.

The second opportunity to get LONG in HAR was the 10:40am – 10:55am bars on the chart.

This chart clearly defines an intraday UP trending stock.

Relative strength right from the open and then a series of price swings that create HIGHER HIGHS and HIGHER LOWS.

Here is the chart with the Swing Highs and Swing Lows marked.

HAR

When the market cooperates strong trending stocks like this often give you additional trade setups when the afternoon session rolls around.

The breakout at 2pm and getting LONG just after the 3pm pullback were two more opportunities to profit in this stock.

The afternoon also offered up several more LONG trade setups for us as the market headed to new highs.

Some of the other stocks we traded after 2pm were CREE, LNC, WMT, ANF, AKAM, CLF and WYN.

We hope this post provides you with some insight of how we "Swing Trade" on an INTRADAY price chart.

If you have any questions or feedback please leave us a comment below and as always…Good Trading to YOU!

Swing Trading Week in Review – August 20, 2010

Sunday, August 22nd, 2010

After the retrace back to the 50 Day SMA last week we saw the DJIA put in a bit of "bounce" to start out this week of trading.

DIA - DJIA ETF

After a nice GAP UP on Tuesday we saw the market stall on Wednesday as it failed to trade above Tuesday's HIGH.

Sellers jumped back into the market on Thursday and pushed the market lower to close the week in negative territory.

In last week's BLOG POST we posted about how we saw the market "transition" last Tuesday and Wednesday.

The type of price action transition we noticed had us looking for some SHORT Swing Trading setups coming into the start of this week.

As the market "bounced" to start the week we patiently waited for the WEAK stocks and ETF's to trigger a SHORT entry.

After posting about the "Inverted Head and Shoulders" chart pattenr in the Financial ETF (XLF) we followed up last week with a nice trade in the Inverse Financial ETF (FAZ).

 

This week FAZ setup yet another LONG trade entry as the weak Financial sector headed lower again.

FAZ - Inverse Financial ETF

Another sector ETF  that gave us a clue to look for SHORT trades was the Energy ETF (XLE).

After putting in a nice up move on Tuesday we watching as XLE reversed it's upward move and head straight down on Wednesday on INCREASED VOLUME.

This created a confirmed "lower high" a put our new down channel in place.

XLE - Energy ETF

This move in the ETF had us looking through the charts of individual stocks in this sector for possible SHORT trade setups Wednesday afternoon.

APC, SLB and CVX all had nice chart patterns with clearly defined risk levels in place.

This is a good example of how to use sector  ETF's to look for Swing Trading opportunities in stocks that a closely related or correlated to that sector.

The Oil Services ETF (OIH) had a nearly identical chart pattern.

OIH - Oil Servies ETF

DO, BHI and NBR we good candidates in this sector.

On the flip side of the coin we saw the GOLD and GOLD MINERS ETF's have a nice week to the UP side as their recent relative strength continues.

GDX - Gold Miners ETF

Stocks to watch in this sector going forward are AU, EGO, AEM, NEM, ABX, GG, and GG.

Also keep an eye on the Retail ETF (RTH) in the days to come.

We have noticed some strong BUYING in the some of the retail names this week.

This could be a sign of things to come but as always we need confirmation to declare the down trend has come to an end.

As we go into next week there are a few things that we have noticed that have us wondering whether or not this most recent down move has any legs.

We still have a TON of stocks that are holding up (showing relative strength) despite the selling we have witnessed the last two days of this week.

AKAM, MELI, INFA, MO, SNPS, and VRSN to name a few.

Although the DJIA and S&P have technically put in a "lower high" AND "lower low" the Nasdaq has only put in a "lower high" and has yet to confirm a "lower low".

No one knows for sure what we will do come Monday morning so as always be prepared for anything so that you can take the appropriate action when the market tells you it's true intentions.

Until next week…Good Trading to YOU!

P.S

Would like to learn more about how we locate our short term trades in stocks and ETF's?

If so feel free join us Friday, August 27th for our "Finding Swing Trading Opportunities in Today's Market" webinar.

You can register for this absolutely FREE Swing Trading webinar HERE.

 

 

 

Swing Trading Week in Review – August 13, 2010

Sunday, August 15th, 2010

After last week's low volatility sideways price action we saw the market transition this week putting the short term UP trend in jeopardy.

This "transition", which began on Tuesday, also came with increasing volume.

To say this market has been a little Schizophrenic would be an understatement.

In the past few months it seems that every time the market seems to be heading one way it stops on a dime and goes the other.

We have posted about the frustration that some short term traders are feeling in this trading environment.

One of the many skills you need to master as a short term trader is the ability to identify how and when the market (and stocks) transition from one mode to another.

A good example of this was the type of trading we saw on Tuesday of this week.

If you didn't put all the pieces of the puzzle together in time you could have easily missed "Transition Tuesday".

Monday we saw the markets GAP UP and follow through slightly to the UP side on LOW VOLUME.

We would like to see HIGHER VOLUME as the market moves higher in a short term UP trend and we did not (as of yet) get that.

Tuesday"s FED DAY showing the typical choppy trading after the GAP DOWN until the announcement came in the early afternoon sending the market a bit higher.

The GAP DOWN and rally into the close had some traders thinking that this type trading was a positive sign of things to come.

We on the other hand saw it as a chance for the "big boys"  to get SHORT.

Our suspicion was confirmed when the market GAPPED DOWN again on Wednesday.

By the close on Wednesday we saw the market sell off as volume increased yet again.

We saw some sector ETF's that were trying to break to the upside FAIL TO BREAKOUT and actually move lower on increasing volume.

XLE, OIH, USO, and SLX all where showing signs of a possible move up but ultimately ended up selling off and giving back most of the gains from the past week and a half.

The Financial ETF (XLF) inverted "head and shoulders" pattern that we posted about also FAILED TO BREAKOUT to the upside and sold off with the rest of the market.

This was a very good example of a FAILURE and a transition from (short term) bullish to bearish.

These "failed" chart patterns often times lead to very profitable trades if you can identify the "transition" fast enough.

Once we noticed the "failure" we entered into a LONG position in the INVERSE FINANCIAL ETF (FAZ) for a nice STS trade.

In our next "Swing Trading Weekly Wrap Up" webinar this upcoming Friday night we will go over this and some of the other trades we made last week.

Feel free to join us!

Until next week…Good Trading to YOU!

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