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Swing Trading Week in Review – July 16, 2010

Saturday, July 17th, 2010

Another interesting week in the market!

After pulling back off of the recent lows the market heads back down as sellers aggressively drove the market down on Friday.

Last week we saw the market pullback on LOW volume so going into this week we were looking for signs that this "retrace" was losing steam.

Monday and Tuesday's price and volume action let us know that the overall market had NOT yet ended its retrace BUT some of the individual stocks and ETF's that were on our watch list told a different story.

Since we have recently taken out the February lows in the market and we are still trading under the 50 day SMA our bias remains to the SHORT side for our "bread and butter" strategy.

In a perfect world we would be able to time our trades to match when the overall market makes its move but usually that is not the case.

Often times individual stocks (or specific sector ETF's) will lead the market by moving prior to the overall market.

In a down trending environment we often see the "weakest" stocks start to move lower even as the market is moving slightly higher.

The opposite is true for a up trending market.

"Strong" stocks will often breakout well before the overall market gives you confirmation that it is going higher.

We saw this happen at the beginning of the week as several of the stocks on our watch list triggered a SHORT entry signal.

Monday the market started to head lower but ended up closing near its high albeit on lower volume.

When the market gapped up on Tuesday some of our SHORT positions moved UP with right along with it.

The gap up in these stocks was of some concern but most stayed well below our initial STOP LOSS levels so we simply held our positions.

Allstate (ALL) is one our trades that triggered on Monday.

After hitting new yearly lows last week ALL put in a nice LOW volume 3 day retrace at the end of last week.

Monday you can see how ALL traded through Friday's low on increasing volume.

Our SHORT entry was triggered and we set our initial STOP LOSS level at $29.87 which is 1 ATR ( .77) away from our entry ($29.10).

It is important to note here that by using the Average True Range (ATR) of the stock we were able to position our stop above an area where a chart pattern based stop would have been placed.

Using our Average True Range (ATR) again we would use a multiple of 2 (2 x .77= $1.54) to set our profit target at $27.57 ($29.20 – $1.54= $27.56).

However based on the chart we set our initial PROFIT TARGET at $27.78 which is just above the previous Swing Low at $26.68.

This is not quite a 2:1 risk/reward but we put our target just above the possible support level and would cover a portion of our position at this level and let the remaining shares run.

Tuesday you can see how ALL gapped up a bit with the overall market but stays well below our ATR based stop.

Wednesday ALL finally follows through to the down side and volume increases even as the overall market holds up.

The end of the week brings more more of the same and near the close on Friday ALL hits profit target #1 as the market sells off.

Some of the other stocks on our list that turned out to be good SHORT trades were APC, ZION, CLF, and SLX.

There were a lot of trades this week and its hard to go over them all in this BLOG.

At our "Indicators and Oscillators" webinar last night we went through each and every one of our trades.

We analyzed trades in MOS, AKAM, ALTR, XLNX, and ETF's like DXD, SRS and SKF.

We discussed how we use our indicators in conjunction with price action, volume and trend lines to make our trading decisions.

Based on the feedback we received it was a very insightful webinar for you short term traders!

Our next webinar is our popular "Swing Trading Weekly Wrap Up" where we do more of the same.

We analyze the market and sector ETF's and go over our trades in detail.

Please bring your questions and the symbols of the stocks or ETF's you want to discuss.

We look forward to seeing you there!

Until next week…Good Trading to YOU!

Tags: ETF Swing Trading, SHORT SWING TRADING, Swing Trading, Swing Trading Blog, Swing Trading Chart Patterns, Swing Trading Price Action, Swing Trading Strategies, Swing Trading Volume
Posted in ETF Swing Trading, ETF Trading, Swing Trading, Swing Trading Blog, Swing Trading Chart Patterns, Technical Analysis | No Comments »

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.

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.

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.

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 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.

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.

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.

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.

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!

Tags: DIA, ETF Swing Trading, RTH, SHORT SWING TRADING, SMH, Swing Trading Blog, Swing Trading Chart Patterns, Swing Trading Price Action, Swing Trading Strategies, XHB
Posted in ETF Swing Trading, Swing Trading, Swing Trading Blog, Swing Trading Chart Patterns, Swing Trading Charts, Technical Analysis | 2 Comments »

Swing Trading Week in Review – June 11, 2010

Friday, June 11th, 2010

Well after a mild continuation sell off that started last week the markets finally put in a decent move to the upside to finish positive for the week.

Monday we watched the market continue lower but we noticed the this move was not accompanied by strong volume.

We were focused on the 9835.09 level in the Dow as a possible level of support.

9835.09 is the low of the reversal day that happened on February 5th and was essentially the starting point for the 1400 point that followed.

The chart below is the WEEKLY chart of the DJIA to show you the level we were looking at.

And here is the daily chart of the DJIA which shows you an additional "touch" of this area back on the 25th of May.

Watching the price and volume action around this level would give us a "clue" to what the market may do next.

Tuesday the market did head lower to break through the 9835.09 level once again but by the end of the trading session you could almost feel the tide turning.

We were able to cover most of our SHORT positions (DOW, KLAC, UPS) into this down move on Tuesday as price reached our initial profit targets.

We tightened up our stops and were stopped out of the remainder of our positions on Wednesday morning as the market rallied to new highs around 11am.

Tuesday and Wednesday's price action told us that a "bounce" or "retrace" had begun (at least for the short term) so it looked like the 9835.09 would once again hold as support.

Anticipating the possibility of a "bounce" we also had several stocks on our watch list that were showing signs of relative strength during the recent down move.

Our strategy was to buy a few of these strong stocks if price firmed up around the 9835.09 level and began to show signs of moving up.

As the morning progressed Wednesday we did enter into a few new LONG swing trades.

One of the "strong" stocks we have been watching is NTAP.

After a nice run up to NEW HIGHS you can see how NTAP put in a pretty text book retrace from the HIGH of last Thursday to the LOW of Tuesday's trading.

This pullback from NEW HIGHS was happening as the market was headed lower from a LOWER HIGH into a possible support area…a good sign of strength.

Tuesday's price action in NTAP gave us the "heads up" for it's next possible leg up.

Wednesday, when the market gapped up, we payed close attention to NTAP and once we saw the relative strength in the overall market and NTAP we were able to enter into a LONG position at just over $38.

The market rolled over hard into the close Wednesday and NTAP actually closed well below our entry price after being UP almost $1 in this position.

This is more often than not a sign that our trade will not work out but instead of jumping the gun we just followed of rules like every other trade we put on.

Our STOP for this trade was set at 1 ATR or $1.70 in this case.

The late day reversal on Wednesday brought NTAP within .09 of stopping us out of this trade as the market closed.

From a HIGH of nearly $39 NTAP traded all the way down to a LOW of $37.39 by the close.

Since $39 minus $1.70 is $37.30 (our trailing ATR stop level) that shows you just how close we were to being stopped out.

Thursday the market gapped up a bit a NTAP had an "inside day" on LOWER VOLUME.

No sign for panic but not a great sign for us as the market moved higher.

Friday we got the follow through in NTAP that we were looking for…a nice move UP on INCREASED VOLUME.

As NTAP closed today at just under $40 we trailed our stop up accordingly and, absent any HUGE gap down, have locked in at least a small profit on this trade.

Follow your trading plan and don't try to outguess the market!

Until next week…GOOD TRADING TO YOU!

Tags: Swing Trading, Swing Trading Blog, Swing Trading Chart Patterns, Swing Trading Price Action, Swing Trading Volume
Posted in Swing Trading, Swing Trading Blog, Swing Trading Charts | 2 Comments »

Swing Trading Week in Review – June 4, 2010

Friday, June 4th, 2010

And here we go again!

The Dow and S&P finished down 2% for the week while the Nasdaq held up a little better by losing ONLY 1.7%.

DIA Swing Trading ETF

Sounds pretty plain and simple but the trading during the week was a little bumpy.

The holiday week started off with yet another GAP DOWN in the market.

We know that the buyers have been defending the area just above 10,000 in the Dow as this GAP DOWN brought us right into this area.

The market rallied right from the open but late day selling came into the market and pushed the market down to close below its open…a true reversal day.

Wednesday the buyers stepped back into the market at near the same levels (just above 10,000) pushing the market higher right into the close.

Thursday the market GAPPED UP a bit but quickly fizzled out and closed near its mid point of the day.

Then Friday comes and BAM!…down we go again.

Sellers aggressively took the market lower with the Dow finishing down over 300 points for the day!

This was an important week in our opinion.

Not because of any significant financial related news or event.

We think it was important because of the lesson you could learn from this weeks trading action.

If you are a short term trader then the valuable lesson to be learned from this week's price action is to have "re-entry" plan in place.

Let's rewind a bit and look at the charts to see what we mean,

After last Friday's lackluster performance it appeared that Tuesday was setting up for the next leg lower in this down trend.

DIA - Dow 30 ETF

As a matter of fact there were a TON of SHORT Swing Trading setups on our "watch list".

We notified our newsletter subscribers of several SHORT stock setups and several possible LONG Inverse ETF setups for Tuesday morning.

The market GAPPED DOWN on Tuesday and the late day sell off actually triggered several of our SHORT swing trades near the close.

We did notice however that by the close the volume levels for this "reversal day" were low…not exactly what you want to see when the market reverses.

Trading price action is our primary focus but this volume "clue" was a caution flag for us.

On Wednesday the market rallied right from the open and closed near its high for the day…another bad sign for our SHORT positions.

Our best trades usually work right from the start and with the market moving up so strongly we were now "taking some pain" in our positions.

Another thing we noticed is that in some of our positions the volume INCREASED as price rallied on Wednesday.

We know from understanding the PVT Method that price moving UP as volume INCREASES is classic UP trending price action.

Look at the chart of KLAC below.

You can see where we entered out SHORT position (RED ARROW) and then look at Wednesday and Thursday's price and volume action.

KLAC - Swing Trading Stop Out

KLAC trades higher on INCREASING VOLUME (blue arrows) and closes above the recent swing high and our STOP LOSS point (black line).

Friday KLAC heads lower on INCREASING VOLUME confirming the "two stage" retrace.

Some of our other SHORT positions went up a bit with the market on Wednesday but on LOWER VOLUME (a clue of things to come?).

Let's look at one of our "good" SHORT positions.

Notice on the chart of DOW Chemical (DOW) below how unlike KLAC price actually moves sideways both Wednesday and Thursday.

DOW - SHORT swing Trade

This sideways price action is accompanied by LOWER, DECREASING VOLUME a good sign for our SHORT position.

DOW follows through to the down side nicely on INCREASING VOLUME as the market sells off on Friday.

As you can see from the charts above things played out pretty much as anticipated.

We got stopped out of some of our SHORTS that continued to rally on increased volume on Thursday.

Can you guess by now which positions stopped us out?

Our other positions that went up a bit with the market on LOWER volume (like Dow Chemical) ended up closing under their recent swing highs so we were able to hold onto to these.

We thought that Thursday's move in some of these stocks was possibly a "two stage" retrace so we were ready by Friday to re-enter our SHORT positions if price action called for it.

Friday the market GAPPED DOWN again and after about an hour of sideways trading rolled over and finished the day DOWN over 300 points on INCREASING VOLUME!

Our "good" short positions followed through nicely and, as planned, we re-entered into some of our positions that stopped us out just the day before.

By using both price action and volume we avoided getting "shaken out" of some of our SHORT positions.

Getting STOPPED OUT for a loss or near break even is not fun but by following our "re-entry" rules we were able to get back on the right side of the market and hopefully profit from our analysis.

Until next week….GOOD TRADING TO YOU!

Tags: ETF Swing Trading, Swing Trading Blog, Swing Trading Chart Patterns, Swing Trading Price Action, Swing Trading Strategies, Swing Trading Volume
Posted in ETF Swing Trading, Swing Trading, Swing Trading Blog, Swing Trading Charts | No Comments »