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I have 23 consecutive profitable trades of 15% or better. How is this possible? Every day there are hundreds of stocks setting new highs, no matter what happens in the overall market. Many of these stocks are still at very reasonable valuations. Afraid of buying stocks at their highs? Think of it this way: a new high is really a future floor for companies with solid financial underpinnings. Quantitative momentum modeling makes it easy to identify stocks that can continue this upward momentum trend. Why does this happen? It's really very simple..ask me about what investors and cows have in common. I am $$$ MR. MARKET $$$. I AM HUGE!!! Bring me your finest meats and cheeses. You can join in on the fun. Register for free and you'll be able to post messages on this forum and also receive emails when $$$ MR. MARKET $$$ makes his own trades. ($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
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  1. #11
    Join Date
    Apr 2004
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    Awesome thread!

  2. #12

    Default Thanks

    Thanks for the kind words, Websman.

    Will work hard to keep the quality content coming.

    Deron

    Quote Originally Posted by Websman View Post
    Awesome thread!

  3. #13

    Lightbulb How We Gained 11% On A 6-Day Hold In $BRLI (Trading Strategy and Education)

    Recently, we bought Bio-Reference Labs ($BRLI) as a stock swing trade in our newsletter. The trade followed-through as anticipated, enabling us to lock in a solid 11% gain on a 6-day holding period. Following is an educational, technical recap of the original trade setup and subsequent price action.

    BRLI broke out to new all-time highs on its weekly chart this past summer (2012). On the chart below, the horizontal dotted red line marks the prior all-time high. Notice how the consolidation over the next several weeks (the yellow rectangle) held above that $26.00 support level (which was prior resistance). We also liked to see the price action holding above the 10-week moving average, which is equivalent to holding above the 50-day moving average on the daily chart. Finally, the dry up in volume during the last few weeks of the consolidation was positive as well. On the long side, we never swing trade in stocks that are trading more than a few percent below intermediate-term support of their 50-day MAs (it is our line in the sand for buy setups):



    Because of the bullish consolidation on the weekly chart above, BRLI was placed on our internal watchlist around September 17. Once a stock or ETF makes it to this watchlist, we patiently wait for a low risk buy point to emerge, at which point we list it on our “official” watchlist in our trading newsletter. The setup prior to our actual buy entry is detailed on the shorter-term daily chart below:



    We were finally rewarded for our patience when BRLI broke through the top of its tight trading range on September 27, thereby triggering our buy stop for trade entry:



    As you can see on the final chart below, BRLI smoothly followed through to the upside immediately after our buy entry, backed by a strong accumulation day on October 3. On October 4, we sold BRLI when it hits its price target and while it was up nearly 3% on the day. This allowed us to lock in an 11% gain on a six-day hold. The goal of our swing trading system (in a strong market) is to identify low risk entry points in stocks that have explosive potential. These stocks can run 10% to 20% higher over a 1 to 3 week period:


  4. #14

    Thumbs up Why We Are Waiting For The Nasdaq 100 To Bounce Into Resistance ($QQQ)

    Given that the Nasdaq 100 Index ($NDX) has been drifting lower for the past six days (including the flat closing price on October 12), the index may be becoming a bit “oversold” in the near-term. We hesitate to use the term “oversold” because it’s a relative term; stocks and ETFs can frequently become even much more “oversold” before eventually bouncing. Therefore, we use the term loosely. Nevertheless, odds now technically favor at least a short-term bounce off the lows in the coming week, which could create a new opportunity to short sell $QQQ (or buy an inversely correlated “short ETF”) for swing traders who missed the initial sell-off and breakdown in the Nasdaq.

    Because of the anticipated near-term bounce, we have tightened the protective stop on our current ETF position in the inversely correlated ProShares Short QQQ ($PSQ), which is presently showing an unrealized gain since our October 9 entry (we bought PSQ, rather than selling short QQQ, so that subscribers with non-marginable cash accounts could still participate). Going into today, our new stop for PSQ has been moved to just below last Friday’s (October 12) intraday low ($25.09). This new stop price enables us to capture even more gains if the Nasdaq 100 fails to bounce today and continues extending its losing streak. However, with this new, tightened stop price, we will still quickly lock in a gain on our ETF trade, even if the Nasdaq suddenly bounces sharply higher or a “short squeeze” sets in.

    Over the next week or two, we would ideally like to see a substantial bounce in the Nasdaq 100 Index up to new technical resistance of its 50-day moving average (remember that a prior level of support becomes the new level of resistance after the support is broken). Further, the 20-day exponential moving average (beige line on the chart below) is now converging with and is poised to cross below the 50-day moving average (teal line), thereby creating additional resistance.

    If the Nasdaq 100 bounces into convergence of the 20 and 50-day moving average and stalls, we would then have a low-risk re-entry point for selling short the Nasdaq 100 Index, along with a much more positive reward-risk ratio, in anticipation of the index making another leg down. The ideal bounce for the Nasdaq 100 is annotated below on the daily chart of PowerShares QQQ trust ($QQQ), a very popular ETF proxy for the Nasdaq 100 Index:


  5. #15

    Default CurrencyShares Euro Trust ETF Setting Up For Buy Entry ($FXE)

    Earlier this week, in our swing trading newsletter, we posted a chart of CurrencyShares Euro Trust ($FXE) that showed a bullish consolidation above long-term support of the 200-day moving average. As a follow-up to that analysis, the longer-term weekly chart below shows the breakout above a year-long downtrend line, along with a coinciding pickup in volume:



    With the strong move off the July 2012 low, the price action of FXE should continue to consolidate in a tight range, and ideally not retrace more than 38% of the rally from the July 27 low to September 14 high. Currently, the low of the present consolidation is only 33% off the high of the move.

    We are now monitoring $FXE for a potential low-risk buy entry point on a pullback, especially if the price action can test the rising 20-day exponential moving average, along with forming a “higher low.” However, the price action does not have to pull back. Rather, there could be a correction by time, in which the price could just drift sideways for a day or two before breaking out above the October 17 high. This is explained in more detail on the daily chart of FXE below:



    Since FXE is a currency ETF, one bonus is that it has a low correlation to the direction of the overall stock market. With our market timing system now in “sell” mode, we focus more on ETFs that are not comprised of industry sectors. If FXE meets our strict criteria for buy entry, subscribers of our newsletter will be notified in advance of our exact entry, stop, and target prices.

  6. #16

    Default Our ETF Trading Strategy With New “Sell” Signal On Market Timing Model ($QQQ, $SPY)

    After the major indices began pulling back from their highs in late September, then subsequently bounced in the beginning of October, our disciplined, rule-based market timing system shifted from “confirmed buy” mode to “neutral” mode on October 5. This change in our market bias perfectly coincided with the peak of the bounce off the lows of late September. In “neutral” mode, we can be positioned either long or short, but position size of all new trade entries will be lighter than usual, in order to reduce risk. Also, our portfolio will be primarily (or fully) in cash, with only a few positions in either direction.

    As we entered into neutral mode on October 5, we exited all long positions in individual stocks and began focusing primarily on swing trading ETFs with a low correlation to the direction of the overall stock market (ie. currency, commodity, fixed income, and international ETFs). One week later, on October 12, the necessary signals were generated for a new “sell” signal (click here to review each of the five different modes of our timing model). The recent changes in our sentiment, based on our market timing system, are shown on the daily chart of the PowerShares QQQ Trust ($QQQ) below. Notice how the model is designed to keep you out of trouble when the going gets rough:



    If we enter any individual stocks right now, the trades will be on the short side. But with ETFs, we have the choice of being short, buying an inversely correlated “short ETF,” or simply trading ETFs that are not correlated to the direction of the broad market. The latter is what we are doing right now. In addition to our three open positions, there are two new ETFs on our trading watchlist for potential entry in the coming days ($FXE and $SIL long). The technical setups of both these potential trades were discussed in the October 19 issue of our swing trading newsletter. Both of these ETF trade setups are low-risk ways to profit from weak market conditions for traders who are unable to sell short if they have a non-marginable cash account (such as an IRA).

    Presently, we have three open ETF positions in our model ETF trading portfolio, each of which is showing an unrealized gain due to its low correlation to the direction of the broad market. US Natural Gas Fund ($UNG) is presently showing a 4.2% gain since our October 9 entry, FirstTrust Natural Gas Index ($FCG) is up 2.2% since entry, and our partial position of iShares Colombia Index ($GXG) is now trading 2.6% above our entry price. Since these ETFs have exhibited solid relative strength as the market sold off sharply over the past week, we anticipate further gains in the days ahead and will soon be raising our protective stops to lock in gains along the way.

    In last Friday’s commentary, we said, “We can’t expect much from the S&P 500 if the Nasdaq is not on board. Over the past few weeks, two key Nasdaq leadership stocks, GOOG and AAPL, have broken down below their 50-day moving averages. These leaders are being replaced this week by insurance and utility stocks….this is not the type of rotation that inspires confidence.” Given that AAPL declined another 3.7% in last Friday’s session, further deterioration in leading Nasdaq stocks indeed played a big role in the day’s sharp decline. We continue to expect further pressure on the broad market as long as leading tech stocks remain weak. This week, all eyes will be on the quarterly earnings report of AAPL, which is due to trumpet its latest results on Thursday after the close.

  7. #17

    Lightbulb Two Bullish Emerging Markets ETFs In A Bearish Stock Market ($EEM, $EWH)

    Over the past week, we have been noticing an interesting and notable divergence between the performance of U.S. broad-based ETFs and select emerging markets ETFs. The PowerShares QQQ Trust ($QQQ), which tracks the Nasdaq 100 Index, has convincingly broken down below key intermediate-term support of its 50-day moving average and is technically in bad shape. However, the iShares Emerging Market Index ($EEM) has been consolidating in a tight, sideways range during the same period, and also formed a “higher low” within its base of consolidation. With a little help from a bounce in the broad market, EEM will likely break out above the highs of its range and start making another leg higher. The daily chart of EEM below illustrates this:



    Looking at the longer-term weekly chart of EEM, notice that the consolidation on the daily chart follows a recent breakout above resistance of an 18-month downtrend line, which should now act as the new support level:



    Of the various countries that comprise this emerging markets ETF, one of the best looking country-specific ETFs is iShares Hong Kong ($EWH). As shown on the daily chart below, notice that EWH has been neatly holding near-term support of its 20-day exponential moving average, and is now poised for a breakout to a fresh 52-week high:



    When an ETF has so much relative strength that it simply trades in a tight, sideways range while the rest of the broad market is trending lower, it clearly indicates a lack of selling interest. As such, it doesn’t take a lot of buying interest in the broad market to subsequently move the ETF higher. Therefore, both EEM and EWH are potential buy candidates if they rally above their respective horizontal price resistance levels. This could easily happen as soon as we see the first decent bounce in the U.S. markets.

    As mentioned yesterday, we presently have the choice of being short, buying inversely correlated “short ETFs,” or trading ETFs with a low correlation to the direction of the broad market. Since these are international ETFs, there is a low correlation to the direction of our domestic markets. Accordingly, both EEM and EWH could be considered for potential buy entry IF they trade above their trigger prices, despite the recent “sell” signal on our market timing model. EWH is probably the better choice of the two because it is poised to breakout to a new 52-week high. Nevertheless, we are not yet listing either ETF as an “official” trade setup because we first prefer to see at least a bit of broad market stabilization, which would reduce the odds of a false breakout if these ETFs attempt to move to new “swing highs.”

    For those who are new to trading or new to running a disciplined system, there will be a few times a year when there simply isn’t much to do. When this happens, there is no need to force the issue. If you are keeping track of your trade stats (and we know you are), you should be able to review these periods when you should have done very little and analyze each trade taken. Did you really have a good reason to put the trade on or were you simply trading because you were bored? Are you taking setups outside of your methodology just to satisfy the urge to do something? What was the overall outcome? For us, we plan to remain disciplined and patiently wait for the pitch, following the proven methodology of our swing trading system.

  8. #18

    Lightbulb Where Will The Nasdaq, S&P 500, and Dow Find Support And Resistance? Here’s Our Take…

    As market conditions continue deteriorating, many traders and investors are now seeking guidance to help them determine where the S&P 500, Nasdaq, and Dow Jones may find support, as well as the levels where these major indices are likely to encounter resistance when eventually attempting to rebound. As such, this article will provide you with a clear, objective look at the technical chart patterns of broad-based ETFs that track the S&P 500 ($SPY), Nasdaq ($QQQ), and Dow Jones ($DIA). Let’s start by analyzing the daily chart of the S&P 500 SPDR ($SPY), a well-known ETF trading proxy for the benchmark S&P 500 Index:



    Until yesterday, it would be fair to say that the chart pattern of SPY had not yet convincingly broken down. Rather, the index had been clinging to key intermediate-term support of its 50-day moving average. Furthermore, the “hammer” candlestick pattern that formed when on October 22 was slightly encouraging because a bullish reversal bar that coincides with an “undercut” of an obvious support level often precedes a rally. But not this time. The mere fact that SPY opened below the October 22 low in yesterday session was quite negative. Now, the 50-day moving average should act as a significant resistance level on any subsequent rally attempt. The prior lows from the previous trading range (the dashed horizontal line) will also act as a substantial area of resistance. New traders need to know the following basic tenet of technical analysis: a prior level of support becomes the new level of resistance, after the support is broken (and vice versa).

    Although it is bearish that SPY now has a plethora of overhead supply and technical resistance levels to contend with, one potential ray of sunshine in the storm clouds is that SPY is coming into major support of a year-long uptrend line. This is annotated on the longer-term weekly chart of SPY below:



    The longer a trendline has been in place, the more likely the trend will remain intact. Therefore, it is positive that SPY is now coming into support of an uptrend line that began with the lows of October 2011. If SPY is looking for an excuse to bounce from current levels, this would fit the bill. HOWEVER, with our market timing model now in “sell” mode and the daily chart pattern starting to look at bit ominous, this does not mean swing traders should be looking to step in and start buying stocks. Rather, we view any stock market bounce from here merely as an opportunity to dump any badly losing positions one may still be holding (shame on traders who failed to honor their protective stops). Furthermore, one could be looking to establish new short positions when the broad market starts bouncing into its new resistance levels, which would thereby create positive reward to risk ratios and low-risk entry points for selling short and/or buying inversely correlated “short” ETFs.

    For the sake of brevity, we will skip analysis of the Dow Jones SPDR ETF ($DIA) because both its daily and weekly chart patterns are quite similar to SPY above (broke down firmly below its 50-day moving average yesterday, and is also coming into support of its year-long uptrend line). Instead, let’s jump to the daily and weekly charts of PowerShares QQQ Trust ($QQQ), a popular ETF that tracks the performance of the tech-heavy Nasdaq 100 Index (which has been trading in similar fashion to its sibling, the Nasdaq Composite Index). Our annotated daily chart of QQQ key is below:



    It takes only a quick glance at the chart above to notice that QQQ began breaking down well ahead of SPY, and is technically in much worse condition. In the October 8 issue of our swing trading newsletter (and on this blog post), we provided five technical reasons we felt stocks were poised to move lower in the near to intermediate-term. One of those five reasons was the formation of a bearish “head and shoulders” pattern that was forming on the chart of QQQ key to at the time. Just one day later, QQQ began following through on the bearish pattern by slicing through its 50-day moving average. Technical analysis states the projected decline of a “head and shoulders” pattern is equal to the distance between the top of the “head’ and the “neckline.” That equated to a projected drop of approximately 4.2% at the time of our initial October 8 warning. Since then, QQQ has fallen 4.4%, which means it has fully followed-through on the projected decline of its “head and shoulders” pattern.

    As for support on QQQ, the index is now approaching major long-term support of its 200-day moving average, which is just below yesterday’s low. The last time QQQ came into support of its 200 day MA was at the beginning of June 2012, which marked the low of the correction that spanned from March through May of 2012. As for the weekly chart pattern, QQQ is now trading just below its one-year uptrend line (similar to the one shown on the weekly chart of SPY). However, support of its 200-day moving average is at least equally as important as a one-year uptrend line.

    As the chart patterns above clearly illustrate, we are now dealing with a stock market in which sentiment has clearly reversed over the past several weeks. As it is designed to do, our rule-based system for market timing provided the requisite signals for us to close our long positions (other than ETFs with low correlation) and get out of the way before downside momentum really started kicking in. Now that the change to an overall bearish sentiment has been confirmed, we are now patiently waiting for an eventual bounce in the broad market that will provide us with ideal, low-risk entry points on new short positions or inversely correlated “short” ETFs. In the coming days and weeks, we will be providing subscribers with our detailed entry, exit, and target prices of any swing trade setups that qualify.

  9. #19

    Default How To Find The Best Entry Points For Short Selling Stocks

    Because fear is a more powerful human emotion than greed, stocks nearly always fall much faster and more violently than they rise. As such, there are key technical differences in our trading strategy with regard to the price levels where we look to sell short stocks, compared to the ways in which we buy stocks. In this article, we summarize our basic trading strategy for determining the most ideal, low-risk entry points for short selling stocks and ETFs.

    Since our rule-based system for market timing switched to a new “sell” signal on October 12, our swing trading focus is now on selling short weak stocks, rather than buying stocks with relative strength to the broad market. It is crucial to realize that trading in the same direction as the dominant broad market trend is, and has always been, the first and most important element of our swing trading system.

    Presently, the majority of stocks we are monitoring for potential short sale entry have either set a new “swing low” within the past few days, or are trading too close to a prior low, to initiate a low-risk entry point at current levels. We do not sell short stocks that are breaking down below obvious levels of support, as they tend to rebound and rip higher after just one to two days of weakness.

    Our most ideal short selling candidates are stocks and ETFs that have recently set new “swing lows” (or are testing prior lows), and have subsequently bounced into resistance over a period of three to ten days. But even though we prefer to wait for a bounce before entering a new short position, it is important to realize we do not enter a new short position while the stock is still bouncing (trying to catch the high of the bounce). Rather, we first wait for subsequent confirmation that the stock is about to stall again. This typically comes in the form of either a bearish reversal bar (such as a bearish engulfing or hanging man candlestick pattern) or sharp opening gap down, which signals the short-term bounce is losing steam. Similarly, we always take the same approach on the long side when buying pullbacks of uptrending stocks; we always wait for a pullback to form some sort of reversal pattern before buying (rather than trying to catch the bottom of the pullback).

    Below is a chart of O’Reilly Automotive ($ORLY), which is a good example of what frequently happens when attempting to sell short a breakdown below an obvious level of price support. Again, entering a new short position as a stock is breaking down below the low of a range is something we are not very comfortable doing:



    A lower risk way of initiating a new short sale, which also provides you with a more positive reward to risk ratio for the trade, is shown on the following chart of Check Point Software ($CHKP). This is an example of what we are looking for when entering a short position (although the declines are not always as dramatic):



    On October 17, CHKP gapped down sharply, on huge volume, due to a negative reaction to its quarterly earnings report. This caused the stock to crash through a four-month level of price support at the $44 area (dashed horizontal line). But over the past week, notice that CHKP has been climbing its way back up to test new resistance of its breakdown level. If CHKP now manages to probe above the intraday high of October 17, it would see some short covering, as most traders would not have expected the price action to climb back to that level. Further, the 20-day EMA is also above to lend a little more resistance. It is at that point ($44.50 to $45 area) that we would look for the first bearish reversal candle OR opening gap down to initiate a very low-risk short selling entry with a positive reward-risk ratio. By waiting for a significant bounce into new resistance of the breakdown before selling short, we can “be right or be right out” by keeping a relatively tight protective stop.

    In our swing trading newsletter, the current near-term plan with regard to individual stock and ETF trades is to remain patient and wait for proper, low-risk short setups to emerge. When the stock market eventually and inevitably bounces, we anticipate nice short selling opportunities to develop, and we will be prepared to take advantage of them. As for the long side of the market, we are not even looking for new buy entries right now because the overall stock market has simply deteriorated too much for our liking. At a minimum, even the best stocks and ETFs will now require at least six to eight weeks for new bases of support to develop.

  10. #20

    Default How To Quickly Scan For The Best Stocks For Short Selling

    In my last post on this thread (above), I summarized my basic strategy for finding the best entry points for short selling stocks and ETFs. It was the first time I had discussed my swing trading strategy for the short side of the market in quite a while because my market timing model only shifted to a new “sell” signal on October 12. Since the first and most important element of our rule-based trading system is to trade in the same direction of the dominant market trend, I simply was not interested in looking for short selling candidates when the broad market was previously in a steady uptrend.

    Now, I follow-up that previous post with this short (3-minute) trading strategy video that shows you how to easily and instantly find the best stocks that meet my strict technical criteria as short selling candidates (ie. weak stocks bouncing into resistance, after breaking down below obvious levels of support). Hope you find it useful.

    Enjoy the day off from the market...let's hope New York endures the storm with minimal damage.

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