Emini Levels for March 11th, 2010

We've come a LONG way! I think the market is due for a pullback, but probably not before the $SPX pokes it's head above 1148 for 5 or 6 points to SUCK IN THE LONGS! I'll be mostly watching and maybe getting in a few scalps.

Upside Levels (if we make a sustained upside break)
1230 - 61.8% retrace of entire pullback
1200 - resistance on the 3 year weekly
1175
1148




Downside Levels:
1140.75
1134.75
1123.50

Emini Results for March 9th and 10th

I have not had much time to trade in the last few days. In the last 48 hours, I've made 3 trades. 2 winners and 1 loser. However, the loser was a 4 pointer on Monday. However, today I did make that back. My thinking for the last 2 days has been that the the mid January highs would act like a magnet. We finally hit 1148 today... that's good enough for me as 1148.25 is the high on the Emini March contract. I'll probably be in wait-and-see mode as volatility will probably be the rule in the near-term.

Fibonacci Rocks Your World!

Just a quick note to tell you something you already know...

One of my theories yesterday was that we would get a 50% retrace of Friday's candle. It didn't come to fruition yesterday, but last night we did get a 50% retrace of the entire Friday/Monday move. I've been using Fibs quite a bit lately, and this is just further confirmation that Fibonacci rocks in the trading world!

Emini Results and Discussion for March 8th, 2010

-6.75 points today. 0 wins and 8 losers. I should've stopped after a bad morning that put me on tilt.

Basically, I bailed out of trades early. I over-reacted to three bars (marked on the chart below), and I didn't execute trades exactly when my trading plan says I should (i.e. pshychological low points -800 or +800 on the TICK).

This graphic gives a breakdown of what happened to my morning trades:

Emini Results for March 5th, 2010

+0.25 points! Not really a good day for me.. there was too much "extraneous" stuff going on today. I really shouldn't have traded and couldn't fully concentrate on the market. That said, I was proud of myself that I came back from a dismal performance early on in the day. A few of my trades did get caught up in the narrow range whipsaw that lasted the majority of the day.

Emini Levels for March 5th, 2010 and Beyond!

30 Day Chart for Downside Levels:

1122-1125
1115
1110
1105
1100 - big support



6 Month Chart for Near-Term Upside Levels:

1122-1125 - Current level and 76% retrace of current pullback.
1131 - resistance
1150 - breakout and continuation of bullmarket?



3 Year Weekly Chart - Levels for Dreamers!

Emini Results for March 4th, 2010

+4.75 points today. 4 winners, 2 losers. My last trade of the day was at 1:15 PM EST. The Emini futures had been pushing up against 1119.50 for the previous 10 to 20 minutes. So, I felt like the market would burst through that level and I'd be able to get at least 1 point out of it. Lucky for me, I had my sell limit placed at 1120.50 because the market went to 1120.75 and promptly sold off. Some would say I got lucky there, but I think the trade was successful because of my overall strategy of "hitting singles" and never trying to take too much from the market in any given trade.

Emini Levels for March 4th, 2010

UPSIDE LEVELS
1130
1125.25
1120/1122

DOWNSIDE LEVELS
1115
1110
1106
1098.50

Tomorrow is the day before the employment report... do we stay in this 1115 to 1122 range while we await the numbers? On the other hand, there is a lot of other data being released tomorrow.

Emini Trading Results for March 3rd, 2010

+2.75 points. 4 wins, 2 losses, 1 flat.

I didn't love the way I traded today. It felt like I was chasing too much. At 2:14 EST, there was what I like to call a "NO DEMAND" bar (circled on chart below). The significant thing about this bar is that right after it, there was a large -0.75 bar confirming that there was no demand. Also, the volume histogram shows that the NO DEMAND bar occured at a very important price level. I should have nailed this trade, but I wasn't quick enough today. As a result of my hesitation, I didn't get into the selloff until 1118.50 and then again at 1119.

Emini Levels for March 3rd, 2010

Levels:
1126
1122
1115
1110
1105
1100

Emini Scalping Results for March 2nd, 2010

+2 points today. Only 3 trades today as my day was VERY busy: 2 winners and 1 loser. Two target levels that I mentioned in my blog yesterday were hit. 1122 support and 1115 resistance (really 1115.25). Stay tuned for tomorrow's levels.

Emini Levels for Tuesday March 2nd

Downside Levels:
1115 is key. If we break the 3 day trendline (right shoulder of H&S patten on the 30 day chart below), then first stop is 1110. Then, 1105.




Upside Levels:

If we break and hold 1115, then 1122 is the 76% retrace of this entire pullback. There is also resistance at 1126.

Emini Scalping Results for March 1st

+3.75 points today
9 trades
6 profitable
1 breakeven
2 losers

Emini Scalping Results - End of 1st Week

So, yesterday was tough, but today was better. I lost 3.5 points yesterday, but gained 2 today. So, in my first four days using my new scalping plan, I made 6.25 points in 20 trades. 13 of 20 were winners. That's a 65% win rate. I'm hoping that number can be 70% going forward. I did make one mistake that cost me a point. I accidentally sold another ES contract when I thought I was covering... DOH!

Emini Scalping Results

7.5 points in 2 Days... 8 of 9 trades are winners. I have not deviated from my trading plan, and, even though its only been 2 days, I'm happy with it. I'm not neccessarily happy because of the results; I'm happy because I controlled risk at every step of the way.

Adding Emini S&P Scalping Back Into Arsenal...

... but this time, I'm doing it differently. With extreme discipline and I'm gunning for singles, not homeruns. Here's my trading plan:


Trading Plan for Emini Scalping
"Managing Risk and Hitting Singles"

Background
As of February 23rd 2010, I am adding Emini scalping back into my arsenal of trading weapons. This is something I have used, on and off, throughout my trading career. I can honestly say that I have made a lot of money but have not been TRULY successful. On the other hand, I have lost a lot of money, thus, I have not been TRULY successful. So, how can I be successful while both making and losing money? I can avoid these pitfalls which I have not avoided in the past:

1. DISCIPLINE: I was not successful because I did not control my risk EVERY TIME I entered a trade by also entering a stop. Trades would occasionally get away from me and I would take the big loss wiping out all my scalping gains.
2. GREED: I was swinging for homeruns instead of consistently hitting singles. Small 1 and 2 point gains are statistically much easier to attain than 8 to 10 point gains.
3. METHODS: I was trading off of patterns only and not putting in the nightly work that it takes to identify significant price levels.

Goals
1. Control Risk AT ALL TIMES
2. Hit Consistent Singles, Not Homeruns
3. Do not trade when work takes precedence
4. 1st Month – Feb 23rd to March 23rd
a. $300 per week or 6 Emini points per week
5. 2nd Month – March 23rd to April 23rd
a. $400 per week or 8 Emini points per week
6. 3rd Month – To Be Decided – Based on performance of 1st and 2nd months

Preparation
Each night, I will do the following:
1. Identify support and resistance levels on the Emini daily, 30 minute, and 5 minute charts.
a. Support/Resistance levels will be marked using the following:
i. Price/Volume Histograms
ii. “Eyeballing” obvious support levels on the charts
iii. Fibonacci retrace levels
b. On the daily SPX chart, I will use NYSE-TRIN, McClellan Oscillator, and the VIX to help determine overall market direction bias.
2. Check the economic calendar to be aware of timing of key data releases

Trade Setups
I will not take a trade unless price action meets my criteria for a “trade setup”. I will use the following criteria that define a “trade setup”:
1. I will initiate a trade when the market displays a temporary emotional high or low. An emotional high or low occurs when the NYSE-TICK is either above 800 or below 800.
2. I will initiate a trade at a support or resistance level which I plotted out during my “preparation” period.
3. I will frequently tie #1 and #2 together.
4. I will look for divergences between price data and tick data.
5. I will look for high volume and low volume bars on the 1 minute chart which can signify turning points in Emini contract demand.

Risk Control
1. Whenever an order is placed, my trading software is set to immediately enter a stop order 1.5 points from my entry point. Depending on the volatility of the day (or moment), I will have leeway to modify this stop up to 2 points from my entry point, BUT NEVER MORE THEN 2 POINTS. This is the most crucial part of my trading because the act of placing a stop EVERY TIME eliminates the risk of THE BIG LOSS.
2. After a 3 point loss in a given day, I will stop trading for the day.

Managing the Trade
1. I reserve the right to exit the trade before my stop is hit. Sometimes price action is so obvious that I know my stop will be hit. I would rather take a half point loss than a 1.5 point loss. I know this will result in occasionally missing out on positive trades which wouldn’t have hit my stop before I exited, but I am okay with this.
2. I will move my stop to breakeven when price action tells me it is safe to do so.

Closing the Trade
1. In 90% of my scalps, I am looking for a gain of 1 to 2 points. The trade will be exited after this goal is met.
2. Occasionally, if the market is strongly trending, I will move my stop to breakeven and attempt to attain a 2 to 4 point gain. I realize the probability of a 2 to 4 point gain is MUCH LESS than a 1 to 2 point gain; however, it will be up to my discretion to determine when I believe the market will allow me to take larger than normal gains.

Update on TRIN + McClellan Oscillator

I love these "Dip Buying" indicators... USE THEM!!

Watch List

ISSI - insanely powerful chart
PAL - palladium miner
HL - silver miner
SVA - biotech, possible triangle break on charts
CAGC - china agriculture stock
RIMM - like the weekly
TSL - solars have been beaten as of late
APKT - Acme Packet, very strong chart
NOG - Oil and Gas, pullback to support on weekly
SLE - Sara Lee, strong chart
PCX - coal
DV - Devry, about to break into blue sky territory
NFLX - bullflag forming
BIDU - strong, blue sky imminent?
CMG - Chipotle

TLT - iShares 20+ year bond fund if the pullback continues into a downtrend

Hammer Candle and Potential Pullback Bottom?

Thursday and Friday were very interesting trading days! A massive selloff on Thursday and early Friday and then Friday afternoon ended in a reversal on pretty decent volume. If this is the temporary pullback bottom, this action would be a perfect headfake which probably tricked a lot of traders. One candle is not enough evidence of the pullback bottom, and I am very wary of 1025 support and the 200 day moving average acting like a magnet here. So, be on your toes!

I am 100% cash now and am looking for continued market strength before putting any positions on.

McClellan Oscillator Turns Up

Would have liked to have seen a bit more volume today. 1100 zone is key in my opinion. It is the 38% retrace and a big resistance zone from previous 5 trading days. The up turning McClellan oscillator and the dropping VIX are bullish.

Dip Buying with TRIN, McClellan Oscillator and VIX

RMBS Valuation

Okay, I took a shot at valuing RMBS one year from now. I start with a premise from Ford Equity Research that RMBS trades in a band from 6.27 times trailing 12 month sales to 25.12 times trailing 12 month sales. I took the midpoint of that band, 15.7, to use as my multiple. So, based on my "back of the napkin" calculations, RMBS should be a $32 to $64 stock JUST BASED ON THE SAMSUNG DEAL ALONE. This does not count a potential settlement between Hynix and/or Micron. I think RMBS is a serious deal below $25.

Rambus a Steal Under $25

I bought a pretty significant position in Rambus (RMBS) at the end of the day today. It is a special situation trade that I think may be pretty huge. The company is FINALLY getting results out of a decade long court case against a cartel of DRAM makers that have infringed on Rambus' patents. Today, the news came out early of Samsung's settlement and I didn't really have time to digest it until later in the day which kind of sucked because had I realized the gravity of the situation, I would've bought immediately. The Samsung deal basically doubles RMBS trailing twelve months of revenue by contributing $25 million PER QUARTER for the next 5 years! ON TOP OF THIS, Rambus gets another $200 million in cash plus Samsung invests ANOTHER $200 million by buying stock at $20.88 per share (which is a damn good price for Samsung) and it definitely puts a floor under the stock. I was shocked to get the stock under $25 at the end of the day. With the Samsung settlement alone, RMBS is probably a $30 to $35 stock.

However, I couldn't help thinking that this settlement now opens up a wellspring of settlement opportunities for RMBS. The other two companies involved in patent infringement are Hynix (a South Korean Company) and Micron. Tonight, I was doing some more research when this link came across the wires. Hynix is saying that they are now "open to settlement" outside of court. Wow! So now, the question is when will Micron fall?? Will there be other settlements? If you want to read more about a gabillion other companies that are probably also infringing on RMBS patents, there are some good posts over on the RMBS board on the InvestorVillage.com web site.

L-1 Identity Solutions

Took a small loss on this one last time. It's been a bit whippy in this bullflag, but I think it's ready yet again.

VIX Calling a Top as Well?

Medium Term Trend Change Upon Us?

I am all cash as I type this after pulling off one short scalp this morning on the $ES_M (S&P Emini March Futures contract) for +4.25 points. Evidence seems to be mounting that this rally is running on empty. The dollar is looking stronger, equity leaders are taking it on the chin today, money is flowing to the 30 year treasury bond, volume is pretty strong to the downside, and volatility is increasing. Last but not least, the NYSE $TICK registered it's 4 worst half-hour tick readings this morning (year to date).

I've called market tops before and been burned, so I'm not going to do that this time. I'll just sit this out for a while. If I miss a big move to the upside, so be it. The definition of a market top implies EXTREME volatility. I LOVE leveraged instruments such as options and futures and they are great for capturing quick gains during breakouts and trends. However, as someone who uses a lot of leveraged instruments, I can get crushed if my portfolio gets in too deep. If there is ANYTHING i've learned over the past 14 years of trading, it's that MARKET TOPS AND BOTTOMS CAN KILL. Minimal trading for me until the market reveals it's true self.

Wynn Resorts (WYNN)

Bought some $70 Feb calls at the end of the day. Looking for a pop to new yearly highs in the next couple days. No head-fakes please.

L-1 Identity Solutions

Gold Takes a Hit While Dollar Treads Water

I hacked out some gains trading one gold contract today. Not bad considering all my trades were long and gold took quite a hit today. The dollar index threatened to break yesterday's lows during the morning hours, but then firmed up later in the day. In my opinion, the move in gold did not make sense in relation to the move in the dollar. THAT, ladies and gents, is how you know that options expiration is around the corner! The SPDR Gold Trust (GLD) is seeing 2X average daily trading volume, with 461,000 contracts traded and put volume representing about 53 percent of today's activity.

Trading Tendencies in Gold

I owned one contract of $GC_F (February Gold Futures) at $1140. I sold it this morning at 8:21 AM EST at $1160 because I've noticed a "trading tendency" that keeps re-occuring *almost* every day since gold bottomed at 1075. Gold gets ramped up in the low volume off hours and then sells off during the high volume market hours. This is a tactic used by professionals to make it hard for an amateur to buy into a security. Even though gold futures are traded almost around the clock, it creates a situation where the professional essentially gaps the opening, shorts a bunch of contracts, and then gradually converts his position to net long by the end of the day. Then, the next morning he sells his longs and gets short, and the process begins all over again. I bought back into $GC_F at 1:22 PM EST today at 1152. So, I'm trying to stay long the overall trend, but also exploit the tendency. My overall target on gold is 1300.

Like I said, it's a "tendency" and it doesn't happen every day, but keep an eye out for it! As most traders know, Gold futures are probably the single most tricky vehicle to trade so watch it!

Here's a chart of $GLD. Notice how, today, $GLD bounced off the 50% retrace of this latest 4 week pullback.

FinViz Screen for Profitable $5 to $10 Stocks

I like the FinViz site very much. Most of the time my ideas come from screeners such as FinViz and then overlaying technical analysis on top of those ideas. That way, I ensure a value component to my technical trades.

Here is a good screen that I use on $5 to $10 stocks with great potential for growth. Notice that 5 out of the 10 stocks are Chinese.

Watch List for Week of 1/11/2009

2010 Trends to Watch - Research Notes

Here are some of my notes from a recent research session I did. My goal was to identify potential trends and tradeable stocks in 2010. Enjoy....

Energy
Natural Gas – nat gas is definitely part of the near-term solution as it is VERY abundant in the U.S.
Evidence of Adoption
Town and City Bus Fleets already in conversion process

Carbon Pricing – storing and capturing CO2 emissions.

Growing Population Growth
Demands on Food, Clean Energy and Clean Water


Stimulus Money – only one quarter (as of this writing) has been spent.

Power Grid
Quanta (PWR)


Security and Protection
Level 3

China
GSI – recently took a hit for issuing more shares. June $5 calls look good. Expects to earn 0.14 this year but S&P expects 0.90 in 2010.

LFT - #1 developer of banking software in China and #2 developer for insurance industry. Also just moved into the securities industry.

PWRD – I know the story here. Entertainment Software. Great margins and products.

Government Unwind – no one really wants to loan the U.S. gov’t money at 3.4% anymore, AND, the gov’t has been keeping rates artificially low to stimulate the housing market. This artificial stimulation should come to an end soon, thus rates should go up. Also, as demand picks up, inflation should rear its head and the gov’t will need to raise rates to combat it. TBT (ultra-short 20+ Treasury Bond) is an ETF that moves in the opposite direction of bonds by a factor of 2. So, if bond PRICES fall 1% as rates go up, then TBT should go up by 2%.

Switching From U.S. Consumer-Centric growth to multi-polar growth – Genius Mohmaed El-Erian says that this should happen over the next 5 years and things will be rocky over the transition period.
The average investor needs to look beyond the U.S. and be wary of inflation.

Gold – gold is doing what it’s doing because it’s bringing together people who are worried about all kinds of things: people worried about inflation, geopolitical risks, and the dollar.

Novartis – growing revenues at twice the clip as the industry and they just hired Jon Symonds who was at Astra-Zeneca and was very good at cutting costs. Novartis is bloated but growing revenues fast and just had 13 new drugs approved by the FDA over the last 3 years.

Ritholtz – Arch Coal; entire coal group. Gannett (GCI) and New York Times (NYT)

Big Companies with Strong Balance Sheets that have foreign sources of revenues – IBM