Thursday, October 18, 2012

Thursday Notes:

Flat open at 8:15.

aapl, amzn red.

BAC, EWG green.

Whole problem for years has been not allowing winners to pay for losers.  

The psychology of trading trumps methodology.   Inability to follow a system will always destroy a winning system.  So to not make psychology the #1 focus is always a mistake.

Markets sag on   claims data.

AAPL no longer leading.

VXX, /zb  up --  so Market Signals clearly indicating weakness.

IWM 83.40 is the major support area to look for. 

/cl also dropping fast.   oil, materials were huge leaders past 5 days.  May pullback.(red premarket)

Reminder:  Strong names will pay, weak names will not. 

Key focus today:  Wait for market to hand you a lay up.  The trouble for most traders is taking trades they shouldn't be taking.  They hit their winners.  But if you also take a bunch of losers - it's a loss.  The ability to NOT take trades should not be underestimated.    Boredom is a major danger for the excitement-seeking trader.

Seeking excitement is not the same as seeking profits, the two goals are in fact, inversely correlated.

/cl -- sharp drop   5 xover 34  MA on 1 min chart caught 100 tick move -- still on sell signal.

x-over signals only work when combined with key sup/res. areas on chart.   Half the signals will fail or provide little profit.

High short int.   ==  extremely sharp, volatile moves.  Know your stock.  Know price behavior.

mixed day -- /tf --  wide range -- spiked to 841.40 -- clear resistance area - then drops fast.  Very choppy as expected.  Can't wait for x-over -- it's too late in a range   

EBAY, EXPE  - fast winners. 

Market Signals weaker --  IWM pushing down to 83.40 -- major support level.   Leadership red.   AAPL  -1.2%     QQQs almost below 10 day MA daily.

IWM -  at  20 day MA daily  level.  could be supportish.

/tf  double bottom at 835.50 - not a majorsupport level.

bot CIG - on bounce -- worst stock on my list.  got  5/34 xover after touching 12 support.  risking $120.   Below 10 day MA daily.  Really against the system.  Bad habit trade. 

/cl -- providing huge moves -- with a few small losses

NAV  below 10 day MA on daily -- this is not a buy.  Insider purchases don't change the signals.

/tf --  x-over into resistance at 839 -- may be a top but no sell signal -- nice bounce.

/tf -- shorted on 5/34 xover -- sold for 17 ticks - paper.   However, it was incorrect, supposed to hold.   Had two trades now .... for 40 ticks. 

Market now very weak.  GOOG   -68  on a miss.     shorting /cl  on 5/34 xover. 

note how NAV is weak -- holding around 20.50 -- always focus on those whole numbers. 

Almost entire IBD list red. 

OIH  up .85% -- rigs strong.   Charts were clear  days before the push.

/tf == sharp chop again -- near  KNOWN SuPPORT -- can take an early entry (TL break)

/tf  chopped 4x  -- imagine it's gonna get tighter now...   this is absurd. 

x-overs -- only work if you know the structure --   sup/resistance.  If you don't's a gamble.

more huge weakness

Why are there clear 3 touch  support lines before big moves?  Probably because someone knows -- and requires 3 or 5 days to accumulate a stake -- so they have a key line and buy it up -- then let it fall back down to the line.   

This is why you can't buy weakness -- someone could be pushing the stock down for 7 or 8 days before ramping it.   Or there is bad news.   Either way -- you step aside and re enter. 

So if you don't know   clear  support/resistance  -- then buy AFTER a 3 touch line....shows support or resistance midday -- then usually break in direction of the TL as  buyers/sellers overwhelm.

5/34 xovers work best at major support/res.    /CL just topped at 15 min high from days ago -- then x-over results it very fast drop.

EURO - dropping fast now --  took 2 days to top out -- then finally  drop -- sloppy  3 touch TL but still a TL formed before the final break.

/tf -- breaks support  AH.    Hmmm.   

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