Hello everyone, here's tonight's newsletters, as always I cover the general market and a few commodities, however the vast majority of the newsletter is spent on trade ideas, so please check them out!
best to your week!
Matthew Frailey
Wednesday, November 28, 2012
New Trade Ideas
Just got through looking through 1000 charts, here's a bunch of trade ideas
since I have so many trade ideas this evening, I'll keep the rest of the newsletter short
SPX 5 min and 60 min comments
$SPX - Chart Link - nice pop on that pennant via the 5 min chart
$SPX - Chart Link - 60 min chart shows an inverse H&S pattern, perhaps this can play out, however too early to tell.
$SPX - Chart Link - however remember that a good move up might only be a wave C, we'll see...
IWM chart
IWM - Chart Link - to along with the Russell 2000 chart below, you can see this perfect kiss of the downtrend line which occurred yesterday, provided a low risk short
Market comments
As you know the market rebounded off the lows a couple weeks ago, which was logical given the fact that several of our market breadth indicators like the NYMO, NAMO, RHCOMPQ, NYLOW were at extreme levels (see my prior posts from below to see these indicators). Now that the market has bounced, it went too far too quickly and looks like it may want to pull in some here.
The first chart shows a daily chart of the Russell 2000, we showed this to members yesterday, notice how the candlestick exactly tagged the downtrend line, that marked resistance and a low risk short with a tight stop. Now we'll see if price can form a higher low on a pullback or not.
The second chart shows the RHCOMPQ market breadth indicator, which had spiked down to 5% two weeks ago, and subsequently the market bounced afterwards. However notice that many times this indicator has two spike lows before a good bottom is in (not always but many times it does). If this were to occur again, then expect another market pullback to form either a higher low or a lower low.
Again the easy long trade was 2 weeks ago when the indicators were at extreme levels, now we'll see where this pullback takes us, stay tuned...
Tuesday, November 20, 2012
Market follow up comments
Late last week on Thursday and Friday I posted charts of the NYLOW and NAMO and NYMO market breadth indicators, which had spiked to levels generally associated with some kind of tradeable bottom - as you know so far we've had a nice rally off the lows, especially on Monday.
The first chart below shows the NYLOW indicator, as of Thur/Fri last week it had a large spike up, which as you can see generally marketed at least a short term tradeable bottom - basically the rubber band got too stretched and was due to snap back, or a reversion to the mean.
The second chart below is a daily S&P 500 chart, last Friday the S&P 500 closed well off the lows to form a hammer reversal candlestick and note that it logically occurred right off the 61.8% Fibonacci retracement. The next major resistance for the S&P 500 is the 20 day MA and of course the think blue horizontal line between 1403 - 1405, this is an area to watch for a potential pullback again.
The third chart is a 60 min SPX chart, note the bull wedge that had formed at Friday's lows last week - next resistance are the Fibs and the downtrend lines.
And lastly the 4th chart shows a 15 min chart of the S&P 500, if the market has put in a low, one bullish pattern that could set up is an inverse H&S pattern, currently the RS is developing, but still too early to say for sure and anything goes at this point.
Otherwise congrats to anyone who went long Thur or Friday last week for a tradeable bounce!
If you like our charts and analysis, please consider signing up to our website, also ask about our 25% coupon end of year special!!
Happy Thanksgiving!!
BPT
Monday, November 19, 2012
NYLOW, NAMO and NYMO update
$NYLOW - Chart Link - Obviously a nice bounce in the market, but again these indicators were at extreme levels late last week, as you can see from the NYLOW here, so should not be a surprise
$NAMO - Chart Link - NAMO and NYMO with Bollinger Bands
Thursday, November 15, 2012
NYLOW spiking
This indicator is spiking and getting to levels where the market has bounced from in the past
Dow and S&P daily charts/comments
The H&S pattern on the Dow is finally getting closer to its target area
The S&P 500 has now retraced to the 61.8% Fibonacci retracement
NYMO
$NYMO - Chart Link - Here's a longer view of the NYMO, last night I showed the NYMO with Bollinger Bands, this one goes further back without BB's, instead uses the -80 level - gives you a visual of how this current spike down is in relation to previous spike lows, clearly it's low right now, but as you can see many times on deep pullbacks it goes quite a bit lower
Wednesday, November 14, 2012
NYMO and NAMO with Bollinger Bands
$NYMO - Chart Link - price spiked below the Bollinger Bands on both the NYMO and NAMO, so it's something to take note of as spikes below the Bollinger Bands can sometimes market short term or tradeable bottoms.
However these can be early and clearly the market index charts still do not look good, just pointing out these indicators for now as we are getting oversold in the short term.
Tuesday, November 13, 2012
Time Tested Trading Rules
Here's a post I made back in Dec 2008 (the wild days)
http://breakpointtrades.com/blog/post/40089/
Time Tested Classic Trading Rules
for the Modern Trader to Live By
This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time.
I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.
- Plan your trades. Trade your plan.
- Keep records of your trading results.
- Keep a positive attitude, no matter how much you lose.
- Don't take the market home.
- Continually set higher trading goals.
- Successful traders buy into bad news and sell into good news.
- Successful traders are not afraid to buy high and sell low.
- Successful traders have a well-scheduled planned time for studying the markets.
- Successful traders isolate themselves from the opinions of others.
- Continually strive for patience, perseverance, determination, and rational action.
- Limit your losses - use stops!
- Never cancel a stop loss order after you have placed it!
- Place the stop at the time you make your trade.
- Never get into the market because you are anxious because of waiting.
- Avoid getting in or out of the market too often.
- Losses make the trader studious - not profits. Take advantage of every loss to improve your knowledge of market action.
- The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
- Always discipline yourself by following a pre-determined set of rules.
- Remember that a bear market will give back in one month what a bull market has taken three months to build.
- Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
- You must have a program, you must know your program, and you must follow your program.
- Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
- Split your profits right down the middle and never risk more than 50% of them again in the market.
- The key to successful trading is knowing yourself and your stress point.
- The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
- In trading as in fencing there are the quick and the dead.
- Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
- Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
- Accept failure as a step towards victory.
- Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work.
- One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door.
- The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
- It's much easier to put on a trade than to take it off.
- If a market doesn't do what you think it should do, get out.
- Beware of large positions that can control your emotions. Don't be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
- Never add to a losing position.
- Beware of trying to pick tops or bottoms.
- You must believe in yourself and your judgement if you expect to make a living at this game.
- In a narrow market there is no sense in trying to anticipate what the next big movement is going to be - up or down.
- A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss - that is what does the damage to the pocket book and to the soul.
- Never volunteer advice and never brag of your winnings.
- Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
- Standing aside is a position.
- It is better to be more interested in the market's reaction to new information than in the piece of news itself.
- If you don't know who you are, the markets are an expensive place to find out.
- In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word - Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
- Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade continues winning without you. Chances are it won't continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.
- When the ship starts to sink, don't pray - jump!
- Lose your opinion - not your money.
- Assimilate into your very bones a set of trading rules that works for you.
Monday, November 12, 2012
Moon cycle chart
Tomorrow is the New Moon cycle, lately the market has at least responded to the cycles for at least a temporary bottom, we'll see if this one produces a bounce. Remember that the cycles are +/- a day or so
Thursday, November 8, 2012
BPT EMA RSI 2 system comments
The RSI 2 BPT system will go long today if the SPX closes down but remains over the long term 160 SMA. Below the 160 SMA the system doesn't take longs.
If the market closes down today, the EMA based RSI 2 will have been oversold for 2 days in a row, which is a requirement for the system - but again price must stay above the 160 SMA, which is currently at 1386, but can of course change sightly by the close
This system scales in for a potential of 4 entries of 30%, 30%, 20%, 20%, today's entry would be 30% if it occurs.
Remember that there are two versions to this reversion to the mean system, one that closes out when RSI is overbought or oversold, and one trending version that at times will attempt to hold a trade longer when conditions apply. Here are statistic reports for each version of the system
(click below the report will open ONLY in I.E. Internet Explorer as an MHTML performance report file)
Rules: goes long when price is above the 160 SMA when EMA based RSI closes below 11% for 2 days in a row. exits when RSI 2 closes at 80% or higher
Shorts - reverse, when price is below 200 SMA, shorts when RSI 2 closes above 90% for 2 days in a row, exits on a close below 40%
System scales in 4 potential entries of 30%, 30%, 20%, 20%, but each successive entry must be at a better price than the previous one i.e. entry 2 has to be better than entry 1, entry 3 has to be better than entry 2 etc.
This is a reversion to the mean system as it is only in the market 12.4% of the time
(click below the report will open ONLY in I.E. Internet Explorer as an MHTML performance report file)
EMA RSI 2 system - trending certain times
Rules: The same as the non trending system, except this system will attempt to hold trades longer at certain times - however this is still a reversion to the mean system, it's only in the market 19% of the time, the rest of the time is in cash - while the non trending system above is in the market only 12.36% of the time.
As always this is provided as information only, trade according to your plan and risk tolerance
Wednesday, November 7, 2012
Our Recent Newsletter
Hello everyone, here's my most recent Newsletter, please take the time to review as I discuss both the short term and longer term picture of the market, as well as commodities.
Also on an Administrative note, be aware that we have a 'new' Newsletter format where you can skip around and play audio for individual charts vs the whole newsletter (see the tabs at the top of the newsletter.
As always, best to your week!
Matthew Frailey
Tuesday, November 6, 2012
so far the market has tracked the election cycle seasonality ...
so far the market has tracked the election cycle seasonality average this year quite well (average back to 1928), if it continues market should go higher into year end
Monday, November 5, 2012
Here's the updated RSI 2 strategies - As you know, ...
Here's the updated RSI 2 strategies - As you know, one RSI strategy closed out on Thursday (the one that only used the RSI 2 getting over bought without the trending indicator), while the one with the trending indicator closed out on Friday's ugly day after the close.
Here are the charts and Statistic reports. The system that uses the trending indicator has a higher profit factor and a higher net gain, while the one that ONLY uses the RSI 2 to exit trades has a lower profit target of 7 vs 9.8 and a lower total profit gained - however it does have a higher win rate winning 85% of the trades vs 83.9% for the trending system
I will be adding these systems to the Mechanical Systems section of the website and plan to send email alerts when they trigger
Friday, November 2, 2012
futures are up about 7, was up more Regarding the RSI ...
futures are up about 7, was up more
Regarding the RSI 2 SPX system - again do what you feel is right, you can either take nice profits or hold and wait for the system to reverse, or a combination of both. The system won't exit until its trending indicator goes negative, if I turn off the trending indicator the system would be out. The stats are still nice with it off, I've attached two stat reports one with it on and off: the system with the trending indicator turned off actually has a slightly higher winning % of 85.3% vs 83.9%, while the one with the indicator turned on makes more money - again that's only logical
otherwise do what you feel is right and suits your trading style.
Moon cycle chart
$SPX - Chart Link - once again the market bounced at the moon cycle, otherwise today the Jobs report will be released at 8:30 EST, let's see how they spin those numbers
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