Not For The Faint Of Heart....

What a week! Volatility has returned to the markets which can often be a sign of the end to the existing trend. While difficult to trade it can be a great opportunity to make good profits. The key is to stick with your system and use a trailing stop to lock in your profits. The open position in Goldman Sachs continues to be profitable. As of Friday's close I have an open trade profit of $22.76 per share. The trailing stop for Monday is a close above $157.16.

For next week I will be watching the follow stocks and ETF's (charts below). Each symbol is listed below with it's corresponding entry for Monday only.

GS - Short at $171.48. Trailing stop at $157.16
TBT - Long on a close above $48.41
RSX - Long on a close above $32.43
FXY - Short on a close below $109.38
DTG - Long on a close above $25.69
AMZN - Short on a close below $119.73

A Kindle For Everyone?

Today I was watching the price action on amazon.com with interest as the company announced it's earnings. From a technical perspective the weekly chart (chart 1) is in a down trend starting on the highlighted bar. The bounce on the daily chart gives me a potential entry on the short side if the stock closes below $119.73 on Friday's close (Chart 2).

I did not get a signal in RSX or TBT today and will not be looking for an entry tomorrow. DTG however was very interesting today. The signal was to go long on a close above $25.69. I monitored intra day prices and bought just before the close at $25.72. However, just after my trade was filled the stock fell back slightly and closed at $25.68 therefore not triggering the official entry! This can happen when the entry price is very close to the market action prior to the close. I will watch DTG closely tomorrow and sell quickly if there is a significant sell off during market hours. Such is life!

Chart 1

Chart 2

One Way Or Another.....

This is the type of market that drives traders crazy. For the past few weeks the broad indexes have been sideways. As stated before the long and medium term direction is still up. A new stock that has caught my attention is DTG. Chart 1 below is the weekly chart. The trend is still up as long as this weeks close stays above the blue line. You will also notice that DTG has retraced a little below the 61.8% Fibonacci retracement level. Since the weekly chart is up I will be looking for a buy signal on the daily chart. Chart 2 below is the daily chart. DTG has retraced exactly to the 50% Fibonacci retracement level. I will be looking to buy DTG if the close tomorrow is above $25.69.

TBT is still a buy watch on a close tomorrow above $48.79 and RSX on a close above $25.69.

Chart 1

Chart 2

Market Action On Tuesday

We did not get an entry signal today on either TBT or RSX. The set ups are still valid and I will be looking for enty points on the close Wednesday if price is above $48.79 on TBT and $32.70 on RSX. Meanwhile my positon in Goldman Sachs continues to grow in open trade profit (chart below). As of the close today the open trade profit is $20.60 per share. I will exit the trade on the close tomorrow if price closes above $159.19 which will lock in a nice profit. See prior post on GS for more details.

Two For Tuesday

Tomorrow I will be watching two ETF's for a possible entry on the close. TBT is the ProShares UltraShort 20+ Year Treasury that seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index. The weekly chart (chart 1) turned up on the highlighted bar. The market has pulled back on the daily chart (chart 2) but is still up on the weekly. I will buy TBT if the market closes on Tuesday above $48.79.

RSX is the Market Vectors Russia ETF that seeks to replicate as closely as possible the price and yield performance of the DAXglobal Russia+ Index. The weekly chart (chart 3) turned up on the highlighted bar. The market has pulled back on the daily chart (chart 4) but is still up on the weekly. I will buy RSX if the market closes on Tuesday above $32.86.

If filled on either or both of these positions I will publish the initial and subsequent trailing stops.

Chart 1

Chart 2

Chart 3

Chart 4

The Anatomy Of A Killer Short Trade

During an up trend I always look for a few short trades to compliment my long positions. One of my current open short trades is in Goldman Sachs. Why did I enter this trade when the current market is rising? Goldman Sachs is one of the key stocks I watch as it can tend to be a leading indicator for the general market. The first chart below is a weekly chart of Goldman Sachs. After the close of the bar highlighted on the chart my system identified a change in direction from bullish to bearish. I then began to monitor the daily chart looking for an entry signal in the direction of the weekly trend. That signal came at the close of the daily bar highlighted on the second chart below. This trade currently has an open profit of $17.36 per share in only eight trading days. Using my trailing stop method I will lock in my profit if the stock closes above $162.69 on the daily chart on Monday.

Weekly Chart of GS

Daily Chart of GS

Current Market Trend

The last couple of days have certainly shown some blood letting in all the major indexes. While these types of days can motivate traders to jump in to short positions I will wait until my trend indicators confirm a new down trend. As you can see from the charts below both the long term and medium term trends are still up for the S&P 500. With the exception of one short position in GS I am still looking for long opportunities.

Long Term Trend: Market is above the blue line.



Medium Term Trend: Blue line is above the green line.