“Accumulation” is the process of buyers gaining control from sellers after a prior corrective or bearish trend of lower highs and lower lows. Observing the volume pattern on daily and weekly timeframes is one tool at your disposal in attempting to identify signs of accumulation. Strong signs of accumulation raises the specter of a major reversal in trend.

However, price is king and must make progress in conjunction with volume. Moreover, the accumulation process can be a rocky one in terms of the price swings that take place, meaning just because you may very well have correctly identified an accumulation process, it does not necessarily follow that you should plunge back into any security or the broad market all at once.

Two issues to consider as examples of “strong hands” stepping in after a corrective period are BZ and HHC, both intriguing firms on the fundaments side, also in terms of their respective sectors. While I expect anything but smooth sailing higher from here as there is more work to be done to confirm a fresh uptrend, both volume patterns are compelling enough, in conjunction with improved price action, to warrant your attention.

Disclosure: I am currently long HHC inside the 12631 Trading Service. 

____________________________________

____________________________________

Comments »

Just under two years ago, The Fly approached @RaginCajun and myself about starting a trading service that would compliment The PPT, the flagship premium service at iBankCoin. Given the success that The PPT has had, and continues to enjoy, the idea was to take The PPT service and algorithm one step further by filtering the financial tools available there through the lens of technical analysis and sound risk management principles. With the help of our top flight IT department, we built a state of the art chat room where members can interact with us and each other. In addition, we maintain a premium blog updated frequently, as well as our real-time portfolios and watchlists available to members literally around the clock.

Since the inception of the 12631 Trading Service in November 2010, we have indeed built a special place where traders not only constantly improve before our eyes, but where they also enjoy the camaraderie of a real-time chat room and the supportive nature of our community. The focus is on making the correct tactical decision at each juncture in the market, seeking to quickly cut losses while managing winning trades with discipline. As an example, thus far in 2012 we maintained a bullish stance on the market throughout the winter months, only to move to a more defensive posture at the end of March, avoiding the subsequent 11% broad market correction. We preach a highly selective yet also aggressive strategy, when appropriate, though we have members with all types of trading styles and backgrounds.

The second half of 2012 presents a great opportunity for you as a trader to start fresh and exceed your own wildest expectations. The best way to achieve that goal is to join the best trading community at your disposal. Since the 12631 Trading Service is only available to members of The PPT, now is the time to take a bold step in the right direction to seriously improve your trading prowess.

PLEASE CLICK ON THIS 12631 HYPERLINK TO JOIN NOW

Comments »

The current price action in the market is your typical, drifting summer doldrums. As opposed to the distinct emotions at play during sharp, fear-based sell-offs, it is human nature in a lethargic market to be lulled into a sense of complacency and even boredom. When that happens, it is easy to become sloppy in your approach, making low probability trades just for the sake of looking for action. Rather than acquiescing, though, the better approach is to usually accept these types of markets as challenges to your discipline as a trader, protecting capital and confidence while letting the dust settle. Along the way, many a bold prediction will go unrealized, rending most traders stupefied before the choppy action is all said and done.

We may very well be nearing the final stages of the broad market correction that we have seen since April, but that is not of much consolation for underwater longs dating back to last week. This is the fifth day in a row we are lower, with the Nasdaq Composite falling back below its key, multi-year 2,900 level.

At the very least, some of the better-performing stocks this summer have needed more time to base out. Continuing to stalk this market from the sidelines is still the way I am largely playing this malaise, as stocks are capable of turning on a dime. As I pointed out to 12631 members yesterday, as demoralizing as this action may feel, all the S&P 500 has really done is pull back into prior resistance (1335), as well as the support trendline dating back to the June 4th low.

In other words, don’t give up on the rest of the summer just yet.

_______________________________

Comments »

http://www.youtube.com/watch?v=6GdeU0ww4zY

As the overall market attempts to put in another higher low and eventually firm up enough individual charts to sustain a multi-week/month rally, patience has been the toughest skill to master. During this tedious attempted stabilization process, we can and do look for clues of accumulation, or large institutions layering into stocks they believe are bargains, in order to gauge potential leaders of the next leg higher.

Until recently, the housing sector and housing-related stocks had more or less been left for dead in recent years, understandably so with the sharp decline in home prices and home ownership. However, when you look at lumber firm WY, as well as roofing play BECN, and window/door/glass-maker NX, the bottom portion of my charts tell a story worth watching unfold. Note the volume patterns on their respective daily charts below. It does not mean that they will double in price starting tomorrow, or that you should go out and buy these stocks tomorrow looking for immediate upside.

What it does likely mean, though, is that the process of large market players accumulating these stocks has more than begun and the firms should be watched very closely going forward. If the broad market cannot sustain another leg higher this summer, these stocks probably just build a larger technical base going sideways, serving as a coiled spring.

However, on the slightest technical improvement in the broad market, such as the 50 day moving average on the senior indices starting to turn up, I expect these stocks to be out in front with strong underlying bids to not only support them but propel them much higher.

A big hat tip to 12631 member “Earl” for pointing out BECN and NX in our chat room.

__________________________________

__________________________________

__________________________________

Comments »

I created one of my favorite saved “screens” in The PPT a while back. It it called “12631 RELATIVE STRENGTH” an seeks to isolate the very best stocks as detected by The PPT algorithm. It is a good starting point in trying to separate the men from the boys in a market that is still trying to prove itself.

Members of The PPT and 12631 can click here for the screen (save it on top lefthand corner of your screen, once inside).

As an example, of the names on today’s list (it is up to the minute) is CRIS. Noe the high tight bull flag on the daily chart below after its recent advance.

_____________________________

Comments »

In addition to our first class community and state of the art chat room inside the 12631 Trading Service, we also provide members with a Weekly Strategy Session post each weekend. Back on May 28th, after we had been looking for an initial correction in the market, we posted the following at the beginning of the strategy session:

“Three steps forward, two steps back; Three steps back, two steps forward…”

I expect the price action over the next month or so to resemble the above pattern. Tempering your emotions in either direction continues to be critical, given the corrective nature of the broad market since April. Until we see at least a few explosive days higher with broad participation, I suggest not embracing the exuberance associated with oversold rallies. True, we can play along. But we must be nimble and careful, as oversold rallies can fizzle out violently at a moment’s notice.

Comments »