Starting today, I will be extremely busy. I am preparing for my first day of school on August 31st. As you know, I will be starting a new shrink program. I have many, many reasons to do this, but I have no idea why I really chose to go back to UMD. I’ve been having recurring dreams for over a year telling me that I have to go “find something”. Who knows what that is, but my dreams or visions are usually correct. Say what you want, but I’m not crazy. I executed the delegation of my responsibilities in all of my businesses yesterday, except for my personal trading and anything that’s internet-related.
Most of you figured out the way I day trade. You see a lot of break even trades for a reason, and that reason is because I am testing out the market. I have to see what is working early on, and when I do, that’s when I go in “heavy” sometimes doubling or tripling my positions. It’s pretty simple if you think about it: find what works then heavily allocate your capital to the best ideas, thus maximizing your gains and limiting your losses. Winning almost everyday is not some kind of bizarre mystery or stock market “secret”…which also brings me to another point.
I still don’t get why people complicate trading with complicated and worthless indicators, computer programs, spreadsheets, or anything else that wastes your time. Here’s a tip – if you can’t even trade profitably and consistently off of the basics, then you’re going to run into major problems down the road. No method is 100% perfect, but make sure you perfect the basics first, then move onto other shit.
This post will be two parts: the usual SPX analysis and the biotech/pharma sequential breakout analysis.
First, the SPX charts in the following time frames: 2-day, 5-day, 10-day, 1-month.
Now, I heavily day traded biotech stocks yesterday. By heavily, I mean that I was executing trades every 1-3 minutes which made it pointless for you to follow. I took the charts for BCRX, NVAX, SVA, INO, HEB, VICL, DVAX, and AGEN and stuck them all together into two images.
Yes, I know that some are not swine flu related, but they moved anyway, didn’t they? I could careless what you think and only care about WHAT is moving. I find out the WHY part later, after my trades are finished.
The long black vertical line marks the breakouts for BCRX and NVAX, which were the first breakouts of the group. Scroll down a little to INO. The remaining charts show sky blue boxes. These mark the delayed movements in the rest of the group where you only had several minutes to take action.
The long red vertical line marks the pullbacks for BCRX and NVAX. Note how SVA pulled back first, HEB kept going higher, and some of the others just didn’t move at all. During pullbacks, you want to heavily allocate towards the strongest in the sector, which was HEB (you can check out my twitter stream and assess how urgent I made it to get into HEB).
The area between the long black vertical line and the long red vertical line shows the breakout volume. Volume should and must be heavy for a stock to gain momentum, which reduces the risk of failure.
The area between the long red vertical line and the long green vertical line shows the importance of pullback volume. For most of the stocks, you should see lower, steady volume, which indicates a healthy consolidation zone. High volume inside this zone flashes a big warning sign of instability.
The period after the long green vertical line is mixed. You can see secondary breakouts in BCRX, NVAX, SVA, and VICL – all marked by heavy volume that should be similar to what you saw in the initial breakout volume area (between the black/red vertical lines).
Finally, chart patterns made sure that you got in at the right moment.
When you see 2 or more stocks in the same or similar industry/sector, then you must immediately scan and chart the entire group’s components. Some of my biggest plays are due to sequential breakouts which give you windows of opportunity to get into stocks prior to high-probability breakouts. Good examples were my end of April/early May oil/gas shitstock plays in XTXI, XTEX, APL, AHD, and a few others. I believe I wrote a post on it, but I’m not going to dig for it.
That’s your lesson for the day.
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You “FREAK”~~~~!
Great stuff. Good luck with school. Best thing you can do. I love the idea of the vertical comparison of the breakout / breakdowns. Thanks.
Thanks for the charts as always CA.
Shrink school as in psychiatry (MD?) or will there be a John Lee Life Coaching / tough love enterprise down the road? Either way, I’m sure you will succeed glouriously indeud.
Hey CA!
Who do you think you are, communicating with potential readers like this.
The word for arrogant pricks like you CA is ‘knobjockey’.
Its sure gonna hurt when you hit the ground!
CA–good explanation of strategy..thanks laddie. School..hmmm co-eds…
yep, one good reason.
Thanks CA, great post!
People, I’m guilty of it myself, complicated things because we were sold these useless lagging indicators.
Who’s to think that the authors writing these TA books weren’t here to help you? They’re here to make money off of you.
Good for you … going back to school. I did the same thing after dropping out for years. The degree gives you the ‘ticket’ to enter into many more opportunities. You’ll move into another level or opportunity. The four to six year experience from a good university cannot be compared to anything else in life. Its an added element in your life that will change you forever. Thanks for all you do!!
U R NUTZ
CA..good luck and thank you for sharing your knowledge..I never fail to learn from your informative posts
Holy shit — APCVZ up 300% pre market…Never heard of it…
I’m starting to feel like I may be testing my luck a bit – for 2 weeks, I’ve not had a losing trade in the Euro (as called here live). I will be reducing position size and will be extra cautious today.
Last night the Euro retraced back to 1.4250 (1.4253 to be exact – this is why I set profit tergets just before resistance or support) as I’ve been expecting and it reacted hard with a really nice bounce.
As of now, I am biased to the upside but I am without conviction as long as we stay below the bottom trend line of the channel (1 hour chart – from last Wednesday) that was broken yesterday right before the close. I would like to see it clear and hold through a downside test or 2 (or just blast through).
I sure as hell won’t be shorting this unless we test that trend line 2-3 times and continue to push back down. This does not appear likely but it’s a possibility. You will note that we are testing it right now.
In other words the 1.4330 to 1.4380 range is now for quick scalps only and only if you are ready to cut a losing trade fast before it runs hard.
As an aside, I enjoyed CA’s post this morning especially:
“I still don’t get why people complicate trading with complicated and worthless indicators, computer programs, spreadsheets, or anything else that wastes your time.”
SO true.
There is one exception though – if a system has a VERY fancy name like “market neutral multi-layer fuzzy neural clustering”, if it costs more than $2000 AND if it is limited to the first 35 people because, if too many people get involved, Goldman Sachs wouldn’t have a chance. You might consider that one!
Anybody watching this stupid TD Ameritrade commercial on CNBC?
It’s just to your point Retox, they’re pitching some trader platform, and this douche guy is throwing out fancy sounding trading terms.
I think the real issue is that most traders want instant profits so they look for a system that always keeps them in the market one way or another (if you aren’t in you can’t make money right?)
They find an indicator that promises they will be able to trade like they have ADD and they lose money because markets just don’t do they same thing all the time.
So either you learn to trade the market on its terms; a day-to-day, minute by minute basis (harder) OR you learn to trade break-outs (easier). Either way you will probably do okay.
If you learn to do BOTH consistently (someone like CA) you will then never have to work again. Oh sure, it sounds easy but it’s so against human nature that most people just can’t do it.
Covered $AIG $34.57/frac
Bought $CNXT 2.73/frac
Sold $SVA, $VICL, $HEB, $BCRX, $NVAX
Good information. Though I’m curious why someone who consistently scores annual returns of 200%-300% and has a better track record than any hedge fund, money manager, or GS has ever had, would go back to school. That’s like LeBron James dropping out of the NBA to go to college.
Or perhaps he’s just made so much effing money that he’s content to sit back and enjoy the things he’s worked to achieve. Like for example, taking some time to pursue a hobby — psychology perhaps? Besides, it’s not too hard to continue trading while going to school. I’m living proof of that one, lol.
Speaking of which, http://chart.ly/dfmwd5, yesterday’s trades & journal. 9:30-11:00 due to classes.
nice day Mike.
I think you also called the SPX top (for the day) at 1036 did you not?? you nailed that one.
ever hear of a renaissance man?
Thanks, and yes I have. : )
I was expecting 1036 by the close, didn’t really expect the drop back down but eh, I’ll take it. har har.
well yea, and I’m not “well-rounded” as I should be. A certain blogger here on iBC stressed that importance. This is one reason.
HERO 4.99
Bought $PNX 2.60
Bought GNBT .64/frac
Bought $JAZZ 6.79
Bought $SPPI 7.22
no more postings. too much activity .
IN ARNA @ $4.53
could scalp Euro short here with a stop above 1.4356. – thinking about it
Holy ES breakout, Batman! WTF?
Someone at GS accidentally put in a 40,000 contract ES trade lmao?
Wish I had waited another 60 seconds to sell, a +2 trade makes me happy, but a +8 would have been nice too.
FAS running. I’m looking for this to break down this week. See if it can break above this 81 ceiling….
PMI BTFO…
got short, got stopped on the report
got short again – made more – bitch
alrighty boys… the VIX finally filled its gap.
don’t go long today.
i meant becareful going long today
SPX – we’re really just hesitating under the upper trend line on a day chart from 5/7. I think that was our 3rd failed attempt…
Euro should find support 1.4311 through 1.4308
it held so far – watching for another downside test
as an opportunity to get long Euros for a grind back up
grinding up – 1.4338 is a key resistance level to this trade
paused and cleared – next resistnce will come at 1.4345 – top of new channel
hit it like a wall
watch for the lower trend line on the channel to hold – I said grind up, not rip.
If the bottom does not hold, cut this trade fast and keep your profits.
Better – try to get out at the top of the channel – there is probably limited upside.
out at 1.4336 +11 pips
risky but established trendlines usually act like magnets when they break like that bringing the price back at least one last time before they give out.
1.4328 to 1.4338 is a range of resistance/support
1.4311 next support
1.4308/1.4300 is key support range
1.4345/1.4350 next resistance range
Can anyone guess the city pictured above?
Looks like Dallas
It is Dallas, half the downtown landmarks are missing from that picture including the Petroleum Club.
Anyone have an opinion of BKI on the daily?
(EDIT: sorry. fuck that. i accidentally had my volume screener under 500k.)
Watch CNO, PMI
Any thoughts on MEG? Good b/o but doesn’t seem like much volume!
Lately it’s been a buy on the fade at end of day and sell into early morning strength next day … I think it should trend up to $10 area but looking to catch it on a down day. Having better luck right now with ETM.
Well I’m done for the day, argh. Good luck everyone. +2.25
Today’s log: http://chart.ly/fy7hxe
Out of ARNA @ $4.75
Ooops … still going!
Bought CPST @ 1.17
Sold @ 1.23
Bought APCVZ @ 1.30
Sold @ 1.26
Short FNM at 1.86
Dollar…watch it here…looks like it wants to rally..
yes – Euro key support is being attacked – next support is 1.4300 then it may get ugly
1.4300 hit – expect a reaction to the upside and watch for direction
Euro support and resistance levels are magical today – 1.4311 killed the retrace
2nd test of 1.4300 held
3rd wave will be the tell – if it breaks we should see 1.4250 to 1.4275 area again later/overnight with a stop behind 1.4311
I’m still convinced we will revisit 1017 SPX before we can rip again
C looks like its running out of upward pressure..short multiple at multiple levels yesterday and today
YRCW
c-n-g: you really mean it’s running out of downward pressure right? draw some lines
nope..i meant what i wrote..you like it..put in a buy..i already have established a short positon.
CNO
Hey CA ,
I have been following you for awhile, always great charts especailly today’s.
When you are analyzing a sector like biotech what criteria are you using to select your stocks that you feel will start the break ie BCRX and NVAX and which ones you feel will lag you basing it on market cap small, large or something else?
Heavily short $AIG
It’s getting too big
that’s the “I’ve got balls and I know how to use them” trade – beautiful
Took a hit on BCRX, CNO doing fine…
Also took a hit on tza and dto but will hold.
leaving $AIG for now. No edge yet.
CNO moved PMI is next
Bought $MTXX $6.56
faker – out $MTXX 6.43
Bought $CNO 4.43
Bought $DAN 5.75
Sold $CNO 4.42 …lack of vol on the breakout
Doubled $DAN 5.77
Short AIG 33.77
Short $AIG 33.76
Sold $DAN 5.74/frac – too screwy
k, i’m out of CNO from yesterday.
now holding dto and tza.
Bought $MTXX 6.61
out $AIG 33.84 – focusing on $MTXX
OREX ??
Covered AIG 33.92
YMI blast off
Nice
SDS overnight
Overnights: $CPST, spec play SPNG
case you didn’t get enough today – a descending triangle forming on the Euro – 1 min chart – right into key support. should prove interesting overnight.
SPX likewise formed a desc triangle intraday (although a messy one) resting on support – and it printed a shooting star for the day with neg divergences on the daily mo indicators. Do you have an ES position here?
no, I’m short some Euros right now for a little breakdown – I’m slightly positive and I’ll give up at pattern failure or early enough to eat dinner.
way too many reports out tonight and early tomorrow to hold this overnight
entry was 1.4314
I just can’t ignore the upper trendline on ES on a day chart from May 7th. We’ve chopped above it a bit but it appears to be holding.
Another dip before we move forward again would look very probable.
Don’t forget about the shorter term. Yesterday’s high a big resistance at 1035, with the exception of that monster gap up which quickly faded, it’s been tested twice so far. Third test should reveal whether we still have enough gas to push higher or if that 1017 level you mentioned is in our future.
there it went – should see another push down as the CME closes forex futures @ 5pm
so predictable – got the last minute “capitulation push” (I was in forex not futures)
covered @ 1.4294 +20
night night everybody
thx for all the updates
Anybody find the link to the sequential play of shitty oil stocks?
Thank for your charting. These charts are beautiful, and make your points clear and easy to understand.
Didn’t know if I should Tweet this to you, or leave it here: LDK solar. 59% short interest, just partnered with an entire *city* in China to develop 500 MW of power over the next 5 years. Moving AH
Are you going to school in Dallas? If so, welcome to town.
John i am signed up for your program . new email [email protected] thank you
Mike,
I believe there is validity to your thesis. I would take that one step further and say that we will have our answer tomorrow with a strong lineup of market movers early on:
2:00am EUR German Import Prices m/m
4:00am EUR German Ifo Business Climate
8:30am CAD Corporate Profits q/q
8:30am USD Core Durable Goods Orders m/m
8:30am USD Durable Goods Orders m/m
10:00am USD New Home Sales
10:30am USD Crude Oil Inventories
12:00pm USD FOMC Member Lockhart Speaks
Wow, I had no idea there was so much happening tonight, thanks for the info. I think I’ll add a quick report check to my premarket drill from now on so I don’t get caught with my pants down while this tasteless ‘news’ thing keeps happening.
Also – the Euro is forming a killer wedge on a 5 minute starting at 8 this morning.
Careful of a fakeout though – it might have just been a graceful & orderly landing back to support where traders are waiting for better direction from the equity markets.
Here is the post for sequential oil-stock breakouts [for my own reference] — May 2009
http://ibankcoin.com/chart_addict/2009/05/04/expecting-pullback-on-this-dollar-stock-circus/
SOMX
LDK on the move premarket!?