The weekly SPY chart still does not look good (updated)

Here is what the weekly SPY chart looks like right now:

The late rally from the low isn’t helping much.  Even if SPY rallies all the way back to 136.40; we will have the dreadful Doji bar against the 61.8% Fib retracement.  Either way, I’m taking my 85% cash with me over the weekend.

Oh yeah, I bought back half of THLD I sold this morning.  The chart looks so strong I can’t help but feel that it will go much higher next week.  I still have my TZA starter position but my SKF was stopped out.

Notice the last red bar is now below the 61.8% retracement of April 6th high and June 8th low.  This can only validate the resistance power of the Fib 61.8%.  If we have a red candlestick bar by end of the day (which mean a red weekly bar), there is a high probability the price actions will roll off to the downside.

Hence, I’m mostly out of my equity position:

Long-term equity: 11%

THLD: 3%

TZA: 1%

Cash: 85%

Good Hunting!

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Threshold Pharmaceuticals!  That is what I’m talking about.

I like the weekly and the daily charts for THLD.  Just by looking at the charts, I can “hear” the price actions screaming “I WANNA GO UP!”  So, to calm the voice in my head, I added THLD twice today.

Oh no, this is not a recommendation or suggestion to buy THLD.  Besides, you must be crazy to buy a stock pick from someone who claimed to hear “voice” about price actions.

Below is the daily THLD chart:

Below is the Weekly THLD chart:

Good Hunting!

ps. I forgot to mention that I like the fact that THLD made new high today.  Yeap, a new high for the last 60+ trading days.  Thus, this could be a trigger for long-term trend players to get in.  Watch out if price actions take out the March 30, 2012 high of $9.07.

Current equity holdings  (27%):

(Order: large to small) PRLB; THLD; USU; USEG; LMLP; DNN; HDSN;

Long-term portfolio (11%);

Cash (62%)

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Hope you all have a Happy July 4th!

So far, Monday & Tuesday gave us a good positive price action by mean of having a nice green bar that closed on top of that 61.8% retracement.  I like to see Thursday and Friday’s price action to maintain this green weekly bar or at least close above the SPY price of $136.45.  However, I will prefer that we don’t ended the week with a Doji bar that close near $136.45.  It is my experience that a Doji bar near any Fib retracement carry a higher probability of a correction to current trend.  So, let’s see how the rest of the week play out.

Currently, I’m heavily weighted on PRLB since I doubled-down on the price run-up on Tuesday.  Remember, I only averaged up.   I’m sitting on some nice profit but will have no hesitation to dump it for profit if price action begin to have 2nd thought on the uptrend.  Nevertheless, price action looked positive for PRLB and the odd is that the momentum may continue.

I also doubled-down on THLD on Tuesday because of a breakout pattern I saw on the chart.  See below THLD daily chart.

I’m disappointed to see HDSN not only failed to breakout of the high of May 10th; but ended Tuesday with a bearish engulfment bar.  I will continue to reduce my position if price continues to head lower.

Currently 44% equity and 56% cash.

Good Hunting!

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Yeap!  I got this quote from the book, “Endgame: Bobby Fischer’s Remarkable Rise and Fall- from America’s Brightest Prodigy to the Edge of Madness” by Frank Brady.

I’m still half-way thru the book but came upon this quote by Malcolm Gladwell.  I’m amazed at the dedication Bobby and the top chess players spent on their chess games.  Imagine if aspiring traders apply 10% of that kind of dedication; the reward will be tremendous.

Now, I’m more motivated to allocate more time to play chess, ooop! I meant to say- allocate more time to study and practice trading skills from my repertoire.

I’ve a feeling that this week is going to be a non-eventual week.  Price action isn’t going to take to the moon or fall off the cliff; instead, it is going to dance around inside the red box below.  Just my take of it, of course.

My equity position increased to 40% today and cash is 60%.

I found a 3D printer stock alternative called PRLB and it looked like it was bottoming out.  Since DDD and SSYS were kind of on a high side; I figured I could play PRLB for a catch-up.  Nevertheless, this is a super-high-beta stock and the volatility isn’t for everyone.  No, I’m not advising anyone to buy.

I also bought back USU, USEG, LMLP and a few suggested by iBC members such as HDSN, RBCN. and THLD.  Don’t worry, I’ll be applying my own trading style on these picks; but thanks in advance anyway.

Good Hunting!

Below is the daily SPY chart:

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See for yourself below:

There was a strong rally in the last week of June 2011 and the weekly bar ended almost identical to what we have last week.  Did you see how the price actions consolidated mostly in July and then rolled off the hill in August 2011?  (see the price action inside the red rectangular box on the left)

In order to avoid a repeat of last July & August, we need to see price action takes out the 61.8% retracement of Point (3) and Point (4) and turn the retracement into a support instead of bumping against it as resistance.

Perhaps, this year being the Presidential election year will turn the tide to the upside instead of a replay of 2011?

Stay tune and watch out for price action.  Last Friday, I increased my equity to 29% and cash @ 71%.  I will add more equity if price action (SPY) can take out the $136.45 and stay above the retracement I mentioned above.  On the other hand, if price action is having a hard time bumping against the resistance, I will be unloading my equity back to cash to play safe.

Good Hunting!

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I couldn’t agree more!  I read this sentence from the book, “The Life of Pi” by Yann Martel.  For those who have not heard of this book, it is a fictional story of a teenager who survived 227 days on the ocean.   I bought this book for years but finally decided it was time to read it last week since I wasn’t actively trading (due to my promise to myself to take a break while price actions was trading inside the dead zone).

The author gave a full treatment on the subject of “fear” in one short chapter (chapter 56).  While the information provided in the chapter is “nothing new” since we all have at one point in our life experience fear in its naked form; it is still quite “revealing” to read the author’s recap of the essence of fear.

I’m sure everyone who are reading this post know and understand that fear is our worst enemy when it comes to trading.  While fear can destroy us “slowly” in our normal day-to-day living if you don’t do something about it, it will “accelerate” your demise in the trading world by paralyzing your ability to trade with a plan and thereby destroy any chance you have to improve your game.

You must FACE fear.  You must ACKNOWLEDGE fear.  Only by facing and acknowledging your fear can you then embark on developing a PLAN to trade with DISCIPLINE in spite of your fear.

Yes, it means you have to WORK at it.

Nope, it doesn’t matter if you follow the most successful traders on this planet, you will still lose your shirt if you don’t INVEST your time to become a disciplined trader.  Every successful trader trades with a style that is very much their OWN UNIQUE style.   And the odd that you can be successful by taking the easy way out in following the trades of any successful trader is a big ZERO.

You know why?

FEAR

Just because a trader is successful doesn’t mean he has no fear.  It only means that he FINDS his own personal way to work around this fear and still be successful.  And guess what, if you didn’t spend the time and investment to develop the discipline need to follow a trading plan that is unique to your own personality; your fear will destroy the trades you took by following Trader X.

How?

Does the following sound familiar?

1) Trader X bought AAAA

You just took a loss from previous Trader X’s trade; now you FEAR to take another one.

2) Trader X sold BBBB as a loss

You hesitate to take the loss because you FEAR stock BBBB will take off without you.  On top of that, you now decided Trader X is wrong to take loss so soon.

3) Trader X is holding CCCC thru the volatility while sitting on profit

You FEAR of losing the profit so you closed the trade to lock in profit even though Trader X is still holding it.

4) Trader X is still holding DDDD when the loss is now approaching 5%

You FEAR that the stock is going to zero; so you cut your losses (which by incident is the right thing to do but it’s just not part of Trader X’s trading plan).

Don’t forget, Trader X is NOT PERFECT and Trader X will have his usual % of trades that are wrong; however, by second-guessing Trader X and proving to yourself that you are “right” when Trader X is “wrong”, you are only encouraging your bad habit and allowing your FEAR to dictate your market decision instead of relying on a sound trading plan.

You see, there is no short-cut to become successful in trading.  Either you work on your discipline as a mean to control your fear or you may as well be the benefactor to those who win consistently because they find their way to work around their fear.

Here is how the author Yann Martel closed his chapter on fear:

“…if your fear becomes a wordless darkness that you avoid, perhaps even manage to forget, your open yourself to further attacks of fear because you never truly fought the opponent who defeated you.”

Amen

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Wow!  What a sight!  With such force of explosion, the dead zone was obliterated in a vaporized second and the Bulls run like they were in the annual San Fermin festival in Pamplona.

At this point, price action is screaming buy!  However, with such a strong head wind already expended; I will be looking to buy on retracement and on a gradual scale due to potential profit-taking activities.

Congratulation to those who took the risk hanging on to the bull side; you earned this big win off the gate.

And thanks goodness I only have a small percentage of my money in the bear trade (TZA and SKF) which I mostly like will be stopped out since I placed stop loss below the over-night intra-day low.

Good Hunting!

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Right now, price actions from both sides, the bull and the bear, are trapped in the Dead Zone.

There is only one thing to do- escape!

While the bull’s escape plan “almost” succeeded in breaking out from the past 2 days of furious digging; it was unfortunate that the tunnel collapsed today.  The bear, meanwhile, has a better plan; it flooded the tunnel built by the bull and slide down the slippery mud with the help of gravity!

So far, the bear is in control; nevertheless, there is still a bit more to go before the bear breakout of the Dead Zone and fall off the sky.  Yes, there is nothing the bear wants more than the feeling of free fall.  And yes, that feeling can be quite addictive.

Below is the daily chart of SPY.  From the look of it, who do you think will escape the Dead Zone first?

Needless to day, I added some more SKF and TZA today.

Currently 10% long-term hold; 6% short (SKF & TZA); and 84% cash.

Good Hunting!

ps. For those not familiar with the Dead Zone; it is my own personal interpretation of the range between last Friday high and Monday low which I considered a “consolidation” area with no bias on either up or down from an intermediate to long-term perspective.

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After getting stopped out of my TZA and SKF twice this morning, I sat back and just watched the bubble floating inside the “dead zone“.  When the SP500 e-mini reached the Pivot Point- R2 level @ 1327.50 resistance and started to roll off “the hill”, I bought back starter positions on TZA and SKF with stops below intra-day lows.

Like I said in my previous post, I’m refraining from buying any long position today because the price action is trading inside the dead zone.  My “personal” thesis is that this rally (and yesterday’s) is still a head-fake.  Since I’m still 87% cash (3% being peeled off to buy TZA and SKF) and 10% long-term hold; I’m basically in a “don’t care” mindset.  Meaning I’m neither overly net short nor overly net long.  In other words, I’m giving up the opportunity to add to my YTD gain in return for protection against giving back some of my YTD gain.

Yes, I think the right word is “indifference”.  I’m indifferent to current price action due to my interpretation of the “Dead Zone”.  That is pretty much the gist of my day action.   Like I said, I don’t have any power of precognition so I can be wrong as always.

Good Hunting!

Can you see the bubbles inside the dead zone?

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I can’t believe that in the last 2 days, the SPY daily chart is showing more than a chart pattern.   My eyes must be playing trick on me; but did you see the floater in the chart below?    Yesterday a dump; today a floater!  Yuck!

While today price action took out yesterday high, the overall trend based on the last 5 days is still down.  In order for me to be convinced that the bull is back, price action has to take out the high of last Friday (June 22nd).  Meanwhile, today gallant move of the bull is nothing more than another dead cat bounce.  Yeah, just like the one last Friday.

So far, yesterday and today price actions are trading around the 50% retracement of the low of June 4th and the high of June 19th.  You can see the dashed line (50% retracement) that cut thru yesterday and today daily bars.

The big question here is, “Will this support at 50% retracement hold?”

If it doesn’t hold, then that mean price action will have to break thru the low of yesterday.

The thing about using the Fib retracement system is that you also need to be alerted to the “failure” of the Fib supports and resistances.  A failure of the Fib retracement means those supports and resistances are not there anymore.  Thus, if the 50% retracement fail to support today and yesterday price action; I will expect the market to continue the downtrend to the next support level at 130 area (see the dashed red line).

In summary, although I got bumped out (again!) of my TZA and SKF positions today, I’m still not convinced of the bull taking back the helm.  While I’m surely missing out some of the bull run in some stocks, I consider the price range b/w yesterday low and last Friday high a dead zone.  Therefore, I’m now sitting on 90% cash due to my reducing some more of my long-term holdings.

Having only 10% exposure in the market and no plan to invest more in the “bullish” side inside the dead zone; I think it is time for me to stop and smell the roses so to speak.

Good Hunting!

Almost forget, can somebody FLUSH the toilet already!

Below is the SPY daily chart which I highlighted in red rectangular box the “Dead Zone”.  My interpretation only, of course!

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