Charts Of Interest

Just a quick charts of interest to start the week. Q4 earnings kick off, so it is going to be very interesting to see. I am hitting the earnings with options on certain stocks that I have on my watch list. I am already well above my monthly target of 10% so just taking it easy. I trading on the road at the moment. I know, watch out for cars :). I will be trading and travelling much more. My goal is to trade and travel much more.

I was just listening to this great interview on Chat With Traders. It is really worth listening to. Day trader talks consistency, strategy, volume • Mike Katz. He is a day trader, but he talks about trading principals that apply to every trader. He confirmed what I thought, that people will not use my trading method the way I do, no matter how I show it. They will try to learn, but it is much better to help people to find their own way. He talks about his edge or what I call the secret sauce.

I have a couple of months left until my blogs domain registration expires and I don’t plan to renew it. I enjoy writing this blog but its time to move on. I tried my best since 2012 (starting on my old blog) to show what I do.

VTI weekly still holding up well. Now 22% above the mth kijun sen.

Bitcoin daily at the 100 day MA and weekly kijun sen support, a very key level. Everyone is saying crypto’s have crashed. Most of these people have no trading experience. This is a standard correction. I always said these crypto’s are not suitable for investing, they are good for short term trading like what I do. People ask me where is it going? I say you would have to ask the people on twitter, they have all the answers. It’s going to 100,000 by then end of 2018 right? Who am I to argue? Just remember, “price is what you pay, value is what you get”.

FTSE day retracing after a strong breakout.

VIX daily testing resistance.

DXY weekly will close the week below support. Some say this is a controlled devaluation of the dollar. China is certainly showing concern about it.

TNX daily 10 year yield on the rise.

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EURUSD Trade Study

This is the next update of this series. Most people I show my trading method to, are not getting it at all, so I am going to try doing a video that follows the price action over time and how I trade it. It will be like a time-lapse type of thing. I am going to post the charts here on my blog as well as I collect them for the video. It’s all exactly the same for stocks, forex, commodities, crypoto’s.

EURUSD 4hr chart. Currently we have a consolidation like at point 3. Point 4 the trade was stopped out. Price either hits my alert to the upside or it hits my stop. The MACD is crossed down so not likely to see a breakout. This is the if/then process that I talk about all the time.

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Volatility Watch

The short volatility crowd is quietly moving to cash but not in any meaningful way. Volatility is increasing at the same time as stocks. This is due to the implied volatility in the options market. A lot of the risk indicators are very over done. All you can do is watch as it develops. I just follow my method and take it a day at a time. It will position me where I need to be.

SVXY inverse short volatility ETF. Watching for a weekly close below supertrend.

VXX is still a long way from the kumo. A break above the daily kumo will likely signal some significant downside in stocks.

VIX daily back above the kumo.

Nasdaq VIX is within the normal range. A breakout of the range will be a warning signal.

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Gold Silver Copper Oil

Just a quick look at what is going on in the four main commodities. Very important to understand these four because they can tell you a great deal about what is going on in the global economy.

Gold has been up quite strongly compared to he amount that USDJPY has fallen. Early days for gold yet.

Silver weekly is back above the kumo.

Copper weekly has been up along with the U.S. ten year yield on rising inflation expectations.

Oil weekly is holding the breakout but the kijun sen is lagging a bit. Could be it retraces back towards support.

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EURUSD Trade Study

Most people I talk to, think trading is a matter of coming home from work and sitting down at the computer for a couple of hours and trying to guess where something it going. You will never learn to trade that way, if you just try to guess where to enter and exit. You must use a trading method of some type. I have never seen a trader make money by just  guessing. I am going to do some of these studies looking at trades for the few people who are using my trading method. I don’t know how to get people to see what I do. To me, this is the easiest thing ever now, but it did not come easy to me at first, it took me a lot of work to get to this point. If you don’t put the work in, you will never succeed at trading.

Back to basics. See if you can understand what I am going to do next on this EURUSD pair. I will follow up when with point six. See how you go. Write down your answer and compare it to what actually happens.

This is pair trending daily/4hr/2hr on my method.

EURUSD daily. Number five is the current long entry. Note that price is wide of the flat kijun sen. The kijun sen is the most important thing to understand. (Remember, the kijun sen acts like a magnet, but if momentum is strong the kijun sen can turn up. We don’t guess, we wait for the confirmation.)

EURUSD 4hr price is also wide of the flat kijun sen. Can you see where I would have my stop on this chart?

EURUSD 2hr also wide of the kijun sen.

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SPX v JNK

S&P 500 has had a strong breakout of the uptrend resistance to begin the year. Last week junk bonds turned a bit soft while stocks pushed higher. Have to just see what happens here. The market can turn very sharply with the threat of bond market jitters. I would like to see a good 10% correction and then move higher into the end of the year.

SPX v JNK daily junk bonds were not able to break above the key resistance last week. If JNK drops back below the blue 15 MA it could put the brakes on the stock rally.

SPX weekly with some key retracement levels. I would like to see a good retracement back to the 50% Fibo at 2322 but there is nothing to suggest it will yet. VIX would have to get above the red line at 17.5 which is a long way above where it is now at 10.

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Crypto’s Update

Just a quick crypto update. We had the Korea FUD last week. This is a good opportunity to see which ones reacted to the panic and which ones had not much reaction at all. The projects that have stronger holders and didn’t show much reaction, are the ones that I like. There are heaps of interesting developments coming out in the space this year. People are asking me what is suitable to invest in long term. I don’t recommend investing in any cryptocurrency long term. Speaking from experience, these speculative products are only suitable for short term trading. Everyone is an expert on the way up, but on the way down not so much.

I was asked what are my top ten cyrpto’s. This is my current top ten below but this can change very quickly. Not to be taken as trading advice.

Ethereum is going well but you would not add on that pullback last week because it is too wide of the kijun sen.

Ethereum Classic range breakout.

Veritaseum holding support

Bitshares pulled back just under support.

Neo very nice not much reaction to the FUD last week.

Iota is in consolidation under resistance.

Lisk in consolidation on support.

EOS range breakout.

Litecoin in consolidation.

Lumen in consolidation.

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Small Caps

We still have some nice momentum in small caps. My allocation to small cap stocks is quite large but I am ready to move to cash at a moments notice. I don’t get married to any stocks. With the larger caps, I am trading them mostly with options. My stock portfolio was fully allocated by the end of last week. I don’t trade with scared money. If I did not have conviction, I would not be in any trades. I rely on my trading method to guide me based on my journalling records. In recent years I have been focusing on consistent results, the rest has looked after its self.

RUT weekly small caps index is full bullish but it is 24% above the monthly kijun sen so this has to be monitored closely.

RVX weekly small cap VIX is still in decline. Will monitor for any change.

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Materials

The materials sector has been going off the hook and I believe we are just seeing the beginning. I trade by sector, not by what the overall market is doing. I can be long stocks in one sector and short stocks in another sector at the same time. Where the overall market is going to be in 12 mths time is of no interest to me whatsoever. I am going to be looking at some of the main sectors that I trade.

I have been building my sector watch list for many years. All of my trades come from my watch lists. I never trade a stock unless it spends time on my watch list first.

Materials kicked off in early 2016. The sector never even blinked in 2017. I search for stocks that produce these materials and I add them to my watch. This is what I spend 95%  of my time doing research for my sector watch lists.

Gold and silver futures loves rising inflation. I hold physical metal as well as trade in gold and silver producer stocks.

Copper futures love inflation.

Aluminium a couple of good up-legs in 2017.

Uranium looking for a breakout.

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New Paradigm or Same Old?

This post is just me thinking out loud. I like to look back on my posts and see if I was on the right track with my analysis, or if I was way off, and if so why. I like to look at what happened in the past to see if there are any similarities that might give us some guide as to what to expect in the future.

These are a few charts that I will be looking at this year on an ongoing basis. If this is a new paradigm in the bond market, then we will likely see some very large rotations in most assets classes. Every time yields rose too sharply without the inflation to back it up it has not ended well for stocks and there has been a sharp reversal. We don’t want to guess what will happen. We want to let the evidence guide as as it unfolds. Just take it a week at a time, but know what the warning signs are. The warning signs will always show in the bond market first.

TNX mth showing the key level to watch. When a crisis starts, it is very difficult to see at first. It all depends what the Fed does with rates this year.

SAGG weekly is a bond bear ETF meaning you go long this ETF if you are bearish on bonds.

JNK mth is just in a consolidation. Nothing too alarming but it is important to watch the spread between junk and investment rated bonds.

TLT mth 20+ years bond ETF is still in uptrend. Have to watch this trend line.

TIP weekly is an inflation indicator. As you can see it is very flat. The Fed should not be raising rates aggressively this year. If they do there will be trouble.

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