So I have been in the financial field just over 10 years now. For my first year I worked in a branch office opening new accounts for customers, taking deposits and answering any questions that they may have had about their balances, trading or transfers. For my second year I worked in the 401k department for a large mutual fund company. I pretty much did the same thing but I was on a computer and phones, not in front of clients. I worked behind the scenes.
I really wasn’t into trading as much back then, I was learning. I was learning about the market and I was studying for series 7. Which if you don’t know is the craziest test you probably will ever take. More than half the information you study you will never use in this line of business. But it is cool to pull something out of the back of you head and say, “did you know?”
After that adventure I stumbled across a software company that made a trading program for the stock market. I wanted to know more and I wanted to trade. So I applied for the job and over the next couple of years I learned to actually trade the market and use a very simple program to accomplish my goals. For the next 8 years this was the only tool I ever used to trade. No Fibonacci, candlesticks or Bollinger bands. No SMA’s or EMA’s. I didn’t need them.
Fast-forward to present day.
So now I’m now learning how to use Fibonacci, candlesticks, SMA’s and EMA’s. Joy!!!!! There is nothing more satisfying than having to use all these tools to figure out what I already knew. But at least I know now “why” my previous software charts did what they did. I know the mystery behind the lights and charts. It kind of reminds me of the Wizard of Oz. I must say that it has been very educational and I am learning a lot. I have been kind of hesitant in wanting to learn new tricks because the old ones worked so well and have never failed me. But I have always told my clients that an educated trader is the trader who is going to be the most successful in his/her trading.
So on one hand I am a hard headed and don’t understand why you would want to reinvent the wheel, but if it can be a safer more efficient wheel then I think it is well worth the effort. So I am taking my trading knowledge to the next level and I am sure I will come out the better trader.
Just remember, never stop learning. Improve yourself and improve your returns in trading by investing in yourself.
Today's trading did not show much conviction. The 1100 ceiling seemed to be too much for the S&P 500 today. Why would that be after such a bullish day yesterday? My Italian trading friends the Fibonacci's might have something to say about it. If we measure the January 19th closing high of 1150 vs. the February 8th closing low of 1056 you have a difference of 94 pts. The 50% retracement of this bearish move would take us back to 1103 and change. If we measure intraday highs and lows we end up using the Jan 19th high again of 1150, and the Feb. 5th low of 1044. The difference there is 106 pts. The 50% retracement of this level is found at 1097. The S&P 500 closed today at 1099 which is right in the middle of the two retracement levels. Ultimately, picking a direction from here would be a coin toss for me except for the fact that almost every chart I look at seems to either be over sold on the stochastic or nearing that level. I guess we will see what tomorrow brings.
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As most of you know the VIX has traded up ten points in the
past month. That may not seem like a lot
until you consider that it started at about seventeen. The rise in the VIX is a sign that fear is
entering back into the market. The ATR
on the DOW is 141. Are you kidding
me! That’s huge. Sometimes up, and sometimes down. Above
10,000, below 10,000, above, below and on it goes. No wander fear is back – there is no
consistency. So how can we take advantage of this
chaos? If you are a Dow watcher, make a
change to the S&P 500. Yogi Bara
once said “You can observe a lot by just watching.” When it comes to the S&P 500 it is
true. I was just having a conversation
today with my “Trade with Me” class in which we were discussing the market’s volatility. I suggested that with the futures pointing
higher today we would have a pop initially but the S&P 500 was showing an
awful lot of congestion (resistance) at the 1071 range. The market opened and of it went – right through
10,000. The S&P did run up and it actually
made it to 1072 but because we had spent some time with the S&P chart
before the market opened when were watching for the fade around 1071. If my eyes were on the Dow I might have become
infatuated with the Dow above 10,000 but instead we held steady and the S&P
500 guided us through the market swing. Before
I make a trade, even if the stock chart looks fantastic, I always confirm the
move with the S&P 500. I think of
support and resistance levels on the S&P 500 as my “Market GPS.”
Follow up – Just after I wrote the information above, the S&P launched over the 1071 to a high
of 1079.28. I really did not expect this
to happen, but once the index broke its resistance (1071) I had a pretty good
idea where support now was (1071ish because old resistance often becomes new support). As the day progressed, the S&P500 has
worked its way back down to either side of 1070. If it holds the 1070 mark today, I would
think chances are good for a continuation of the rally. If it closes below 1070, we may be looking at
another downside reversal for tomorrow.
I will be watching my “Market GPS.”
I am sitting hear in my mancave watching the S&P 500 move from 1099 to 1100. From 1100 to 1099. How exciting! Yesterday I was totally confident that we were heading down after the "dead cat bounce," but here we are up 85 pts on the DOW and 11 on the S&P 500. Mayby the cat is not dead yet. I went into my charts and happened to notice an interesting picture. Back on October 19 2010, to S&P 500 topped out at 1100. The following day the high was 1098 and the day after that the market made one last charge to 1101 and then reversed course to the downside eight days before bottoming on November 2, 2010.
More recently the 1100 number has come into play as well - Like today! January 27th, the S&P ran up to 1099 and then retraced back to close positive for the day but off the highs. On January 28th, the S&P ran up to 1100 and backed off to close negative for the day. The market dove pretty hard for a couple of days down to 1071. Currently, the market is, as I mentioned earlier, at 1100.
If we were to put the pieces together we would notice the once we decisivley broke above 1100 December 22nd, that level became new support. When we broke through that support on January 22nd (30 days later) it has become new resistance. Here is my thought on the cat. If the S&P 500 does not close above 1100 today, the kitty may not come when you call it.
We started February off with a kick with the market up over 118 points going into the close. BRK.A has been a big mover since the stock split a couple of weeks ago. Yesterday we got a pull back for a possible entry long today; we just have to let the charts set up for that potential entry. The market is flipping back and forth from positive to negative this morning at the open looking for some sort of direction. I have been keeping my eye on Sirius Satellite Radio (SIRI) as it has been making some moves over the last couple of days fueled by upgrades and other news. Sirius made a new 52 week high this morning. There is a look at some stocks that have been making moves over the last couple of days, remember to do you own homework before you buy any stock and make sure its right for your investment goals.
