Archive for December, 2008

Day Trading Technical Analysis

December 24, 2008 Leave a comment


Day trading Technical Analysis: 

The markets are in holiday mode with light trading and volume. If you are trading during the holidays you need to be nimble and take profits when you have them.   Most of the indexes have broken above their 50ma. This was a great sign however they could not hold this key support and now are drifting lower and are now below their 20 ma.   

Below are some key levels  to look for:

S&P Daily chart lost the uptrend line and is clinging onto the 20ma. Key support would be 857 – 851   and resistance would be 890-918 .  I decisive break in either direction need to be respected.

SPY Daily:

Is at the lower end of a rising channel.  Horizontal support can be found at 85.5.  Next horizontal support can be found at 81.20.

Here are Fibonacci levels to watch for:  00.0% – 74.37 ,  38.2% – 96.31,  50% – 103.09 ,  61.8% – 109.87 , 100% 131.83


 QQQQ Daily:

Q’s is at the lower end of the rising channel and it is clinging to the 20 ma. Support can be found at 28.75 and looks like it will be tested.

Here are Fibonacci levels to watch for:    00.0 % – 25.77,  38.2% – 34.49 , 50% – 37.19 , 61.8%- 39.89 ,  100% – 48.34



I noted in previous  post to keep an eye on the US Dollar. The dollar has rebounded after it’s sell off and  has caused equities to sell off. It looks like from the daily chart the dollar may be topping out at around 81.50 area.  If we see the dollar start to retrace lower this would put a bid into the equities markets and commodites.  Great way to watch the dollar is looking at the etf  UUP. 

 Wishing all a safe and Happy Holiday Season!

Quote of the day: “Remember that stocks are never too high for you to begin buying or too low to begin selling”

Jesse Livermore

Keep in mind the trend is your friend.  Have a great day!!




Categories: Uncategorized

Holiday Trading….

December 23, 2008 Leave a comment

In between Holidays after such a high octane year all traders need a break. The Vix has settle below 50, currently at 43, still very high historically but much better than the levels we have been seeing. The markets need a break, and so should traders. This year has been amazing in many ways… as intra day traders we need to learn from these events especially the speed in which events occur, so that we can take advantage of the markets once the volatility settles down.


Less volatility means more orderly order flow, less guess work. We need to recognize when we have an edge and when we don’t. Too many times we see traders enter a position for the sake of being in a position, or when we see a trader enter the most volatile stock in that moment… All the trader is telling us is the lack of discipline and the inability to do nothing when there is no edge. Trading volatility is almost equivalent to throwing a dart and hoping you hit the target. That is not a way to make consistent money.


During the Holidays recharge your batteries, get ready for next year, and write a plan. In our morning meeting today Pete said that we need to be prepared and get ready for next year. Somebody once told me that “luck is where opportunity meets preparedness”, there is no such thing as a consistently lucky person, only somebody who is prepared and ready to take an opportunity when it comes his way.


All the best for the Holidays and may Santa bring us patience…


December 22, 2008 Leave a comment


Categories: Uncategorized

FOMC Trading

December 16, 2008 Leave a comment

We started the week on very light volume and a couple of inside days, meaning very tight trading ranges, even the volatility index has been coming down dropping down to about 52. FOMC Tuesday comes along, and with Fed rates already at 1% the expectations were for a 50bps to 75bps cut in rates. You wonder how much of an impact monetary policy will have on these markets at these levels, only the announcement would let us know. What an impact we had… the announcement came in and right from the start we started seeing large buy orders hitting the system. Almost 100 million shares of QQQQ traded in the last two hours, 150 million of the XLF traded as well, every pull back in the market in the afternoon was a long. Traders had to be reminded that you never test a trending market, meaning if the flow is positive and strong, don’t look for a short. Those that did got burned.

The large volume that we got in the last two hours plus the fact that we closed on the highs, will make tomorrow very interesting. We have seen that over the last eight trading days, negative news has not really resulted in a major sell off or a test of lows, we also know that hedge funds and mutual funds have been sitting on cash scared of redemptions. For now all these factors and today’s news has send us off to test monthly highs.

Today’s lesson is very simple for intra-day traders. Trade with the flow, and never get married to a position. Do your homework overnight and be prepared for an interesting day tomorrow.

Success or Failure

December 14, 2008 Leave a comment

A common question we get during our equity trader open house presentations is : How many of the traders’ that go through your program become succesful?

A good question, yet one that is not so clear cut. Industry statistics will show that anywhere from 90-95% of the individuals who enter the trading business will fail and lose their money.  Why is that number so high?  Well there are quite a number of reasons why. The first reason is that they start to trade with no thought to a trading plan or a business plan.  In other words they roll the dice and hope for the best.  However, even if you enter with a solid plan, it does not guarantee success.  Do you have the discipline to follow the plan?  In many cases the answer is no. Having a plan is worthless unless you maintain the discipline and follow the rules that were in the plan.  One of the other greatest reasons for failure is to be undercapitalized, in other words you are trading scared because you can not really afford to lose the money that you are risking. Lets say you have a plan, you are disciplined to follow it and you have capital to risk, does this assure success?  of course not, these factors will help you, but now you must see how you react when you start to have losing days. do these losing days effect you when you get home at night? do they start to rattle your confidence?

When trading with Keystone, many of these hurdles are removed. Our Equity trader 101 course is a trading plan, as well as a business plan. Once our traders start to trade, we instill discipline in them by monitoring their trades and having intra-day stop losses in place. We make sure that consistency must come before excessive risk is taken.

When interviewing potential candidates to trade our capital, we always look for hungry , driven individuals who we feel have the confidence to be successful as a trader.  Unfortunately there is no perfect science for this. For example, we hired a young gentlemen who had previously been a stockbroker, after 2 weeks of trading, we received an email with the subject line  “raising the white flag”.  Apparently, he had a few losing days in a row and he was emotionally not able to handle it.  This business will test your emotions. Can you step up to the plate and instead of getting knocked down, get up and be more determined to succeed.  If so, then you will indeed be a Success in the world of online day trading!


Day Trading Technical Analysis

December 12, 2008 Leave a comment


Day trading Technical Analysis: 

The markets were range bound most of the day until the last three hours when selling accelerated.  After all said and done the Dow and the S&P lost 2.5%. Futures are down big this morning.  Important thing to note for is the gap down in the morning will buyers come in and mark the low of the day or the selling continues and makes new lows.

 I noted that the Dow, S&P and the Nasdaq all broke out of there downtrend line and were approaching their 50 ma and are now pulling back.  Watch the existing downtrend line as support to see if the markets can hold.

 US Dollar formed a wedge pattern and has stopped and the bottom of that pattern.  This made commodities and stock move higher.  Continue to see the action of the dollar during the trading day. The relationship continues to be stronger dollar weaker equities and commodities and vice versa.    

 Below are some key levels for your review.

SPY Daily:  The spy broke above the downtrend line and stopped at resistance of the 50 ma. With todays action in the futures the downtrend line will act as short term  support. 

SPY Daily Fibonacci levels:  100% – 100.78 , 61.8% – 90.68, 50% – 87.56 , 38.2% – 84.44 , 00.0% -74.34


Dow Industrials:  The Dow also broke out of it’s downtrend line and stopped at the 50 ma. Support is the down trend line at 8421. Dow futures are indicating a breach of that support.  Next support comes in at the 50% retracement of 8235.



Quote of the day: “Remember that stocks are never too high for you to begin buying or too low to begin selling”

Jesse Livermore

Keep in mind the trend is your friend.  Have a great day!!







News and Order Flow

December 9, 2008 Leave a comment

I have always told traders that they need to know what is going on around them in terms of news and information that can impact the markets. Traders can have an opinion as to what a news item may impact the price action of a stock. That is ok, until you get married to your opinion and get stubborn. As a trader the Order Flow will be THE most important variable that will make you money or take money away from you.

It has been very clear since last Friday’s horrible employment numbers and the rallied that occurred, followed by a continuation move on Monday despite plenty of traders opinion that we should head down to test recent lows, that the order flow will always trump opinions. What this is telling you is order flow will dictate where the market is going to go, sometimes negatives news is already discounted in the market, so we actually see a rally after negative news are announced. You need to go with the order flow, despite what the news or your interpretation of the news is.

Another example of this was last nigh when various companies reported lower guidance for 4Q earnings as well as 2009 earnings estimates, TXN NSM FDX, were some of them. However from the very start of the day, SMH the semiconductor index showed positive order flow with strength and volume started from early in the morning. Both TXN and NSM traded higher for the day, despite starting the pre-market with large losses. The sector was so strong that it carried with it many stocks in the NASDAQ including CSCO and INTC that most traders were able to enter into longs following the positive flow in the sector.

This is the sort of order flow that an intra-day trader needs to jump on. We need to learn to stay away from mixed signals and lack of clear order flow, and wait for the moment we have an edge in.