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Archive for November, 2010

Yesterday Trading

November 30, 2010 Leave a comment

With the markets trading sideways yesterday between the 20 and 50 sma on the daily charts follow through is limited until price action can break through support or resistance level. Looking at the hourly chart we can see intra-day there are a lot of support and resistance levels that need to factored in trading decision and game plan.

With this being said, it is very important to focus your game plan on the best sectors and stocks to achieve the highest probability for follow through. Having strong trade ideas long and short will give you great flexibility to take advantage of opportunity in the choppy market.

Yesterday the majority of Keystone traders made money on the short side as the SPY pushed lower during early morning trading which was supported by a rising VIX and weak tick reading, but continued sideways into the lunch hours. The afternoon trading provide a good opportunity as the SPY pushed higher. The Euro was able to break out of it small trading range which provide a nice long opportunity in commodity stocks, which was supported by the rally in the markets.

What’s in the News

November 28, 2010 Leave a comment

Over the past few months the dollar has been on steady rise against most major currency pairs. With the debt crises emerging again with Ireland accepting bailout funds from the ECB and with the continued concern of the debt crises spreading to other European countries such as Portugal and Spain many investors have been flocking to the dollar and gold as a safe haven. The 10-year bond spreads of Portugal and Spain against the German bond are near their highest levels since the Euro inception. With the increased yield investors are demanding to hold Portugal and Spain debt against German bonds signals the lack of confidence the EU will be able to contain the debt crises.

The dollar has also been rising constantly against the yen over the past four weeks. As military tensions between North and South Korea escalated this past week putting increased pressure in the regions.

As we can see from the daily SPY of the past week price action has been trading sideways between the 20 and 50sma with the 20 sma as the resistance level.  From my perspective trading will be very limited until we are able to pick a direction above or below the simple moving averages to expect some follow through or trade ideas.

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Update

November 24, 2010 Leave a comment

Well the SPY did not hold the 20 sma on the daily charts. price action declined sharply during the better half of Monday morning when the new of Ireland receiving 90 billion euro bailout from the ECB was announced. This led to a sharp decline in the SPY while the dollar pushed higher against the euro, sending gold higher throughout the day and depressing commodities. We did recover most of the decline in Mondays afternoon trade, just to open lower on Tuesday morning with no real follow through in either direction throughout the day.

Even though we open lower Tuesday morning, it felt like the longs were playing out much better that shorts ideas. BRCM and ALTR both discussed in the Keystone morning meeting played out well through the morning. ALTR within the first 15 min closed above Mondays highs of 34.00 witch provided an solid support area for the next momentum move higher. BRCM had a similar story pushing above yesterday highs within the first 20 min of trading and continued to push higher failing to produce a lower low on the 15 min. chart until the early lunch period.

You did have to be patient with the stocks as bias was skewed to the shorts, but both of them showed relative strength as he market was declining within the first hour. Once the market selling subside both these stocks provided good momentum opportunity.

The next support in the SPY is 117.59 which is practically the same level as the daily 50sma. If price action breaks below these level it could fuel a momentum push lower

Looking Forward in the Week

November 22, 2010 Leave a comment

Looking forward this week, if the SPY can hold its daily 20sma would give me greater confidence that we trade higher to test 123.00 resistance level. With the Thanks Giving holiday coming up this Thursday I would not be surprised if there is light volume trading this week. With that said, it is important to focus on the right stocks/sectors and good risk/reward trade scenarios so we can have the highest probability of follow through for our trade ideas.

One stock in particular that I will be watching is LVS, which seem to want to re-establish its trend to the upside. This past Friday price action traded back and held above the daily and hourly 20 sma. What does concern me about a potential continuous move higher is the increased volumed that occurred with the pullback over the past two weeks. The higher volume could be a forecast that the sell off could continue further.

I am also looking for the oil services sector to continue higher, particularly XOM and HAL.. Both of these stocks have been very strong in the last few weeks. I am looking for XOM to test the 72.00 resistance level and looking for HAL to continue to make new monthly highs. Both these stocks have strong hourly charts to support the strong daily price action.

Chart Talk

November 15, 2010 Leave a comment

 

Todays morning price action was a bit uneventful as the market did not follow through in one direction. Coming into the day I was looking for XOM, HAL and JNPR to continue there strength from last week and push higher. When the market opened, JNPR immediately started to push lower.The first level of support was on the hourly chart near the 35.00 level; because of how strong JNPR was at the previous week I planned on entering the first swing low on the 5 min chart.

Generally this setups provide a good risk/reward. Friday highs was the first profit target and possibly looking for a move higher. We can see on the chart below JNPR formed a swing low entry. Unfortunately the trade did not follow through as the SPY was breaking below 15 min ORB, ended up taking a small lost. But the setup was a great idea which provided great risk/reward and should be taken ever time.

As we see on the HAL chart the exact same idea/ trade setup (strong stock, weak open, swing low entry) worked out great, providing a nice .40 cent trade going into the lunch hours.

The afternoon trading was a little easier because we had a nice sell off for the last few hours of the day. ABT provided a nice short trade in the morning with 15min ORB and in the afternoon with a breaking the morning lows of 48.45 for about .30 cent.

$RIMM in Play

November 10, 2010 Leave a comment

Coming into today Research in Motion(RIMM) was on my radar.  Some news had come out in the pre-market about the pricing of its tablet computer.  The news basically said that the tablet would be priced below $500 which would make it a cheaper alternative to the iPad.  The pre-market wasn’t showing much in the way of price action but I had RIMM on my watch list to see how it would react to this news. 

Immediately on the open RIMM showed some strength, basically trending higher for a $1.50.  The first level I was watching as potential resistance was 56.60 which was the highs from 11/08.  We broke this level in the first 15 minutes but this was where your skills as a trader must come in.  First of all the stock had just run for over a point so odds are pullback or sideways consolidation was to be expected.  Second the open in this market lately has been a chop zone with a lot of volatile sideways action.  For about 2 months now, in our morning meetings at Keystone, we have talked about the better opportunities presenting themselves after the open around 10-10:30am. 

After the open I knew I wanted to get involved in RIMM.  The market was showing weakness especially in the tech sector and RIMM was staying relatively strong.  It was only a matter of waiting for RIMM to consolidate and finding a good area to manage risk.  I entered during the hour-long consolidation pattern and added on to the trade when it broke the high of 56.81. 

As you can see for the rest of the day it was just a matter of how much you made on this trade.  Personally I missed about .70 in middle of this trade because I covered the entire position around the resistance at 58.00 instead of holding a piece.  I got back in on the next break out but left some money on the table.  Coming into tomorrow I am expecting RIMM to still be in play as this is usually a stock that trends for a few days after a news related break out.  The 200ma is at 59.50 but above that could see a trend into the 61-63 area.  Best of luck in your trading and have a great night. 

Kyle

ALTR and EBAY

November 9, 2010 Leave a comment
Yesterday was a very lack luster day in terms of the market price action. Looking in bigger context we can say its a continued pause after the up trend day we had Thursday after the FED announcement. While today was not the easiest day to trade, a few Keystone traders were able to take advantage of morning price action in a few stocks.

ALTR in the morning came out the gate pretty strong, within the first 15 min it traded and closing above Fridays high. Entering the stock was a bit tricky as there was only a small pause right before the 15 min ORB. After the break there was no real identifiable pullback on the 5 min chart. Therefore the next possible entry would have been a 15min foundation candle break. The stock had a strong momentum move for about .50 cents out side of the ORB.

Another stock that opened up promising but was not able to follow through was EBAY. Similar to ALTR within the first 15 min the stock was above Fridays high. I actually took an aggressive entry in this stock entering after the first 5 min close above Fridays range near the 36.00 level using Fridays highs of 29.90 as support. The price action was able to follow through for the next 5 min but subsequently came in as the markets (SPY) was breaking below it’s 15 min ORB.

Not giving up on the long idea, the next trade was the first swing low on the 5 min chart looking for new highs in the stock. Which was actually very close to my first entry and the support of Fridays highs (as you can see on the chart below). Even though the stock has able to briefly make new highs, the price action came right back into the morning range and break down into Friday price action, which stop the intra-day long idea until price action was able to hold new highs (which is never did)

 

 

 

Categories: Uncategorized