Archive

Archive for the ‘Chart Talk’ Category

Intra-day movement (VIX)

December 9, 2010 Leave a comment

Today’s markets seemed like a case of deja-vu from Tuesdays price action as we open near 52 week highs and sold off for the remainder of the morning, finding some support at yesterday highs. And similar to Tuesday trading it was difficult to initiate long with a high probability of follow through but we could not short aggressively because of the overall strength in the markets.

In the afternoon we were able to hold support at Wednesday’s high and started to make a run back to test session highs near the 124.00 level. Which provide some interesting long opportunities in stock that have been strong throughout day, such as BBT, MET and COST (from Keystone stock list).

As far as trading goes the VIX did present good clues as to markets direction. As the VIX gaped lower on the open (coinciding with the market opening at its highs) we subsequently pushed higher, but could not continue lower as the VIX tested and held its first 15 min support area giving legs to the continued uptrend (bearish) through out the the morning session.

As we look at the afternoon session the VIX had the same type of move, just on the long side. As the afternoon continued the VIX formed lower and lower swing highs giving way to the afternoon rally. Even though the SPY and the VIX opened and closed near the same level, paying attention to the directional movement of the VIX could have resulted in taking advantage of some intra-day movement in this very stock specific market.

A few things I did notice in the markets today was the relative strength in the financial sector and weaker price action from the technology (specifically semi-conductors SMH) and the energy sector, which could be the beginning of leading sector rotation (but we need more time to see if this is the case). If the financials with tech and energy could start to push higher consistently I think we will have no problem getting above the 124.00 resistance we have in the SPY.

Todays Markets 12/07/10

December 7, 2010 Leave a comment

Trading this morning was difficult as the SPY gaped higher above yesterdays trading range make new 52-week highs around the 124.00 level. While the longs have been the better trade over that past few weeks in this strengthening market, it was important to be patient during the open and wait for the proper signal to execute trade ideas during the first pullbacks, due to the near one hundred point gap higher at the open. Unfortunately as the morning pushed forward the markets continued to push lower making it harder to justify longs and to distinguished between risk only trade and trade that actually had a high probability for follow through.

On the flip side while long were not working out it was difficult to load up on shorts due to the recent strength in the market during this past few weeks. While it was prudent to wait for conformation on short ideas this could have resulted in missed entries and difficulties managing shorts.

In the afternoon trading we started to make a move to the highs of the day but could not hold the rally as we sold off hard into the close breaking lunch time lows and closing inside yesterdays trading range. In the markets today we did not see performance from the energy or technology sector which has been pushing the market higher. Both the oil service (OIH) and the semi-conductors (SMH) and its components has unenthusiastic performance in today’s trading.

A few trade ideas that worked out well for Keystone traders today was a short in United Airline (UAL). A short below yesterday lows was the entry area as we were below the 15 min ORB and below the 50 sma on the daily charts, which provided momentum as the stock pushed lower. The stock traded a dollar-plus below the entry area (shown in the charts below). The price action also provide a great exit signal in form of exhaustion on the five minute chart with the huge increase in volume near the 25.50 October support area. This increase in volume was a perfect clue to tighten stop or get out of the short position altogether.

Market Action

December 2, 2010 Leave a comment

The SPY had a strong buying yesterday as we broke above two week trading range, closing above the daily 20 sma resistance level.  Good economic data out of the U.S. with the FED Beige Book reporting improvements in the manufacturing sector and good global economic data help support the market rally.  If SPY price action can hold above 20 sma and not fall back into trading range the next move is to test the November highs of 122.95. 

The technology sector did well in relation to the semi-conductor space as many of the major components of the SMH had strong buying during the open. ALTR presented a good momentum long in the morning trading coming off a pullback on the daily charts.  The price action gapped above yesterday’s highs and immediately continuing higher on good volume, with the 15 min chart creating higher high into the lunch time period. 

Commodities moved higher with the Euro bouncing off its daily 200 sma sending the dollar lower.  This resulted in the oil and oil service sector to continue higher with BHI, HAL, and SLB making new monthly highs and XOM trading back above it 20 sma n the daily charts.

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.

LVS Long

October 27, 2010 Leave a comment

Today’s markets action provided some good opportunity during the morning trading, but as always you had to be ready and focus to take advantage. In has been tough trading from a market stand point as the indexes have not cultivated an environment of confidence in one direction intra-day.

Today I want to talk about long trade setup, that provide good risk/reward and show how developing trade ideas on the higher time frames and sticking with thoughts ideas will provide conviction and allow your p/l to light up green.

The trade is LVS, as we can see on the daily charts that the trade is undeniably a long, but prior to today’s price action over the past weeks the longs have been a tough trade(as we can see on the hourly chart). So being the best trader we can we had to be patient and let the price action establish itself to the long side before we could trade this stock with more confidence.

Well today we got the price action once we were able to breakout above 39.50, which was a strong resistance during previous weeks trading. We can see on the 15 min chart that once the price action was able to hold above the resistance and close above yesterdays high the stock exploded higher for about a one dollar profit.

 

Breakout Trade $RIMM $$

October 26, 2010 Leave a comment

Day after day we as traders are in search of opportunity.  I have many conversations with traders who complain at the end of the day that this market is void of good trades.  They complain that there is only 30 minutes to an hours worth of good trading a day.  The problem these traders are having is that they are not in the right stocks.  The majority of our time should be spent looking for stocks that are going to move plus be readable. 

Today was a perfect example of being in the right stock.  The market as a whole was flat and basically trendless on the day.  Even though this was the case I ended the day thinking it was an easy day.  Why? Because I was in the right stock. 

On the open today there was one stock on my radar, Research in Motion (RIMM).  The previous day RIMM traded very well, with volume, and closed strong.  I was watching the stock trade in the pre-market and right around 915-920 RIMM started to show some strength on the tape.  My game plan was to get long around the previous days high.  This entry triggered at 933 and I got long.  This was the definition of a breakout trade as I was booking half of my trade for a point within 6 minutes.  The reason I booked is the market lately has been retracing opening moves only to resume them later on in the day.  The correct way to trade this breakout was to book some of the trade in order to manage risk.  RIMM ended up pulling back a bit but was still exhibiting strength on the tape so I added back in around the 53 level.  As you can see from the chart this was a good idea as I got another point out of the trade before exiting most of the trade during the consolidation of the move around 1030-11.  I reentered the trade when volume picked up at the 55 level and the bid held after the break.  I got a quick .90 on this trade before I recognized exhaustion coming and exited.  The tape started to get erratic and I knew this was the time to get out as something was changing about the way RIMM was trading. 

The key to this trade was that I was ready for it.  I had a game plan and the plan executed.  Many traders spend their time complaining about moves they missed or trades they mismanaged.  The reason for this is that they don’t have a good plan about what they are going to do.  Spend your time developing trade scenarios and spend the market hours executing your plan.  Best of luck in your trading. 

Kyle

Up, Up and Away (The Breakout)

September 30, 2010 Leave a comment

Today CHK (Chesapeake Energy) had a great breakout trade unfold that generated great profits if anticipated and traded properly. Looking at the daily chart we can see how the trade scenario is developed. Over the past two to three weeks we can see a clear resistance level around 21.80 for the stock. Ever time the stock approached this level seller came into the market and pushed the stock lower (creating a reference point a trader could expect volatility once the level was broken.)

What makes this trade so attractive (and a must take) is the profit potential compared to the risk taken on the trade (the trader has a solid reference point to determine if the trade is working out, which is the 21.80 area). As we see on the charts below once we broke and held above the 21.80 the closest resistance area was the 21.50-21.60 range (giving the trader a reasonable profit target to aim for if the stock generated some volatility.)

The most important thing here is not the follow through on the trade but the concept of how this trade idea is developed and the reasons why you would want to take a trade like this very time it unfolds.