Removing the Human Factor is Not Total – Part I Chart $GC

I start with an apology for missing very consistently my own objective to post on a more frequent basis.  Amazing how easy it becomes when “I” get in the way of achieving “my” objectives.  In my own defense, I have been working diligently on the MJF1 Partners’ auto trader.  I’m excited to bring it to the LogicalSignals Trade Room where I’m already testing it in real time.  The results are exciting.

NormalVariableRandomI have often stated, “If you can’t beat ’em, join ’em.”  In doing so I’ve had to quiet more times than not the “trader” in me.  Why?  Because the trader has emotions and emotions can interrupt the decision processes, by hesitating.  Computers, on the other hand, don’t hesitate.  They have their marching orders and execute them.  As “traders” we need to understand that there are a myriad of algorithms in operation firing off orders at all times conceivably in all traded markets.  Add to that the myriad of strategies that are at play via the myriad of algorithms in operation firing off orders at all times conceivably in all traded markets.  Get the picture?  To be successful in trading  you really can’t care about the “who, what, where, when or why.”  Remember it’s only a number.  And many relevant numbers are being processed simultaneously and disseminated to massive amounts of servers across the globe operating algorithms written by MIT graduates.  The amount of $’s flying around the world in need of a temporary resting place is substantial.  And at the moment, the sheer volumes bring opportunities some will say come every 4 years as the battle for political control in the U.S. continues in a perpetual state of transition.  Having the right mindset has become critical to succeeding. Getting caught up in all the hubris taking place within the current election cycle is important to pay attention to, but don’t fall into that abyss.

binaryeventI don’t have an opinion of the markets that I choose to trade.  For the most part,  I’ve stopped thinking about the necessity to understand what fair value for the underlying should or shouldn’t be.  I think of “cents” instead of the “dollars” and the probability and random variable theory as measured by volatility.

As I’ve previously discussed, anticipating versus participating becomes heavily favored towards participating.   Opportunities are abundant across a wide variety of tradeable markets and are likely to remain in their various forms of “transition” through the balance of 2016.  It isn’t easy to just step into a market that you haven’t traded before based purely on computer generated signals.  But when trading in tune with the volatile price swings, the rewards are extremely encouraging.  While there are “traders” in all of us the concept of “removing the human factor” can’t be total.  The input will always be traceable back to a human being. Therefore, I’ve had to embrace the 21st century and abandon the reality of the trading floor and accept the realities of a virtual trading floor, which is, for the most part anonymous.

I am resolved in accepting the direction that my trading has taken  by shifting from primarily trading options to primarily trading futures.  Since I’ve kept close tabs on the “economic pecking order” and with, interest rates sitting at the top from which everything else flows into and out of,  I’ve been able to get comfortable trading futures.   Currently in “pecking order” this includes futures on bonds, US$/EUR, (6E), precious metals, and stock indices.  I’m looking to re-engage trading within the forex markets as well.

The discussion will continue —

gold$Gold has come back into play over the past week or so as global markets move in tandem with the US $ against the Euro and the Yen. With volatility getting kicked up several notches the opportunities for “runners” of 20 to 50 ticks is occurring with more regularity.  I would anticipate that this will remain the case as the US Dollar is pulled into the global transitions happening within China, Japan, and the European Union.

Check out the chart for today’s trades and discussion.

2016-05-04_14-33-34_Gold

Logical Market Update: Day Two – Bulls Attempt to Stage a Comeback

Day Two and the Bulls Attempt to Stage a Comeback – Gold Stocks Back on the Radar – Time to Begin Buying?

The markets followed through on Tuesday’s selling finishing what I’m considering the initial (first) leg down.  Interestingly though, when the bulls moved in to stage their comeback, the volatility indexes were first on the firing line.  By the close a decent bounce higher was in place.  I’m not so sure the markets are convinced though that the drop off of recent highs was just an apparition, with the bulk of the closing madness being on the sell side.  The initial leg down remains in progress and while there may be additional buying tomorrow with the potential for an up day not off the table.  Even the last minute marking battle favored the bears leaving the bulls to push the futures and ETFs after the close.  What a joy it is to know that the exchanges still have a soft spot for their larger players giving them an extra 15 minutes to hedge – yeah right!  Current parameters remain valid for the broader indexes.  Tesla, Green Mountain Coffee Roasters, and Groupon reported earnings after the close.  TSLA jumped $18, GMCR fell $6 and GPRN popped up $2.50.  The saying “Only the Good Die Young” is somehow now more believable.   

 

Bonds put in a solid rally today and managed to hold it through most of the day’s gyrations in the equity and forex markets.  Expectations remain in place for a continued recovery rally to unfold before the next leg down takes over.  Again, any clues to direction will likely begin in the 10-year note.  The Dollar got caught between a rock and hard place as the British Pound was pounded into submission after comments from the Bank of England.  The rally in the Euro was again contained to the first hour of U.S. trade with most of the action being within the European sessions.  Most of the U.S. trade was held to a slightly expanded range of 20 ticks. 

 

 

Gold and gold stocks are back on my active radar after the latest bashing brought the gold stocks to gold ratio to a long-term low, further bashing would likely lead to this ratio testing the 2001 lows.  The damage is deep across the board.  Since January 2013 gold has dropped from $1700 to $1180 and gold stocks have fallen more than 50% and that would be amongst what are considered to be the titans within the mining sectors.  Weaker companies were cut off at the knees loosing up to 75%. 

 

The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index is a modified equal dollar weighted index.  The component companies are involved in gold mining.  HUI is one of the most watched indices and retains titan status next to the XAU index.  The unhedged part of the index name is the basis for the index.  Its component companies do not hedge their gold production beyond 1.5 years.  The table below lists the current company components and their weighting.   

 

Component Companies (HUI)    
Company name Symbol Weighting 
Goldcorp Inc NYSE: GG

16.20%

Barrick Gold NYSE: ABX

15.37%

Newmont Mining NYSE: NEM

10.88%

Harmony Gold Mining Adr NYSE: HMY

5.21%

Coeur d’Alene Mines NYSE: CDE

5.11%

Yamana Gold NYSE: AUY

5.00%

Anglogold Ashanti Ltd Ads NYSE: AU

4.88%

Gold Fields Ltd Adr NYSE: GFI

4.80%

Randgold Resources Ads NASDAQ: GOLD

4.71%

Iamgoldcorp NYSE: IAG

4.43%

Eldorado Gold Corp NYSE: EGO

4.34%

Hecla Mining NYSE: HL

4.14%

Comp de Minas Buenaventura Ads NYSE: BVN

4.08%

New Gold Inc NYSE MKT: NGD

3.90%

Kinross Gold NYSE: KGC

3.85%

Agnico Eagle Mines NYSE: AEM

3.11%

 

 

 

 

 

 

 

 

 

 

The HUI Index has been hammered, as the component companies have been sold in step with the decline in physical gold.  Off of the September 2012 high the HUI has dropped 323 points (60%).   Currently 2013 has not seen any favoritism towards the HUI.  But that may be about ready to change.

 

The weekly chart below details the decline beginning off of the September 2011 highs.  The pattern in place, which encompasses the rally off of the 206.66 June 2013 low to the July high at 263, took a lot of momentum to achieve less than 60 points.  The sharp decline in the last two weeks may be the beginning of an exhaustion decline, which could set the stage for a more sustained and dynamic rally.  The stochastic oscillator has again slipped into oversold readings, but has not shown any signs of turning yet.  Currently the HUI is likely to drop to a new low under 206.66 before the next sustained rally phase takes over. 

 HUI_WEEKLY_AUGUST_07_2013-08-07-TOS_CHARTS

An additional important measure of value for gold stocks is the HUI – gold ratio.  The HUI-gold ratio is an expression, which compares the HUI index to the price of gold.  The ratio is calculated by dividing the value of the HUI Index by the price of gold.  Yes, it really is that simple – and here’s the kicker – when this ratio is very high, it correlates to gold stocks being expensive in relationship to gold.  Conversely when the ratio is very low, it correlates to gold stocks being relatively cheap relative to the price of gold.  The HUI-gold ratio bottomed in 2001 reaching a top in 2004. Progressively deeper major lows have occurred in late 2005, late 2008 and June 2013 as the bear market likely moves into its final stages.

 

Bollinger Bandsmeasure the “high” or “low” of the price relative to previous trades and are considered a volatility indicator.  Therefore by definition prices are high at the upper band and low at the lower band.  This definition can help in pattern recognition and when combined with additional indicators help to arrive at decisions as to direction or trend. 

 

The chart below keeps in perspective just how far the HUI has dropped and is likely in the finishing stages before a trend change takes place. 

HUI_WEEKLY_BOLLINGERBANDS_2013-08-07-TOS_CHARTS

It is time to move Gold, the HUI Index, and gold stocks back on the radar.  Opportunities are already presenting themselves and traders that already trade gold via one of the DTS “birds” should find solid profitable opportunities as the bear market finishes and the bull takes the reins.  I will be adding to our list below as this sector jumps back. 

 

 

Indicator Warehouse

 

Indicator Warehouse has in my opinion the best platforms available covering a wide range of traders from novice to expert.

 

The Diversified Trading System from Indicator Warehouse offers cost effective products that allow a trader to enter into the “chaos” and trade more effectively.  

 

Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 

 

A newer member of the money management tools available from Indicator Warehouse is the Profit Finder – System Back Tester When implemented it allows the user to:

  • Immediately know the impact of parameter changes. 
  • Automatically reads all of your DTS entries and exits
  • Calculates the profit/loss of each trade
  • Performs a wide number of essential intelligence boosting calculations instantly
  • Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators

 

The last two points above are valuable tools to use.  It will show you where some “tweaking” is needed to improve results through the back testing feature. 

 

My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames.  As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.”    Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System.  Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms.  Our goal remains to assist traders to make greater profits during all types of markets.  Sector and money rotation is another tool.

 

The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA).    In the near future I will be adding options strategies to the trading list. 

 

Here is an updated (7/31/2013) list of the markets where I have found that DTS (all three birds) are producing numerous signals.  Continue to bear in mind that there are days when trading opportunities are not as plentiful.  These are days when not trading is likely more profitable than attempting to “force” a trade”:

 

  • DJIA future (e-mini available) – highly recommended for experienced traders
  • S&P-500 future (e-mini available) – highly recommended large intraday moves.
  • Russell 2000 future (e-mini available) – highly recommended can lead in either direction.
  • NASDAQ 100 future (e-mini available) very highly recommended and dominated by AAPL, AMZN, NFLX, GOOG, and TSLA
  • US$/Euro futures (e-mini available) – very highly recommended – easy to trade afterhours as well.
  • V (Visa) – stock and options – recommended – large swings in both direction likely
  • MA (MasterCard) stock and options – recommended – $600 stock – large swings likely
  • GS (Goldman Sachs) – good two way volume –
  • AAPL (Apple Computer) – highly recommended – Options trading as well
  • GOOG (Google) – highly recommended
  • LNKD (LinkedIn) – solid intraday range
  • NFLX (Netflix) – solid intraday range
  • TSLA (Tesla Motors) – highly recommended 
  • 30-yr Treasury Bond future – highly recommended
  • 10-yr Treasury Note future – solid two way trade
  • TLT (Treasury Bond Long ETF) – very active
  • TBT (Treasury Bond Short ETF) – very active (moves inversely to TLT)
  • Gold (futures and ETF – GLD) very active – not suitable for all traders
  • Silver (futures and ETF – SLV) – very active – not suitable for all traders
  • EURO FX (futures, mini and micro contracts available) very active suitable for all account sizes

Logical Market Update: Near Term Outlook Gold & Silver

Near Term Outlook Gold & Silver – Downside Potential Stronger

Wednesday’s trading was limited with intraday ranges also limited for most issues.  After hours tech titans IBM and INTC reported earnings.  Initially reaction took the stock prices lower, which included a very brief downdraft in the NDX and SPX futures only to be replaced by a as sudden updraft driving the stock prices higher and igniting buying in the NDX and SPX futures.  It’s earnings season and there are times that a titan reporting better than expected earnings can ignite a broader reaction, albeit short in duration. 

 

The equity markets are pushing hard against upside overbought readings, with volumes trailing off leaving the buying to what is likely day traders and shorts covering.  If the past has anything to say about the future expectations would be for a sudden “out of the blue” downdraft to hit across the board to shake things up somewhat.  It is those days that many of us “trade for”, days where signals are plentiful across the wide array of sectors. 

 

What could trigger such an event?  The reasons currently are as plentiful as the trading signals.  Some that jump to the front are:

  • Precious metals turn lower with gold dropping between $50 to $100
  • Bonds turning lower with yields again turning sharply higher
  • The U.S. dollar taking out some upside resistance
  • U.S. equity markets selling off with the DJIA dropping 3% as today’s buyers become tomorrow’s sellers.

 

The current patterns in progress across the board are pointing to this type of “perfect storm” type of day.  Where one sector follows another as the broader indexes drop in unison.  I wouldn’t suspect that the end is upon us just yet.  I continue to view downside as corrective within an ongoing uptrend.  However, having said that the downside will begin to expand its range somewhat as the degree of the 4th wave declines increases to finish the series of sub-divisions previously discussed. 

 

The opportunities for day trading should continue.   Don’t forget about position sizing.  The use of this remains critical in maintaining a positive P/L.    

Gold and Silver

 

Gold (click chart to enlarge)

Wednesday’s selling may be ushering in the next leg down for gold.  The monthly chart (below) has not changed in terms of downside support or upside resistance.  I have continued to allow for a drop to stronger support at the 1155 to 1150 area.  A break back below 1250 with follow through would substantially increase the odds. The stochastic oscillator has produced a buy signal that would put the odds on the potential for additional downside (not severe and likely to hold around the 1250 area) creating a more sideways range bound pattern. 

Gold futures monthly

GOLD_MONTHLY_FIBO_2013-07-17-TOS_CHARTS

 

Gold futures daily

The daily chart is ambiguous in that today’s selling may have completed a smaller correction with a fresh attempt at 1303 resistance next up.  A break below 1250 would not entirely negate a test of resistance near-term, but it would leave a more convincing pattern that a break down to support at 1155 is on the way.  The stochastic momentum oscillator produced a sell signal on Wednesday and carries strong potential for downside momentum to continue. 

GOLD_DAILY_FIB_2013-07-17-TOS_CHARTS

 

Silver (click chart to enlarge)

Silver while most of the time mirroring gold carries a more convincing argument for additional lows below 18.42 seen at the end of June.  The monthly chart has not changed with regards to support or resistance.  Critical support at the 17.15 area remains in place and may provide enough of a barrier to complete the corrective phase off of the 2011 highs.  Failure of this level would open the “flood”gates of potential for a complete price washout to the 8.25 area.  The momentum oscillator does favor the 17.15 zone holding, as deep oversold readings would suggest. 

Silver futures (monthly)

SILVER_MONTHLY_FIBO_2013-07-17-TOS_CHARTS

 

 

Silver futures (daily)

SILVER_DAILY_FIBO_2013-07-17-TOS_CHARTS

The daily chart reveals that Wednesday’s selling did leave a 3 way advance (countertrend) in place, which supports a drop to support at 17.15. 

 

My intention remains not to sound like a broken record but the importance of accepting that the status quo is changing and carries much of the burden of price volatility seen recently so again I will say please don’t be fooled in to complacency.  Now is the time to keep alert as the trading opportunities will be numerous and present themselves in both directions. 

However, it remains a time when things can seem to change quickly coming as “surprises” to the markets when in fact the larger moves have been in the making for several years.  

It is a time when the underlying reasons for the advances – the huge influx of money into the system by the global Central Banks – will eventually come full circle via the credit/debt – interest rate bubble bursting with such force that the markets will not be able to lean on the Central Banks good faith and credit to fix the problems.  It is a matter of when not if

 

While some position trading will be highly profitable – I am continuing to find ample opportunities in day trading.  Depending on your objectives a combination of day and position trading could prove very rewarding as the current patterns unfold.

 

Diversified Trading System

 

I continue to recommend as the best trading platform available to a broader range of traders from novice to expert.  The Diversified Trading System offers a cost effective product that allows a trader to enter into the “chaos” and trade more effectively.  

 

Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 

 

A newer member of the money management tools available from Indicator Warehouse is the Profit Finder – System Back Tester When implemented it allows the user to:

  • Immediately know the impact of parameter changes. 
  • Automatically reads all of your DTS entries and exits
  • Calculates the profit/loss of each trade
  • Performs a wide number of essential intelligence boosting calculations instantly
  • Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators

 

The last two points above are valuable tools to use.  It will show you where some “tweaking” is needed to improve results through the back testing feature. 

 

My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames.  As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.”    Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System.  Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms.  Our goal remains to assist traders to make greater profits during all types of markets.  Sector and money rotation is another tool.

 

The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA).    

 

Here is an updated list of the markets where I have found that DTS (all three birds) are producing numerous signals.  Continue to bear in mind that there are days when trading opportunities are not as plentiful.  These are days when not trading is likely more profitable than attempting to “force” a trade”:

 

  • DJIA future (e-mini available) – highly recommended
  • S&P-500 future (e-mini available) – highly recommended
  • Russell 2000 future (e-mini available) – highly recommended
  • NASDAQ 100 future (e-mini available) very highly recommended
  • US$/Euro futures (e-mini available) – very highly recommended
  • GS (Goldman Sachs) – good two way volume –
  • AAPL (Apple Computer) – highly recommended
  • GOOG (Google) – highly recommended
  • LNKD (LinkedIn) – solid intraday range
  • NFLX (Netflix) – solid intraday range
  • TSLA (Tesla Motors) – highly recommended  
  • 30-yr Treasury Bond future – highly recommended
  • 10-yr Treasury Note future – solid two way trade
  • TLT (Treasury Bond Long ETF) – very active
  • TBT (Treasury Bond Short ETF) – very active (moves inversely to TLT)
  • Gold (futures and ETF – GLD) very active – not suitable for all traders
  • Silver (futures and ETF – SLV) – very active – not suitable for all traders

Logical Market Update: Precious Metals Hammered Lower – Negative Momentum Getting Extreme

Gold & Silver Hammered Lower- Negative Momentum Getting Extreme

 

Gold and silver dropped to new two-year and nearly three-year lows.  The futures markets have again seen the liquidation of “weak-handed” longs and continued technical short selling as the market reacts to the prospect of a stronger U.S. economy triggering the Federal Reserve to begin to scale back its monetary stimulus program.  Tuesday’s economic data strengthened the argument of the FED weaning the economy from the easy money policies that have supported a continued bullish stance on the raw commodities sector including precious metals. 

 

Adding fuel to the shorts argument was the continuing “cash crunch” in China further weakening demand for gold and the government of India placing additional duties on the import of gold.  China remains the center of attention though as the world’s second largest economy grapples with its own growing pains. 

 

Both gold and silver have dropped into extreme oversold readings (monthly charts), which supports the bear market reaching a bottom.  As is so often the case, a market is the most bearish at the bottom or most bullish at the top (price) – just before things turn around.  If you believe the old trading adage that “the majority of traders are wrong most of the time” and currently it appears that the majority of the gold and silver traders are bearish then a strong argument can be made from a market psychology perspective that the bottom must be close. 

 

Gold (futures – monthly chart)

The break below $1300 and subsequent break below $1250 have cleared the path for a likely test of the $1155 area, which is a short $75 from current levels.  If the bears continue to press through support at $1155 it would raise the potential for the decline to reach $950 before all is said and done.  Resistance of any strength should be found at the $1300 level.  Note the stochastic oscillator is registering extreme oversold.  With the majority of traders appearing to be short I would suspect that downside as well as any turn to be very volatile under increased volume.  Day trading remains my preferred trading strategy as many of the moves start during either in Asian or European trading.   The strength of the moves keeps all three DTS platforms (Hawk Scalper, Falcon Swing, and Eagle Trend) in play for now. 

 

Gold_futures_2013-06-26-TOS_CHARTS

 

 

Silver (futures – monthly chart)

 

The bear market is silver also remains relentless as longs are liquidated and shorts fill in the gaps.  The market is in danger of dropping back below $10 if next support at the $17.15 area doesn’t hold.  Support below would be at $8.25 that is basically the starting point for the bull run that ended at $49.80 in 2011. 

 

The stochastic oscillator is also into extreme oversold readings so I am beginning to look for signs of a market turn – which haven’t appeared yet – and I would not recommend getting in front of the pent up downside momentum in silver. 

 

Margin requirements are high in Silver ($15,000 per contract), but the alternative for trading would be SLV (silver ETF), which trades in step with the futures and is very liquid. 

 

Silver_futures_2013-06-26-TOS_CHARTS

 

Diversified Trading System

 

I continue to recommend as the best trading platform available to a broader range of traders from novice to expert.  The Diversified Trading System offers a cost effective product that allows a trader to enter into the “chaos” and trade more effectively.  

 

Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 

 

A newer member of the money management tools available from Indicator Warehouse is the Profit Finder – System Back Tester When implemented it allows the user to:

  • Immediately know the impact of parameter changes. 
  • Automatically reads all of your DTS entries and exits
  • Calculates the profit/loss of each trade
  • Performs a wide number of essential intelligence boosting calculations instantly
  • Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators

 

The last two points above are valuable tools to use.  It will show you where some “tweaking” is needed to improve results through the back testing feature.  

 

My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames.  As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.”    Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System.  Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms.  Our goal remains to assist traders to make greater profits during all types of markets.  Sector and money rotation is another tool.

 

The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA).    

 

Here is an updated list of the markets where I have found that DTS (all three birds) are producing numerous signals:

  • DJIA future (e-mini available) – Highly recommended
  • S&P-500 future (e-mini available) – highly recommended
  • Russell 2000 future (e-mini available) – highly recommended
  • NASDAQ 100 future (e-mini available) very highly recommended
  • US$/Euro futures (e-mini available) – very highly recommended
  • GS (Goldman Sachs) – good two way volume –
  • AAPL (Apple Computer) – highly recommended
  • GOOG (Google) –  highly recommended
  • LNKD (LinkedIn) – solid intraday range
  • NFLX (Netflix) – solid intraday range
  • TSLA (Tesla Motors) – highly recommended  
  • 30-yr Treasury Bond future – highly recommended
  • 10-yr Treasury Note future
  • TLT (Treasury Bond Long ETF)
  • TBT (Treasury Bond Short ETF)
  • Gold (futures and ETF – GLD) very active – not suitable for all traders
  • Silver (futures and ETF – SLV) – very active – not suitable for all traders

Logical Market Update: Deja Vu of 2008 – Thursday Was Day Traders Dream – Long Bond Holders Bound in Nightmare!

It Felt Like 2008 Again – Thursday Was Amazing – Day Traders Dream – Long Bond Holders Still Trying to Wake Up From the Nightmare!

 

If I thought Wednesday night into Thursday morning was an “Everything Must Go Sale” – Thursday’s U.S. sessions proved to be what I call a “Billy Graham Sell-Off”.  All assets were sold or liquidated for cash.  Nothing was spared my entire screen was red (except for inverse ETF’s like the FAZ and TBT and the Volatility Indexes – VIX and VXX).  At several points I had to turn off the audible signals being produced by the DTS “birds” the Hawk Micro Scalper, the Falcon Swing Trader and the Eagle Trend Trader.  The Hawk chimes “scalp” to alert a trade set up and then again for the entry.  The broader indexes were moving so quickly (in both directions – just more pronounced to the downside) that the different Hawk screens I use were basically just an overlapping “scalp”.  It was the type of day where traders needed to focus on between a few products.  Position traders were likely chewing anti-anxiety pills as bids vanished and markets dropped. 

 

Nothing escaped the wrath of the bear today – equities, bonds, forex, precious metals, and commodities all were sold as traders, portfolio managers, hedge fund managers, and investors attempted to sell assets before they become worthless.  It was a day where rallies were short as traders swarmed in to sell – the 30-year bond appeared to be in free fall at several points during the session breaking the 137 level during the night session and the 136 level during the U.S. day session.  Gold broke below 1300 in grand style setting off stops and creating a downdraft, which drove prices to 1268 before stabilizing.  Silver followed suit breaking below $20 reaching a low at $19.31.   The US Dollar flexed all the muscle it could taking the Yen and Euro to the “woodshed” during the Asian sessions and then again during European trading.  Commodities were sold as well – cocoa, coffee, sugar, frozen orange juice, soybeans, corn, wheat, feeder cattle, live hogs, lumber and energy  – oil, natural gas, heating oil, and gasoline.  The long and short end of the yield curve got whipsawed as treasuries fell from favor.

 

It was a day traders dream in fact I must confess that I stayed up all night trading the Euro and watching the moves in the other markets.  Now here is some advice – it is not time to move into long positions.  Covering short positions is totally appropriate and that actually should be the main reason for buying.  I do feel that the treasury markets are putting in a short-term bottom and are extremely oversold.  Most markets are oversold after Thursday – but I don’t think a few days of selling has reconciled the imbalance of longs in the markets.  Check the charts below to again put into perspective the damage done in comparison to the levels of support expected to be reached before it is time to get long.

 

 

 

Thursday morning was the start of the June expirations with some indexes expiring on the opening print.  Tomorrow is a triple witching expiration (equity options, index future and options) after the last few days of selling it really is anybody’s guess as to where things will get “pinned”.  I really don’t see any major rallies getting started before the later part of June or July.

 

Equity Markets

 

The corrections got a huge jump start on Thursday with the DJIA down over 300 points, the S&P 500 down over 45 points during the session,  the Russell 2000 shed 29 points and the NASDAQ 100 sank 85 points during the day. The charts (daily) below continue to indicate support to complete the corrections lies well below current levels.  I would anticipate a few additional “ugly” days of downside activity.   Longer-term I still believe the broader indexes will move to additional new highs before the advance is complete. 

 

DJIA

DJIA_Thurs_2013-06-20-TOS_CHARTS

 

 

 

S&P 500

SPX_Thurs_2013-06-20-TOS_CHARTS 

 

 

 

 

 

Russell 2000

RUT_THURS_2013-06-20-TOS_CHARTS 

 

 

 

 

NASDAQ 100

NDX_THURS_2013-06-20-TOS_CHARTS 

 

 

 

Repeated from previous blogs, as it remains very important. 

 

It is interesting times in which we live and choose to trade.  I have advocated changing strategies as a trader in becoming more of a day trader (no overnight risk) versus carrying positions.  This remains important during times such as these.  When the dust settles it will be important to have the cash to invest for the next move. 

 

 

Diversified Trading System

 

I continue to recommend as the best trading platform available to a broader range of traders from novice to expert.  The Diversified Trading System offers a cost effective product that allows a trader to enter into the “chaos” and trade more effectively.  

 

Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 

 

A newer member of the money management tools available from Indicator Warehouse is the Profit Finder – System Back Tester When implemented it allows the user to:

  • Immediately know the impact of parameter changes. 
  • Automatically reads all of your DTS entries and exits
  • Calculates the profit/loss of each trade
  • Performs a wide number of essential intelligence boosting calculations instantly
  • Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators

 

The last two points above are valuable tools to use.  It will show you where some “tweaking” is needed to improve results through the back testing feature. 

 

My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames.  As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.”    Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System.  Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms.  Our goal remains to assist traders to make greater profits during all types of markets.  Sector and money rotation is another tool.

 

The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA).    

 

Here is an updated list of the markets where I have found that DTS (all three birds) are producing numerous signals:

  • DJIA future (e-mini available) – Highly recommended
  • S&P-500 future (e-mini available) – highly recommended
  • Russell 2000 future (e-mini available) – highly recommended
  • NASDAQ 100 future (e-mini available) very highly recommended
  • US$/Euro futures (e-mini available) – very highly recommended
  • GS (Goldman Sachs) – good two way volume –
  • AAPL (Apple Computer) – very highly recommended
  • GOOG (Google) – very highly recommended
  • LNKD (LinkedIn) – solid intraday range
  • NFLX (Netflix) – solid intraday range
  • TSLA (Tesla Motors) – highly recommended  
  • 30-yr Treasury Bond future – did not get quiet – opposite took place
  • 10-yr Treasury Note future
  • TLT (Treasury Bond Long ETF)
  • TBT (Treasury Bond Short ETF)
  • Gold (futures and ETF – GLD)
  • Silver (futures and ETF – SLV)