Blog

All Posts (10732)

Sort by

Elliott Wave setup for long Dow trade today

Posted by Justyn on May 26, 2011 at 8:54pm

Here is my Elliott Wave chart of the last 2 days action on the Dow.

I bought near the bottom today and am holding that long overnight. I was called "brave" in the chat area for this trade - especially as everything including the EUR.USD was heading rapidly south, but from an EW perspective it was simply a case of understanding what was happening, following the EW rules, setting an appropriate stop and of course hoping I was right!

 

8118296253?profile=original

For anyone who is not familiar with EW, here are some basic rules and guidelines:

 

Rules:

1. Wave 2 cannot retrace beyond the start of wave 1

2. Triangles will only occur in waves 4 or B

 

Guidelines:

Wave 2 will often retrace almost the whole of the wave 1

Wave 3 will often extend. Wave 3 is usually an extremely powerful move, much more so than wave 1 and will defy divergence and oversold/overbought (depending on direction) indicators to keep going

 

Firstly there was a clear 5 wave move up yesterday to form a possible bigger wave 1 (shown in red). Note the smaller wave 2 (shown in black) retraces very deeply into the territory of wave 1 as per the guidelines.

The sell off this morning (marked B) had a triangle half way down (triangles must be in either wave 4 or B). Therefore there was a good probability that we were seeing the wave 2 correction (shown in red) and about to see the start of wave 3 upwards.

 

Taking the trade was simple, buy as low as possible but above 12310 (the start of wave 1). The stop would be placed just below 12310 (wave 2 cannot retrace below the start of wave 1) and going below 12310 would invalidate the setup. This gave a low risk (approx 20 pips) opportunity to take a long position where the upside should be at least 300 pips. The minimum 300 pips is based on a final 5 wave move up.

Lastly it looks like we have a bull flag at the end of the day finishing with CCI oversold at -200 plus divergence on RSI which encourages me that we will see more upside to come.

I hope this brief article might encourage some fellow traders to take a look at Elliott Wave and understand how it can give low risk entries with a high risk-reward ratio.

 

Read more…

EU sell of Monday

Posted by Chelski on May 25, 2011 at 10:27am

On the higher Time frames, weekly and daily we get a nice clean move on Monday. 

EU closed Friday below the Daily support / resistance zone (blue line) You can see on the weekly that EU is in down trend, 2 weeks sell off. Las week we rallies but stalled and sold off. The big bearish bar that formed the high tells the story here as we failed at its lows. now over to the daily chart.

Friday closed below support and a powerful bar with a close near the low too. I sold 10 pips on from the low of Friday, my target was 1.4 as the "Big round number can act as support, also there is Daily / weekly support there. eu1.gifeu.gif

Read more…

Must Read Lesson From The Past... (NASDAQ:LRCX)

Posted by Aadil on May 24, 2011 at 1:22pm
Many traders and investors have simply been buying the dip every time the stock market declines. This method has worked because the daily chart trend is up. As long as the daily chart remains up the buying the dip method will work. However, day traders or scalpers must deal with two trends and this makes day trading a much more skillful endeavor. Day traders or scalpers must watch and know the daily chart trend plus the trend of the intra-day time frame that they may be using to find support or resistance. 

Take note of the chart of Lam Research Corporation (NASDAQ:LRCX) below for an example.

The day trader should know that a bounce is very likely at strong intra-day support levels despite the intra-day trend being down as long as the daily chart trend is up. As a scalp trader or day trader we can buy the strong intra-day support level for the small bounce. However, it is important to remember as a scalp trader or day trader we are looking to take a small bite or chunk out of the stock.  As a day trader your goal is to do this often, accumulating great percentage gains on the day. Once we are in the money on the trade we move our stop loss to break even or in the money to protect against a loss. We never want to get greedy when trading unless we are in the money and have already secured a gain.

If the daily chart trend is down then the scalper must be much more careful trying to trade the intra-day bounce area. In fact, the scalper might be better off trying to sell the bounce short if the trend is down on both the daily and intra-day charts. Scalpers must also always know where the stop loss area will be just in case the stock does something unpredictable. Remember the old market adage, “markets can do anything at anytime.” Become aware of the prevailing trend, how to trade it properly, learn what most people get trapped by and do not fall victum to the same pitfalls.   Learning these tools will place you on the road to earning consistent profits.  By joining our Intra Day Stock Chatyou will be granted viewing access to the real Pros traders desk. You will view their charts live, hear them live, learn and earn live along side of the best in the world. Enter the world now, start with our Free Trial. click here.
Read more…

Blood On The Street (NYSE:SCCO) (NYSE:OIH) (NYSE:SU) (NYSE:DVN)

Posted by Aadil on May 23, 2011 at 4:55pm
This morning, the major stock market indexes are declining sharply lower. The catalyst for the steep stock market decline is once again the stronger U.S. Dollar. When the dollar rallies or trades higher the major stock and commodities will deflate and simply trade lower. This morning the leading commodity stocks such as Southern Copper Corp.(NYSE:SCCO), Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), and United States Steel Corp.(NYSE:X), are all under early selling pressure. Traders should keep one eye on the U.S. Dollar Index(DXY), if the DXY declines intra-day it would be prudent to expect these leading commodity stocks to catch an intra-day bounce. 

Most energy stocks are also coming under selling pressure to start the trading day. The Oil Services Holders Trust(NYSE:OIH) is declining lower by $3.10 to $145.88 a share. Traders can watch for short term intra-day support around the $145.00 and $143.50 levels. Other leading energy stocks that are declining lower include Suncor Energy Inc.(NYSE:SU), and Devon Energy Corp.(NYSE:DVN). These stocks could also see some bounces if the U.S. Dollar Index pullback intra-day.

Step inside the elite world of Pro Traders. Join our Pros live as they navigate the markets, enter/exit positions, view their charts live, ask questions live, hear them over your speakers live, in our Intra Day Stock Chat. Start your Free Trial here now!

Do you have a day job? Swing trade and invest your 401k or IRA to the profits of the Pros. Join our Research Center, gain the expert knowledge and guidance the institutions pay millions for. Start your Research Center Free Trial now. click here.
Read more…

European Crisis: A Path To QE3 (NYSE:SPY) (NYSE:UUP)

Posted by Aadil on May 23, 2011 at 4:54pm
There is little doubt in anyones mind that the current crisis hitting Europe may be just what the Federal Reserve ordered for another round of quantitative easing. In the very least, the Federal Reserve has already made it clear they will re-invest all the current QE2 proceeds. It seems to be clearer each day that the Federal Reserve policy of printing trillions of Dollars has done little to help the system. Europe is on the brink of collapse again and the Unemployment Rate has barely dropped. The only thing that has occurred in a major way is the spectacular rise in commodity prices. These prices have recently taken a tumble on the back a surge in the Dollar. It seems like the stage is set for another type of easing, print money policy. Obviously, the Federal Reserve will not call it QE3 as the unpopularity would be negative, but it is highly likely they will have some sort of new policy in play. How do you play this possible new move by the Federal Reserve? Find out by joining the seven day free trial of the Research Center. Click here.

The markets are sharply lower today as the European crisis continues. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $131.97, -1.64 (-1.23%) as the Dollar is surging. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.82, +0.17 (+0.79%).  The markets remain on edge over the many new bailouts needed in Europe. What do you buy? What do you sell? Take the seven day free trial of the Research Center to master the markets and profit. Click here.

Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Read more…