1900-1890 must hold and then we blast off
we need pull back for new money to enter the market , otherwise not healthy!!
nasdaq long term monthly - still bullish
can it retake 75% retrace ..........if it does then 2000 and 2100 will come !!
Last week I wrote, "Each day I attempt to ask and answer only two questions -What's Happening? And How Will It Affect Price? Get that answer right and you'll be on your way to being a successful short term trader."
That's only partially true.
Short term trading is never only about analytics. It is also about systemic risk control. Your analytics can change from day to day, moment to moment. In fact flexibility and open mindedness are the key attributes of all skillful short term traders. However when it comes to risk control your system must be well thought out and rigid as a column of steel. You can experiment all you want with your trading setups, but deviate from your risk control rules and you will always pay a heavy price. It doesn't matter if you run a 500 dollar retail FX account or 5 Billion dollar hedge fund like LTCM. Ignore the rules and the market will smite you.
Although everyone has a different tolerance for risk, here are my day to day rules.
1. Leverage
In trading there are two ways to generate leverage. You can use high margin or you can have a high turnover. I prefer the later. I don't trade with more than 10:1 margin and generally keep my ratio to 5:1. That means that for every $10,000 in my account I will not hold more than a 100,000 unit position at any given time. My goal is not to "press the pedal to the metal" on every trade but rather to make money one pip at time. My plan is take many trades throughout the day and average 20 pips/day or 100 pips/week. If I can do that consistently that means I am generating $25,000 of profit per year for every $10,000 of capital at risk. That would be pretty damn good.
2. Stops
I trade with fixed stops of 20 pips - regardless of whether I am trading yen, pound or any other pair. I know this ignores the whole issue of volatility but I don't care. It simplifies my trading enormously. I trade with fixed stops of 20 and fixed take profits of 20. During a typical day when I am busy with a million things this system has saved my hide more than once. I NEVER WIDEN MY STOPS, but I may bust out of the trade early if I don't believe it has the power to reach my target. Over a long period of time and after doing thousands trades I learned that 20 points is the perfect amount of risk for me. If I get stopped at -20 it's because I am dead wrong in my analytics or my timing.
3. Position sizing
Again I opt for simplicity. I generally open with 1 unit (so if I had 20K in my account my opening trade would always be 100,000 units) but if I am extremely confident in the trade I will double my bet and trade with two units from the start. That's the maximum position sizing I allow myself. I never add to a losing position but I will double my bet to two units if I get stopped out and I am confident that the trade should work and I was just early. If I get stopped on 2 units I step back and bring my size back to one because I am clearly wrong on the trade.
4. Day Limits
Generally I never reach them, but if I am down 5% on my equity (-$500 on 10K account) I stop trading for the day. There are a million factors that could be responsible for such a drawdown but the single most important action at that time is not to try to figure them out, or to try to get the money back, but to simply STOP TRADING. This is the most common reason why most short term traders blow up their account. When it come s to trading the Hippocratic oath is a pretty good rule to follow - "first, do no harm".
Read more…
The danger list
Below are the 22 towns identified by the Government as the areas with the highest proportion of homeowners at risk of repossession.
1. Barking and Dagenham
2. Birmingham
3. Bolton
4. Cannock Chase
5. Corby
6. Halton
7. Kingston-upon-Hull
8. Knowsley
9. Liverpool
10. Manchester
Read more…
By Nicholas Santiago on March 19th, 2010 3:39pm Eastern Time
As many of our readers know by now we rarely have a big down Friday ahead of a weekend. We believe that the institutional money that can move this market does not want to cause panic in the consumer that is likely to spend money on his or her day off over the weekend. The other reason we believe that we do not see a sharp sell off on a Friday is so that panic or fear does not spook the Asian markets over the weekend.
Often in the final hour of trading the SPDR S&P 500 ETF (NYSE:SPY), SPDR Dow Jones Industrial Average ETF (NYSE:DIA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), and the iShares Russell 2000 Index ETF(NYSE:IWM) have caught bids into the close. This can be seen on any intra-day chart as the indexes have volume during the first hour of the trading day and then it rallies in the final 30 minutes of the day.
Today should not be any different from any other day. The volume is still light especially for a quadruple witching options expiration day. Even when the market closes negative on a Friday rarely will it be down sharply.
The volume during the month of March has been exceptionally light. Historically, th month of March is one of the heaviest volume months of the year. So far the volume this March is rivaling August which is known as the peak of the summer doldrums. Therefore, when you combine the light volume with options expiration and S&P 500 re-balancing anything can happen into the close. Perhaps this market will close down sharply into the close ahead of the weekend. We shall see.
Read more…
The unexpected RATE HIKE from teh RESERVE BANK OF INIDA (first since 2008) must not be ignored especially since it occurred in an unscheduled meeting and 1 month ahead of its next scheduled meeting. This means that further tightening is ahead particularly with rates being at 3.5% and annual inflation at 9.9%. As both India and China raise interest rates, markets anticipate a potential dampening effect on oil prices and overall commodities. QUADRUPLE WITCHING DAY (simultaneous expiry of stock index futures, stock index options, stock options and single stock futures all expire) may extend the equity pullback into Asian Monday, especially as we expect the Fed to raise its discount rate next week (possibly before Bernankes speech).
Read more…
By Gareth Soloway on March 19th, 2010 1:49pm Eastern Time
The markets fell sharply early in early trading today. Fear of healthcare reform and options expiration playing a key role. The SPDR S&P 500 ETF (NYSE:SPY) lower by .6%, the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ) lower by .8% and SPDR Dow Jones Industrial Average ETF (NYSE:DIA) down .74%.
There is a beautiful in spirit of bear flag formation on the intra day charts of the indexes. A bear flag or in spirit of bear flag forms when there is a sharp move down and a following move sideways to slightly higher. In general, this pattern will move to the down side sharply in the coming candles, once fully formed. This play has a high percentage chance of completing as long as volume remains solid.
The pattern today is in, no doubt about it. However, the volume is getting very light in late trading which usually means it will either fail to complete fully or it will complete the following trading day when volume increases again. This will be something very interesting to watch on the markets in late trading today and on Monday. Watch double bottom support on the markets. If that breaks, the pattern should fully complete.
This weekend could be a wild one. With the healthcare vote and possible continued issues in Europe, the markets are nervous about next week. Join the Research Center at InTheMoneyStocks to learn more about these amazing technical analysis techniques along with videos, calls, guidance and education.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
Read more…
By Gareth Soloway on March 19th, 2010 12:04pm Eastern Time
The markets are selling sharply on the best volume of the week. The healthcare vote this weekend looks like it might pass and the markets are getting jittery. The markets hate change and worry about continued government reckless spending. In addition, there will be new taxes imposed on capital gains which hit directly at the core of Wall Street.
While the markets seem to be in a slight panic over health care reform that may pass, options expiration is also at work. The institutions will push the market one way to take out the puts and then flip flop to go the other way, taking out the calls. In the end, the institutions, who sell the majority of puts and calls, look to close the stocks as close to the strike price as possible to maximize profits. The games in the market rage on. Know the rules.
Stocks on the move today include Google Inc. (NASDAQ:GOOG) and Baidu, Inc.(ADR) (NASDAQ:BIDU). Google Inc. is set to let the world know its future plans on Monday. They are expected to pull out of China. While most would think that it may cause a price spike in Baidu, I would caution that the news is essentially factored in the price of the stock. Should any other announcement come out of Google Inc. about them not totally pulling out of China, Google would spike and Baidu would most likely drop sharply.
The Boeing Company (NYSE:BA) reported that they were going to be increasing production of their commercial 747 and highly-profitable 777 series airplanes. The stock jumped early but is already falling back. Technically speaking, which is my language, Boeing is extremely extended and may have put in a short term top. The key is going to be $73.30. As long as price stays below that level, the stock could continue to fall in the coming days and weeks. Often times a final spike flushes out the weak handed shorts but also signals a top. This is possible on Boeing at these levels based on the daily chart.
For more in depth analysis, join the Research Center at InTheMoneyStocks. In the Research Center you get master calls, guidance, education, videos, analysis and so much more. By far the best value, if I do say so myself!
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
Read more…
USD EXTENDS GAINS gains after bottoming above 80 yesterday, with GBP joining the sell-off against USD pairs, eyeing $1.4970 into early Sunday Asia. EURUSD eyeing interim support of $1.3470 after 300-pip decline in past 3-days. AUDUSD failed the weekly trend line resistance of 0.9250 from the Nov high, calling for 0.9120 prelim target. QUADRUPLE WITCHING DAY seen increasing the volatility and sell-off in commodities. CHF was given an unexpected verbal boost from new SNB board member Danthine who said in his first speech that markets must prepare for higher rates. Such shockingly positive news for CHF was least expected especially as markets anticipated remarks that would weaken CHF. Nonetheless, EURCHF did bottom right above the Oct 2008 low of 1.4300. Register for ASHRAFs VANCOUVER SEMINAR tomorrow http://bit.ly/acXvOH MONTREAL + TORONTO follow next.
Read more…
