theblackmamba
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thanks for charts..
isatrader
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An interesting week in the markets. Volatility still rules the day at the moment.
I took the stage 2 continuation in YUM yesterday at $58.26 with a stop at $51.98, but that was my only trade this week as I didn't want to put any new positions on until the Euro summit was concluded.
I've been thinking this week about whether I can automate part of the stage identification process. And as the 30 week moving average is the key component I've been trying to think of a way to measure the momentum of it.
I came up with a simple momentum indicator that uses the "Slope" math calculation of the most recent 5 figures of the MA to measure the 30 week MA momentum - which seems to work well if you look at divergences (see the bottom indicator of the attached S&P 500 chart), but I still think that there could be a better way.
So can anyone suggest a way of calculating the speed and angle of the 30 week MA?
I've attached the S&P 500 weekly chart, which has the NYSE Advance Decline momentum indicator mentioned in Chapter 8 of the book and also my indicator which measures the momentum of the 30 week moving average over the previous 5 weeks.
I took the stage 2 continuation in YUM yesterday at $58.26 with a stop at $51.98, but that was my only trade this week as I didn't want to put any new positions on until the Euro summit was concluded.
I've been thinking this week about whether I can automate part of the stage identification process. And as the 30 week moving average is the key component I've been trying to think of a way to measure the momentum of it.
I came up with a simple momentum indicator that uses the "Slope" math calculation of the most recent 5 figures of the MA to measure the 30 week MA momentum - which seems to work well if you look at divergences (see the bottom indicator of the attached S&P 500 chart), but I still think that there could be a better way.
So can anyone suggest a way of calculating the speed and angle of the 30 week MA?
I've attached the S&P 500 weekly chart, which has the NYSE Advance Decline momentum indicator mentioned in Chapter 8 of the book and also my indicator which measures the momentum of the 30 week moving average over the previous 5 weeks.
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isatrader
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(SPD.L) Sports Direct looks to be close to making a Stage 4 breakdown, after rolling over in the last few months to carve out a Stage 3 top. There's a risk that it'll be dragged up with the market if that decides to have a rally, but it looks like it wants to test lower levels after it's impressive 100% or so Stage 2 rally that began last September.
Relative performance versus the market and industry sector is starting to under perform, but it's slightly outperforming the General retailers UK sub sector still.
Volume is starting to fall off and the 30 week weighted moving average has turned down. Price pushed below the 200 day MA on Thursday and failed on the retest on Friday, so this might be a good hedge as I'm overly long at the moment, but I'm cautious of it putting in a bottom around the 200 level, as that would signal that it's going move back into the Stage 3 range and not break down to Stage 4.
The 200 day ATR is 10.78, so if I short a break of Thursday low at 207.60, then the 2x ATR(200) stop loss would be 229.15. But last weeks high was 232.70 and the 30 week WMA is at 228.06, so it might safer to give the stop a bit more room above 233 and take the position size down a little to compensate.
Relative performance versus the market and industry sector is starting to under perform, but it's slightly outperforming the General retailers UK sub sector still.
Volume is starting to fall off and the 30 week weighted moving average has turned down. Price pushed below the 200 day MA on Thursday and failed on the retest on Friday, so this might be a good hedge as I'm overly long at the moment, but I'm cautious of it putting in a bottom around the 200 level, as that would signal that it's going move back into the Stage 3 range and not break down to Stage 4.
The 200 day ATR is 10.78, so if I short a break of Thursday low at 207.60, then the 2x ATR(200) stop loss would be 229.15. But last weeks high was 232.70 and the 30 week WMA is at 228.06, so it might safer to give the stop a bit more room above 233 and take the position size down a little to compensate.
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isatrader
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Gold's move down yesterday confirmed that it's in early Stage 3 now, by making it's first major lower low for a very long time. However, this doesn't mean that the bull run is over, but that it is in a Stage 3 period of consolidation with a range roughly between 1550 and 1900. It also has major trend line support around the 1600 area, so a move down to test that seems likely with the weakening technical picture and would also complete an A-B-C correction from the parabolic move up in the summer. So I'm personally going to be looking to get long again if we get back to to the trend line. But for the time being the bias is negative and looks a good short term short if it fails to recapture the 1700 level quickly.
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Re: EURAUD Stage Analysis
EURAUD 2 yr Weekly
Would you not look at this, not as a monthly, but simply as a weekly, so, until the break occurs, you can't be sure if it is a proper Stage 1 or a continuation break of a bear flag within Stage 4.
Yes, it has stopped its higher lows and this now looks as if the next bit of bad news will knock it down.
EURAUD 2 yr Weekly
Would you not look at this, not as a monthly, but simply as a weekly, so, until the break occurs, you can't be sure if it is a proper Stage 1 or a continuation break of a bear flag within Stage 4.
isatrader
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Re: EURAUD Stage Analysis
Yep it certainly looks interesting at this point, but I'm already in the euro short trade as I took the GBPEUR long I talked about at 1.1636 on 27/11, so I don't want anymore exposure at the moment.
The EURAUD looks very close the breaking down as well, but the EURUSD is very close to major support levels and people might start lightening up their positions as they go on Christmas break, so that is the key chart to watch imo. As if that holds support then we'll get a bounce in all risk assets.
Yep it certainly looks interesting at this point, but I'm already in the euro short trade as I took the GBPEUR long I talked about at 1.1636 on 27/11, so I don't want anymore exposure at the moment.
The EURAUD looks very close the breaking down as well, but the EURUSD is very close to major support levels and people might start lightening up their positions as they go on Christmas break, so that is the key chart to watch imo. As if that holds support then we'll get a bounce in all risk assets.
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isatrader
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China Shanghai Composite Index (^SSEC)
I've been watching this one for a while and they just reminded me on the tv about it. The Shanghai Composite is very important for commodities especially copper, which in turn affects our markets. It broke a key level on Monday and is now at the beginning of a new Stage 4 continuation. Not a good sign for the rest of the world.
I've been watching this one for a while and they just reminded me on the tv about it. The Shanghai Composite is very important for commodities especially copper, which in turn affects our markets. It broke a key level on Monday and is now at the beginning of a new Stage 4 continuation. Not a good sign for the rest of the world.
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isatrader
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Copper (HG) was largely ignored today in the media in favour of other commodities such as Gold and Oil, which had big moves. However, Copper also made a Stage 4 continuation breakdown and as you can see on the daily chart attached it looks like it could test the $3 level again.
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isatrader
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Brown-Forman Corp B (BF-B) made a Stage 2 continuation breakout last week. Relative performance versus the market and it's sector is good and it's volume is increasing. Watch for a pullback to support at $77.50 or a new break above $81.50
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isatrader
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DUK - Duke Energy
Duke Energy (DUK) made a 4 year high closing 0.2 above it's recent high at 21.04 today.
The all time high is at 21.30 in 2007 and the initial Stage 2 breakout was in September, but if it can close this week above 21.02 then that should be good confirmation that the Stage 2 rally is continuing into it's next phase for the time being and that it could break out to new all time highs.
XLU (Utilities) is the strongest industry sector currently and the ^DJUSMU (Dow Jones US Multiutilities Index) is tracking fairly closely with the S&P 500 at the moment. DUK is outperforming both it's industry sector and sub-sector and the volume has had a significant increase since the Stage 2 breakout in September. So I'm going ot be watching this one closely tomorrow and will likely take a position if it looks like it will close the week above 21.02
Attached is my charts
Duke Energy (DUK) made a 4 year high closing 0.2 above it's recent high at 21.04 today.
The all time high is at 21.30 in 2007 and the initial Stage 2 breakout was in September, but if it can close this week above 21.02 then that should be good confirmation that the Stage 2 rally is continuing into it's next phase for the time being and that it could break out to new all time highs.
XLU (Utilities) is the strongest industry sector currently and the ^DJUSMU (Dow Jones US Multiutilities Index) is tracking fairly closely with the S&P 500 at the moment. DUK is outperforming both it's industry sector and sub-sector and the volume has had a significant increase since the Stage 2 breakout in September. So I'm going ot be watching this one closely tomorrow and will likely take a position if it looks like it will close the week above 21.02
Attached is my charts
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isatrader
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I'm pleased with the results so far. The trades are outperforming the S&P 500 by a good margin and have made a good profit while the market has moved lower over the same period, which is really encouraging.
I was a little impatient with DUK today and got in fairly early in the day after the first pullback to the breakout point. So my entry price was 21.08, but it closed the day lower at 21.01, however, this is still a new weekly closing all time high. So I'll see where it takes me now. But I forgot to mention yesterday the nice 4.8% dividend, so it's certainly one I can hold on to if it goes to plan.
I also shorted SPD.L (Sports Direct) today at 207 as it made a Stage 4 breakdown yesterday and retested the break today. So my target on that one is 160.
Current Open Trades
Shorts
Silver
Sports Direct
Longs
Spectra Energy
Rolls Royce
Reynolds American
GBP/EUR
YUM Brands
Brown Forman Corp
Duke Energy
I was a little impatient with DUK today and got in fairly early in the day after the first pullback to the breakout point. So my entry price was 21.08, but it closed the day lower at 21.01, however, this is still a new weekly closing all time high. So I'll see where it takes me now. But I forgot to mention yesterday the nice 4.8% dividend, so it's certainly one I can hold on to if it goes to plan.
I also shorted SPD.L (Sports Direct) today at 207 as it made a Stage 4 breakdown yesterday and retested the break today. So my target on that one is 160.
Current Open Trades
Shorts
Silver
Sports Direct
Longs
Spectra Energy
Rolls Royce
Reynolds American
GBP/EUR
YUM Brands
Brown Forman Corp
Duke Energy
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isatrader
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US 30 Year Treasuries Stage Analysis
Below is the latest US 30 Year Treasuries chart which I believe is very important at the moment as it highlights the risk off trade. Price bounced off the trend line and and made a new weekly closing high and now looks set to test the September high this week. If it breaks out then the risk off trade would be back on and equities could sell off again. One thing to note is that volume was fairly light on lasts weeks move higher though.
Below is the charts
Below is the latest US 30 Year Treasuries chart which I believe is very important at the moment as it highlights the risk off trade. Price bounced off the trend line and and made a new weekly closing high and now looks set to test the September high this week. If it breaks out then the risk off trade would be back on and equities could sell off again. One thing to note is that volume was fairly light on lasts weeks move higher though.
Below is the charts
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isatrader
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Gold Stage Analysis
The weekly chart for Gold has moved into Stage 3 now, with price finding support this week at the 3 year trend line. Volume has been leaving Gold as you can see in the cumulative volume, but price is near the bottom of the Stage 3 range so there’s a possibility of a bounce soon. Especially as there a number of factors supporting Gold in the 1550 to 1600 area.
To become long term Stage 4 I’d personally want to see a close below the 3 year trend line and a move below 1535.
Here’s the chart
The weekly chart for Gold has moved into Stage 3 now, with price finding support this week at the 3 year trend line. Volume has been leaving Gold as you can see in the cumulative volume, but price is near the bottom of the Stage 3 range so there’s a possibility of a bounce soon. Especially as there a number of factors supporting Gold in the 1550 to 1600 area.
To become long term Stage 4 I’d personally want to see a close below the 3 year trend line and a move below 1535.
Here’s the chart
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isatrader
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AUDUSD Stage analysis
It's been a while since I looked at the AUDUSD weekly chart on 22nd September http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-2.html#post1681978, but it has played out very closely with the stage analysis.
On the current chart the Stage 4 breakdown continues to work itself out with a succession of lower highs. The recent double bottom made it look like it might reverse course, but price has been held down by the trendline and the falling 30 week MA. Cumulative volume has now turned negative and relative performance vs S&P 500 is under performing. So it could get a move down to retest the recent low and support zone around 0.94 and if it closes down there then it would complete a large one year head and shoulder pattern which would signal a larger down move.
Attached is the latest weekly chart and also the previous chart from Sept 22 to compare.
It's been a while since I looked at the AUDUSD weekly chart on 22nd September http://www.trade2win.com/boards/technical-analysis/134944-stan-weinsteins-stage-analysis-2.html#post1681978, but it has played out very closely with the stage analysis.
On the current chart the Stage 4 breakdown continues to work itself out with a succession of lower highs. The recent double bottom made it look like it might reverse course, but price has been held down by the trendline and the falling 30 week MA. Cumulative volume has now turned negative and relative performance vs S&P 500 is under performing. So it could get a move down to retest the recent low and support zone around 0.94 and if it closes down there then it would complete a large one year head and shoulder pattern which would signal a larger down move.
Attached is the latest weekly chart and also the previous chart from Sept 22 to compare.
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theblackmamba
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like you i am pleased with my results so far. they would be better if i hhadn't done some numbskull trades, but i guess thats the learning curve. as of friday this portfolio was up 1 percent whilst the ftse was down about two percent so relatively better.
current trades are
long - img, oxig
short - essr , mjw, fosl, spd, spt, sthr, spotgold, safe.
am halfway through an interesting book on jesse livermore, and a few points spring to mind. trade in the direction of least resistence. at the moment this is sideways/slightly down in ftse100, and sideways in sp500, so i keep telling myself be patient dont jusp in to everytrade. take the best afterall its best to do 200 trades in a year averageing 500 quid profit per trade, rather than 300 trades averaging 300 pertrade...
current trades are
long - img, oxig
short - essr , mjw, fosl, spd, spt, sthr, spotgold, safe.
am halfway through an interesting book on jesse livermore, and a few points spring to mind. trade in the direction of least resistence. at the moment this is sideways/slightly down in ftse100, and sideways in sp500, so i keep telling myself be patient dont jusp in to everytrade. take the best afterall its best to do 200 trades in a year averageing 500 quid profit per trade, rather than 300 trades averaging 300 pertrade...
isatrader
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I think one of the important things I've taken from the Livermore book that applies to the Weinstein method is evaluating continuation pivotal points, as these help you stay in through the entire Stage 2.
Quote from the page 77 of the book - How to Trade in Stocks by Jesse Livermore
"I define a Continuation Pivotal Points as a consolidation where the stock pauses in it's ascent, as a general sometimes pauses in a major assault to let his supply lines catch up to his troops and provide his men with a rest. It is usually a natural reaction of the stock. The prudent speculator, however, will carefully observe which way the stock will emerge from this consolidation, and not anticipate."
I highlighted the last sentence as I think it's important to take in.
Quote from the page 77 of the book - How to Trade in Stocks by Jesse Livermore
"I define a Continuation Pivotal Points as a consolidation where the stock pauses in it's ascent, as a general sometimes pauses in a major assault to let his supply lines catch up to his troops and provide his men with a rest. It is usually a natural reaction of the stock. The prudent speculator, however, will carefully observe which way the stock will emerge from this consolidation, and not anticipate."
I highlighted the last sentence as I think it's important to take in.
isatrader
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isatrader
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MO (Altria Group) Stage 2 continuation
I've been searching through the strongest sectors and one that stands out is Tobacco, as it has 3 stocks on Stage 2 continuation breakouts. PM, RAI, & MO. Confirmation of other stocks in the same sector is one of the key components of Weinstein's method, so it is very encouraging to see as I'm already in RAI.
I don't want to take a new positions in MO yet because of my exposure in RAI, and also because the breakout point has been missed. But, I thought MO was interesting as it's had an increase in volume on the breakout and has started to outperform RAI, so it may actually be a better play. However, I intend to wait for the first major pullback for a Continuation Pivotal Point to form as that will give me a chance to raise my stop loss above breakeven on RAI if all is going to plan and free up capital to trade MO.
Here's the charts
I've been searching through the strongest sectors and one that stands out is Tobacco, as it has 3 stocks on Stage 2 continuation breakouts. PM, RAI, & MO. Confirmation of other stocks in the same sector is one of the key components of Weinstein's method, so it is very encouraging to see as I'm already in RAI.
I don't want to take a new positions in MO yet because of my exposure in RAI, and also because the breakout point has been missed. But, I thought MO was interesting as it's had an increase in volume on the breakout and has started to outperform RAI, so it may actually be a better play. However, I intend to wait for the first major pullback for a Continuation Pivotal Point to form as that will give me a chance to raise my stop loss above breakeven on RAI if all is going to plan and free up capital to trade MO.
Here's the charts
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