Swing and Position Trading

[Splitlink]

Well, that it didn't work once doesn't mean that in general doesn't work. I'd like to understand what you meant before and I still don't get it. May be if you give me the kind of rsi you were looking at when you notice that I can understand better

Good trading,

Silvia.

Hi Silvia,

Haven't forgotten you, but am a bit tied up. I'll be there as soon as I can!

Split

 

[barjon]

azn coming into play?

you can see from the monthly chart that azn has ranged between £18 and £28 for the last couple of years with pretty clearly defined buy and sell zones at each end. The red line is the Fib50% retracement of the big 2002 down move. October printed a bearish shooting star (the last doji hammer is just so far this month) so whereto next?

The daily swing chart shows a breach of the previous swing low, although the one before that held (blue lines) which may have signalled a trend change to down. If so we've had a series of potential swing highs with the last (just about an engulfing down candlestick) today. No prizes for guessing which way I might jump, particularly if the market comes back.

Good trading

jon

 

[silviaic]

you can see from the monthly chart that azn has ranged between £18 and £28 for the last couple of years with pretty clearly defined buy and sell zones at each end. The red line is the Fib50% retracement of the big 2002 down move. October printed a bearish shooting star (the last doji hammer is just so far this month) so whereto next?

The daily swing chart shows a breach of the previous swing low, although the one before that held (blue lines) which may have signalled a trend change to down. If so we've had a series of potential swing highs with the last (just about an engulfing down candlestick) today. No prizes for guessing which way I might jump, particularly if the market comes back.

Good trading

jon

Well spotted
Here are the charts I'd look at: 5years and 1year back. I know the 5 year one it's a very long time ago, but as you say, the resistances make it more relevant. This is the historic channel you're talking about, right?. In the second chart I marked what I think are the recent resistance and support levels. For the moment it's a short for me, but the price objective it's very short term. It seems a good entry point for a 'defensive' play on the short side, just in case it happens that it keeps going down. If I'm wrong it should give me time to get out or even reverse. However, AZN is in my 'only long', because there were some little rumours about a take over. I burnt myself so often with this that now I included this column in my selection table. I wouldn't mind if we were in a 'normal' market, but it is a merger&acquisitions market, isn't it?

If the support at 24 proves to be strong (there is also the 200 ema at the same level), I'd consider a long from there. Sometimes I found that in order to break an important resistance price needs to what I call 'prepare'. First it needs to establish a good support zone that it's clear to everyone, and that it's tested in a proper way. Once it builds momentum at that level, it could get close to the resistance but not too close. Then in the second or third try it crosses it without leaving any doubts to anyone where it wants to go. I'm still in my early days as a trader, so there is many things I overlook. But I find that shares have like a 'personality' and 'personality disorders' that are finite. May be azn is in that class that does something like what I described before...

Good trading,

Silvia.

 

[Splitlink]

Hi Silvia ,

Instead of using relative strength based on historical data I have been looking at it based on the day's closing prices, using FT100 or the Allshare. Sharescope does this by getting the required chart, right clicking and, on menu, selecting "Price Relative to FTSE100" and "Add FTSE100" I would have thought that a better method would have been to divide one into the other and display it as a separate indicator but Sharescope has chosen to display it on the price chart, the problem being that, over a large time scale the graph lines can get too far apart and, over a shorter period the graph gets spikey and more difficult to guage.

Nevertheless, I have been able to identify shares where, although the price has been going up with the index, several days before, the RS line has warned by peaking and going lower.. This means (to my twisted thinking) that when the trader gets a signal that the index is going to reverse, this and similarly performing shares should be shorted. Not before, though, as the price could run up with the index for some time.

Divergence make more sense to me on these charts, too. A lower peak on RS against a high peak on share price means that, when the index fails, the share price could reverse.

This is just an idea that I have been playing with and I don't think that I will continue with it
because the resulting charts look cluttered up and ugly.. Relative Strength makes a lot of sense to me, but only on up to date comparisons with some other index or share. Data based over a certain number of days does not help me, at least.

If there is anything you want criticise or discuss about this I am always interested in ideas.

Hi Jon,

I thought I'd produce your chart to see if it helps. Buy signal 2 did not follow my argument. It went up but against the index but, when the index turned, the share rally fizzled out. Shouldn't have done that!

Oh, well! At least it signalled a price rise.

Split

 

[silviaic]

.....This is just an idea that I have been playing with and I don't think that I will continue with it
because the resulting charts look cluttered up and ugly.. Relative Strength makes a lot of sense to me, but only on up to date comparisons with some other index or share. Data based over a certain number of days does not help me, at least.

If there is anything you want criticise or discuss about this I am always interested in ideas....
Split

Split, there is something there that makes sense to me, I can't say more than that for the moment. I need to think about it. It could take me days or even weeks but definitely it's stored in neuron cell number 2 (number 1 is being used to write this). Thanks a lot for taking the time to explain your thoughts.

Good trading!

Silvia.

 

[techst]

Shorting

A few elder shorts. These fall into the conservative style of the elder approach.

The 70,130daily EMAs on the chart are a quick and dirty way of plotting the Weekly 12,26. These two examples show the stocks that have entered bear markets as defined by the Weekly 26EMA. The stocks have fallen below the EMAs and have then rallied up to hit the value area and use it as a ceiling. Short term support has been broken and their is solid volume folowing the downward move. These setups are harder to find in the current markets but i do believe these types of setups are going to be more readily available in the coming months. These setups help you avoid trying to short stock in bull markets, which can be tricky, and requires you to at the top of your game. Of course this is just a setup or an entry. It does suprise when the culture of the boards (and not just this one) is to just print entries and not a full trade including the exits. Pros concentrate on the exits, and trade management,daily grind of homework etc. This is certainly not an attack on anyone just an observation.

Any thoughts on these guys and girls?

 

[Splitlink]

A few elder shorts. These fall into the conservative style of the elder approach.

Of course this is just a setup or an entry. It does suprise when the culture of the boards (and not just this one) is to just print entries and not a full trade including the exits. Pros concentrate on the exits, and trade management,daily grind of homework etc. This is certainly not an attack on anyone just an observation.

Any thoughts on these guys and girls?

I know that everyone says that. Nevertheless, it's debateable. I am trying to get into a trade as close as possible to where I want my stop and I believe that it is extremely important to do that and to get the stop moved up into profit, as soon as possible. That is a very important part of trade and money management and I am fairly satisfied with the way that I keep my losses small, although it has not always been like that. It takes a lot of will power to get in just above where you are prepared to get out! I will admit to paying less attention to the exits than to the entries. I'm not a pro, but I am sure that they have their styles- they are not all the same.

Split

 

[silviaic]

Tsco

A few elder shorts. These fall into the conservative style of the elder approach.

The 70,130daily EMAs on the chart are a quick and dirty way of plotting the Weekly 12,26. These two examples show the stocks that have entered bear markets as defined by the Weekly 26EMA. The stocks have fallen below the EMAs and have then rallied up to hit the value area and use it as a ceiling. Short term support has been broken and their is solid volume folowing the downward move. These setups are harder to find in the current markets but i do believe these types of setups are going to be more readily available in the coming months. These setups help you avoid trying to short stock in bull markets, which can be tricky, and requires you to at the top of your game. Of course this is just a setup or an entry. It does suprise when the culture of the boards (and not just this one) is to just print entries and not a full trade including the exits. Pros concentrate on the exits, and trade management,daily grind of homework etc. This is certainly not an attack on anyone just an observation.

Any thoughts on these guys and girls?

Funnily enough, I went short TSCO today. I agree with your views. My trade wasn't based on any indicators, but on a failure to stay above the 200 ema when it crossed as if it wasn't there. This also formed a potential swing high. There is something that keeps me alert and this is the price making a higher low on nov the 2nd and price going higher than the previous swing high at 311. However, I've got a general feeling of bearishness (which could be wrong), and it seemed to me a good entry to give me time to take a position in the case I am in the right side. If the price stalls at 305 or around and looks like going back up again, I suppose I'll be out. If price stalls at 290 (which in the 5year chart I read as a resistance) this gives me the possibility to take a chance and wait to see how the price behaves there (I'm playing kind of defensive lately...). I'm still not good at fixing precise price targets, and I'm working on it. As you well say techst, beginners concentrate more on their entries, and this is my case (I don't take this as an attack, it is a fact, so don't worry). Just recently I started to be confident about my entries and not worrying so much about them. Now I get to the point where I need to learn how to get out. My dilemma is to see clearly where to get out before I get into the trade. I have to choose to do this kind of analyisis for the moment until I learn how to deal with precise price targets. How would you get out in this case?

Good trading!

Silvia.

 

[silviaic]

Hi Silvia ,
.........
This is just an idea that I have been playing with and I don't think that I will continue with it
because the resulting charts look cluttered up and ugly.. Relative Strength makes a lot of sense to me, but only on up to date comparisons with some other index or share. Data based over a certain number of days does not help me, at least.

If there is anything you want criticise or discuss about this I am always interested in ideas.
........
Split

Hi Split,

Well, I've been thinking about what you said. I think there is 3 ways to display the information you have there, which are equivalent (I'll call SPRI= share price relative to index):

1. Share price and Index
2. Share price and SPRI
3. SPRI and Index

SPRI is constructed by computing the relative changes of the share price respect to the index. I think basically it is calculated as (sp-index)/index. So I think there is no more information there than those two variables (this doesn't mean that I think is useless, I'm just putting boundaries in how much information I can extract from such an indicator). To start with the very simple case, if you plot this indicator respect to the index, this gives a straight line at 0% change. I'm still not sure how to interpret changes respect to a main index, but most traders think that when we're in a bull market is good to buy and in a bear market it is good to sell. This indicator could help in choosing the stronger shares in a bull market and the weakest in a bear market. My considerations are in hindsight, which makes this quite tricky, but anyway: if you know you're in a bull market, you could look for those shares showing an uptrend in the SPRI. This means that the share is giving better returns than the average, so it is strong. At the same time, shares which are in a downtrend respect to the average should be considered with care, and may be even put in a watchlist waiting for the next bear market as they could be good shorts. I know this theoretically, my experience is too short to say if it really works this way. Going back to SPRI, flat means that the share is highly correlated to the index (it is behaving just as the index). Down trend in SPRI means the share is weak respect to the index (it is underperfoming it). Up trend means the share is strong respect to the index, as I said before. Respect to divergences, It might be useful to look for a divergence in a chart of the SPRI and index (case 3 above). For example, if we believe the premise that in a strong bull market eventually all shares will follow the up movement, the end of a downtrend of the indicator could be a good buying opportunity. As an example I posted the chart of AAL. I don't think this indicator should be used by looking at its absolute value (I mean: it doesn't matter if it reads 10% or 5%, because this depends on your reference point), but it seems to be useful if you look at its trends. May be looking at this indicator could help you go long or short independently of what the general market is doing. But should you go long a share that seems to be strong in a bear market (or short in a bull market)? I suppose it could be worth testing it...

Silvia.

 

[techst]

I let the market tell me where to get out. My target is an area that the stock could possibly fall to. But I'll let the market show me how much is left in the move.

What I find really helpful and something that i keep at the forefront of my mind. 'Pros trade at the close'. If I look at a stock mid-day and it's going against me I rarely exit, I'll wait til the close. Most of the time the stock has recovered by then and I didn't give my profits back early. And even when the stock has gone against you and by the close the situation is the same, then at least you know by the final bell it's time to exit, and there's no time left for it to reverse and that you must make the decision to cut a loss. This helps you avoid the tyranny of the shoulds.

I also use buy/sell traps to go long and short on stocks at a price where my analysis of the direction is confirmed. I'll use limit orders to exit stocks at my target too. Because you can bet, that the morning your battery runs out on your alarm clock is the morning your stock reaches your target when your not there to watch it.

One of the best threads on this site is 'free trading videos'. If you wanna see a trade from entry to exit then here's the place. Des runs through how to manage the trade, moving stops up etc. it's a great lesson in how to manage your positions swing trade style.

 

[Splitlink]

Hi Split,

Well, I've been thinking about what you said. I think there is 3 ways to display the information you have there, which are equivalent (I'll call SPRI= share price relative to index):

1. Share price and Index
2. Share price and SPRI
3. SPRI and Index

SPRI is constructed by computing the relative changes of the share price respect to the index. I think basically it is calculated as (sp-index)/index.
Silvia.

Hi Silvia, The problem with SPRI is that it has to be worked out on a spreadsheet and I have got past that stage. I might do it for one or two shares but to find potential shares one has to be able to scan the lot and I can only do that with Sharescope

I think that an easier method, which does the job almost as well, is the one I posted , AZ. I have opened one possibility this morning with WTB. Let's see how it goes. As DJ did well yesterday,Footsie should rise some and, therefore, WTB should, too. Sticking my neck out a bit, I know!

Another one I selected was SSE but didn't trade. That one has gone up- mine hasn't!

Split

 

[silviaic]

Hi Silvia, The problem with SPRI is that it has to be worked out on a spreadsheet and I have got past that stage. I might do it for one or two shares but to find potential shares one has to be able to scan the lot and I can only do that with Sharescope

I think that an easier method, which does the job almost as well, is the one I posted , AZ. I have opened one possibility this morning with WTB. Let's see how it goes. As DJ did well yesterday,Footsie should rise some and, therefore, WTB should, too. Sticking my neck out a bit, I know!

Another one I selected was SSE but didn't trade. That one has gone up- mine hasn't!

Split

whoops! May be I wasn't very clear, but I was refering to the same indicator that appears in sharescope!

I used a longer time display for the chart of AAL (5 years), but I'm plotting the same you've plotted in the AZ. chart.

Silvia.

 

[Splitlink]

whoops! May be I wasn't very clear, but I was refering to the same indicator that appears in sharescope!

I used a longer time display for the chart of AAL (5 years), but I'm plotting the same you've plotted in the AZ. chart.

Silvia.

Sorry, I misunderstood. I wasn't stopped out of WTB yesterday

Split

 

[techst]

On the long side

ULVR setting up nicely for a swing or position trade. I like the series of divergences that it's printing on the indicators. I think the last short drive upwards to 580 has created this divergence setup. This has caught traders out hence the large volume has it falls from 580 the most recent high. I would be setting a trap to enter, but CMC wont let me get any where near the close price! Which i normally take as a good sign. What I normally do in this case is to enter the buy stop in the last 10 minutes of the previous day so i can get a closer trap set. I didn't do this on this occasion so I'll just have to wait til monday and enter using an intraday setup. Although saying this the stock will probably tank and gap down! sod's law being what it is! In the big picture ULVRs bull market is still young just one year old, and the stock is sitting at the bottom of it's long term trend.

Here you've got indicators setting up the opportunity, You've also got the stock in a value area within the 'elder averages'. It's at the bottom of a long term trendline and a close at the high of the day. A convergence of signals which build a 'weight of evidence' for the case to go long. But having said all this it's still only a setup, but a nice one.

 

[Splitlink]

ULVR setting up nicely for a swing or position trade. I like the series of divergences that it's printing on the indicators. I think the last short drive upwards to 580 has created this divergence setup. This has caught traders out hence the large volume has it falls from 580 the most recent high. I would be setting a trap to enter, but CMC wont let me get any where near the close price! Which i normally take as a good sign. What I normally do in this case is to enter the buy stop in the last 10 minutes of the previous day so i can get a closer trap set. I didn't do this on this occasion so I'll just have to wait til monday and enter using an intraday setup. Although saying this the stock will probably tank and gap down! sod's law being what it is! In the big picture ULVRs bull market is still young just one year old, and the stock is sitting at the bottom of it's long term trend.

Here you've got indicators setting up the opportunity, You've also got the stock in a value area within the 'elder averages'. It's at the bottom of a long term trendline and a close at the high of the day. A convergence of signals which build a 'weight of evidence' for the case to go long. But having said all this it's still only a setup, but a nice one.

Hi Techst,
I'm posting another chart on ULVR. This idea of RS that I have been on about in previous posts with Silvia coincides with your ULVR choice. The RS has just broken through the green line which marks the previous RS low, so I shall be watching with interest.

Another couple of points. Don't you think that the latest bar moves into an overbought area for anyone using a channel?

What do you think of aggressive entries, where the bar returns to a previous low, such as where my red lines are? This is what I meant in an earlier post where the stops are kept close.

Split

 

[silviaic]

ULVR setting up nicely for a swing or position trade. I like the series of divergences that it's printing on the indicators. I think the last short drive upwards to 580 has created this divergence setup. This has caught traders out hence the large volume has it falls from 580 the most recent high. I would be setting a trap to enter, but CMC wont let me get any where near the close price! Which i normally take as a good sign. What I normally do in this case is to enter the buy stop in the last 10 minutes of the previous day so i can get a closer trap set. I didn't do this on this occasion so I'll just have to wait til monday and enter using an intraday setup. Although saying this the stock will probably tank and gap down! sod's law being what it is! In the big picture ULVRs bull market is still young just one year old, and the stock is sitting at the bottom of it's long term trend.

Here you've got indicators setting up the opportunity, You've also got the stock in a value area within the 'elder averages'. It's at the bottom of a long term trendline and a close at the high of the day. A convergence of signals which build a 'weight of evidence' for the case to go long. But having said all this it's still only a setup, but a nice one.

Well, there is not much left to be said! I agree with your readings. Split, I see a red line in your chart at around 550, I think you meant a support there, right? May be I'd add to that a possible resistance at around 570 (572), which makes your trap, Techst, a nice one!

Good luck!

Silvia.

 

[Splitlink]

ULVR setting up nicely for a swing or position trade. I like the series of divergences that it's printing on the indicators. I think the last short drive upwards to 580 has created this divergence setup. This has caught traders out hence the large volume has it falls from 580 the most recent high. I would be setting a trap to enter, but CMC wont let me get any where near the close price! Which i normally take as a good sign. What I normally do in this case is to enter the buy stop in the last 10 minutes of the previous day so i can get a closer trap set. I didn't do this on this occasion so I'll just have to wait til monday and enter using an intraday setup. Although saying this the stock will probably tank and gap down! sod's law being what it is! In the big picture ULVRs bull market is still young just one year old, and the stock is sitting at the bottom of it's long term trend.

Here you've got indicators setting up the opportunity, You've also got the stock in a value area within the 'elder averages'. It's at the bottom of a long term trendline and a close at the high of the day. A convergence of signals which build a 'weight of evidence' for the case to go long. But having said all this it's still only a setup, but a nice one.

Hi techst,

I must be going soft in the head. I mixed you up with Naz. Sorry about that, although he is a very nice person, I'm sure ( got to be careful, here). I've edited my post to "Hi techst" and

Good luck, next week!

Split

 

[techst]

"Don't you think that the latest bar moves into an overbought area "

I think were all using different systems here, one man's overbought is another man's trigger price. And it does depend what trend your trading. There's three trends acting on all stocks. Short, intermediate and long.

I think the benefit of hindsight makes your aggressive entries look great. But I'm sure it's a tradeable system.

 

[Splitlink]

One of the rules about close stops , which I disobeyed, is that one should have enough confidence in the share to buy back in again, hopefully at a lower price. Otherwise a close stop loses part of the reason for using it. So I got closed out of WTB and today it is up again.

Yours is nicely up, techst. I'm pleased for you.

Split

 

[Rex79]

ascending triangle anyone ?

afternoon all - hope your all trading well.

have just noticed RR.

a good ascending triangle is froming - (maybe it's it formed a little too far, i've previously read that it if reaches the apex it's likely to fail), but I think if the market rises there may be a good upside to this.

Rolls Royce are doing well with orders at the moment.

all comments appreciated