Swing-day trading US stocks

Watch ideas for 09/20/2007

Hi all,

I will little talk about moving averages. I won’t cover all, because that will be to long post, but I will cover 10sma and 20sma. Both are very useful tool for trend determination and for low risk setups. My members asked me how long I wait for consolidation, when is too early or too late. One of tools to help us with that is 10sma and. 20sma. I’m trend trader and I need patterns as best tools for low risk setups. That is most important because without good risk/reward trades on longer term we can’t be successful. For that we need patterns (triangle, base, flag) to cut risk and for good trading plan. Since I’m breakout trader my focus are breakouts. Chart will explain more then thousand words.

http://www.ivicacharts.com/diagrams/2007/09202007tsm.jpg

This is TSM 30 min chart. We can see that after nice move up, with strong volume and strong breakout pace, TSM started with consolidation near highs. Right now range is tight and coming to 20sma 30 min support area (blue line) I will look for bounce from 20sma and setup is above red pivot bar. Stop is under 20sma. It is important to see reaction on Wednesday high of the day, breakout pace and volume. We want all in our favor for possible good risk reward trade. Target will be 10.50 areas what is equal move and number resistance area.

Next example is GNK.

http://www.ivicacharts.com/diagrams/2007/09202007gnk.jpg

Same reason, just this time we can see bull flag. I will look for 60 as target area. Reason for that is equal move and number resistance area. Important is to pay attention on Wednesday high resistance area, pace and volume.

Those are two examples how I use 20sma tool. If chart will continue with consolidation despite of 20sma support area, breakout risk will increase and in that case I will leave that opportunity, unless “whole picture” is really nice and I use intraday pattern for swing trade.

Hope all above makes sense. If anyone will have any question feels free to contact me or join us in our trading room. We have number of trading ideas and all explanations are live. Every trade will have chart so you can learn how to be successful trader

Good luck all
Ivica
 
Hello all,

Hope you all saw yesterday post. If you remember (you can look yesterday post), I was talk about 20sma as very powerful tool in combination with “whole picture”.

GNK was idea and I was look for bounce from 20sma on the 30 min chart. Setup was above previous high and we took at around $58.40, with stop under 57.90. HNK saw target area and much more. If anyone took it and closed at target area, we can see that GNK gave us several 5 min setups. Here is chart before setup:

http://www.ivicacharts.com/diagrams/2007/09202007gnk.jpg

This is chart after setup.

http://www.ivicacharts.com/diagrams/2007/09212007gnk.jpg

This is chart after setup. Take a look at brow3n line (10sma). It is very good trend determination line. For strong uptrend move we want see chart above 10sma and with 20sma can be very powerful tool if you know how to use it.

I have several ideas for today (STLD, HLS etc) but since we have option expiration day I like to watch open first and then I will bring updates during market hours.

Good luck all
Ivica
 
Market commentary for 12/06/2007

Good day!

Symbol Last Net Net% Symbol Last Net Net%
INDU 13444.96 +196.23 1.48 DIA 134.45 +2.02 1.53
S&P 500 1485.01 +22.22 1.52 SPY 148.81 +2.45 1.67
COMPX 2666.36 +46.53 1.78 QQQQ 51.57 +0.90 1.78

The ADP job report reported a stronger job growth than expected and a four year high in labor productivity. The result of this was a strong gap up for Wednesday's open. It ended up being a trap for short traders because the indices opened above Tuesday high. The problem with the market is quite a lot of resistance over head on the daily charts and the resistance came in right after open so we didn’t see a strong continuation. The first 30 min brought range action which is not typical for trap. The indices then decided to run up to the previous resistance area which we can clearly see on the 60 min charts. The resistance area was too strong and during the doldrums the indices started a strong intraday reversal which is not the action we like to see after trap open. The previous support areas held and after lots of indecision the indices ran back to the highs and closed strong. That suggests a continuation for Thursday morning.

http://www.ivicacharts.com/diagrams/2007/12062007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/12062007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/12062007qqqq60.jpg

It wasn’t a typical trap action because of sharp intraday reversals. Another thing that I don’t like from Wednesday action is volume. I expected much stronger volume and a huge exhausted bar. When we look at the daily charts we can see that indices back to Friday’s high resistance area and we have a possibility of a daily double top pattern. In case that is broken the next resistance is close. For the DIA that is the 100sma and then the 50sma. For the SPY that will be the 50sma and the QQQQ still has room to reach the previous high.

http://www.ivicacharts.com/diagrams/2007/12062007dia.jpg
http://www.ivicacharts.com/diagrams/2007/12062007spy.jpg
http://www.ivicacharts.com/diagrams/2007/12062007qqqq.jpg

For all these reasons I do not expect a strong healthy move up in the morning. We might have a gap up, but I expect Friday’s high will hold and we could see gap and crap scenario. Of course that is just one possibility. We don't know what the morning will bring. For now the indices act with previous expectations and in Monday’s commentary I stated that I expect whippy daily action and the possibility of a move up for the rest of the month. I don’t expect that move will be as strong as last weeks bounce from the low. The weaker buying paces with choppy intraday action suggest this action. This is not good market action for swing trades, since each day the gaps bring a higher risk and we must be very careful with the risk that we use. We have several open swings and for now they are doing ok. I like to note again that overnight risk must be small. Yesterday's gap up didn’t convince me to be a strong buyer. I will follow the market action as usual and I will use it for intraday setups what are the safest place for now. Generally the market show strength, but I’m suspicious looking for a continuation.

Wish you all a good trading day.

Ivica
 
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