Trader MD

Here's QQQQ from yesterday.



Costco from today. As Jamie pointed out, this could also be a 3 point pivot base & break.



I entered in on some puts when AGU broke down here @ the time of this screen shot.



The same goes with here and POT, yet I quickly realized they had earnings before the market open tomorrow and my goal was to manage the position since I was already in it and close it out by the end of the day, which is basically what I did (closed just before the end of the day).




As far as my GLD trade, I've been going back and analyzing it. It's been my only losing trade over the last 2 weeks. It's definitely good to have a bad trade every now (keeps you humble, disciplined) and then and heck maybe I've had a pretty lucky streak considering I'm basically away from the trading desk from 11 AM EST to 3 PM EST aside from a couple glances at the market / chance for a quick entry or quick exit every now and then (in between patients!).

Back to GLD. The one thing I failed to recognize on the GLD trade was that I didn't put in ample analysis in analzying the $USD which it basically trades off of. Even by looking at the euro (for example the FXE ETF), I would have seen the FXE was right up at resistance and my entry point on GLD was a poor choice. In addition my strong suit isn't pullback entries. They are usually a bit harder for me as stops aren't as clear cut and break outs/breaks down are just more of a clear defined area/number in which you can enter on.

As of now I'm nearly flat for swing trades, aside from the AGU (doesn't report earnings till august and will participate in any downside due to earnings reports from other Ag related names) puts I entered today. The Ag names still are looking techincally too strong (in compared to the other momentum names of late like coal, steel, energy stocks, etc). They look to be setting up for at least a flush out if not a retest of the 200 day MA.

Going with the theme of the Ag sector, here's another chart to keep an eye on. They report earnings July 29th, BMO.

Posted by Trader M.D. at 10:50 PM 0 comments

Labels: AGU, COST, CupnHandle, Gap Fade, POT, qqqq, Trendline Break, Triangle

Here's LDK. The only day trade today and the first one in a while.



Now for some general market thoughts. The market has to be in a pretty sad state right now, or at least the bulls have to be. Despite the positive news behind Fannie Mae and Freddie Mac released on Sunday by the PPT (Plunge Protection Team), they were still unable to put together a sustainable rally... even for a day.

This goes along with what I posted last Thursday, in regards to the better than expected jobs report. If the market was really as oversold as the charts make them look, they would be hungry to rally on any type of good or bad news possible. That clearly isn't the case.

What I'll be focusing on this week and going forward is looking at some of the key economic reports and earnings coming out. In order to even begin to get bullish, I want to see a good reaction to a bad report.

And just some food for thought: The $VIX is creeping up... sure... but who's to say it's not creeping up for a break out? It'll be interesting to see how the $VIX reacts in between the 30-37.50 levels, especially compared to the markets. If the $VIX starts knocking on the 37.50 area and the market is still continuing to slide, the $VIX could very well break out.

Look for signs and evidence of a rally before you put your hard earned capital to work. I made my mistake and quickly learned from it last week when I tried to trade AAPL / BRCM to the upside.

Posted by Trader M.D. at 7:19 PM 0 comments

Labels: CupnHandle, Fibonacci, Index, LDK

First here's DUG as promised from last night.

I was comfortable closing out my position yesterday below the $30 level as I saw the 30.40-30.60 area being pretty decent resistance, along with the outer limit of the ~5 month long channel being in that area, and seeing how much of a move DUG has made in the last few days already.

Sure the volume has been great, maybe even fantastic, but I'd still love to see it put in a pause at this area before attempting to work its way higher. Since this was a swing trade, my entries and exits were based on the daily chart for the most part.



I also think that the market has put in at least what appears to be a short term bottom here as crude has started to crack (down >$10 in 2 days). While the $VIX is no where near the mid 30s like we'd all love to see, the fact that the safe haven known as crude is breaking down is a very positive sign for the markets and it goes beyond the price of gas at the pump.

I'll try and briefly explain. It goes along the logic of me looking for energy stocks to break down last week. The energy sector stocks were basically the next domino to fall. The materials stocks (XLB) had been breaking down and the other recent hot sectors had been falling as well (solars, then Ag, then coal). The next biggest safe haven / momentum play / sector with relative strength, after those names was the oil and natural gas energy plays.

Now taking that a step further, the only investment over the last several months that has been even stronger than the oil and natural gas names themselves is crude oil. Now that crude is no longer a "when in doubt buy crude oil" play and money is finally flowing out of crude, it can now be put to work in actual stocks.

Think about it another way: if you can simply just throw your money in crude oil and be relatively comfortable that you will make $$, then why would you bother trying to invest anywhere else?

Here's AAPL & BRCM, which I added as swings today. You'll notice that they have fairly similar charts. Both have held up relatively well with the recent downturn in the markets and both of them have potential cup and handle patterns.

If AAPL can validate the C&H, and the market / earnings / etc cooperate, AAPL has a chance of hitting its cup and handle target of $265. The same goes for BRCM and $43.

Even if that doesn't pan out I think AAPL can hit / retest resistance at $200 for a nice short trade and BRCM can reach the low to mid 30s.

Posted by Trader M.D. at 11:23 PM 0 comments

Labels: AAPL, BRCM, CupnHandle, DUG, Trendline Break, Triangle

First a look @ the 3 minute chart (I managed the trade off this chart). I have to say I managed this trade nearly perfectly.



Now a look at the 15 minute chart, from which I entered off of.

Posted by Trader M.D. at 1:11 PM 0 comments

Labels: CupnHandle, FCL, InsideBar

The Nat Gas swings I had gapped up and attempted to push higher before selling off.

I sold 1/3 of my XTO @ 73.61 (38% fib extension of the double bottom/cup & handle pattern) and was stopped out of the rest just below 72.00.

I was stopped out of the entire DVN position just below 121.00.

I tried putting a swing position of EAC on just above 75 yet that reversed with the rest of the nat gas sector once the EIA data came out. I stopped out just below 74.

As far as the day trades go, most everything I was watching looked pretty choppy.

I was debating taking a long position on ENER, but it seemed pretty erratic for the first part of the day.

One trade I did put on was a short on PXP as it posted an inverse cup and handle that based @ ~77.75. I wish I could say I held it the entire way down but I began partialling out at the pivot points shortly after. My initial stop was just above 78.25. Bleh.

I most likely will be taking tomorrow off as it's likely to be as choppy as things were today.

Posted by Trader M.D. at 4:35 PM 0 comments

Labels: CupnHandle, DVN, EAC, PXP, Swing, XTO

Here's DVN, which I also have a swing on.



Didn't see much else today.

Posted by Trader M.D. at 1:19 PM 3 comments

Labels: CupnHandle, DVN

Had 2 bad trades in FWLT & LVS. They were solid setups, and the stocks were acting fairly orderly, yet I didn't give them time to work and bailed on the trades instead of moving my stops up.



Here's LVS. Keep an eye on it, if it can pull back here it could form an inverted H&S to setup a base for its next leg higher.



Finally, here's Visa, which was my best managed trade of the day.



Today was a lot like Wednesday (and the opposite of yesterday), in that all the momentum stocks did well, while the stock market averages didn't really move a whole lot.

Another thing I noticed early in the day, was that a lot of the momentum stocks gapped up and few provided any decent opportunity for an entry. In particular I hated how ENER had a monstrous jump over its recent bullish flag. I didn't have a stop order ready at the open and missed any semblance of a low risk entry.

Enjoy the weekend.

Posted by Trader M.D. at 12:45 PM 0 comments

Labels: CupnHandle, FWLT, Lesson Learned, LVS, V

Market was up decently today, but it sure didn't feel like it. Most stocks I was following had little to no follow through.

I hesitated on taking NSC early in the day and it turned out to be the stock with a monstrous follow through.

Be sure to check out the FSLR chart as I finally was able to point out something I've been meaning to.



Here's SCHN.



Both trades had little follow through, yet were properly managed.

I fear that tomorrow could be another summer like Friday. If you aren't finding solid candidates/setups early in the day, chances are the afternoon maybe worse. I'm going to be paying particularly close attention to the volume on any issue I trade tomorrow.

Posted by Trader M.D. at 3:33 PM 0 comments

Labels: CupnHandle, FSLR, Lesson Learned, SCHN, Wedge

Here's AAPL which had been steadily trending up over the last few days. Today's entry provided a good short if the market weakness continued and stocks broke down. From what I've noticed recently, when AAPL falls, it usually falls in a hurry.

The market didn't end up breaking down, and AAPL ended up bouncing at the confluence of the top of yesterday's base & the 78.6% fib retracement from the recent low to high.



Here's a look at the AKS daily chart. It's been trading up in a channel over the last few weeks and bounced off of the lower trendline in the channel on Friday & Tuesday.



The AKS trade had a good result, but it was still poorly managed.



That was it for today's trades.

I wasn't filled on the Base & Break in CMP @ 74.00 (HCPG Watchlist). It basically ran right by my stop limit order. I pulled the order, as I didn't want to enter on what could have been a reversal.

I also lost focus a few times and failed to enter trades in RIMM (beautiful gap up & falling bullish wedge), CLF (gap up & bull flag), NUE (Cup & Handle type pattern at the top of Friday's high), & AMSC (A focus list stock with a base & break @ 33). Ouch.

I'm going to spend some time thinking of ways to force myself to stay in solid trades & better manage my screen space so I don't miss out on setups I've been stalking.

Posted by Trader M.D. at 1:05 PM 0 comments

Labels: AAPL, AKS, CupnHandle, Trendline Break

Had a trade early in the day on AMAT, in which the bullish flag failed. Also had a trade in MDR in which the C&H failed.

The charts are from Stockcharts.com today as opposed to the service I regularly use to post my trades (Prophet charts, some sort of data issue).





In hindsight, I clearly shouldn't have taken the MDR setup as it wasn't really a high quality setup (too much choppiness in the handle) and the market really didn't have a lot of volume or force behind it today.

AMAT on the other hand was a decent setup in a sector that was showing fairly good relative strength this morning as many gapped up with LRCX (which was upgraded I believe).

I also managed the AMAT trade a lot better. The loss was much smaller than 1R as the stock wasn't nearly as choppy as MDR. By that I mean, from looking at the charts, you can easily see distinct areas where a stop could have been raised to, yet it was really hard to say the same for MDR.

Posted by Trader M.D. at 12:50 PM 0 comments

Labels: AMAT, CupnHandle, Failed, Flag, MDR

The market was generally weak all day and the morning trades had little follow through (essentially turning into scalps). It wasn't until the afternoon that the market really started to break down.

Aside from managing my swing trades in IPI, MTL & AKS, I was watching the Ag sector.

The annotated chart for POT basically says it all.



Speaking of those swing trades, I'll post up some charts later of my entries and exits (They've all been closed). I'll also try and post some index recaps.

Right now we're either going through a flush out or the market could be starting to break down. It's a bit early to tell, but one key area I'm watching on the S&P is the 1370/1380 area. IMO a break below 1380 could bring in more selling pressure.

If you are still in any swing positions, I would consider tightening my stops here.

Posted by Trader M.D. at 12:54 PM 5 comments

Labels: AKS, CupnHandle, IPI, MTL, POT

Market action improved today. We gapped down on the indexes, and gradually pushed higher through the day.

The Ag group was showing relative strength from the open. I saw POT and AG gap up, so I looked for an entry in the group and found AGU.



While I used a wider stop than I would have liked with AGU, the trade still still had a good result. I would have closed part of the trade at the fib extension and let the rest run, but the market has had little follow through over the last 2 days. AGU pushed higher, but I didn't miss too much.

V on the other hand, had a better formed handle (more distinct volume contraction) which let me use a tighter stop.



Taking a look at the V chart, you can see how either a conservative or aggressive fib level would have worked. I tend to use conservative fib extensions (drawn to the generalized base of the cup, as opposed to the very bottom of the cup).

Seems like the commodity areas (oil/energy/steel/ag/coal/etc) & solars just roar on.

Quite a few steel stocks hit new all time highs / recent highs (X, SCHN, MT, NUE, GGB). I also like to include CLF in that space (although they are an iron ore producer). The price action in CLF today was amazing. They report earnings and miss by something like 40 cents & gap down as a result. Buyers stepped in and pushed CLF to new all time highs.

Speaking of steel stocks, I picked up MTL today as a swing, and keep an eye on AKS as it sets a new all time high just above 69.62. RS looks very compelling as well (although it has lagged recently, it has formed a nice base and breaking above 64 could really push it higher).

JRCC (coal) & JOYG (machinery) had similar price action to CLF. Speaking of machinery stocks, CAT looks like it wants to push higher and test its recent highs of ~85.50.

Current swing positions:

• Picked up AKS, MTL & IPI.
• I was stopped out of my DZZ today for a small loss.

Posted by Trader M.D. at 12:42 PM 0 comments

Labels: Ag, AGU, AKS, CupnHandle, IPI, MTL, Steel, V

Nothing special on the day trade front. I was stopped out of a few trades and called it a day. I've really noticed between Friday and today that my system really doesn't work well on low volume / churn type days.

It almost feels like the street is a bit demoralized as despite the dollar improving somewhat over the last week/few weeks, oil continues to hit new highs.

The dry shippers & coal did really well today, and steel is breaking out to all time highs.

As far as swing trades go, I closed out RIMM (~134.50) today. I may look to re-enter after a consolidation/pullback.



In respect to the RIMM trade, after looking it over, there is very little I would have done differently. Not only was it a good trade in that it banked some coin, but my reads on the entry & exit points were solid.

It probably needs to rest a bit / consolidate here before making any realistic attempt to push higher. Volume (the power behind the move) has been decent, but not strong enough to power it through multiple resistance levels and to all time highs with out taking a breather first.

---

After looking at the charts from today, I can't really say I have any special watch list type picks to add for tomorrow.

I'm looking for continued strength in the Steel / Coal / Dry Shippers and possibly Ag starting to push higher again.

---

Depending on how the volume is tomorrow I may try and spend some more time away from the desk.

In a little over a month I'll be working about ~60-70 hours a week and need to start getting reacquainted with looking at my positions / adjusting my stops once every few hours (if that) on swing trades.

Posted by Trader M.D. at 5:16 PM 0 comments

Labels: CupnHandle, Recap, RIMM, Swing

Let me start off with a little self promotion and say that my eye on the dollar was right on.

If you've been watching this blog over the last few days, today's move up shouldn't have surprised you. Even if you checked the watch list for today (albeit I end up posting them late for some of you as I'm on the West Coast), you'll know that the focus was all about the dollar.

From last night's watch list:

For an idea of what to go trade, keep an eye on the dollar. If you don't get get futures data, you can watch the ETFs to get a good idea of what's going on: FXE (the euro), FXY (the yen), and FXB (the pound) are the currencies to be watching. Then of course the commodities: GLD (gold), SLV (silver), and most importantly USO (oil).

With weakness in the dollar look to for long setups in anything commodity related: Ag, Coal, Steel, Energy/Oil related names.

If the dollar can firm up a bit look to tech & transports (esp the rails).

Pre-market the dollar was much stronger (The PCE deflator definitely helped with that) and the FXE, FXY, FXB, USO, SLV and GLD were much weaker.

That in turn helped push the rally in techs & financials (which I like to stay away from).

Speaking of today's rally. I believe it still has some more legs. Keep an eye on that dollar and the reaction in the markets.

Things I liked about today's rally:

• Strong volume & price action on the QQQQs (Nasdaq 100, essentially Tech), XLF (Financials), IYT (Transports), and SMH (semis)
• In addition we had good strength in the dollar, which in turn leads to weakness in the aforementioned currencies and commodities
• The SPY moved up strongly above the 1400 level (although I wish volume was better)
• The DOW (the meaningless index IMO) closed above 13,000
• Leadership appears to be changing from the Commodity (XLB) and Energy (XLE) leadership to things like Tech (XLK or Q's), and IYT (Transports, which continue to be strong) and Financials (XLF)
  

Things I disliked (or wished that they would have been better) about today's rally:

• The IWM (Russell 2000) still continues to lag and I want to see it close above the 73 level and volume to pick up.
• And as mentioned, I wish the volume on the SPY was a bit better.

Now onto today's charts (most of the annotations are on them).






I also had some solid cup & handle type trades in the Ag sector (IPI & MON) late in the day.

As for an update on the swing positions I had open. I took a little off the table off the DUG when it started to back off of 34 and then tightened my stop on the rest of my position (I was stopped out). DUG will probably move higher as oil moves lower, but as it's been so strong, people will keep trying to buy the dips in it and as a result I'd rather stick with the better of my 2 strong dollar plays, the DZZ (inverse gold).

One thing I said last night that I didn't want to do was add a swing position ahead of tomorrow's job number, but the price action on RIMM today was very compelling and I picked it back up as it broke out of a cup & handle type formation late in the day. I loved how it closed strong (near the highs of the day) and volume picked up. In addition, this is the 4th highest close for RIMM. I suspect we set a new high sometime soon and, no it's not too late to get on the RIMM bandwagon. Out of all the leader-type tech stocks, its the one that's just breaking out of its base, while GOOG, AAPL, BIDU, etc have all run up quite a bit.

Another swing type name to keep an eye on is AMZN, but I suspect that will lag and struggle more than the other leader type tech stocks.

Posted by Trader M.D. at 1:52 PM 3 comments

Labels: CupnHandle, Dollar, Index, MA, Recap, Triangle, V, VMW

Great way to start the day. I've said basically everything I have to on the chart.



Be sure to take a look at MOS (Mosaic) and MON (Monsanto) on the same time frames (2-3 days x 5 minute bars. Take a look at how MON gaps up and starts to move ahead of the Ag sector and then compare the charts of MOS & IPI (especially the location of the handle and the volume).

Posted by Trader M.D. at 10:53 AM 2 comments

Labels: Ag, CupnHandle, IPI

I'm guessing some gibberish was said during the conference call. I also didn't like how the rest of the steel sector wasn't moving up & reversing with X. That was the clue to be more aggressive with stop management.



MON on the other hand is one that just got away due to poor management. The rest of the sector was weak and I was way too aggressive with stop management.

Posted by Trader M.D. at 12:55 PM 2 comments

Labels: CupnHandle, Lesson Learned, MON, Tweezer Bottom, X

It just goes to show you that you should trade what you see and not what you believe will happen. If you asked me yesterday and with the initial reaction to CF's earnings after the bell yesterday, I would have guessed the Ag sector would have continued lower and I did mention that in last night's watch list for today:

That probably would mean more selling for Ag, and more break downs for Coal, Steel, Energy, Solar names.

Woops :) Anyhow the Ag sector started off slow and then they all started to move higher one by one. I went through all the charts of sector and found IPI forming a nice Cup & Handle.



SOHU was from last night's watch list. It was forming a nice bull flag on the multiday / daily chart. Some @#$! analyst at Citigroup upgraded it in the premarket to have it gap above the bullish flag.

It probably would have been a pretty nice swing entry on a break of the bullish flag, but I didn't want to chase it.

Anyhow, it set up with a bull flag later in the day. I only got a partial fill so I scrapped my trade shortly there after.




Have a good weekend :)

I'll be watching the 2008 NFL Draft. Go Niners.

Posted by Trader M.D. at 1:16 PM 6 comments

Labels: CupnHandle, Flag, Gapper, IPI, Lesson Learned, SOHU

RIMM & MOS offered similar patterns as far as their coils go.

RIMM then went on to form a bowl / rounded bottom type pattern, where as MOS failed in the C&H.

When looking at the 2 examples look at how dramatically different the volume is on their upside breaks.

Also notice, that despite leaving quite a bit of $$ on the table, I had some pretty successful trades in them. Even though the MOS patterns didn't exactly pan out, I still locked in some profit on each trade and managed my stops properly.



The AG names I was watching while trading MOS (I was cycling through them for evidence of reversals, as sectors often trade together): POT (sector leader), AGU, MON, & CF.



Just out of curiosity, do you guys prefer that I annotate the trades on the blog, or on the charts?

I try and use different (legible) colors where I can in order to make things easy to follow. I'm sure that MOS trade is probably a little on the crazy side though, since there are so many annotations.

Posted by Trader M.D. at 6:06 PM 4 comments

Labels: Coil, CupnHandle, MOS, RIMM

First, the earnings (I'll be paying attention to the italicized ones; courtesy of Briefing.com):

• Monday: ALDN, ACI, BAC, LLY, GCI, MRK, NVLS, STLD, and TXN...
• Tuesday: AKS, BHI, CME, COH, LMT, MCD, NCC, PAS, UAUA, UNH, WU, BRCM, CREE, CYMI, NSC, VMW, YHOO, and YUM..
• Wednesday: AAPL, APD, ABK, ABC, BIIB, FCL, GENZ, SGP, BUD, AMZN, CMG, FFIV, NTRI, and QCOM...
• Thursday: MMM, MO, DOW, FLIR, MOT, NOC, PEP, POT, RTN, TASR, ZMH, AXP, BIDU, MFE, WFR, MSFT, WDC, and YRCW...
• Friday: AXL, GT, ERIC, and WEN.

Note: VMW, NTRI, CMG, BIDU, TASR, CREE and YRCW have significant short interests (a positive reaction to their earnings could accelerate quickly to the upside)

You'll notice there are quite a few coal, steel, semi

This week's economic reports are on the lighter side & there is no scheduled fed speak.

On to the indexes:

• Keeping a longer term perspective on the S&P

• The S&P daily

• The QQQQ daily

• The IWM daily

• The XLF daily

• The SMH daily

We've had quite a nice move up over the last week and we're probably due for some sort of a breather here. Another event that will make next week interesting is what happens of the YHOO/MSFT deal.

Things look good for now and I think that will continue, even if we get a few minor shocks along the way. Any unexpected major shocks could definitely change the course over the short to intermediate term.

Posted by Trader M.D. at 10:37 AM 0 comments

Labels: Coal, CupnHandle, Index, Recap, Semis, Steel

WFR was on my daily gap down list from Briefing.com. I noticed after gapping down over 8 points, it started bucking the trend and pushing higher. It began to form a C&H type base with a very narrow handle. I liked how the volume contracted during the handle and expanded as the pattern broke. Unfortunately after 3 WRBs (Wide Range Bars) I tightened my stop on my entire position was stopped out for a little over 4R.

Stop placement and profit taking is something I clearly have to work on. When entering the trade, my target was the 200% Fibonacci extension from the height of the cup. Better stop placement &/or position management would have resulted in a far better trade.

I was watching Visa progressively work higher when it started to form an ascending triangle type base under the even number of 64.00. I entered on a break of 64 but was unfortunately stopped out on the very same bar as it whiplashed below my stop level. Needless to say it was frustrating to see V run up over 2 points from my initial entry. *sigh*

Posted by Trader M.D. at 11:45 AM 0 comments

Labels: CupnHandle, Triangle, V, WFR