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Lifting Up The Market's Hood: Lemons Or Leaders?

2011-05-03T15:23:42Z

Every senior index (DOW, S&P 500, NASDAQ, and the Russell 2000) all gapped higher on the news of the demise of Osama Bin Laden. The S&P 500 and Dow Jones Industrial Average were all set to continue the 4-day winning streak and the NASDAQ was looking at extending an 8-day winning streak, all of which lead to intraday fresh-new multi-year highs. The exuberance lasted for a couple hours after the market opened and then one-by-one the leaders began to rollover. In today's update, I highlight a few examples in an effort to raise awareness that "higher targets" down the road in the broader averages are likely, but that doesn't mean that stock-by-stock and sector-by-sector won't under go some corrective action.

WFMI - Possible Bump And Run Pattern Breakdown

PNRA - Possible Head And Shoulders Top Breakdown

DECK - Possible Rising Wedge Breakdown

FOSL - When Bullish Patterns Fail In Leading Stocks

From a technical perspective nothing unusual about yesterday’s action gives me pause or concern, for the medium and longer term trends higher. The only problem short-term is what we started seeing as early as last week, and that is the higher the market goes the less, or fewer, stocks within the broad averages actually participate. The chart that sums it up the best continues to be the one I brought to your attention last week called the “NASDAQ New High Index Chart.” As you can see below for all of 2011 we continue to make fewer and fewer new highs while the index continues to advance. As you can see below for 6 straight months as highlighted in "yellow squares" the higher the market goes the fewer stocks the index takes with it to new highs.

NASDAQ New High Chart - (Click Chart To View Larger Image)

For the most part earnings season as been better than what most analysts seemed to expect, and we can see that by the amount of stocks that are crushing the top and bottom line, so from a fundamental back drop one could not ask for a better market to continue to invest in. However, if fundamentals were the only thing traders looked at they would be scratching their heads, as I am sure they are right now, as too why with such great news, great earnings, M&A that continues to pick up, share buy backs, and all this great value that the market didn’t close up 500 DOW points yesterday, especially in light of the Osama Bin Laden news. Truth be told, if this happened back in 2003, 2004, 2005, or even 2009 not a doubt in my mind the DOW would have gapped up 1,000 points or more.

But we have to trade what is happening now, versus what could have happened in the past and this is the bottom line when it comes to the short term – my “Buy America” theme of 2011 has had a healthy run for the first 4 months of 2011. A little pause and consolidation is not unusual when momentum gets this stretched and stocks and sub-sectors remain this overbought. Now let’s review what technicians view as overbought by using a couple of different charts to put this in a little bit better perspective.

These charts are called “Bullish Percent Index” and put simply: the Bullish Percent Index offers something for all sorts of traders. Bottom pickers can look for bullish reversals when the index drops to the 30%-40% range. As you can clearly see that was a great time in 2010 to swing long with a relatively low risk. Of course that came on the back of the flash crash so “emotionally” buying then when blood was in the streets when we had so many mixed signals wasn’t for the faint of heart. While top pickers can look for bearish reversals above 80 to 90% level however, it must be said that these are the more risky entries because tops can extend over time. Additionally, they can often get a re-test of the prior high within the bullish percent index because as we all know “tops are not an event” they have and will always be a “process”.

As you can see with the BPSPX it quickly reversed higher after only hitting a low reading in the 70% range, post-Japan crisis. Those that have been short all the way up from those March 16, 2011 lows, have clearly been in as much pain as those that were long and wrong May 2010 through about July 2010. In both cases of the S&P 500 (BPSPX) and NASDAQ (BPCOMPQ) we might not be at levels that warrant any top calling because that isn’t what these charts are designed for or represent. The Bullish Percent Index (BPI) is a breadth indicator based on the number of stocks on Point & Figure buy signals within an index or a sector. Much like the “NASDAQ New High” chart it’s simply one other way to measure how the engine is running underneath the hood and to keep us on our toes of conditions that might not be caught as quickly by just looking at a price chart of any senior index.

Bullish Percent Index SP500 (Click Chart To View Larger Image)

Bullish Percent Index NASDAQ (Click Chart To View Larger Image)

So in conclusion, what I see “underneath the hood” is a rally a wee-bit long in the tooth, that has leadership stocks that led the advance now retreating, while laggard stocks are starting to lead, which again should be no surprise to anyone because that is exactly how the pattern this market is in the "Expanding Triangle" in the S&P 500 is supposed to act, at this stage in the rally, as I pointed out on the SPY ETF chart back on April 12, that we would see a few more days of selling down to SPY 130 before a parabolic rally north that would lead every major index to new 52-week highs before the end of April 2011. You can review that update here at this link "Expanding Triangles - Tortoise and the Hare"

SPY - Expanding Triangle Chart From April 12th (Click Chart To View Larger Image)

Now here is where our job as traders, gets a little tricky. When we have a shift in market momentum and leadership sectors and the big boys forget to send out a notice that says “By the way, starting next week, what worked last month isn’t going to work this coming month and what will work this coming month we would like to keep a secret until we are fully invested but we will be sure to notify you via a slew of upgrades after we backed up our truck.” That’s Wall Street for ya, but I digress. The clues are actually already right in front of us, we just have to make sure we are paying attention to what everyone knows by now is called “sector rotation”. As we begin to see this occur this month I will show you a few tricks of the trade I use to 'see it' before it actually happens.

As far as the markets go today these are some sectors, indices, and ETF’s that for the first trading day of May managed to squeeze out a new 52-week highs, but in most cases they reversed to close on or new lows.

Futures Making New-52 Week Highs

ES #F (SP500 Futures)
YM #F (Dow Jones Industrial Futures)
NQ #F (NASDAQ 100 Futures)
TF #F (Russell 2,000 Futures)

Cash Indices Making New 52-Week Highs

$SPX (SP500 Index)
$INDU (Dow Jones Industrial Index)
$TRAN (Dow Jones Transportation Sector)
$UTIL (Dow Jones Utility Sector)
$COMPQ (NASDAQ Index)
$NDX (NASDAQ 100 Index)
$NYA (New York Stock Exchange)
$RUI (Russell 1,000)
$RUT (Russell 2,000)
$RUA (Russell 3,000)
$VLE (Value Line Index)
$SML (SP600 Small Caps)
$MID (SP400 Mid Caps)
$OEX (SP100 Large Caps)
$RLX (Retail Index)
$BTK (Biotech Index)

ETFs Making New 52-Week Highs

SPY (SP500 Tracking ETF)
DIA (Dow Jones Tracking ETF)
QQQ (NASDAQ 100 Tracking ETF)
IWM (Russell 2,000 Tracking ETF)
IYT (Transportation ETF)
HHH (Internet ETF)
MDY (Mid Cap ETF)
GLD (Gold ETF)

The hardest hit would be the high beta “small cap index” or what we call the Russell 2000 which dropped hard yesterday with a loss of 1.17% on the day putting in what we call an “Outside Daily Bearish Key Reversal”. An engulfing pattern (bearish) or what we also call “Outside Daily Bearish Key Reversal” develops in an uptrend when sellers outnumber buyers; this action is reflected by a long red real body engulfing a small green real body. Keep in mind these are "daily reversal bars" so some perspective should be noted;

1. One day doesn't change a trend

2. Confirmation is required

3. Even if we do get confirmation, the trend doesn't instantly change, only our position size and management of current trades should be reviewed

Engulfing Pattern (Outside Daily Bearish Key Reversal) -- Bearish

IWM - Outside Daily Bearish Key Reversal

OIH - Outside Daily Bearish Key Reversal

MDY - Outside Daily Bearish Key Reversal

$SOX (PHLX SemiConductor Index) - Outside Daily Bearish Key Reversal After Stalling At Resistance

ES #F (SP500 Futures) 240 Minute Chart Of the Expanding Triangle (Click Chart To View Larger Image)

ES #F (SP500 Futures) Daily Chart Of The Bullish Ascending Triangle (Click Chart To View Larger Image)

Best and Worst Benchmark (Sectors, Indices, ETF's) So Far for 2011

Classic Patterns

Classic is a term used to refer to a group of patterns that typically have a longer-term horizon (greater than 12 days) and which have distinct price swings such that the price swings form distinctive patterns. The names of classic patterns often reflect the shape of the formation such as the Double Top, Double Bottom, Head and Shoulders Top, Ascending Triangle and so on.

Bullish:

Bearish:

Short-term Patterns

Short-term patterns are based on the shape and relationship of the candlestick(s) or price bar(s) representing one or multiple consecutive trading days. This includes patterns such as the Hanging Man and the Gap Up. The technical event is the confirmation that the pattern has formed in the price bar(s). These Technical Event® opportunities are useful for suggesting possible short-term price movement. They are also useful for supporting or refuting the possible price movement suggested by classic patterns. Short-term patterns are often considered as supplementary information.

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Misplaced Confidence In Judgment - Keep It Real

2011-04-29T01:06:34Z

The greatest obstacle to discovery is not ignorance--it is the illusion of knowledge...Daniel Boorstin (1914-2004, Librarian of Congress Emeritus)

The English word hubris has its roots in the Greek word hybris. It refers to the excessive pride that almost always precedes the downfall of the tragic hero in Greek drama. Anytime a person is given praise and rewarded based on some measure of what they do (as opposed to who they are as human beings), that person is vulnerable to falling into a state of hubris. I have seen this over and over again in my own trading and in the trading of those who have just come through a period of large gains. If pride is not contained, put into perspective and managed completely, it morphs into a dangerous state. This is the point where the trader is most vulnerable and begins to set himself up to lose.

The first step in the development of hubris is to have a series of gains or praise. If those gains are attributed to the some unique ability, skill or intelligence, they will contribute to the pattern of overconfidence. Overconfident traders ignore or change their risk parameters and puff up their egos to the point that they feel they are invulnerable.

A growing amount of literature shows that misplaced confidence in judgment of the trader or investor (including all manner of traders, investors, money managers and market prognosticators) leads them to believe that they can predict the future by knowing what happened in the past. To compound this overconfidence bias, there is also a tendency to actually distort past events and the recollection of these events. (This tendency is called hindsight bias.)

Given the inadequacy and fallibility of human judgment and decision-making, particularly in the stress-ridden environment of the trading day, it is critical that traders become intimately aware of how overconfident they are and how this will affect the way they interpret what they see, hear and read about the markets.

I urge each of you to take a close look at your feelings about yourself during and after the trading day. At those times when you feel that you can do no wrong and that everything you touch will turn to profits, please start to reflect. Allow yourself to be in humility and gratitude for the gifts that you are privileged to receive from the markets. Always remember that making money is a by-product of planning your trade, trading your plan and setting aside your ego.

Doubt is not a pleasant condition, but certainty is absurd...Voltaire

Classic Patterns

Bullish:

Bearish:

Short-term Patterns

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Expanding Triangles - Tortoise and the Hare

2011-04-12T14:53:58Z

It may surprise you to learn that every single crash in the market in the past 50 years was a variation of the expanding triangle pattern. Conversely, more often than not, during the past 10 years, nearly every acceleration to the upside was a variation of the bullish expanding continuation triangle. I want to look at how this has played out in the past, as well as what strategies would have netted you profits in the current market.

Current SPY Chart (Click Chart To View Larger Image)

Looking at the SPDRs (SPY), to put in perspective how tricky this market has been from the March 16 lows, this is what would have happened if you had bought the close and sold the open, versus buying the open and selling the close: The March 16 close in the SPY was $126.18 and the April 11th close was $132.86 with a total gain of $6.28. 'Buying the close and selling the next day open' is now outperforming 'buy the close of March 16 and hold.'

What is Working

'Buy the Close' and 'Sell the Open' -- The day after the March 16 lows, you would have gained $7.76 per share in SPY from March 16 to April 11 following that system.

What Hasn't Been Working

'Buy the Open' and 'Sell the Same Day Close' -- You would have lost $3.45 per share in the SPY from March 16 to April 11 following that system.

Conclusion

The last three times that 'Buy the Open' and 'Sell the Same Day Close' worked resulted in three different end results. However, there was one thing they all had in common: the "Expanding Triangle."

This is not a prediction that what happened before is going to happen exactly the same way again. However, as Mark Twain said, “History never repeats itself, but it often rhymes.” If anything, what is happening now looks very close to what happened in 1998. As I have stated all year, higher prices are still in order with an end-of-year target for the S&P 500 well into the 1400s, but that doesn't mean we won't get a correction at some point in the coming weeks.

So, let's start off with the expanding triangle of 1998 in the S&P 500, then move on to the expanding triangle in the Dow Jones Industrial Average of 2000 and lastly review the expanding triangle in the QQQs that topped out March 31, 2007.

The S&P 500 in 1998 - As many sources note, the Russian financial crisis (also called the "Ruble crisis") hit Russia on August 17, 1998. It was triggered by the Asian financial crisis, which started in July 1997. During the ensuing decline in world commodity prices, countries heavily dependent on the export of raw materials were among those most severely hit. Petroleum, natural gas, metals, and timber accounted for more than 80% of Russian exports, leaving the country vulnerable to swings in world prices. Oil was also a major source of government tax revenue.

The S&P 500 hit a high of 1190.58 in July 1998, then tumbled to 923.32, or 267.26 points, a drop of 22.45%. The S&P 500 then bottomed in October 1998 at 923.32 and rallied into the end of the year, hitting a high at the end of December at 1244.93 with a gain from the October lows to the December 1998 highs of 321.61 points, or 34.83%. As you can see from the chart below 'Buy the Close' and 'Sell the Open' was the only system that worked "best" until wave "E" was in and the market went off to the next market top highs. See below.

S&P 500 Expanding Triangle Continuation Pattern of 1998 (Click Chart To View Larger Image)

The Dow Jones Industrial Average in 2000 - Again, as many sources will tell you, the International Monetary Fund expressed concern about instability in U.S. stock markets in the months leading up to the sharp downturn. The technology-heavy NASDAQ stock market peaked on March 10, 2000, hitting an intra-day high of 5,132.52 and closing at 5,048.62. The Dow Jones Industrial Average peaked on Jan. 14, 2000, with an intra-day high of 11,750.20 and a closing price of 11,722.98.

As you all likely know the Dow Jones bottomed nearly two and half years later in October 2002 at 7,197.49. Like the Russian currency crisis that was triggered by the Asian currency crisis as you can see above, both lows in 1998 in the S&P 500 and the low in the Dow happened in the month of October. Oddly enough, the same can be said for the 1987 crash that bottomed also came during October shortly after the August 1987 top. And guess what pattern was present during each crisis? You guessed it: the “Expanding Triangle”! As you can see from the chart below 'Buy the Close' and 'Sell the Open' was the only system that worked "best" in the last stages of the move up.

Dow Jones Industrial Average Expanding Triangle Top in 2000 (Click Chart To View Larger Image)

The NASDAQ 100 (QQQ) on Oct. 31, 2007 -, The QQQss succumbed to a wider financial crisis along with a decline in technology spending and plunged toward a Nov. 21, 2008 intra-day low of $25.05. Because this is likely still fresh in everyone's short-term memory, there's no need to get into the entire nitty gritty but, needless to say, once again the pattern that told the story before it happened was the Expanding Triangle. And like the other expanding triangles, 'Buy the Close' and 'Sell the Open' was the only system that worked "best" in the last stages of the move up.

The NASDAQ 100 (QQQ) Expanding Triangle Top of 2007

Bottom line: Some expanding triangles, like the one in 1998, are "continuation patterns" that lead to new highs. Other expanding triangles are "reversal patterns" that lead to new lows. Our job is not to guess which we are currently in because, odds are, we would guess incorrectly. More importantly, our job is to be conscious of this pattern and the different ramifications and risk/reward that each present. If there was ever a time to not "over trade" this would be it, which reminds me of a story … "The Tortoise and the Hare."

"The Tortoise and the Hare"

Once upon a time, there was a hare who, boasting how he could run faster than anyone else, was forever teasing the tortoise for its slowness. Then one day, the irate tortoise answered back: "Who do you think you are? There's no denying you're swift, but even you can be beaten!"

The hare squealed with laughter. "Beaten in a race? By whom? Not you, surely! I bet there's nobody in the world that can win against me, I'm so speedy. Now, why don't you try?"

Annoyed by such bragging, the tortoise accepted the challenge. A course was planned, and the next day at dawn they stood at the starting line. The hare yawned sleepily as the meek tortoise trudged slowly off. When the hare saw how painfully slow his rival was, he decided, half asleep on his feet, to have a quick nap. "Take your time!" he said. "I'll have 40 winks and catch up with you in a minute."

The hare woke with a start from a fitful sleep and gazed round, looking for the tortoise. But the creature was only a short distance away, having barely covered a third of the course. Breathing a sigh of relief, the hare decided he might as well have breakfast too, and off he went to munch some cabbages he had noticed in a nearby field. But the heavy meal and the hot sun made his eyelids droop. With a careless glance at the tortoise, now halfway along the course, he decided to have another snooze before flashing past the winning post.

And smiling at the thought of the look on the tortoise's face when it saw the hare speed by, he fell fast asleep and was soon snoring happily. The sun started to sink, below the horizon, and the tortoise, who had been plodding toward the winning post since morning, was scarcely a yard from the finish.

At that very point, the hare woke with a jolt. He could see the tortoise a speck in the distance and away he dashed. He leapt and bounded at a great rate, his tongue lolling, and gasping for breath. Just a little more and he'd be first at the finish. But the hare's last leap was just too late, for the tortoise had beaten him to the winning post. Poor hare! Tired and in disgrace, he slumped down beside the tortoise who was silently smiling at him.

"Slowly does it every time!" he said.

A Few Trading Lessons from the Tortoise and the Hare:

(1) Overconfidence is a badge of ignorance. Unless you approach the markets daily with humility, you are doomed to failure. You might knock out a few good trades, and then get even more confident. You are an accident waiting to happen.

(2) Self-confidence is great, but it must be tempered with self-criticism and vigilance.

(3) While you are sitting back resting on your laurels, and bragging to yourself and others about your wins, another trader is out at the gym doing pushups and strength training. He/she is preparing to do battle with you. Stay alert!

(4) Learning to trade properly is a marathon, not a sprint.

(5) Never underestimate the value of patience.

Best and Worst Benchmark (Sectors, Indices, ETF's) So Far for 2011 (Click To View Larger Image)

Classic Patterns

Bullish:

Bearish:

Short-term Patterns

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Trading Is Not Gambling - Lessons From Livermore

2011-03-19T17:58:07Z

A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does damage to the pocketbook and to the soul...Jesse Livermore

Jesse Livermore, perhaps the most famous stock trader in history has been chronicled in “Reminiscences of a Stock Operator” and in several less well known books by Richard Smitten.

Livermore made millions during the great stock crash of 1929 (thus his nickname The Great Bear.) Many actually blamed him for the stock market crash. It is said that he made and lost four multimillion dollar fortunes during his 30 years as a speculator.

Apparently the thing that Livermore did not "get" was that you had to actually take money out of the markets and keep it out before you can say that you actually made it. He did not know how to keep his #winnings.

Lesson for traders: you never go broke taking a profit, but you definitely go broke if you take them and then turn around and lose more. Jesse, apparently, did not know the meaning of keeping what he made.

What I have learned this week especially is “I am the problem and I am the solution”. I will expand on this in my next blog post of my greatest mistakes made year to date. And boy oh boy do I have some whoppers!

In any case, there is no real way to know exactly who he was or how much of what has been written about Livermore is fact vs. fiction. Livermore was subject to deep black depressions all his adult life, during success or failure. This photo was taken on November 26, 1940, two days before "The Great Bear" of Wall Street committed suicide by putting a bullet through his brain.

Trading is not gambling and the stock market is not a casino...unless you treat them in that manner. Once again, it is up to each of us. We are the problem and we are the solution.

So why can't most people achieve success as investors? Think about it for a minute? Some of the most highly educated professionals such as doctors, lawyers and engineers who are used to being first in their class...the best of breed in whatever they do... fail miserably as traders and investors. The reason is that the process of trading and investing is completely different from any activity, which we are taught growing up. As we grow and develop, we learn that, little by little, we acquire levels of control.

We learn to control our bodies, movements, environments, who we chose as friends, lovers and mates, our educational goals, where we live and how we live. And now with social media we also learn (and quickly) who to follow or not follow on twitter and stocktwits.com when it comes to micro-blogging and the speed of information we act or don’t act on real-time in the stream.

So, we get kind of cozy and comfortable in our little worlds where we make the rules, and live out our lives in accordance. Yes, there is a lot going on in the world, but it really doesn't mean all that much unless it affects directly us or those we love. Then we take control, problem solve, and get done what needs to be done.

In the markets things are quite different. We have no control except over ourselves. We are faced every day with an entity, which is larger than life, and yet it is life. Millions of people from every part of the world are there making decisions which affect them and you in either a positive or a negative fashion. Millions of people are trying to take your money before you take theirs. What is more striking is that they are, for the most part, nameless and faceless. There is no situation in the life of most people that compares with this. That is why successful trading and investing requires one to adopt an entirely new mind-set, and a new way of looking at everything that appears. We can’t insist on adapting the markets to our own narrowly constructed and provincial rules and worldview, or we will fail. And sometimes, we fail and fail miserably.

If you are going to trade, trade for the joy of it, the mastery of it, the fun of winning and the lessons from losing.

Jesse, thank you from all of us for many the lessons learned, including teaching us what NOT to do. Likely the best lessons ever taught by Jesse were not the lessons of what we should do, but by his example, all the things we shouldn’t.

I added this week my 4th following on twitter @chessNwine for one simple reason, in order to get better you have to follow the best, the best is just a handful.

Fear Wins The Prize For The Most Powerful Emotion

2011-03-16T07:02:31Z

After listening to Dr. Phil Pearlman on Stocktwits.com TV this evening; today seems like a good day to hand out the award for the most powerful emotion.

“Fear” <----- Hands Down

Fear wins the prize for being the most powerful emotion of traders and investors. Additionally, I believe that fear and greed are virtually impossible to separate. I would state almost without equivocation that greed is the manifestation of fear and that markets move on fear and fear alone. Although I may use either the word “fear" or the word "greed” in this context, I am really talking about fear.

Our ancestors lived in a constant state of fear, their lives in constant jeopardy from the elements, wild animals or climate changes that threatened to kill them. In the modern age, we know that some dangers are still very real. If you are walking across the street and a large bus careens out of control and comes bolting toward you at high speed—you are in real fear. In this case, the bus is the predator, and you are the prey. Death is literally staring you in the face, and your body goes into fight or flight mode as it tries to avoid it. This is real, tangible fear, and many of you have faced situations where bodily harm or death was literally staring you in the face.

In the markets, the fear predators are what force us to take action. Fear is the hunter, and we are the prey. We want to make money, and the predator that pushes us to do that is greed. Markets move up because people are buying and down because people are selling. We do not know the motives of these millions of people, but we infer that they are acting in their best interests to make money or minimize losses. Thus, buying or selling begets more buying or selling as the herd reacts to the predator of fear/greed.

To experience fear is human. It is the emotion that binds us together, and it is the emotion that the media, public relations and advertising use to drive powerful messages directly into our brain.

The major fears of traders are based on one simple premise: We do not like to be wrong! We don’t want to make a mistake—and having made one, we don’t want to admit it. At some point, the pain of realizing that we have made a mistake is too great to bear, and we get rid of our position at any cost.

This is why short squeeze rallies (shorts buying at any cost just to get out so that they don’t have to take the pain that literally feels like their insides are being squeezed) are so powerful. This is why long squeeze declines (longs selling out at any cost just to get out so that they no longer have to tolerate the pain of descent into complete despair) are equally breathtaking.

The four major fears of traders and investors: fear of losing, fear of missing out, fear of leaving money on the table and fear of being wrong—are really some combination of fear and greed. The bottom line here is that fear is the predator. It chases after us, it hunts us down, it makes us captive to it and it causes us to act in ways that are not necessarily in the best interest of our equity curve.

The fear of dying from a bus coming at you full force is very real. The fear of dying from selling a losing position or from leaving money on the table is quite different. The former is a rational fear of a real danger that is stalking us. The latter is not entirely rational, yet we allow it to stalk us.

The best thing we can do with less-than-rational fears is to turn them around completely. In other words, rather than letting fear be the predator and stalk you, adopt another attitude of action. Do not be paralyzed and frozen by fear. Become the predator and stalk it. Face it full on. Look at it and ask yourself if it’s really all that frightening. As long as you continue to allow yourself to be stalked by fear, your world will shrink, and you will become smaller and smaller as you retreat into a space of trying to protect yourself. Fear has you exactly where it wants you.

If, instead, you begin to move in the direction of your fears—slowly and steadily—you will find that they have less and less power over you. Your world begins to expand. You understand that these fears are really false evidence appearing real. You begin to see that you have the power within you to face these fears and to control them. They are real only if you allow them to be real. By using the tools of position-sizing and money management, you control your risk as you move closer and closer to that fear. Once you are able to keep moving toward it, fear begins to diminish and you see it for what it really is, rather than what you imagined it to be.

Classic Patterns

Bullish:

Bearish:

Short-term Patterns

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

The Unforgiving Tide Of Water And The Stock Market

2011-03-13T15:00:34Z

Japan's most powerful earthquake since records began has struck the north-east coast, triggering a massive tsunami. Cars, ships and buildings were swept away by a wall of water after the 8.9-magnitude tremor, which struck about 400km (250 miles) north-east of Tokyo.

The unforgiving tide of water unleashed after one of the biggest quakes in recent history obliterated tens of thousands of buildings, devouring almost anything in its path.

It churns, wrenches, and becomes violent and unpredictable, except for the fact that it is moving–moving very fast, raging and pushing anything and everything in its way. Once it’s finished, rivers and oceans again become more or less quiet and peaceful. What, then, is the true nature of water? Is it calm, peaceful, meandering and quiet? Is it violent, eruptive and powerful? Is it chaotic and complex, or quiet and simple?

Seventy percent of the adult body is composed of water. A fertilized egg is 96% water, and a newborn in 80% water. In essence, we live our lives in and of water.

As in the markets, the nature of the water depends on the conditions it encounters. The water does not know what is going to happen, but it adapts to any conditions it encounters.

All of this is in the context of staying with the flow of the markets and your own trading sensibilities. Your mood right now is just that: It is about how you are feeling in this moment. In the next moment, it could be entirely different. The characteristics of water may change, but water is water. Within a complex adaptive system such as the human body or the financial markets, there are always going to be ups, downs and all-arounds.

As traders, we are advised to benefit from the lessons of the water and oceans. In fact, we have a definite advantage over the waters, which are subject to instantaneous changes. We have control over how we act in the markets. We can control our behavior as traders, even though the waters and oceans around us can turn raging.

Yes, of course, there are going to be unexpected conditions that make us feel like we are being tossed around, or make us feel like we are hurling downward into the abyss. This is the nature of uncertainty, and we must be prepared for this. We prepare by training, studying and staying with our plan.

We prepare by practicing consistency, by keeping a clear head and by strengthening ourselves daily. Great traders expect the best and prepare for the worst. If, one day, they find themselves in the midst of a sudden state of change where they may be carried or tossed about by the raging water, they know that this is just temporary. Calm will return, and they will survive and prosper.

It is the task of the trader and investor to stay steady, to understand that now is not the time to change state and try to become something or someone else. Now is the time to stay the course and prepare yourself mentally and emotionally for what lies ahead. When you think that all is lost and you are falling into the abyss, remember the lessons from water.

Be careful what you water your dreams with. Water them with worry and fear, and you will produce weeds that choke the life from your dream. Water them with optimism and solutions and you will cultivate success. Always be on the lookout for ways to turn a problem into an opportunity for success. Always be on the lookout for ways to nurture your dream...Lao Tzu

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

A Price Print Means Different Things To Different People

2011-03-08T02:10:13Z

It is abundantly clear that we trade to make money. Almost without exception, every person who enters the markets does so because of the promise of making his or her life better through buying and selling in the financial markets. So many are called to this activity because of the lure of easy money and the proliferation of this or that system, method, software, trading technique, seminar or infomercial.

Never in the history of mankind has it been easier for people to tap into the markets. These people visualize themselves as sitting in their pajamas, making trades from home and earning a really good living. Moreover, trading goes on all over the world and people can buy and sell at almost any time of the day or night. What’s not to like about this? How easy can this be?

At their core, trading and investing are simple. The challenge is that they are not easy. Trading is unlike any other activity that a human being experiences. The reason for this is that the markets are an open, adaptive system that is always in motion.

Other than the regulations set by the exchanges, there are very few rules. Trading is a game where we make our own rules and strive to take money from other people before they take our money. This is serious business, because it is our hard-earned money that we put at risk every time we enter a position.

Why do so many traders fail? Why are so many called and so few chosen? There are several main reasons for this, but the fundamental one centers around belief systems. When you think about it, you realize that the market is pretty much a level playing field. Granted, there are those who have so-called inside information, and deception abounds.

However, for the most part, everyone has access to similar information, charting systems, and trading platforms. For a price, you can get just about anything you think you need in terms of trading. The one thing you really need to be successful is not for sale: That is your belief system and the belief system of others.

We are not really trading the markets. We are trading our beliefs about the markets against the beliefs of everyone else who is trading. This is the area where the majority fail; i.e., they do not have a good understanding of their belief system and thus struggle to put it into action to generate profits.

You are what you believe, and if you don’t know who you are or what you believe, the market is a very expensive way to find out. Why? Because you will act out your insecurities and telegraph them to others in the markets who will exploit them. This happens every day on a very large scale—those who know themselves take money from those who do not know themselves.

A price chart is the sum total of belief and emotion. Why do you execute on that chart? Because you believe something about it. The thousands of others who are executing on that chart are also trading their beliefs. In order to have a chart, it is necessary to have both buyers and sellers.

Think about that concept for a moment or two. In order for price to occur, there have to be both buyers and sellers. Someone is buying, and someone is selling to them. That means that these people are trading their beliefs in that moment. That also means that they have beliefs which are completely in contradiction. If it were not so, there would be no price movement and no chart.

How can we understand this even more clearly? A price print means different things to different people. Those who win have learned to focus on what price means to others, rather than to themselves.

Successful trading, in many ways, requires a complete unlearning and then re-learning of everything you thought you knew.

Today's ES trades in this coiled symmetrical triangle are a perfect starting point: See The Below Tweets

Update #1 SP500 Futures 1320's On The Way Down

Update #2 SP500 Futures 1316's On The Way Down

Update #3 SP500 Futures 1313's On The Way Down

Update #4 SP500 Futures 1307's On The Way Down

Update #5 SP500 Futures 1304's On The Way Down

Update #6 SP500 Futures 1303.00 Ticks From The Bottom

Update #7 SP500 Futures 1304's On the Way Up

Update #8 SP500 Futures 1312's On the Way Up

Update #9 SP500 Futures 1314's On the Way Up

Update #10 SP500 Futures 1317's On the Way Up

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Treating Each Trade As A Possible Winner Or Loser

2011-03-04T02:10:13Z

Trading is a mirror of almost every aspect of your life. If you are thinking or behaving in an undisciplined or unorganized way when you are not trading, you will trade in an undisciplined and unorganized manner. Without discipline and rigorous attention to detail, you will not be able to trade successfully.

Treat each trade as a possible winner or a possible loser. There is absolutely no such thing as a "sure thing" in trading, Trading is a game of probability, and the goal is to make more than you lose. If you are in a strait jacket of perfectionism where everything has to work all the time, and you have to get just the bottom or just the top, and you cannot tolerate even one downtick, let alone a drawdown, then you are not suited to be a trader. Good traders know that you only get one opportunity in your life (if you are inordinately lucky) to pick the exact bottom or the exact top of traded entity. Strive for moderation and balance, and eschew perfectionism, as it will be one of your greatest enemies.

Winning traders and losing traders experience the trading environment differently. It makes them feel different and as a result their actions vary in a consistent manner. In psychological terms, they interpret the market differently because they have a separate belief system in the way that they see themselves relative to the stock market. Change your belief system from the reactionary emotional beliefs of most losing traders to a more proactive unemotional approach of a successful trader.

This doesn’t happen overnight mind you, you can review the 5 stages to trading here. "The Five Stages Ttrading"

Know when NOT to trade. This skill is just as important as knowing when to pull the trigger. Part of being a great trader is being a keen observer of what a stock is telling you. By committing to observe objectively, you give yourself permission not to trade until the conditions are right.

Don't trade for excitement or entertainment. Avoid the highs that come from quick profits or the lows that can appear after losses. If you have a sound system, it does not matter whether any particular trade makes a profit or a loss. What matters is that the probabilities over time are in your favor. You must remember that no system is perfect, and prepare for losses along the way.

You should measure yourself on whether you followed your rules and executed your system, for both winning and losing trades. The process of trading is much easier when you focus on execution of a system rather than on whether each individual trade was right or not, because you take your ego out of the process. This makes you more rational and less emotional, which leads to better investment performance.

Remember losers always look for somebody else to blame. Winners look to themselves--- particularly if they have to take a loss on some trades, as is inevitable for all traders and all systems. When you accept total responsibility, you commit that in any market environment you will find the way to win.

As @charliesheen would tweet #WINNING!

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Volatility And Risk Are Not The Same Thing!

2011-03-02T02:10:13Z

If you are one of those people who, despite all the evidence, retains some lingering illusions about the rationality of financial markets, today should have cured you.

Volatility is a form of market inefficiency. It is a reaction to incomplete information (i.e., uncertainty). Excessive volatility is irrational. The confluence of mass greed, mass fear, and mass disagreement regarding how to react to information yields to wild price fluctuations.

If you desire high long-term returns, you must be willing to accept the high levels of volatility associated with the production of such returns.

Volatility and risk are not the same thing. Volatility is the tendency for prices to change unexpectedly. Volatility is the up and down nature of markets. If your trading strategy expects the markets to move up and down, as markets do, then you must be ready to deal with volatility each and every day.

If you expect markets to go straight up or straight down, then you might want to revisit your childhood amusement park and take a ride on a roller coaster. That is what we experience every day in the markets, and it is important for you to understand that "it is what it is."

Nothing goes straight up or straight down. It has taken economists a long time to accept the idea that financial markets are systematically too volatile. It was some 30 years ago that Robert Shiller, whose book, "Irrational Exuberance," produced what he thought was an ironclad argument against the then-dominant "efficient market" theory of stock prices.

According to that theory, movements in the stock market should always reflect genuine news about future earnings. But Mr. Shiller showed that actual stock prices fluctuated much more than any possible rational forecast of prospective profits; he thought that this "excess volatility" result would settle the point.

Of course, it didn't. Efficient-market theorists defended their thesis by putting forth elaborate statistical critiques of Mr. Shiller's calculations. Despite this, there has been a gradual erosion of belief in the efficient market thesis.

Notably, during the 1987 stock crash, Mr. Shiller had the presence of mind to carry out an instant survey of investors. This timely survey obliterated all the so-called rational explanations for the crash , because it showed that the only reason any significant number of investors gave for selling stocks was that prices were falling.

Markets move up and down in their own time and their own rhythm. Markets are living breathing human entities. The questions will always be the same. It's just the answers that are different.

Don't ask why the markets do anything. Instead, ask why did YOU do anything, what did YOU do, and how did YOU feel when you did it?

Just like the roller coaster, you cannot control the markets. The only thing you can control is yourself. When you gain mastery of yourself and your emotions, you will recognize that the markets may not be rational, but you can be.

Either you make up your mind to get on the roller coaster and ride it to the end, or you can chose to jump off somewhere along the way (maybe at the top just before the coaster descends, or maybe at the bottom before the coaster takes off again to the upside.) The choice is yours.

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Are You Stressed Out During Volatility Swings?

2011-02-28T22:12:06Z

Volatility is the tendency for prices to change in an unexpected manner. The two major reasons for this change are responses to some new information about value of a traded security (fundamental volatility) or responses to the demands of traders for liquidity (episodic volatility).

There are many ways to look at volatility, some highly mathematical and confounding. That said, options traders live and breathe by volatility, be it historic or implied. Stock and futures traders can either use it to their advantage or get blindsided by it.

Volatility changes with time—i.e., there are times when the markets are quiet and times when they are violent. Often, large price changes occur within very short periods of time, catching many people off guard or leaning the wrong way. This abrupt, violent change in price movement is called transitory volatility and can be terrifying to the trader or investor. Those holding long positions in big drops become frightened and those holding short positions in big drops become euphoric. Since these periods of transitory volatility tend to be short-lived, only the most nimble trader is prepared to take advantage of them. That said, every trader should become familiar with the concept of volatility, as it will affect his or her trading in some way.

Factors underlying fundamental volatility include anything that can cause the price of a given trading instrument (security) to change. For example, in commodities, the most important factors are cash market supply and demand conditions. For bonds, the critical elements underlying fundamental volatility are interest rates and the credit quality of the bond issuer. Unexpected changes in any of these elements generate fundamental volatility in the instrument.

For transitory volatility, the most important factor relates to the demands of impatient and uninformed traders who cause prices to diverge from fundamental values. Although such fundamental values are often not taken into consideration with technical trading techniques, it is critical for the trader to understand and exploit this deviation from what is called mean reversion. In other words, trade while the sun shines and trade what you see, but don’t think it is going to last forever, because it won’t.

What can you do to arm yourself against volatility swings? Many traders become dizzy, agitated, frustrated and impatient in the face of volatility because they are either holding and hoping or trying to anticipate what will happen. Also, the majority of traders are not skilled enough to use volatility to their advantage to take profits from movements that result from the actions of uninformed and impatient traders.

Thus, for most traders, the following steps are recommended in the face of volatility:

Absolutely avoid any attempts to top-tick or bottom-tick. You get one chance in your trading lifetime to get that right, and most simply cannot do it.
If you are a trend trader and the market is not trending, wait. Wait for the market to reveal itself by breaking up or down out of its trading range.
Remember that shorting is not the same as selling longs.
In market downdrafts, sell only if the reason for your entry is violated.
Control your exposure by the use of proper position-sizing. When unsure, reduce your position size so that you are working at a risk-reward ratio that allows you to sleep at night.

Having a basic understanding of stock market volatility and taking the steps recommended above will go a long way to making you a stronger, more profitable and better-grounded trader.

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

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Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Do You Deserve To Be A Successful Trader?

2011-02-27T20:50:39Z

Deceptively simple because most people, when questioned, will tell you that they totally believe in themselves and deserve to be successful as traders.

When you expose the majority of people to the myriad of real time decisions afforded by the market, this belief system reveals how fragile and fleeting it is, and begins to fall apart. Traders spend more than 90 percent of their time thinking, questioning, doubting, reassessing, struggling to keep focused, being whipsawed by emotions and just plain worrying if they are doing or not doing the right thing. What part of any of these activities reflects authentic belief in oneself?

When I say believe in yourself, I am not talking about superficial muttering for the sake of political or social correctness. I am talking about a deep-seated, absolutely incontrovertible and unshakeable belief in yourself as a consistently successful trader. This is among the most difficult challenges we face because it requires us to construct an adequate and realistic self-image and then use that image to propel ourselves to achieve our trading goals. It is like making a movie of yourself or setting the stage for the most eloquent performance of our life.

How many times were you told that you were bad because you did this or that ,or you would be punished if you did not say things in a certain way, and all of the horrible things that might happen to you if you disobeyed or did not listen? How many times were you told that you would never amount to anything and that you were just plain not good enough?

These memories are intensely powerful and also very sneaky because many of us have spent our lives hiding from them or denying them. Because few want to admit that they harbor massive insecurities, they act out their lives in such a way as to make these messages self-fulfilling and then sit around scratching their heads and wondering why they are not getting anywhere or why they are failing to achieve their goals.

In essence, what people are doing in this situation is affirming the negative messages stored in their brains. If our self-image is one of shame, guilt, anxiety and insecurity you will sabotage your trading IN ORDER TO LOSE. Yes. You will set yourself up, just as more than 50% of traders do, to actually lose.

That is not a typo! 50%!!!!

This then reinforces that we deserve nothing good and deepens the shame and self-contempt. I know it's not easy for many of us to hear this, let alone wrap our brain around it as it applies to us. But, you must be strong enough to do it, because it means the difference between failure and success in your trading and your life.

What is required to change your belief system about yourself is to truly see yourself as successful. It is like taking a photograph of yourself right now and then stepping back and looking at how you would like it to be if you were living up to your full potential.

Some people say I have attitude - maybe I do...but I think you have to. You have to believe in yourself when no one else does - that makes you a winner right there...Venus Williams.

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Technical Analysis Is About Plotting Emotions On A Grid

2011-02-27T18:50:39Z

As I have shared with you for more years than I can even remember, technical analysis is about plotting emotions on a grid. The trader who is able to grasp this concept is going to be ahead of the pack of traders. Markets move on emotion as traders trade their money and beliefs. Markets are made up of human beings, and human beings are emotional creatures. There is no way to get around this. Anyone who tells you to trade without emotions is denying one of the essential elements that separates losing traders from winning traders.

Decisions about trading and investing bear many similarities to decisions made outside of the markets. Human beings make decisions in the context of numerous societal factors, not in isolation. In this regard, we are functioning less as individuals and more as a social collective.

In the realm of trading and investing decisions, the importance of knowing what and how others are thinking is critical for success. Put another way, the social dynamic of herding is evident every day in the markets, and its importance cannot be ignored. In market situations, behavior is motivated by assumptions and perceptions of what other traders and investors are doing. Social psychology, based on collective perceptions of the decisions of other traders, becomes the basis for actions of the individual trader. In this herding process, traders attempt to anticipate and mimic the actions of other traders. Decisions imitate decisions, setting off a kind of self-fulfilling prophecy where more and more traders are making the same decision simply because others are doing the same.

Numerous scientific studies demonstrate the power of the need to conform to group consensus, particularly in simple and clear-cut situations that involve decision-making. In the markets, the tasks of decision-making are made more difficult because of the instant availability of highly diversified, contradictory and ambiguous information.

Another explanation for herding in the financial markets has to do with the emotions of anticipated regret and fear. It is of interest that these unpleasant feelings of fear and anticipated regret are intensified when they are made in isolation, i.e., not shared with the group. It is easier to be a loser in a group of losers than to be a loser in a group of winners. It is easier to be in fear and regret when others are like-minded—misery loves company.

In this regard, herding may be a reasonable option for those traders that are concerned about their reputations. By failing with others, they put themselves in a position to share the blame and do not have to deal with being ostracized by the group for their individual success in the face of the group's failure. As John Maynard Keynes said, “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

When I was an analyst…I placed too much stock in the opinions of others who seemed to know more than I did (my fault, not theirs). More unsettling, I saw others do the same with me…Henry Blodgett

Classic Patterns

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Short-term Patterns

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Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Trading Our Bias Based On Our Belief

2011-02-03T10:08:44Z

Trading is all about making decisions, and decisions are made by what we believe. You are what you think and believe, and your trading decisions are a reflection of your thoughts and beliefs.

Ok so now that we cleared that up I want to tell you about my week in the stocktwits.com stream in this little blog post. Which by the way, is so much fun it’s almost getting to be an addiction because it’s that engaging and interactive, but I will save that for another day.

Trading our bias based on our belief known as the “status quo”

Such statements as "I love this stock," "The dollar is just going to keep going lower and lower," or "The ES has to move up today" all reflect a form of bias called the status quo. What does this mean to the trader and his or her position? Once a person has decided that things just have to be a certain way and that they are going to continue in the same direction, that person decides on a specific course of action. Unless one is highly skilled and has trained themselves to be “flexible” and think in probabilities, the status quo bias will persist.

All of you are aware of so-called permabears or permabulls who remain either bearish or bullish despite every evidence that their choices have little if any chance of success in a given market condition. They will read every piece of information, study the most obscure writings, and search constantly for indicators or any signs that their bias is correct.

Interestingly, because there is no shortage of opinions about the market especially in the stream, if they look long or hard enough (as they usually do), they will find some fact, piece of writing, historical precedent or other reason to confirm that their bias is correct.

For example, some traders engage in the same losing strategies for extended periods of time. Something in their thinking tells them that if they just hold on long enough, their bias will be justified and they will be rewarded for staying with the status quo.

In these instances, traders become emotionally and intellectually attached to a stock and to a losing market view. This is sometimes referred to as "being married" to a position or a market bias.

These include statements such as "I took this position for a really good reason, and I know it will work if I just stick to my guns." The reality is that the individual has an extreme desire to be right and, because of inflexibility and despite clearly being wrong, will not open their mind to any form of discussion about the direction of that stock. This is a self-perpetuating downward spiral where rigid adherence to the status quo bias results in increasing tweets (and obviously losses otherwise why tweet so much about the same thing over and over, right?)

We all have been there and done that. Let’s face it, we all have been in that situation likely more times than any of us care to admit, but it wasn’t until micro-blogging that this type of behavior has become easier to spot. Onlookers in the stream will from time to time tweet “nice conviction to see you stick it out” but the reality is as their position continues to go in the opposite direction they actually are just getting louder out of frustration not conviction.

Now behind the scenes they begin an even more frantic search to find opinions to justify holding on and accumulating losses. A particularly malignant form of status quo bias is called “decisional escalation”. In trading terms, this means that the trader holds so firmly to the status quo concept that he or she continues to add to a losing position. This is different from “scaling in” this is just flat out compounding, throwing good money after bad trying to make it work knowing deep down that really it never will.

The takeaway from this observation if you will is that the status quo bias helps explain the psychological inclinations of market participants to maintain and reinforce a losing strategy instead of having the flexibility to change it in light of all evidence that the strategy is not working.

In other words, traders are advised to constantly evaluate their belief systems and the actions they are taking in the markets based on these beliefs. Implicit in this is the ability to take a laser look at yourself, to admit that you were wrong, to take personal responsibility for getting into the situation and learn from all the things that brought you to this point so you don’t fall into the trap of getting stuck in the “status quo bias” ever again.

The first step to following rules that so many like to tweet by using the “$STUDY” symbol is to understand what kind of game you intend to play. In trading we really only have two types of traders:

Profitable
Non-Profitable

Make a choice

Bearish Patterns That Fail Can Be Explosive

2011-02-02T16:48:55Z

The stock indices started Tuesday on solid footing and kept on running into the afternoon with the Dow Jones Industrial Average and S&P 500 crossing back above 1,300 and 12,000 respectively to set new multi-year highs (previous psychological levels). The advance was broader based, with the Russell 2000 and NASDAQ pacing the way on a percentage basis, but they have not yet broken above their January highs to confirm the move. I will explain more of this in the video update, which you can watch by clicking here,

Now, while I can't list all the indices and stocks making new 52-week highs, the below list should give you a good idea of the market landscape of February 2011 kicked off. To sum it up, the market kicked that "Outside Bearish Reversal" candle stick chart pattern and everyone short because of it got kicked right in the teeth when it staged a massive rally where just about everything was able to get wet in all of this juice.

Take some time to view the full video and update so you can see what I'm seeing.

Futures Making New-52 Week Highs

ES #F (SP500 Futures)
YM #F (Dow Jones Industrial Futures)
HO #F (Heating Oil Futures)
$XRB #F (Unleaded Futures)
HG #F (Copper Futures)

Cash Indices Making New 52-Week Highs

$SPX (SP500)
$INDU (Dow Jones Industrial Average)
$NYA (New York Stock Exchange)
$RUI (Russell 1,000)
$RUA (Russell 3,000)
$MID (SP400 Mid Caps)
$OEX (SP100 Large Caps)
$SOX (Semiconductor Index)
$OOG (Oil And Gas Service Index)
$EPX (Oil and Gas Exploration Index)
$CRX (Commodity Related Equity Index)
$DJUSCH (Dow Jones Chemical Index)

ETFs Making New 52-Week Highs

SPY (SP500 Tracking ETF)
DIA (Dow Jones Tracking ETF)
XLE (Energy ETF)
XLB (Materials ETF)
OIH (Oil Services ETF)
SMH (Chip Sector ETF)

Best and Worst Benchmark (Sectors, Indices, ETFs) So Far for 2011

ES #F (SP500 Futures) - Click Chart To See Larger View

YM #F (Dow Jones Industrial Average Futures) - Click Chart To See Larger View

NQ #F (NASDAQ 100 Futures) - Click Chart To See Larger View

This Week's Economic Calendar

Tuesday's Top performing sectors included:

Disk Drive +4.1%
Casino +3.4%
Ag/Chem MOO +3.1%
Steel SLX +2.9%
Gold Miners GDX +2.8%
Mining XME +2.7%
Coal KOL +2.7%
Materials XLB +2.7%
Computer-Hardware +2.7%
Semi SMH/XSD +2.5%
Paper +2.4%
Bank KBE +2.4%
Commodity Index +2.4%
Healthcare +2.4%
Pharma PPH +2.4%
Insurance KIE +2.3%
Internet HHH +2.1%
Solar TAN +2.1%
Broker +2.1%
Finance XLF +2%
Transports IYT +2%

Tuesday's Weaker performing sectors included:

Natural Gas UNG -1.5%
Crude Oil USO -1.4%

Support and Resistance for Wednesday, Feb. 2, 2011

Some of the "Confirmed" More-Widely-Held Stocks Reporting Earnings This Week:

For a complete table of earnings announcements with pivot, support and resistance 01/31/11 – 02/04/11, visit here.

Monday Jan. 31st AM: CHKP, XOM, HAE, ITW, NS, ROP, SAIA, SOHU, TNB, WDR

Monday Jan. 31st PM: ALGT, APC, BIDU, BCR, EMN, GGG, HOLX, IDTI, IRF, MTW, MCK, NVLS, PRXL, PCL, QGEN, RGA, RCII, TGI

Tuesday Feb. 1st AM: AMG, AXE, ADM, ARMH, ARM, ALV, BMS, BIIB, BP, CE, COV, EMR, HNT, KCI, LSTR, PCAR, PCX, PRGO, PFE, UPS

Tuesday Feb. 1st PM: APKT, AFL, ADS, BBOX, BRCM, CHRW, CCK, JKHY, JLL, MEE, NLC, POWL, SLGN

Wednesday Feb. 2nd AM: AGN, ARW, AVY, CAM, CINF, CGX, HSY, HSP, LAZ, LZ, MAN, MRO, NDAQ, SU, TWX, WHR

Wednesday Feb. 2nd PM: ACE, ATW, AVB, BMC, CACI, CNW, CYMI, DNB, EW, EQR, GMCR, SOLR, HIG, MKSI, NEWP, OTEX, REG, TSO, V, VMC, YUM

Thursday Feb. 3rd AM: ATK, AMB, ARJ, AN, BEAV, CAH, CI, CME, CVS, DO, DOW, EL, GR, HOT, IP, ITT, K, MA, MCO, NOV, RDWR, RSTI, RGLD, R, SNE, TZOO

Thursday Feb. 3rd PM: AFG, BKH, CFN, CBG, CSTR, CPX, DLB, FISV, HAIN, JDSU, LVS, LIFE, PKI, POWI, SUN, TRMB

Friday Feb. 4th: AET, ABC, AON, CLX, CEG, FO, PPL, SPG, TDW, WY

Technical Analysis has long been the domain of institutional houses and professional money managers. This is largely a result of the manually intensive nature of Technical Analysis. Now the process has been automated so that new bullish or bearish opportunities are available to you at the click of a button. Technical Analysis is the practice of anticipating price changes of a financial instrument by analyzing prior price changes and looking for patterns and relationships in price history.

Technical Analysis opportunities occur when a significant pattern has formed or a significant price activity has occurred in a financial instrument. Technical Analysis opportunities highlight price situations that may be worth considering in researching an investment activity. For each instrument, the daily and weekly charts are analyzed to identify various types of Technical Analysis opportunities. Some events are bullish suggesting a rising price, while others are bearish suggesting a falling price. They are organized into four Technical Analysis Classes based on characteristics they have in common. To learn about specific event classes and types, click on the tabs below.

A linear price scale is used to identify Technical Event opportunities on daily charts, while a logarithmic price scale is used to identify Technical Event opportunities on weekly charts. To learn more about this and other terms used in the field of Technical Analysis, visit the Glossary page.

Classic Patterns

Bullish:

Bearish:

Short-term Patterns

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.

Bullish or Bearish:

Earnings Preview - January 31st - February 4th

2011-01-31T08:23:57Z

The session started on a relatively quiet note with the S&P able to edge above the previous day's peak to establish a minor new multi-year intraday high above 1300 in the cash index. Although the pre-open data was mixed (GDP +3.2% vs. consensus +3.7%; Deflator +0.3 vs. +1.5%) the GDP details were stronger across the board with minor market improvement noted.

The market ticked higher near the release of the University of Michigan report that came in (74.2 vs. consensus 73.2) which led to the new S&P500 high (1302.67) but the market rotated aggressively lower into midday with the continued barrage of news from unrest in Egypt. New York’s main contract, light sweet crude for March, soared 3.70 dollars to $89.34 a barrel, a 4.3 percent rise for the day putting in a very bullish outside reversal day as you can see in the chart below. Oil prices were also pushed upward by news that the US economy grew at its fastest clip in five years in 2010. Although we can say OIL was pushed higher by strong US GDP data and improved market sentiment that didn’t stop other areas of the market from getting clocked.

Market breadth was horrendous and some support levels were breached across the board in most US benchmark indices and tracking ETF's. While one day doesn’t make a trend especially with new 52 week highs just the day prior in these areas below, we do have to be even more selective with any new names we are looking to add this coming week for those that continue to “buy the dip.”

As mentioned Thursday new highs in these sectors and indices to name a few:

$SPX (SP500)
$INDU (Dow Jones Industrial Average)
$NYA (New York Stock Exchange)
$RUI (Russell 1,000 Index)
$RUA (Russell 3,000 Index)
SLX (Steel Sector ETF)
XLE (Energy ETF)
$OEX (SP400 Large Cap Index)
$CRX (Commodity Related Equity Index)
RTH (Retail ETF)
$OOG (Oil And Gas Production Index)
OIH (Oil Services ETF)
XLK (Technology Select ETF)

Best and Worst Benchmark (Sectors, Indices, ETFs) So Far for 2011

ES #F (SP500 Futures) - Click Chart To See Larger View

YM #F (Dow Jones Industrical Average Futures) - Click Chart To See Larger View

CL #F (Crude Oil Futures) - Click Chart To See Larger View

This Week's Calendar

Friday's Top performing sectors included:

Crude Oil USO +4.5%
Silver SLV +3.8%
Gold GLD +1.8%
Gold Miners GDX +0.7%

Friday's Weaker performing sectors included:

Internet HHH -4.4%
Airline -4.3%
Auto Parts -4%
Discretionary XLY -3.2%
Solar TAN -3.1%
Networking -3.1%
Healthcare -3.1%
Steel SLX -2.9%
Biotech IBB -2.8%
Trucking -2.8%
Transports IYT -2.8%
Retail RTH -2.5%
Casino -2.5%
Semi Equip XSD -2.5%
Insurance KIE -2.5%
Technology XLK -2.2%

Support and Resistance for Monday, January 31st 2011

Here are some of the "confirmed" more widely held names reporting earnings for this upcoming week:

For A Complete Table Of Earnings Announcements With Pivot, Support, Resistance 01/31/11 – 02/04/11 Visit Here

Monday Jan. 31st AM: CHKP, XOM, HAE, ITW, NS, ROP, SAIA, SOHU, TNB, WDR

Monday Jan. 31st PM: ALGT, APC, BIDU, BCR, EMN, GGG, HOLX, IDTI, IRF, MTW, MCK, NVLS, PRXL, PCL, QGEN, RGA, RCII, TGI

Tuesday Feb. 1st AM: AMG, AXE, ADM, ARMH, ARM, ALV, BMS, BIIB, BP, CE, COV, EMR, HNT, KCI, LSTR, PCAR, PCX, PRGO, PFE, UPS

Tuesday Feb. 1st PM: APKT, AFL, ADS, BBOX, BRCM, CHRW, CCK, JKHY, JLL, MEE, NLC, POWL, SLGN

Wednesday Feb. 2nd AM: AGN, ARW, AVY, CAM, CINF, CGX, HSY, HSP, LAZ, LZ, MAN, MRO, NDAQ, SU, TWX, WHR

Wednesday Feb. 2nd PM: ACE, ATW, AVB, BMC, CACI, CNW, CYMI, DNB, EW, EQR, GMCR, SOLR, HIG, MKSI, NEWP, OTEX, REG, TSO, V, VMC, YUM

Thursday Feb. 3rd AM: ATK, AMB, ARJ, AN, BEAV, CAH, CI, CME, CVS, DO, DOW, EL, GR, HOT, IP, ITT, K, MA, MCO, NOV, RDWR, RSTI, RGLD, R, SNE, TZOO

Thursday Feb. 3rd PM: AFG, BKH, CFN, CBG, CSTR, CPX, DLB, FISV, HAIN, JDSU, LVS, LIFE, PKI, POWI, SUN, TRMB

Friday Jan. 4th: AET, ABC, AON, CLX, CEG, FO, PPL, SPG, TDW, WY

Classic Patterns

Bullish:

Bearish:

Short-term Patterns

Bullish:

Bearish:

Other:

Indicators

Indicators that are currently supported are based on moving average calculations.

Bullish or Bearish:

Oscillators

Oscillators are based on mathematical formulas that incorporate historical or recent prices of the stock.