If you follow my charts, you probably notice there is an orange line that looks like it is placed in a random spot. This is what I call the YTD break even line and it is where the instrument closed out the previous year. Not many in the technical analysis space track this but the market as a whole understands it. Whether it is something checked at the end of each week/month or just something that sits in the subconscious, it is aware of it and it is powerful enough to sway people's judgement. Charts in the positive territory have a more easy going vibe to them like MSFT this year since any decline would just be giving back gains. Charts in negative territory have a fearful vibe like LNKD this year since any decline would be loosing even more. At least that is what the charts tell me. Hopefully I can explain that a little better here.
What it does best for me is put the chart into context for the big picture and adds personality to each instrument you are tracking. For example Facebook (FB) was one of the momentum stocks that held up best when the large sell offs were occurring in April/May 2014. I believe this is because of where this price action was happening in relation to how it had performed for the year, which is such a huge concept for me and defines how I look at sentiment.
06-29-14 Trade Plan
The market continues to move in a consistent uptrend. Every week I like to take a shot at those that won't stop shorting the market and telling others to do so, but this week I think we should take a moment to appreciate them. We don't know how much of their ignorance is creating these beautiful up trends but I would guess that paired with the endless amounts of QE, it is creating potent bull runs as they are forced to cover their shorts and bid up the market. The NASDAQ and Russell are holding up the best. I really like the strength that the NASDAQ is showing so that is what I am going to be using as the anchor setup for everything else. I will be tracking the Russell closely as well since it has been participating. The bond market got above that resistance area I talked about last week and the 130m trend is working on turning higher again, so it is fair game for the bulls.
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06-22-14 Trade Plan
The market is continuing to be led by the small caps in the Russell 2000 as well as the energy sector. I've seen so much talk about how energy is topping out because of Iraq, you would think they eventually learn.. Maybe taking profits as it pokes it's head above $100 (XLE that is) isn't a bad idea but shorting is just asking for losses and begging for recognition that you "called the top". In other news, gold and oil (the two commodities I am fundamentally bullish on, simply because of the fed) are really getting some action to the upside. Oil has been looking great for over a year now and I think it is finally starting to make a real breakout. Gold has been basing for over a year now and it is making an attempt (and nothing else) to get an uptrend going which I think could become explosive over time. In fact, silver is really looking technically good more so than gold for now. They will be traded just like anything else.
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06-15-14 Trade Plan
This week was just a pullback in the indices and sectors but these small pullbacks really mean nothing to the setups that are continuing to play out. That kind of price action is good and I am going to keep trading it as long as it lasts. In the various instruments that are pulling back, there is still larger time frame supporting trends to fall back on and look for the shorter time frame trends to reverse and continue in the direction of the big picture trends. A great example of that I am watching now is the Russell 2000. The 65 minute trend is the supporting time frame and in looking for continuation of that trend, I look at the smaller time frame (like 15m) to see if it has the strength to reverse and start a new 15m trend to the upside (which would be the 65m trend continuation). If it can't reverse and it breaks $115 then so be it, but this is what I am wanting to trade.
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06-08-14 Trade Plan
I am absolutely mclovin this price action.. All four indices closed on the highs of the week and all except the Russell closed on the highs of the year. The first few days of the week I was tweeting about how if the NASDAQ broke down below that sideways consolidation, we could probably test $90 area and it is something I was ready for. But every time we gapped lower into that channel support the bids were flowing in.. at that point I tweeted out that a 15 minute trend could be emerging if we could hold that upside breakout from the channel for new highs. We got one test of that 50 period average on the 15 minute chart and that thing acted like a spring and took a boatload of good setups in individual stocks with it. Notice how easy it was to prepare for either side of the trade as it was developing, no bias or opinions. The ease of it likely has to do with the much cleaner price action we are seeing but the concept stands firm. I had an overall bullish bias because of the larger trends (daily, 130m, 65m) and how many good looking setups there were in the stocks, but was prepared for either direction on the shorter trends (15m).
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