Mining For Dollars

The mining sector has been dead money for a long time except for a few 1-5 day rallies.  However some mining stocks specifically Barrick Gold $ABX might be turning the corner.  Barrick Gold right now is in the process of coming out of a 7 month trading range after being under constant distribution for months.

I'm always intrigued by multi-month bases of stocks near their 52 week lows.  Normally a prolong period of contraction leads to a prolong period of expansion.  ABX has traded roughly between $10.30 and $13.30 for 7 months.  What happens in the base is that the buyers and sellers find equilibrium, the sellers for the most part are done selling and or the buyers are taking in all the supply.  These new stockholders obviously believe that greener pastures await the stock.  More importantly, what you see right before the stock exits its base to the upside is a series of higher lows. Since March that's exactly what has been happening with Barrick Gold, this tells you that the buyers are getting antsy and no longer want to wait for the stock to trade at the bottom of its range.  And one can also assume that a lot of the negatives that has been surrounding the stock is already priced in, we can see that today with the stocks reaction to its earnings release.

Photo; Ctv

How To Take Advantage Of A Possible Spike On The VIX

Many market participants say that you can’t chart the VIX, they have valid reasons and justifications that I won’t get into. However, since January 2013 every time the VIX got the $12 dollar level it has bounced, there is no denying that as you can see from the chart below. The purpose of technical analysis is not predict the future, it gives you a road map on what to expect based on what has happened in the past. 

If one believes this is actionable the question becomes; how and with what instrument can we take advantage of this.  Historically the VIX moves opposite of the market, the market goes up (SPY) the VIX usually goes down and vice versa.  If one is a short term trader one can possibly take advantage of this by shorting the SPY or perhaps going long the SPXU (3X SP500 bear etf).

Another option which I believe is the better option is shorting the XIV, as you can see from the chart below the XIV has ran into trouble every time the VIX traded around $12

Different Strokes for Different Folks

You can try to trade like someone else that you look up to or do the same type of trading someone else does, but at the end of the day you have to find a style that suits your personality.

$BAS $BNFT $CRR $GOGL $FCX $AFFX $JCP $PES $CREG $NVRO $LOCO $NE $SDLP $DGLY $HCLP are the names on my swing long watch-list.

The Process;

Every morning I go through a few of my scans to find buy candidates for the day.  Depending on the current state of the market the size of the list will vary, usually its no more than 50 names.  My process is based on market structure not on beliefs or myths of what works– or what doesn’t work.  They are certain behavioral patterns that have been around for 100 years that are based on market structure, these behavioral patterns are recognizable, observable, and quantifiable.  On daily basis we have 3,000 stocks that we filter based on certain market structures that gives us an edge of a higher probability than a random outcome.  Once the list is narrowed to a handful of names the market will further narrow down the list by getting us in or keeping us out of these names with a range expansion move.

I don’t look at charts in your conventional cookie cutter manner, or have rules as to where the stock should be whether its 15% off its 52 week highs or above or below certain moving averages etc, in the short term none of that matters.

How much you put at risk per trade depends for the most part what your current outlook is for the market over the next 0-5 days.

Put these names on your trading platform, set the alerts at yesterday’s high for each name, once the alert goes off take a look at the chart, decided within 3 seconds whether or not you are going to buy it, decide how much you want to risk on the trade and your stop loss, hit the buy button, and leave the rest up to the market, wash, rinse, repeat.  Buy’em tight, Sell’em loose.

A few things that you should know about this swing strategy;

•  Its main goal is to get you in when stocks are moving and keep you out in choppy/sloppy markets, it is imperative that you allowed the market to get you in only when the stocks go through their previous day’s high.
• Your awareness of how the market is behaving is crucial, this will give you an idea of how hard to push the envelope.  My best indicator for this is my rolling 5 day watch-list.
• Swing trading is a numbers game, you are going to be wrong half the time, risk management is above all, and many times you will have nothing to do because the market did not get you in. We are not looking for any action, we are looking for the right action.
• Don’t be penny wise, don’t try to anticipate a move just because the chart looks good.  You can have a great looking tight set up with a stock coiling for 10 days but who is to say that it won’t coil for another 5 days.  If you anticipate the range expansion you might buy something that is not ready to go and it will only frustrate you and lower your odds of a winning trade.
• For me this list is a one way list – long bias.  I do not look at this list as a long or short list, long and short are two different games with different dynamics.
• You need to be extremely organized.  Most if not all your work will be done pre-market and you will spend the day just executing or you can just automated it with buy orders after 9:45am.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

The Biggest Challenge

Trading is 90% mental, you, yourself are your biggest challenge.  Conquer your emotions and you might have a shot in trading successfully.

$CBOE $W $KLXI $EC $PZZA $BNFT $EYES $PDS $WLK $REXX $ABC $SDRL $JOE $HCLP $DRI $FIVE $JLL are the names on my swing trading watchlist today.

The Process;

Every morning I go through a few of my scans to find buy candidates for the day.  Depending on the current state of the market the size of the list will vary, usually its no more than 50 names.  My process is based on market structure not on beliefs or myths of what works– or what doesn’t work.  They are certain behavioral patterns that have been around for 100 years that are based on market structure, these behavioral patterns are recognizable, observable, and quantifiable.  On daily basis we have 3,000 stocks that we filter based on certain market structures that gives us an edge of a higher probability than a random outcome.  Once the list is narrowed to a handful of names the market will further narrow down the list by getting us in or keeping us out of these names with a range expansion move.

I don’t look at charts in your conventional cookie cutter manner, or have rules as to where the stock should be whether its 15% off its 52 week highs or above or below certain moving averages etc, in the short term none of that matters.

How much you put at risk per trade depends for the most part what your current outlook is for the market over the next 0-5 days.

Put these names on your trading platform, set the alerts at yesterday’s high for each name, once the alert goes off take a look at the chart, decided within 3 seconds whether or not you are going to buy it, decide how much you want to risk on the trade and your stop loss, hit the buy button, and leave the rest up to the market, wash, rinse, repeat.  Buy’em tight, Sell’em loose.

A few things that you should know about this swing strategy;

•  Its main goal is to get you in when stocks are moving and keep you out in choppy/sloppy markets, it is imperative that you allowed the market to get you in only when the stocks go through their previous day’s high.
• Your awareness of how the market is behaving is crucial, this will give you an idea of how hard to push the envelope.  My best indicator for this is my rolling 5 day watch-list.
• Swing trading is a numbers game, you are going to be wrong half the time, risk management is above all, and many times you will have nothing to do because the market did not get you in. We are not looking for any action, we are looking for the right action.
• Don’t be penny wise, don’t try to anticipate a move just because the chart looks good.  You can have a great looking tight set up with a stock coiling for 10 days but who is to say that it won’t coil for another 5 days.  If you anticipate the range expansion you might buy something that is not ready to go and it will only frustrate you and lower your odds of a winning trade.
• For me this list is a one way list – long bias.  I do not look at this list as a long or short list, long and short are two different games with different dynamics.
• You need to be extremely organized.  Most if not all your work will be done pre-market and you will spend the day just executing or you can just automated it with buy orders after 9:45am.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Patience is Key

The swing set ups as I see them have dried up considerably over the last couple of days.  This is when patience pays.

$EYES $DPLO $FIVE $MEP $DRI are the stocks on my list today for long swing ideas.

The Process;

Every morning I go through a few of my scans to find buy candidates for the day.  Depending on the current state of the market the size of the list will vary, usually its no more than 50 names.  My process is based on market structure not on beliefs or myths of what works– or what doesn’t work.  They are certain behavioral patterns that have been around for 100 years that are based on market structure, these behavioral patterns are recognizable, observable, and quantifiable.  On daily basis we have 3,000 stocks that we filter based on certain market structures that gives us an edge of a higher probability than a random outcome.  Once the list is narrowed to a handful of names the market will further narrow down the list by getting us in or keeping us out of these names with a range expansion move.

I don’t look at charts in your conventional cookie cutter manner, or have rules as to where the stock should be whether its 15% off its 52 week highs or above or below certain moving averages etc, in the short term none of that matters.

How much you put at risk per trade depends for the most part what your current outlook is for the market over the next 0-5 days.

Put these names on your trading platform, set the alerts at yesterday’s high for each name, once the alert goes off take a look at the chart, decided within 3 seconds whether or not you are going to buy it, decide how much you want to risk on the trade and your stop loss, hit the buy button, and leave the rest up to the market, wash, rinse, repeat.  Buy’em tight, Sell’em loose.

A few things that you should know about this swing strategy;

•  Its main goal is to get you in when stocks are moving and keep you out in choppy/sloppy markets, it is imperative that you allowed the market to get you in only when the stocks go through their previous day’s high.
• Your awareness of how the market is behaving is crucial, this will give you an idea of how hard to push the envelope.  My best indicator for this is my rolling 5 day watch-list.
• Swing trading is a numbers game, you are going to be wrong half the time, risk management is above all, and many times you will have nothing to do because the market did not get you in. We are not looking for any action, we are looking for the right action.
• Don’t be penny wise, don’t try to anticipate a move just because the chart looks good.  You can have a great looking tight set up with a stock coiling for 10 days but who is to say that it won’t coil for another 5 days.  If you anticipate the range expansion you might buy something that is not ready to go and it will only frustrate you and lower your odds of a winning trade.
• For me this list is a one way list – long bias.  I do not look at this list as a long or short list, long and short are two different games with different dynamics.
• You need to be extremely organized.  Most if not all your work will be done pre-market and you will spend the day just executing or you can just automated it with buy orders after 9:45am.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Mexico Is Breaking Out

EWW Ishares Mexico Index Fund is in the process of breaking a 5 1/2 base, the measure move of this breakout is roughly $64.

Taking This Shipper For a Ride

I'm always intrigued by huge bases from stocks that are trading near their 52 week lows.  Normally a prolong period of contraction leads to a prolong period of expansion.  Golden Ocean Group $GOGL formally known as Knightsbridge Shipping (VLCCF) has been basing for roughly five and half months. Prior to this base the stock was in deep downtrend after it peaked at $16 in June of 2014.  As you can see from the chart below the sellers were in complete control, then In December the bleeding stopped and the stock started its base.  Within the base is when the buyers and sellers tend to find equilibrium, the sellers for the most part are done selling and or the buyers are taking in all the supply. The base normally consists of a new set of stockholders who believe that greener pastures await the stock.

What you see in a base is the stock trade in a range, in the case of GOGL its been trading between roughly $4-$5.  Previously in the downtrend the 20 and 50 day moving average capped all rallies, now the stock is trading above those two averages and they have been acting as support, that's a character change.  What you normally see within the latter stages of the base is the buyers start to get antsy, you start seeing a pattern of higher lows and the volatility starts to contract, then you get the explosion higher.  This is exactly what is going on with GOGL right now.  A move above $5.15 should move this stock from a stage 1 to stage 2 (start of an uptrend).

Previous Articles about bases;

ZGNX BASE

VHC BASE

COH BASE

HZNP BASE

PVA BASE

QSII BASE

Photo; Gcaptain.com