I find it interesting that there are market situations that still leave me dumbfounded and if you know me I’m rarely left without something to say. On Thursday Amazon and Google reported earnings. Both had a somewhat mixed to muted reaction as the bid/ask spreads widened leaving many traders on the sidelines unwilling to step in. However, that doesn’t mean some folks didn’t wander in and I have to tell you if that was the case and you needed to move into the market after hours to adjust a position you got raped, pillaged and thrown to the curb bloodied, bruised and dazed. It has been years since I’ve actually seen a bid/ask spread move to over $2 wide and was traded on, where sellers were immediately punished by buyers moving in and running the price $50 or more against them. I understand that timing is everything but what I witnessed in AMZN and GOOG on Thursday afternoon deserves a place on the ridicululist. Don’t misunderstand here the market moved marginally after the earnings were released. It was an hour later that the serious fireworks kicked in where I saw AMZN move from 354 to 392 in a flash and GOOG from 1135 to 1195 in the blink of an eye. Were the conference calls so extended that the CFO and other officers didn’t get a chance to speak until an hour into the call? Strange things happening out there in the investment world my friends and hopefully some of you were on the right side of each directional move and were able to take out a fair chunk of cash in the process.
It is beginning to appear that the bulls are putting all their eggs into a few baskets, (FB, GOOG, AMZN, TWTR, PCLN & LNKD) in order to carry the torch to the finish line. After Facebook reported earnings on Wednesday the stock climbed to new all time highs just below $64, which was defended well on Thursday with the support “line in the sand” being $60. It would seem that Facebook has one of the best business models at work and that their revenue stream will only grow from here. The positive energy was spread to other social media companies with TWTR, and LKND leading the charge to spread the good news that what is good for the goose is also good for the gander or something to that affect.
The corrections within the broader markets continue, where it appears that Wednesday’s lows marked the completion points for the first leg down, which would be labeled wave A. The ensuing rally phase may have completed at Thursday’s highs and if this were the case it would be labeled wave B. The indexes did sell off initially after AMZN and GOOG reported but the subsequent recoveries leave open the possibility that an additional move towards resistance at 3550 to 3570 in the NDX, 15915 to 16019 in the DJIA, 1800 to 1810 in the SPX and 1150 to 1157 in the RUT.
Elliott “B”-waves are notorious for being deceptive and misleading. From what I can see thus far the 4th wave corrections are in line with expectations and the intervening rallies (B-waves) have yet to reach resistance levels given above. So expectations for Friday would include additional upside with again the resistance levels given above holding. The overall pattern continues to need an additional leg down, which should be the same size as what we’ve just seen. Look for the rally to fail with an easy break below Wednesday’s low likely being the initial slide. Check out Thursday’s charts on the $NDX and $RUT for an updated Elliott Count and Fibonacci resistance levels.
Join me Monday thru Friday from 9:30 AM to 10:30 AM EST as I continue to review trading equities using DTS. The room is open to all and is a great place to review how the DTS birds are easy to use and will make consistent trading profits.
The good news is that the current atmosphere remains prime for day trading. And while the $264 billion trade remains elusive there are solid opportunities to trade profitably. I expect there will be numerous opportunities from a growing list for both traders who approach the market from a bullish prospective as well as traders who approach the market from a bearish prospective.
Remember the key is being able to reduce and separate the “noise” from opportunity. This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them.
The trading opportunities should remain abundant within equities, futures, ETFs, options, treasuries, and precious metals. Opportunity continues to knock on our doors. While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.
Using the Hawk Micro Scalper, Falcon Swing Trader, and the Eagle Trend Trader within the various markets can produce strong results. The combination of any of the “birds”, the Hawk, Falcon, or Eagle platforms with Trade Manager provides a solid, more stress free way to building profitable trades.
Indicator Warehouse has in my opinion the best platforms available covering a wide range of traders from novice to expert.
The Diversified Trading System from Indicator Warehouse offers cost effective products that allow a trader to enter into the “chaos” and trade more effectively.
Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility. Automated stop-loss management and position sizing eliminates most of the problems most individual traders have. Day trading and position trading both require (actually demand) good risk management. Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades.
Profit Finder – System Back Tester. When implemented it allows the user to
- Immediately know the impact of parameter changes.
- Automatically reads all of your DTS entries and exits
- Calculates the profit/loss of each trade
- Performs a wide number of essential intelligence boosting calculations instantly
- Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators
My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames. As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.” Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System. Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms. Our goal remains to assist traders to make greater profits during all types of markets. Sector and money rotation is another tool.
The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA). In the near future I will be adding options strategies to the trading list.
Here is a list of the markets where I have found that DTS (all three birds) are producing numerous signals. Continue to bear in mind that there are days when trading opportunities are not as plentiful. These are days when not trading is likely more profitable than attempting to “force” a trade”:
- DJIA future (e-mini available) – highly recommended for experienced traders
- S&P-500 future (e-mini available) – highly recommended large intraday moves. The SPY options are a valuable alternative to the future.
- Russell 2000 future (e-mini available) – highly recommended can lead in either direction.
- NASDAQ 100 future (e-mini available) very highly recommended and dominated by AAPL, AMZN, NFLX, GOOG, and TSLA – will likely continue to have higher percentage moves as the next larger degree decline begins in the NASDAQ first.
- GS (Goldman Sachs) – good two way volume – usually has $3+ intraday range – Options available
- AAPL (Apple Computer) – highly recommended – Options trading as well
- GOOG (Google) – highly recommended – larger accounts needed – options traded
- LNKD (LinkedIn) – solid intraday range and has picked up recently Options traded
- NFLX (Netflix) – solid intraday range – volatility has deflated on the rise back to $300 – Options traded and very liquid
- TSLA (Tesla Motors) – highly recommended – patience is required if you trade the options – trading the stock remains solid
- TWTR (Twitter) – both stock and options strategies available.
- 30-yr Treasury Bond future – highly recommended
- 10-yr Treasury Note future – solid two way trade
- TLT (Treasury Bond Long ETF) – very active – options as well
- TBT (Treasury Bond Short ETF) – very active (moves inversely to TLT) – options as well
- Gold (futures and ETF – GLD) very active – not suitable for all traders
- Silver (futures and ETF – SLV) – very active – not suitable for all traders
- GDX (Gold Miners ETF) – lower priced – suitable for all traders
- ABX (Barrick Gold) – Large rally potential – capable of sizeable intraday moves.
- NEM (Newmont Mining) superb volatility produces opportunity laden intraday moves.
- EURO FX (futures, mini and micro contracts available) very active suitable for all account sizes – Highly recommended
- Natural Gas (futures) – can be active and volatile
- VIX Index (futures) – not suitable for all traders, more experienced traders should find a growing two-way trade.