Using Multiple Time Frames To Locate the HIGHEST Probability Trade Setups

As a technical trader/Chartist one of my "strength" is using MULTIPLE time frames to help locate the absolute HIGHEST quality trade setups. What i try and do is find the strongest setups that align in good and 'reliable" technical setups on MULTIPLE time frames for example a stock that is setting up well on the WEEKLY, DAILY and 60 minute charts make for the best setups and if executed properly, these can be nice trades. I try and make it a PROCESS where on EVERY DAY i am looking for the best setups that align on WEEKLY, DAILY, 60 minute and even 30, 15 minute time frame charts.
It all starts with the BIG PICTURE and ZOOMING down into LOWER time frames to help me "detect" patterns that are otherwise not easily recognizable in HIGHER TIME FRAMES.

Check out some RECENT example of setups i posted here on the blog, on twitter or some that i sent out to ART OF TRADING members .

Hope this helps and as always if you any questions, feel free to ask!  : traderstewie@yahoo.com

Cheers!

First Example: TSO 

The chart above is the original TSO Daily Chart (shared on twitter, posted on this blog and emailed to ART OF TRADING members) setup which was showing a CUP& HANDLE pattern: one of my personal favorite patterns and one of the most reliable ones i have found from my experience.

Here's the original TSO WEEKLY CHART (sent to ART OF TRADING members) which showed a very nice pattern similar to the one we saw on DAILY charts except on WEEKLY CHARTS is looked more "clean" and could see it more clearly to the trained trader's eyes.

Above chart shows the 60 minute TSO chart shows a very nice looking INVERSE CUP & HANDLE. This pattern wasn't very visible on the HIGHER TIME FRAMES but zooming down into the 60 or even 30 minutes charts, you would have able to spot some very bullish and reliable patterns to trade or at least alert/prepare you for a good move that was imminent.

Above is the updated 60 minute TSO chart AFTER the breakout.

Above is the updated TSO DAILY chart AFTER the breakout

 Above is the updated TSO WEEKLY chart AFTER the breakout.

Here's another example: TIVO

Above is the original Daily TIVO chart setup (shared on twitter, posted on this blog and emailed to ART OF TRADING members). Chart showing a decent looking ASCENDING TRIANGLE which tend to breakout to upside.

Above is the WEEKLY CHART of TIVO which shows a beautiful looking long basing pattern which broke out over 12.30 area and held it on retest. That was very important for this setup as it now creates yet another base from which it can now launch off over that 13.00 area. Strong bases make for strong(reliable) breakouts.

Above is the original 60 minute TIVO chart which was showing a solid basing pattern. Breakout was imminent. Only a matter of time. 

Above is the UPDATED TIVO weekly chart. breakout was SOLID and played out very nicely for those that played it.

Above is the updated TIVO daily chart. Notice how the MACD played a key role in spotting this setup and increasing the reliability of the play/

Updated 60 minute chart of TIVO after the breakout. 



I am going to make a new VIDEO on this topic soon but i wanted to do this blog post first as an "appetizer" to open your appetite on this very important topic especially for Technical traders.

Hope it helps.

Anatomy Of A Good Trading Plan

hey folks

Wanted to share with you all a written 'TRADING PLAN' which was created by one of the newer Art Of Trading members. I thought it was so simple yet thought out well enough that i wanted to share it here as i am sure many of you will find it useful and helpful. 

Enjoy! 

10 New Setups To Watch This Week

Note: make sure to check and re-check earnings dates on these stocks. 

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Respect Current Action By Studying Past Price Action

check out the attached SPX chart very closely. Many people are very surprised by the recent strength in the market's move up and i totally agree, its VERY hard to chase it and we ALL want a pullback to get into more aggressive longs and that WILL COME sooner or later. The purpose of this chart is to illustrate that this recent rally we saw that actually started in late December as the "fiscal cliff" fears dissipated. SPX went on a upside run in about 1 month of about 7% (see chart). 

This rally caught MANY off guard like many previous recent rallies. "Calling TOPS" becomes a very popular thing to do among traders and we are all victims of that as no one wants to be left "holding the bag" at the "top". 

Take a close look at the attached SPX chart and you quickly see that the type of rally we are seeing right now is NOT out of the norms. We have seen many like it and in most cases, we see SPX make a big run up with very minor "pullbacks". THe dips tend to be shallow and quick before new buyers come in and take it higher(much to most people's surprise). Calling tops becomes very frustrating for BEARS are want to short and reap rewards on down moves and also for BULLS who want decent dips to BUY. 

Its becomes a CHASERS market. Take a close look at what the SPX did exactly ONE YEAR ago where i recall vividly an almost identical scenario as what we are seeing right now. SPX did indeed "top out" but look at WHERE and WHEN it "topped" out! After a 16% STRAIGHT UP run(very tiny fast pullbacks) and 3-4 months after it started in late December/Early Jan. 

Are we seeing a similar scenario now?? Obviously hindsight is always a beautiful thing but as of now, i am seeing an eerily similar move to the one we saw exactly one year ago.

Let's not get ahead of ourselves and take it ONE DAY AT A TIME. Lets see where and how things go from here. My goal right now is tune out as much as "noise" as possible as everyone usually has an opinion but the only one's that matters is the MARKET'S so I'm going to trade with the market's flow by taking new trades as they emerge and setup whether it be in BULLISH or bearish patterns.

Benefit of doubt goes to the BULLS right now regardless of how "overbought" we are. Just like "oversold" can become more oversold, Overbought can become more overbought. 

NEW Stock Ideas To Watch

 DELL: Technically starting to show hints of a bottom. HIGHER LOWS with accompanying HIGHER VOLUME up days starting to manifest in the DELL daily chart. Keep an eye on this.

 AEGR: Strong trend up: consistent volume patterns with HIGHER Volume UP DAYS followed by small controlled low volume dips to test Moving Averages. New Breakout looks imminent.

 HOG: Who doesn't like a Harley... Enough Said!

 BYD: casino stocks have been ripping big time. See charts of WYNN, HAR, MPEL and LVS. BYD has clear resistance near the $7 spot. Volume patterns building in very bullish manner. Watch for a breakout over 7.00 to 7.10

 HP: Oil drilling sector seems to be getting some love lately. Watch for a breakout soon.

 WDC:  from the data storage sector, STX announced killer earnings today/ Could be helpful to WDC. Volume patterns showing very bullish action last few weeks.

 VALE: A Brazilian Mining play. Volume patterns healthy with big volume up days and low volume controlled pullbacks. Pulled back last few days and now appears to be stabilizing above the rising 20 day MA.

 YPF: Argentinian ADR in the Oil and gas Sector. Momentum looks strong and looks like it wants more. Fast Mover.

X: US Steel in the recently HOT steel sector. posted original setup from the $22 base breakout. Now looks to be BULL FLAGGING.

Note: make sure to check and re-check earnings dates on these stocks. 

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New Setups To Watch This Week

ADT: basing near highs with healthy volume patterns: breakout over 46.00 looks imminent.

CNH: Very strong volume (accumulation) on recent up days. Good momentum here so a breakout looks imminent.

EXPR: Gapped up on strong volume 2 weeks ago on earnings: its been consolidating in a BULL FLAG type formation: Looks poised to breakout soon.

LAMR: A rather unusual looking chart but thus far the action has a bullish feel to it. Could consolidate a few more days ahead of a new breakout over the 41.00 area.

MSCI: Looks to be basing in a bottoming pattern. Its trying to start a new series of HIGHER LOWS. A breakout over 30.30 could start a GAP FILL run up to 35.00.

RPM: A decent looking CUP & HANDLE pattern in RPM now. In the strong "CHEMICALS" sector. RPM looks poised to breakout thru that 29.00 resistance zone.
Other strong Chemical names to watch: LYB, POL, PPG, GRA & WLK. 

. 

XME: This metals ETF could benefit from the rotation we have seen out of the Technology sector and into other areas of the market. XME looks to be setting up in a SYMMETRICAL triangle with a breakout 'warming up'. One more small pullback would not be bad before it attempts a 45.00 area breakout.

Note: make sure to check and re-check earnings dates on these stocks. 

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How Oversold Are We Really?

Just because we are down over 300 points on Dow Jones today or down to 1400 on SPX, DOES NOT MEAN THAT THIS IS A BUYING OPPORTUNITY.

Be very careful falling into the BUY EVERY BIG DIP mentality. Obviously, that all just depends on your timeframes as a trader and the time frame of your trades. Even for my short term nature, i am a little hesitant getting long right now. Yes, some stocks are very OVERSOLD and could bounce nicely for 1-2 days, but keep in mind, OVERSOLD can get even more OVERSOL ..... very quickly. Ask anyone who was bought AAPL recently because it looked "oversold". 

This entire week, My goal was to keep ART OF TRADING members out of trouble; Remained in a 100% cash stance for the entire week pretty much. 

It has helped many based on emails i received and stirred most out of harm's way. That's GREAT as that was the intention. 

Sometimes, in trading, its NOT how much money you make but how money you keep that matters most. If by standing aside you managed to avoid account damage then that's a big win and puts you in a mental and financial position to attack with more confidence when the time is appropriate. 

Look at the chart i attached . You will see that we are nowhere near "OVERSOLD" really. If this maket wants to, it can easily keep drifting down and selling off in the days/weeks to come. The downside risk is very real and it needs to be respected. Sure there will be PLAYABLE bounces(like yesterday's bounce) but let's keep in mind the bigger picture. 

Study the TRIN and SPX relationship in the attached charts. Study how SPX and TRIN behave during times of 'EXTREMES', watch how TRIN spikes up into EXTREMEs on days when SPX tanks and especially near climax bottoms where the selling really intensifies indicating CAPITULATION. 

 If you not sure what you are looking at or don't understand it. email me at traderstewie@yahoo.com, and i'll help explain it(maybe in a video). 

The Most Important Lesson In Trading

Hi folks: An important note that i'd like to share ahead of next week.

While we had a solid week this week(11 trades: 9 winners and 2 losses), we did incur TWO losses in SINA and LULU. But there were VERY valuable lessons to take from BOTH trades. As you  know by now, when a stock gaps DOWN THRU my stop loss, i always urge people to simply OBEY THE STOP LOSS; SELL immediately at the open and MOVE ON. Now, while the SINA trade was a loss of around 1.60% loss(very small loss) if you sold a few seconds after the open(like the alert suggested you do). Some traders did not sell it and SINA luckily reversed back up and some traders LUCKILY sold it for a gain a few minutes later(pheewww, keep in mind, that was lucky).
In the chat room and in the emails, i always recommend you respect the original stop loss and sell it at the open because all it takes is ONE TIME for you to "break the rules" and you can get punished badly. The LULU trade was a perfect example of this, it gapped down below the stop loss level(at which point you must sell it immediately). But i am convinced that a few traders remembered what happened with the SINA trade, where it gapped down below the stop loss area and quickly reversed higher. I have no doubt in my mind, that some were thinking(hoping), the same thing would happen with LULU. Keep in mind guys, IT ONLY TAKES ONE TIME for it to not reverse and it could hurt. That's all it takes, JUST ONE TIME.  
In the end, its trading 101 really: OBEY THE STOP LOSS: as sucky as it may be, we must obey the stop loss. The pain from not obeying is really not worth it cause it ONLY TAKES ONE TIME. LULU stopped out at the open for a 2.60% loss(very respectable loss here), it closed down on friday with a 7.50% loss = NOT acceptable to incur that kind of loss in my book).

The hardest part about trading is TAKING A LOSS. It's hard not only because it means that you will have to incur a loss that will decrease your account size but it's hard mostly because you want to be RIGHT! Nobody wants to be wrong. 

Nothing wrong with getting into a mistimed trades: That happens to EVERYONE regardless of experience. Nothing wrong with making mistakes or bad entries in trading but the biggest mistake one can make is STAYING with a mistake because you refuse to sell at a small loss or obey the initial stop loss. When ego is on the line, as traders, many of us do things we otherwise wouldn't do. Nothing wrong with losses as long as they are SMALL. Recovering from a SMALL LOSS is a whole lot easier then digging yourself out of a big hole, never forget that. Recovering from a large loss is a nightmare and it hurts many traders mentally and financially. Many traders will learn this lesson many times over and over again the HARD WAY unfortunately. The best thing to do is to take the initial SMALL LOSS as sucky as it may feel initially. Bite the bullet and MOVE ON. You will instantly feel a sense of "relief" and you can now focus on BETTER AND BIGGER IDEAS and not be stuck in something that is not working and hoping, praying it turns. 

Cut the losses early/quickly when possible and you will recover and then some later once the better trade setups start lining up again. You will get better trades eventually but you gotta give yourself the chance to win over the longer term and that means taking small losses on mistimed trades.

Thanks for reading.

ART OF TRADING Members Success Stories!

Just wanted to say thanks.

I followed you on GMCR, CTRP, LULU, SINA and CBG. I have a tiny account and was a bit worried about your monthly cost, but by playing with only 1-3 option contracts I have been able to pay for my first month with you. I appreciate the setups and the alerts. I used to be skeptical of all the testimonials you posted, cause a lot of sites I swear they type them out themselves, but here I am writing one for you to say thanks.

Keep it up. I hope I can finally turn around my years of misfortune on the stock market by learning from you.

Richard (New ART OF TRADING member on free trial)

Stewie,

Thank you to you and the service you provide.  I am not a big trader, I consider myself one of the small guys.  I only have an account of $40k but I do want to let you know that because of your picks and the quality of traders you have in the chat-room, I started my account at the beginning of October with $35k and have made over $5k in just over two weeks.  You are a class act and I will recommend your service to all my friends.  And to those who do trade I recommend using the chat room feature because the educational value is second to none...What you teach is invaluable.

A sincere thank you from JohnS

AMZN	253.80	-100	-25380	10.45	-25380	251.12	-25122.5	257.55
TWM	26.80	700	18760	10.45	18760	26.7	18679.55	-80.45
CRUS	37.91	659	24982.69	10.45	24982.69	38.33	25249.02	266.33
PHM	15.64	1590	24867.6	10.45	24867.6	15.79	25095.65	228.05
PPC	5.26	594	3124.44	10.45	3124.44	5.28	3125.87	1.43
AAPL	665.11	-37	-24609.1	10.45	-24609.1	666.38	-24666.5	-57.44
AAPL	666.74	-37	-24669.4	10.45	-24669.4	668.15	-24732	-62.62
USG	21.74	5	108.7	5.22	108.7	22.38	106.68	-2.02
USG	21.74	520	11304.8	5.22	11304.8	22.37	11627.18	322.38
USG	21.74	625	13587.5	10.45	13587.5	22.25	13895.8	308.30
LULU	75.32	210	15817.2	10.45	15817.2	74.85	15708.05	-109.15
TWM	26.96	900	24264	10.45	24264	26.41	23758.55	-505.45
GRMN	42.35	500	21175	10.45	21175	42.5	21239.55	64.55
LPX	12.99	957	12431.43	10.45	12431.43	13.1	12526.25	94.82
CMI	92.17	135	12442.95	10.45	12442.95	91.86	12390.65	-52.30
BGCP	5.09	2455	12495.95	10.45	12495.95	5.12	12559.15	63.20
PANL	33.91	368	12478.88	10.45	12478.88	34.17	12564.11	85.23
FIO	31.51	409	12887.59	10.45	12887.59	31.57	12901.68	14.09
LPX	13.06	957	12498.42	10.45	12498.42	13.57	12976.04	477.62
VNRG	4.63	2693	12468.59	10.45	12468.59	4.88	13131.39	662.80
VNRG	4.82	1329	6405.78	10.45	6405.78	4.8	6368.75	-37.03
HUM	73.80	-169	-12472.2	10.45	-12472.2	73.73	-12470.8	1.38
UA	56.47	-200	-11294	10.45	-11294	56.27	-11264.5	29.55
UA	56.47	-21	-1185.87	5.22	-1185.87	56.09	-1183.11	2.76
ISRG	511.56	17	8696.52	10.45	8696.52	508.06	8626.57	-69.95
AAPL	646.00	19	12274	10.45	12274	643.89	12223.46	-50.54
CRUS	37.92	600	22752	10.45	22752	37.58	22537.55	-214.45
ANN	36.95	338	12489.1	10.45	12489.1	36.84	12441.47	-47.63
AAPL	644.17	-19	-12239.2	10.45	-12239.2	637.94	-12131.3	107.92
AIG	35.58	351	12488.58	10.45	12488.58	35.61	12488.66	0.08
AAPL	638.28	19	12127.32	10.45	12127.32	640.9	12166.65	39.33
CAVM	32.00	-389	-12448	10.45	-12448	31.75	-12361.2	86.80
VNRG	5.22	1000	5220	10.45	5220	5.44	5429.55	209.55
VNRG	5.28	1100	5808	10.45	5808	5.43	5962.55	154.55
AAPL	638.64	19	12134.16	10.45	12134.16	636.1	12075.45	-58.71
VNRG	5.42	1000	5420	10.45	5420	5.23	5219.55	-200.45
AAPL	632.79	19	12023.01	10.45	12023.01	628.82	11937.13	-85.88
XLE	74.12	339	25126.68	10.45	25126.68	74.15	25126.4	-0.28
CRUS	36.94	375	13852.5	10.45	13852.5	36.92	13834.55	-17.95
VNRG	5.29	500	2645	10.45	2645	5.08	2529.55	-115.45
GOOG	2480.00	1	2380	11.3	2380	2800	2788.7	408.70
CRUS	36.90	-100	-3690	10.45	-3690	36.67	-3677.45	12.55
VNRG	5.12	500	2560	10.45	2560	5.38	2679.55	119.55
VNRG	4.99	500	2495	5.22	2495	5.38	2684.78	189.78
VNRG	4.79	1250	5987.5	5.22	5987.5	5.38	6719.78	732.28
SSO	61.39	407	24985.73	10.45	24985.73	61.16	24881.67	-104.06
GOOG	2300.00	1	2300	5.77	2300	2100	2094.23	-205.77
GOOG	2290.00	3	6870	14.15	6870	2450	7335.85	465.85
VNRG	4.55	200	910	10.45	910	4.5	889.55	-20.45
AAPL	644.71	38	24498.98	10.45	24498.98	641.28	24358.19	-140.79
GS	119.37	-209	-24948.3	10.45	-24948.3	120	-25090.5	-142.12
HD	60.47	247	14936.09	10.45	14936.09	59.79	14757.68	-178.41
ANR	7.28	820	5969.6	10.45	5969.6	7.65	6262.55	292.95
CAT	82.61	-151	-12474.1	10.45	-12474.1	82.54	-12474	0.12
ANR	7.28	823	5991.44	10.45	5991.44	7.83	6433.64	442.20
BBG	24.80	503	12474.4	10.45	12474.4	24.59	12358.32	-116.08
HERO	5.08	-2948	-14975.8	10.45	-14975.8	5.28	-15575.9	-600.05
SPXU	38.26	326	12472.76	10.45	12472.76	38.02	12384.07	-88.69
HERO	5.24	-2948	-15447.5	5.31	-15447.5	5.28	-15570.8	-123.23
AAPL	1406.00	1	1406	11.3	1406	1300	1288.7	-117.30
CDE	29.42	424	12474.08	10.45	12474.08	29.61	12544.19	70.11
GS	394.00	5	1970	17.22	1970	415	2057.78	87.78
AAPL	3010.00	1	3010	11.7	3010	3050	3038.3	28.30
AAPL	1035.00	3	3105	14.07	3105	1095	3270.93	165.93
AAPL	2815.00	1	2815	10.85	2815	2931	2920.15	105.15
VNRG	4.83	500	2415	10.45	2415	4.48	2229.55	-185.45
VNRG	4.56	500	2280	5.31	2280	4.48	2234.69	-45.31
AKAM	37.63	-700	-26341	10.45	-26341	37.36	-26162.5	178.55
AET	43.66	286	12486.76	10.45	12486.76	43.43	12410.53	-76.23
HTZ	15.08	831	12531.48	10.45	12531.48	14.98	12437.93	-93.55
QLD	57.36	435	24951.6	10.45	24951.6	57.77	25119.5	167.90
AAPL	2810.00	1	2810	10.65	2810	2740	2729.35	-80.65
LEN	36.30	687	24938.1	10.45	24938.1	36.7	25202.45	264.35
Withdrawal							-500
AAPL	2670.00	2	5340	11.2	5340	2730	5448.8	108.80
CNX	34.47	-300	-10341	10.45	-10341	34.63	-10399.5	-58.45
CNX	34.47	-62	-2137.14	5.31	-2137.14	34.67	-2154.85	-17.71
CDE	29.51	423	12482.73	10.45	12482.73	29.6	12510.35	27.62
Margin							-20.21
AMZN	1320.00	2	2640	14.5	2640	1455	2895.5	255.50
AMZN	1278.00	1	1278	6.06	1278	1455	1448.94	170.94
AMZN	1395.00	5	6975	16.5	6975	1465	7308.5	333.50
AMZN	1430.00	4	5720	16.5	5720	1510	6023.5	303.50
AMZN	1430.00	1	1430	6.09	1430	1550	1543.91	113.91
GMCR	22.18	563	12487.34	10.45	12487.34	23.46	13197.53	710.19
Withdrawal							-500
SINA	59.24	422	24999.28	10.45	24999.28	59.85	25246.25	246.97
GOOG	2190.00	2	4380	13.51	4380	2200	4386.49	6.49
GOOG	2050.00	1	2050	10.65	2050	2150	2139.35	89.35
CBG	19.21	1307	25107.47	10.45	25107.47	19.31	25227.72	120.25
			Stewies calls					$5,563.89
			Today Trades
			Mental Errors I made that I am not happy about

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