New Setups To Watch

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Yet Another 15% Parabolic Rally ?

hey folks,

Not sure how many of you remember this chart? but a few months ago i did a historical Chart Study to compare this current rally to previous rallies we have seen in the past 3-4 years. Parabolic rallies have NOT been that unusual to see over the last few years. We have seen several of them. This current rally is now up about 15% from the November lows and based on historical rallies we have seen since 2010, almost every single "parabolic" rally has moved up somewhere around 15%(give or take 1%). 

As you already know market Tops are rarely a ONE DAY event and i am not saying we are at a TOP now but based on history and this SPX chart, we certainly need to be pay closer attention right now. SPX could easily move sideways, churn and chop for a few more weeks before rolling over to downside like it has done before big previous corrections. 

That remains to be seen but the warning signs are starting to manifest themselves.  

ART OF TRADING Member Gives Feedback

Stewie - I have been meaning to drop you a note this past week to really thank you for your mentorship over the last few months. It has been invaluable.

By way of some background, I recently left a successful corporate real estate career to pursue trading as a chosen profession. A lot of people, including several of my clients, thought that I was crazy given that I, along with my business partner, were responsible for advising on some the biggest office deals across the US over the last few years. However, the reason for making such a drastic change in my career was because I consider 'Time' to be the biggest currency. I knew that if I could become a successful trader then it would give me the freedom and flexibility that I craved.

NOTHING, however, prepared me for the change, or the uphill struggle that would follow :)

To cut a long story short, I learnt the hard way. My only comfort is that most successful traders I have spoken to experience much of the same at the beginning of their (latterly) successful careers and it was your guidance/mentoring that put me on the right track.

I think the key to success in this business is money management and you, sir, are a master.  Technical know how aside, your discipline and patience is something that I admire most and your analytical skills are second to none.

Your trading service is now the only one I use. I spent a lot of time researching and following people over several months. I narrowed my research down to three services and then down to one - yours. Why did I choose Art of Trading? Credibility - It is the single most important characteristic in any business and it shines through in your service. Even when we have losing trades, albeit rare, your ability to analyze and explain teaches those around you to be better traders. For that I am most appreciative.

Keep doing what you are doing.

Going forward, I plan to be more active in the chat room now that my skill set is at a level where I think I can contribute, albeit modestly. Until now I have been mostly watching, learning and, in some cases, paper trading until I felt ready.

Anyway, have a great weekend and see you next week.

J.C. (Jcoren) : ART OF TRADING member since October 2012 

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New ART OF TRADING Member Gives Feedback After 2 days

Hi, Stewie,

This is my second day with the service and I have to give you a great big thank you already! I am impressed with your professionalism, how you manage the chat room, the good information and education you provide. .

I started trading as a hobby about a year ago, having left my professional career, needing a challenge and a change. I studied on my own extensively before trying out a couple of chat rooms. I was actually doing okay buying support and selling resistance. Then I thought that I could probably do even better by following the pros. The styles of the traders in those rooms are so different from mine that there was no way for me to succeed. Even though they knew what they were doing, I felt like I had to be brave enough to jump on and off moving trains at my own discretion. I suffered hits not only to my account but to my confidence. I decided to take a break and just observe for a while. After doing months of research and observing many people on Twitter, I narrowed down my search to three possible services I am interested in. You have a solid reputation on Twitter and your chart work is amongst the best of the best, so I decided to start here...


I appreciate your commentary on stocks and the market throughout the day. You do a great job with the chat room and your email updates.


It's still early yet, but I am really hoping this is where I will find a "home" and won't have to look any further.

Keep up the great work, Stewie!

Gladys (Gtrades)

ART OF TRADING Member Making A Strong ComeBack!

Hey folks, 

Wanted to share this inspirational email i got from Ben. Ben has been an ART OF TRADING member "on & off" since 2009 and here's his trading journey.  
 

"Stewie,

I want to start out by saying thank you once again for all of your help. I would still be a struggling trader if you hadn't been there to mentor me and keep me from making stupid decisions. Subscribing to AOT is the best money I've ever spent on trading.

I mentioned in the chat room today that my account hit a milestone after my gains in STX, but I will get to the numbers in a minute. As you know (most other AOT members don't know) I quit my job and started trading full-time back in November of 2006. I knew I didn't know anything about trading but I was confident that I could learn to be a successful trader if I put in enough time. Over the 1.5 years that I stuck with trading I had some good wins and some bad losses. I was often discouraged and constantly tried "new" trading styles, risk tolerance adjustments, research systems, etc., all of the things that most newbies go through. I tried to trade everything, stocks, bonds, Forex, commodities, futures, options. I tried wide stops, tight stops, no stops at all, scaling in, scaling out, buying weakness, selling strength, selling weakness, buying strength. I wrote out a trading plan (probably 5 or 10 of them), I kept paper journals outlining all of my trades and even started a blog to talk about my trading in hopes that my honesty, and knowing other people were going to see my mistakes, would make me a better trader. I tried increasing my size, I tried trading pre-market and after-market, I even spent some time in "trading probation", all in the pursuit of improving my trading.

After all of this I failed at getting the results I wanted. My need to have a steady income and to keep my wife from killing me forced me to give up my dream of being a full-time trader in May of 2008. Even in the face of my failure I found a friend who told me:

"Ben: of all the bloggers/traders i have known, i have never been so sad about someone leaving, except for now. I am truly sad, but i am sure you have given this idea much thought and you have made an intelligent decision. Trading is very tough and it’s a long learning process alas. It was a pleasure learning with you and getting to know you. You are a very special guy and i wanna wish you success in everything you do. good luck Ben!

- stewie"

Those words of encouragement meant a lot to me. The funny thing is, it wasn't until after I left trading that I realized what I needed to help me be a better trader. It wasn't a bunch of books, or charts, or strategies, or more time or money, it was a community, a connection with other traders. There is so much going on in the market every minute of every day that it is impossible to see it all. This is why your service is so important. Having your experience, the experience and camaraderie of all the other AOT members (both novice and seasoned) is what has turned my trading around.

With all that being said, here is how I use the AOT community in my trading now. I have resigned myself to the fact that with my daily job and workload I will never have the time to do research and find quality trade ideas. I rely on you and the chat room for 99% of my trades.  I simply log into the chat room on days that I will have some time, click on the button to activate your alerts, and turn up my speakers. When the alerts come in, I usually don't even look at the charts, I just calculate how many shares to buy, place the trade and set my stop. I try to do everything I can to take myself out of the trades.

I have gained confidence and I have been looking at your nightly Watch Lists and placing trades before you trigger an alert. For example, NUE, MOS, VALE, and STX. All of these were good winners that you never triggered, or I bought before you triggered.

I am up over $5,000 in my account since starting back my trading in October 2012. Now, $5,000 isn't a lot of money, but when you consider that my account started out at $25,000 that is over 20% return in less than 5 months. What's more is that I have missed many amazing setups because of work or hesitation/timing. 

My recap for 2012 shows 63% winning trades and so far 2013 is at 65%. Again, I don't have any magic other than looking at the charts you send, making trades once they trigger, and trying to manage entries and exits. The key, in my humble opinion, for the last couple of weeks has been trust and patience. Trust the setups you see, and have the patience to let the trades work. I hope this can be of some help to others.

Thanks again,

BEN"

Ben's blog isn't updated as often as he used to a few years ago but it still has lots of GOOD information. Make sure to check it out at http://www.10kthrownaway.com/blog/

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).