Archive for the ‘Market Mechanics’ Category
Building Intraday Skills
Have a proactive plan for the first and last hours. Experienced traders can play these periods aggressively, but newer traders should just sit on their hands.
Become a student of time of day tendencies. Markets tend to trend within narrow time windows, while fakeouts take control for the rest of the session.
Choose a [...]
Playing Post Russell
The following stocks showed unusual volume spikes in Friday’s session. Mean reversion after the Russell rebalancing could trigger buyable pullbacks on the stronger members of this group:
ACE Limited
ACE
53.2
0.41
224057
Alcon Inc
ACL
151.44
1.9
41210
Accenture Ltd
ACN
40.55
3
531599
American Equity Invst Life Hld
AEL
11.39
1.37
37837
American Capital Agency Corp.
AGNC
28.97
0.53
42618
Assured Guaranty Ltd
AGO
13.69
0.19
126382
Alkermes Inc
ALKS
13.09
0.87
44080
Alterra Capital Holdings
ALTE
19.08
-0.14
88877
Amgen Inc
AMGN
56.26
0.11
332973
Ares Capital
ARCC
13.1
-0.07
250178
Asiainfo Holdings Inc
ASIA
23.07
0.1
58593
Atheros Communications Inc
ATHR
29.85
0.36
109559
Atlas Energy Inc
ATLS
29.74
0.47
91505
Aerovironment Inc
AVAV
21.43
-1.83
29094
American Water Works
AWK
21.02
0.22
56513
Acuity Brands
AYI
43.99
-0.05
63875
Brink’s Co
BCO
20.4
0.22
41734
Blackrock [...]
Tape Reading Tells
Reprinted with permission from: The Master Swing Trader Toolkit
Alan S. Farley McGraw-Hill 2010. All Rights Reserved.
Tape Reading Tells
Experienced tape readers keep a collection of key observations tucked away in their brains, so they can act quickly whenever the tape cycles into analogous price action. This hodgepodge of personal [...]
Politically-Correct Short Sale
Lorillard (LO) is a cigarette manufacturer that stalled in October near 82.50, after a strong recovery. It ground out a 3-month double top pattern and sold off last week, breaking the 200-day moving average. A short sale could profit from a downtrend into the mid 60s.
Last Thursday’s gap was triggered [...]
Research in Motion (RIMM): All Pain, No Gain
Research in Motion (RIMM) is getting “rejected” for the third time at the huge gap it popped back in September. Note how On Balance Volume (OBV) has deteriorated in each test, flagging the subsequent reversals.
It sure looks like institutions are still closing out their positions on this former market leader.
Fibonacci Retracements and Convergence-Divergence
It’s natural to measure the “quality” of a bounce by the percentage of the rally off the low but, ironically, this often yields false conclusions. A better way is to measure the percentage of the retracement into the prior downswing, using the Fibonacci tool.
Here’s an example:
The above chart shows the Russell-2000 Index Trust (IWM). Its [...]
Pulling Into Max Pain
Stocks near big strike numbers ahead of triple witching Friday. The theory here is, if a strong stock has fallen into a Max Pain strike number during expiration, it will probably recover after the influence is out of the way next week:
Freeport-McMoran (FCX) 51.16
iShares Russell-2000 Trust (IWM) 51.19
Petroleo Brasileiro (PBR) 40.40
Aeropostale (ARO) 35.17
True Religion (TRLG) [...]
Mosaic (MOS): Big Rock, Hard Place
Mosaic (MOS) has caught fire in the last three weeks, breaking out above 6-month base resistance at 46 and rallying above the 200-day EMA on May 18th. It hit 59.35 a few days later and dropped into a sideways pattern. This is typical price action at the 200-day, indicating a test of that could last [...]
The Volume Problem
The Powershares QQQ Trust (QQQQ) is about to signal a major bearish divergence because On Balance Volume (OBV) has recovered just half the distance between the February high and March low. This is a big deal that could take considerable time to overcome, in light of the poor volume we’ve seen so far during this [...]
Danger & Opportunity on Monday Morning
Overnight price action in the Globex index futures is setting up a two-sided trap this morning. The SP-500 futures (24-hr chart) is trading just above Friday’s high, which targets the stops of short sellers that held through the weekend, assuming downside followthrough.
However, the same level marks the 62% retracement of the downswing off Thursday’s high, [...]