RSSArchive for September, 2011

Which Side Are You On?

September 2, 2011 at 8:22 am

We’re in an interesting spot here, no matter which side you find  yourself on.  Both the bulls and bears have reason to believe they’re going to win this one, so let’s take a brief look at the arguments of each.

From the bullish perspective, we’ve just carved out a higher (incremental) low compared to the early-August low, which was confirmed by a higher high this week (including multiple closes above the mid-August bounce high).  We’re now pulling back after a sizeable short-term run, possibly to fill the gap from 8/29.  A change of direction begins with the creation of a higher low and higher high, and we’ve seen both of those get created.  The worst is behind us.

Here’s the SPY daily chart with notes for the bullish case:

Chart courtesy of TeleChart

From the bearish perspective, this is a low-level (albeit wide) counter-trend consolidation following a major decline.  Advances have not seen meaningful follow through…the 8/9 to 8/15 bounce was met with nearly a complete retracement, and the bounce which completed August is again coming under some pressure here.  This correction is just getting started.

Here’s the SPY daily chart with notes for the bearish case:

Chart courtesy of TeleChart

Charts don’t lie, but at times like this it’s all about perspective.  The next direction is in the eye of the beholder, and that’s exactly what makes a market.  What’s your perspective?

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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The Key to Trade Selection

September 1, 2011 at 9:45 am

There’s always a move you’re missing.  It might be in the overall market (ETF’s), or it might be a sector or individual stock that’s making the move of the day.

As traders, we all dream of being involved in those names on a regular basis.  And while you can focus your entire day on monitoring the news and the stocks which are jumping on headlines (some do and are highly successful), the fact of the matter is that those plays might not be best-suited for you.  And that’s perfectly fine.

You’re unique, and your approach should be as well.  Some traders are tuned-in enough to dedicate their attention to the headline stocks, but many are not.  It’s important to accept that and go the best way for you.

Choose Wisely

In my experience, the important aspect of trade selection is founded in the ability to narrow a list of trading prospects to just a few actual candidates.  The aim is to get your watchlist down to a select few which really “fit” you best.

Here are a few things to consider when doing this

* Are there specific setups or chart patterns which have performed best for you in the past?

* What’s your preferred price range or volume minimum?

* Do you have a directional bias?

* Which type of play do you prefer… breakouts, reversals, pullbacks?

Hopefully you’re seeing some ways to start reducing that list of the cleanest 20 patterns and derive from it an actual trading list.  This way, you can ignore what’s left and stick with only the ones which are most suitable for your style of trading.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!