On both Friday & Saturday (Feb. 10 & 11) at the Worden TC2000 workshop, I’ll be teaching live. It’s at The Woodlands Waterway Marriott (1601 Lake Robbins Drive, The Woodlands, TX 77380). The workshop starts at 10am and ends at 4pm, and I’d love to see you there either day.

Specifically, I’ll be discussing Formulating Your Trading Plan (Friday 1:30 – 2:45) and Locating Trades & Evaluating Risk (Saturday 11:15 – 12:30). I have a lot of good stuff planned, plus you’ll see the new version 12 of TC2000.  I’m in the rotation with Michael Thompson and Peter Worden, so I’m excited about being there and giving you some insights for better trading.

Make plans to be there by pre-registering or just show up (it’s free) – but get there early, it’ll be a full house!

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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Here’s an example from this week…

AGP is sitting in a bullish consolidation pattern here within an existing uptrend.  This is a quality pattern – but it has yet to confirm.  A breakout would happen beyond the upper channel trend line, currently at $70.  Check out the setup, then down below let’s discuss trading it.

Why I Use TeleChart

This is a setup which would have delivered some frustration for those anticipating a breakout – at least for those who entered early.  Wednesday saw a move back up toward the upper channel line, suggesting a breakout was perhaps coming soon, only to have a decisive turn lower on Thursday bring it right back into the center of the channel.  The stock is again lower this morning.

There’s a huge difference between how pro’s and amateurs make anticipatory trades, let’s see what they are and what those choices lead to.

How Amateur Traders Anticipate

Many amateur traders make anticipatory trades.  They receive a tip, or they have a hunch, or they just want to see their predictions proven, and they get in before any bit of a move has started.  They load up, then wait to get paid.  A failure of the stock to deliver the move results in the max loss possible under this circumstance, all because of how the amateur entered the trade.

How Professional Traders Anticipate

Many professional traders make anticipatory trades as well.  Their experience provides them with market feel, and when watching the tape and eyeing the charts, they’ll run across trades they like too – maybe even the exact same setups as the amateur finds.  However, their execution methods are worlds apart.

Rather than piling into the trade and sitting back and hoping the market proves them correct, the professional enters a feeler position – a starter.  A trade small enough to watch but not big enough to hurt them or really help them.  It’s a marker.  As the trade begins to prove itself and the pattern starts to confirm, they add to the trade.  They build a position as it works, allowing them to get paid nicely when their hunch proves correct.  A failure of the stock to deliver the expected move results initially simply leaves them stopping out of their starter position for the bare minimum loss.

See the difference between the two?

There’s a big argument to be made for just waiting for confirmation in a pattern to take place before entering a trade, but anticipatory trading can still produce profits, so long as you’re doing it carefully.

For those of you anticipatory traders, the example above is a great example of how to finesse your entry.  Scale in, make the setup confirm before adding, and know you’re covered either way – whether a tiny loss you can easily survive or a winning trade you can build on.

(For more on anticipatory trading, read When to Make Anticipatory Trades.)

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

Why I Use TeleChart

Last week, the stock broke to a new correction low by undercutting the December lows on heavy volume.  What followed, however, was obviously both shocking and painful for the shorts.

Wednesday’s arrival delivered upbeat news for Weight Watchers as U.S. News & World Report put it at the top of the list for best weight loss diets in 2012.  Consequently, Wednesday’s bar was a bullish engulfing bar as Tuesday’s low was undercut before a close above Tuesday’s high on even heavier volume with a 7% pop.  Then we saw near-record volume Thursday on an 8% advance, and further upside continuation Friday with nearly a 9% gain.

Why I Use TeleChart

Change of character? Absolutely.  Value-buyer accumulation? Hardly.  This is the portrait of a short squeeze, and it’s one reason shorts require absolute stop losses.  The sudden shift can rip the faces off of shorts who panic and rush for the exits while opportunistic bulls get long.  The combination can be explosive, as seen here in WTW.

The lesson?  Watch your shorts and don’t give them more leeway than they deserve.  Keep stops in place and be mindful of what’s possible when the tide shifts.  This is one kind of move you don’t ever want to experience from the wrong side of the trade!

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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Today I want to point you toward 6 stocks which look to have some promise in the months ahead.  This is not a prediction of where they’re headed, just a list of setups which look to have some potential.

I published the post over at MarketWatch, so here’s the link (complete with charts).

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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But can it stick?

That’s always the million-dollar question, but with a solid uptrend in place and prices now pushing to new highs, I certainly wouldn’t bet against it.  In fact, I like it for a push to the $425 area, which is the projection of this pattern (add widest portion of triangle to breakout zone).

Here’s a closer look at the chart:

Why I Use TeleChart

 An aggressive stop would be a gap fill to the 12/30 close of $337.  Nice setup.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

Take for instance CXO.  Right now the stock is sitting in a short-term bearish formation.  The stock recently declined for a couple of weeks, then has attempted to bounce – without success.  That has created a small rising channel, or bear flag, which is quite likely to be resolved to the downside when taken at face value.

Why I Use TeleChart

So am I going aggressively short here?  No, and here’s why:

Short-term, this looks like it wants lower.  But by looking to the left, I see more than just the selloff and feeble bounce attempt.  I see that just about $3 lower is a major level which has served as both support and resistance in recent months.  That could again provide buyers with a spot to take a stand, and it poses a threat to this setup as a bearish play – a roadblock for the trade.

Here’s a closer look at the chart:

Why I Use TeleChart

Always take the short-term pattern you’re seeing in context.  With that in mind, this bear flag isn’t a high-probability trade given support isn’t far below.  Furthermore, the overall trend in recent months hasn’t changed, as this is really just a range-bound stock heading back toward key support.  It might not hold, but trading is about probabilities, and they aren’t real favorable in this case for a move of more than about 3%.

In other words, always look to the left.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

Checking out the recent price action, the stock is a bit range-bound, but a closer examination reveals an often misunderstood pattern: the cup & handle pattern.  The look of the pattern is easily identifiable to even novice chart readers, but they usually fail to take it in context.  Here, it’s right where it should be found – within an uptrend.

Here’s a closer look at the chart:

Why I Use TeleChart

A confirmation of this pattern with an upside exit would put this one in the mid-60′s in short order, so it’s worth keeping on the radar even though it’s far from a momentum name. If anything, this is simply an example worth pointing out. The handle may need a bit more work and it needs to threaten the upper trend line to indicate a move is imminent, but it belongs on the radar no less.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

While some traders prefer a standard lot size, in this video I’ll discuss the notion that your timeframe for the trade should influence your position size.

Yes, the chart itself will help determine your exits, but that’s also a function of how long you’ll expect to be in the trade.

Check out the video for a quick 5-minute explanation and you’ll see exactly what I mean.

(Direct video link is here for those interested in sharing).

Be sure to view in HD (720P) and full-screen mode for best quality in the video.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

Some suggest GLD has topped, and in the near term, they have technical reasons which back that up (lower highs).  But a closer look at the chart reveals a pair of important levels to keep on watch, so that’s what’s covered in this video.

(Direct video link is here for those interested in sharing).

Be sure to view in HD (720P) and full-screen mode for best quality in the video.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

On both Friday & Saturday (Dec. 9 & 10) at the Worden TC2000 workshop, I’ll be presenting in the afternoon.  It’s at the Doubletree Hotel Dallas near the Galleria (4099 Valley View Lane
Dallas, TX 75244). The workshop starts at 10am and ends at 4pm, and I’d love to see you there either day.

Specifically, I’ll be discussing Preparing Like a Top Trader in Today’s Market. I have a lot of good stuff planned, plus you’ll see the new version 12 of TC2000.

Make plans to be there by pre-registering or just show up (it’s free)!

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!