stockbee

6/27/2016

Brexit surprise leads to volatile action

Markets do not like surprises. The market was expecting a "re main" win. It had rallied a day earlier in anticipation of that.  But once the "exit" vote came in there was wide spread selling.

The Stockbee Market Monitor had a huge 1599 down day. Days above 1500 on downside are extremely rare.


But one day does not make a down trend , follow through selling is key. Typically such  big moves triggered by macro events recover in few weeks once the volatility drops down. In short run expect a bit of volatile action.

Market has been stuck in range for last 2 years. Every time it had a correction it has bounced back but has been unable to break above the range convincingly. If in few weeks market shrugs off Brexit based selling and recover it  might set it up for a range breakout. 


6/06/2016

How to improve your trading

Do your own analysis, build your own analysis, develop your own rules and go the extra mile...
1 develop your own scans , entry , exit , risk method after studying or copying others approach.
2 Post your own market analysis on Timeline after close. When I was beginner I use to write my own analysis of market after close and then compare it to IBD big picture analysis.
3 know your method in detail. you should be the ultimate authority on your method, your scans, your risk management, stop and so on... explain it to others, it will help refine and clarify your own thinking
4 Study the best traders in the market and incorporate their learning's. study what is their setup. study their time frames, entry , exit , risk and then use that as raw material for your own method.
5 remember most successful traders had learning curve of 5 year plus. It took Jesse Livermore 10 years to put all elements of his trading together.
Once you get your method in place just 3 to 5 years of superior returns can turn your life around.
The key word in trader development is self efficacy SE . SE can only be achieved through mastery experience. strive for that in your trading journey...

5/31/2016

Breadth improves


With good improvement in breadth in last one week , market might be ready to take out recent high.

5/23/2016

13 negative breadth days in last 20 days


Last 20 trading days  have seen 13 negative breadth days. As a result of this steady selling pressure the Secondary Breadth indicators have turned negative. But Primary Breadth Indicator or Number of stocks up 25% in a Quarter continues to be positive.

As has been the trend in last 18 months or so big breadth thrusts have not followed through and have lead to extended range bound action. This action looks similar. 

5/13/2016

Deteriorating breadth pressures the rally

In last 8 out of 11 days there were more breakdowns than breakout. It indicates steady distribution in to strength.


The sectors that had bounced from weakness in many cases are having hard reversals indicating the bounces were just counter trend moves.

Some pullback after a strong bounce is to be expected , but if breadth continues to deteriorate at this pace , the rally will have tough time sustaining itself. 

5/02/2016

Even IBD shifts focus to swing trading



As many of you would have noticed IBD is now promoting its swing trading service. It is reflection of the range bound nature of the markets.

Stocks do not move for long period of time but when they move they just don't walk they sprint. This phenomenon is more pronounced on stocks with established momentum profile. A surge of buy interest in short period of time creates these kind of powerful momentum bursts. This bursts do not last long , they can lose momentum quickly in 3 to 5 days.







If you set up a method for finding and trading these kind of setups on daily basis you can find these setups on your own.You can scan for stocks with established momentum that are having mini pullbacks. If market is in uptrend you will see hundreds of such setups. If market goes in to correction , these kind of setups automatically dry up as number of stocks with momentum drops on bullish side while bearish momentum stocks increase. At the beginning of new bull move, you will see proliferation of these kind of setups.

Once you establish a scan for these kind of setups, these start showing up on breakout soon as market opens. By first 15 to 30 minutes many stocks breakout. If you enter early you can profit from the move during the day. As the day progresses you will find more and more setups.

In these kind of swing trades you want to put as close a stop as possible. Because the entire logic for buying the setup is that the strong momentum will continue next day or in next 2 to 5 days and stock will never revisit the breakout level. If that happens the momentum burst has failed. So stops of around 3 to 5% are good enough . Profit targets on these kind of setups are 8% to 20%.

This kind of swing trading is relatively easy to master and offers you thousands of opportunities. You can control your risk very well and don't need to know fundamentals of stocks to trade. You do not need expensive software to trade this. You don't need to subscribe to any service or attend expensive thousands of dollar worth of courses to master this. As long as you are motivated and willing to put in efforts for sustained period of time till you can develop expertise in this, you can learn this no matter your age and sex.

If you study the highlighted posts on this site in side panel , you will find complete details for setting a swing tading method on your own.

4/20/2016

How to find Bullish Anticipation setups


To anticipate a breakout look at stocks currently not undergoing momentum burst.

Stock should be in extremely low momentum phase for anticipation .
It can be a shallow pullback or consolidation in established momentum phase.

To anticipate look for stock with extremely low volatility

A stock with low volatility in last 5 to 10 days is ideal candidate as part of a continuation setup.
Look for series of low range bars in last 5 to 10 days
Look for stocks with bollinger band squeeze.

Avoid Anticipation setups on extended stocks

First or second anticipation setup in established trend is best
Extended trends needs to be avoided for anticipation as failure is high on them

Look for early entry on anticipation candidates

Anticipating a breakout helps you get an early entry and can improve your per trade profits.
It also can lower your risk as your stop is closer.
It can help you profit from even smaller moves.
For that entry without waiting for breakout is best.

Anticipation requires more pre planning and effort than buying a breakout.

You need a process flow to do that.
The process should be efficient and done daily after the market close.
The suggested process flow is a template you can develop your own process.

Only 3 to 5 quality ideas should be tracked

"A" grade pre Momentum Burst setup should be your first priority
Once you have list of anticipation setups narrow them down to 1 to 5 for next day action.
Quality is more important than quantity

In order to find Bullish Anticipation setup use DT and TI 65 lists in Telechart

Double Trouble Scan

US common stocks
c/minl252>=1.8 and minv3.1>=100000
Price % change Today between 1 to -1%

TI65

US Common stocks
avgc7/avgc65>1.05 and minv3.1>100000
Price % change Today between 1 to -1%

MDT Above 1.19

US Common stocks
c/avgc126>1.19 and minv3.1>100000
Price % change Today between 1 to -1%

After running these three scan merge them together as some stocks will be common.

Go through the list to find setups that are setting up for possible b/o

What to look for in good anticipation setup

series of narrow range days in pullback/consolidation
orderly pullback with no 4% b/d during the pullback or consolidation
low volume pullback
low volatility during pullback
linear first leg if looking as continuation setup
Stock should go up smoothly and not in volatile manner
3 to 10 days consolidation/pullback
not up 3 days in a row
This entire process once setup tales just 20 minutes daily. You can find 5 to 10 good set ups using this process daily. In good market conditions these setups can make 8 to 20% in just few days. So if you are serious about making money swing trading setup these scans and practice finding good setups. 

Anticipation setups for April 20, 2016


HDS
HEES
NBIX
RAX
PRTY
MOMO
BYD
ACCO
KPTI
PN
AROC
RTK
ATSG

4/19/2016

Anticipation Setups for April 19, 2016

Anticipation Setups for April 19, 2016

 
brkr.png
hds.png
BRKR and HDS are among the 8 stocks I am watching for possible breakout in next few days.
Anticipation Watchlist
XLRN
GWPH
FNSR
HDS
IPHI
CMN
BRKR
VLRS

Anticipation allows you to control risk and get into setups early or as they are breaking out. A
nticipating a breakout helps improve your per trade profits. It can also lower your risk as your stop is close. It can help you profit from even smaller moves.
Anticipation requires more pre planning and effort than buying a breakout. You need a process flow to do that. The process should be done daily and followed consistently.
If you are serious about making money swing trading learn how to develop your own momentum based list of stocks, and how to identify and anticipate good setups from that list. How to enter, exit and manage risk on the trade. If you put one time effort doing that you will have year after year profits. Go through my old posts on anticipation.

4/14/2016

How to improve your trading

Start by understanding how markets and stocks work. If you want to operate or repair a car you need to know how it runs and rules of the road.

To build an edge in trading stocks you need understanding of market structure and how stocks move.

You will fail if you do not have structural understanding of the market . Once you develop understanding of markets then you will be able to design your own methods to extract profit out of the market.

A good understanding of markets will also help you when your methods stop working or you hit rough patch. You will know how to and what to fix.

Unfortunately many traders do not survive long enough to reach a stage where they can understand market structure. The focus on newsletters and recommendations prevents many from understanding market structures.

Most traders do not start out by an objective of understanding market structure. They start by looking for way to make money.

Some are lucky to find a method based on market structure early in their career.Some survive long enough and figure out market structure.

If you want to build enduring trading edge and make money first and foremost understand market structure.You must know how market operates and why it operates in that manner.If you can understand that then you can build many ways to benefit from that understanding.

To understand markets understand the role momentum plays in the market. It is the most basic structural tendency of the market. Momentum has been studied extensively and you can benefit from understanding it.

4/12/2016

How to narrow your focus


If you want to make money in the market then you have to narrow your focus to a specific style and setup .

For a new trader or struggling trader this can be a big challenge. Because you may not know what to focus on. Every style and idea looks attractive at that stage. As you gain more experience it becomes easier to narrow your focus. 

For beginners the best route to narrow your focus is to copy some of the well known approaches that have worked. By basing your approach around a ready template you are likely to  reduce your learning curve significantly.

For experienced traders periodically re looking your approach can help narrow the focus. often as you gain experience you can end up trading many different setups as you get exposed to many successful traders and their approach. This can be good and also sometime bad. It can lead to style drift.

While there are many ways to narrow your focus the simplest approach is to first narrow your approach to specific types of stocks:

  • growth stocks
  • momentum stocks
  • value stocks
  • turnaround stock
  • high priced stocks
  • low priced stocks
  • highly liquid stock
  • low liquidity stocks
  • low float stocks
  • ETF
A narrowing decision then helps you further narrow your setup to specific pattern or anomaly on those stocks.

For example growth stocks tend to breakout on big earnings surprise . You can decide to build your approach around that and focus only on stocks with very big first or second earnings surprise. The Episodic Pivots approach I have detailed focuses on that.

 Successful speculation is difficult art but to develop it first step should be to narrow your focus.