The Italian soap opera is back

This market corrects by going sideways. Every time breadth becomes extreme it goes in tight sideways range. 

Couple of time the range had shakeouts but reluctance to sell is key character of this move.

This is a short week with Friday being holiday. Expect today to be only trading day with some volume as people would start thinning out on Thursday.

The Italian soap opera has potential for whipsaw.

Creeping higher moves

In the last 4 years there have been many financial crisis. The US was obviously the biggest one. Then we had trouble in Europe, Dubai, Iceland, Spain, Italy, Greece, and now Cyprus. The market has taken all those events in it tide and is still up and now approaching all time high.

Each event creates the feeling and echo chamber of big calamity, but nothing major has happened and life goes on. The economy keeps rebounding and the Fed is proactive.

That is the backdrop to the market. The breadth is a proxy for large speculators buying and selling. If they are aggressively buying we get series of 500 plus days, same way if they want to get out aggressively, it is reflected in bearish breadth numbers of 300 plus.

When there is slow and steady buying it is reflected in the kind of breadth we are getting currently. A grinding higher move. Characterized by creeping higher moves without big explosive moves on individual stocks.

There is a constant bid in the market and on every dip it shows up intraday or next day. This can continue as long as the pattern is not broken.

When you see 300 plus day to downside is when to get excited.

Bulls in control

Bulls continue to hold the edge. Every dip is a buy till it stops working.

The market has settled in sideways pattern here, as a consequence individual stocks are also going sideways and number of them are having orderly pullbacks.

The probability of higher prices is rising as a result of this action.

Dip buyers were active

The story remains same of underlying bid, but further progress has been slow. Every time there is a minor dip buyers step in , but broad based buying is lacking.

One of the useful indicator in Telechart is T2108 . T2108 tells you % of stocks above their 40 day moving average. As of now the readings are around 60%. These readings peaked on January 22 at 85% after climbing from September bottom. Less and less number of stocks are leading the advance since then. But as long as readings are over 50% it is still bullish breadth.

The other breadth indicator used by many is $BPNYA. It tells you % of stocks in confirmed buy signal by point and figure chart method. Currently the readings on it are 77.64%. The peak readings were 79.21. When readings on $BPNYA goes down by 6 points after establishing a peak or bottom then it is considered change of direction signal. Which for current market means readings of 73.21.

The overall breadth picture plus lack of excessively bullish sentiment indicates possible continuation of move or even if correction happens it might be contained. Unless there is change in breadth readings the benefit of doubt continues to be on bullish side.

Are you serious about your trading?

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

Why traders come to stockbee?

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.

What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading sites that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.

How can I become a member?

To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.

Underlying bid

There is an underlying bid in the market. Every time it dips a bit , it bounces back quickly. The Cyprus induced gap down was quickly bought and has not dented the market at all.

There are professional bears in the market and they were salivating on Sunday at a prospect of big drop, but the conditions so far have not favored them.

At this stage the sentiments are not extremely bullish and the breadth has come down from excessively bullish readings, that may help stock to make another attempt at a high.

While the overall market is one piece of the puzzle , the more important piece of the puzzle for swing traders is to find setups that will work. In this kind of market you have to look for non extended setups. They come in batches. 

Yet another shakeout

Markets are expected to open down due to Cyprus induced fear. The opening as of now does not look at bad as it looked last evening. We will see if there is any follow through and more importantly spike in bearish breadth.

As market is extended a correction of 5 to 8% may be better course but the market has had strong underlying bid and so far has not shown much damage.

I would watch for breadth keenly to see if a bearish stance is warranted. Absent that it might be another shakeout.

Mild down day

After series of up days in a row market had a down day. But it was not a deal breaker. Bulls have been in control of this tape for sometime and they will not easily give up.

However many stocks are extended and in number of cases new high is resulting in mild reversals intraday or breakout failure. The stocks with momentum are holding up well as of now.

Finding non extended breakouts is a challenge . A sideways move or correction might help .

Trading Basics By Thomas Bulkowski

Trading Basics is first book in three part series Evolution of Trading by Thomas Bulkowski. The two other books in the series are Fundamental Analysis and position Trading and Swing and Day trading.

The first book in series is a big disappointment. It has no clear theme and has no coherent framework. The chapters are disjointed and read like extended advertisement for Bulkowski's previous book Encyclopedia of Chart Patterns. In almost  every chapter for almost every point the author rfers to his earlier book.

More than that the basic flaw in the book is lack of central theme. The book is divided in to seven chapters :

1. How to retire at 36
2. Money Management
3. Do stops work
4. Support and resistance
5. 45 tips trader should know
6. Finding and fixing what is wrong
7. What we learned

As you can see there is no logical sequence to them and each chapter is series of studies the author conducted on some of these topics. While some elements of the tests are interesting in most cases the recommendation derived from them is very generalized. For example after series of test you will find advice like:

• Hold as many position as you can comfortably manage while maintaining diversity
• Scaling in works, but only if the stock rises
• Support gets stronger over time
• if price stalls near an old high it could reverse

This is just few examples of general advice you will find in this book. At the end of the book the reader is left wondering how are these things relevant in larger context and what was the purpose of this volume. 

There is nothing significantly helpful in this book and I would recommend traders to avoid spending 75 Dollars (45 dollar on Amazon) on this badly written first volume. There is hardly any meat and coherent narrative in it. looks more like an attempt to en cash on the popularity of his previously acclaimed book by splitting disjointed chapter in to a book and pricing it at high price. I do not mind paying for a book if it is well written, has useful ideas  and coherence but sadly this book lacks all of that. 

In next couple of weeks I will  have reviews of volume 2 and 3. 

Steady uptrend

Markets had a shakeout couple of weeks ago. After that it has again established a steady uptrend and continues to act well.

Most breadth based indicators are now back again in extended territories. But that by itself is not a case for concern as markets can remain extended for long period of time.

The technology sector has been still lacking in this rally. logically for move to continue at some stage there should be a rotation in to it. 

Slow crawl up

Market continues to crawl up slowly. The underlying breadth has seen bit of improvement in last few days.

The technology stocks continue to struggle as shown by TECL moves. Action is largely focused on large cap stocks.

The lower price stocks are starting to breakout indicative of bit of frothiness. But still not looking at wild moves.

Hot but not red hot

It is a market making new high after a shakeout. Yesterday the action was focused on DJ30 making new high. That has the media going gaga.

Below the surface big moves are rare. it is fairly muted action with number of stocks making 50% moves in a month at 8 and the stock up 25% in month at 76. That is by no stretch of imagination in red hot market compared to historical figures on same readings at this juncture in rally.

The focus has to be on finding individual stock setups that have explosive power. You have to be more selective in picking the stocks.

Some of the good recent swing moves were :

LNKD had a momentum breakout above threshold of 105% plus around 118. Since then it has been going up and had big breakouts post earnings.

HIMX is a low priced stock. It had a momentum breakout with momentum reading going over 105% around 2 dollar. Later it setup for number of swings. The recent swing started around 3 and in 3 days the stock went as high as 4.79 before reversing.

SGMO is another recent good swing trade candidate making 15% move in 4 days.

With the market making new high there tends to be excitement and often investors rush in to buy. But  in this game unless you have a well defined method it is difficult for someone with very little knowledge and skill to start expecting to make money.

If you are interested in investment game , you need to build long term skills. For that you need to understand the language of setups and focus on setup selection. That kind of approach requires willingness to spend 6 month to year or more to work on methods and perfect them.

It requires willingness to invest in some sort of software for scanning for stocks. It requires setting up scans, developing entry and exit strategies, and risk management.

Absent that many who rush to invest at these levels will fall prey to greed and emotions.

Are you serious about your trading?

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

Why traders come to stockbee?

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.

What will I learn in the members site?

The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

Do you have a trial?

If you are just looking for trial you are better off trying thousands of other trading sites that offer free trial or one month trial and offer you promise of riches.

It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.

How can I become a member?

To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.

What to watch for

Market has held up well after a brief shakeout. However many stocks are extended and most moves continue to be of smaller magnitude.

Watch to see if low priced lottery tickets start moving big.

Watch to see if flood of new IPO hits market

Watch for large number of failed breakouts near 52 week high

Watch if there is a big jump in sentiment

Those are typically sign of trouble. Till they show up bulls have the ball.

Choppy periods

Let us look at a broader picture to place current move in overall longer term perspective.

Market bottomed in 2009 and since then has been in an uptrend with occasional corrections. The last major correction of around 16% was between April to October 2011. The current move is part of that bottom.

Since October 2011 bottom the dips in markets have been of 8% kinds. The breadth has steadily dropped as market has moved higher. For every dip of 5 to 8% the Fed has been very aggressive in talking up the market or announcing new policy response. As they say don't fight the Fed has been true since 2009 bottom.

Bulk of the 2012 year was spent by market in a choppy up move. Only the first few months has clear trend. This year also we are probably looking at similar move as of now. The market is becoming choppier in last few weeks.

However the market reached extreme breadth readings few weeks ago, along with that sentiments readings have also been at extreme. In last few weeks breadth has pulled back from extreme readings. The selling was just 2 or 3 days affair. TThe market has been holding up near high in choppy range and likely to attack new high again on at least some Indexes.

Moves on individual stocks have been compressed. As we have seen during this recent bull moves the number of stocks up 25% in a month has been very low compared to historical figures for rallies. Stocks are breaking out , making small moves and pulling back or going sideways.

That is the backdrop of the market. We have to adjust our profit expectancy accordingly..

More volatile action

The smooth move phase has given way to more volatile action. With more sellers than buyers in recent days distribution still dominate. As of now market is early in this volatile phase. More selling will be what to watch for.

Underlying setups still look good and some select stocks still offer swing trade opportunities.