Monthly Stats

This month I was shooting for $300 net/day, which would be $6000 for the month. Let me tell you, I did not even come close to meeting that goal.

This month I made significant changes in trading and though I had the goal of the $300 net/day, it was to actually end in the positive this month. And, I met that goal. It was not a large amount, especially for all the trades I made, but I'm positive.

Here were the changes I made that I have not done before:

1. No Practice Trading whatsoever during futures market hours (this is from Sunday @ 6:30 pm EST to Friday 4:15 pm EST).
2. Scheduled trading times on my calendar of when I will make actual trades (for example, the first 2 hrs of the market, the last 2 hrs, etc).
3. Trade EVERY day no matter what is going on.
4. Reconcile my trading journal (in Excel), trading platform/software, broker statements to the penny.
5. Review every day's trades that day to look for improvements, successes, corrections.
6. Practice trading ONLY from Friday @ 4:30 pm EST to Sunday @ 6:15 pm EST.
7. Get enough sleep every night before funded trading.
8. Keep funded platform up ALL the time during market hours. No switching back & forth between funded and practice accounts.
9. Trade outside of normal equity hours.
10. Keep positions to 1-2 contracts at any given time, legging in and out of trades.

JULY STATS

Days Profitable = 16
Days Costing = 6
Days $300 Net Met = 3

% Profitable Trades = 76%
% Costing Trades = 24%
Total Trades = 95

Total Profitable Trades = $3187.50
Total Costing Trades = $2600.00 (81.6% of profits)
Total Commissions = $379.05 (11.9% of profits)
Net Profits = $208.45 (6.5% of profits )
Monthly ROI = 14% (1 time I actually had 3 contracts on, but usually I used 1 contract, occasionally 2 -- this is based on the max contracts (3) used this month at one time)

Max Profitable Trade = $150.00
Min Profitable Trade = $12.50
Average Profitable Trade = $44.27

Max Costing Trade = <$437.50>
Min Costing Trade = <$12.50>
Average Costing Trade = <$113.04>

Obviously a person cannot live off making this amount in a month, but since I was making such huge changes from what I had been doing for months, I'm glad to end positively this month. It was looking iffy yesterday.

But, unlike results I've had before which I mixed in practice trading, all these results are all real money results with no practice stuff.

What are the things the things that were the biggest challenges?

1. Fear -- I had a lot of fear of losing money. I am addressing these things with my therapist. This caused me to not really go for it in my trading, as each time I took a cost more than a $100, I felt fear and would trade REALLY cautiously, wanting to JUST make some money, even if it was 1-2 ticks ($12.50-25) at a time. Nothing wrong with that, but if the market is willing to give me so much more, that fear causes me to overtrade or get out too soon.

2. Getting in when things were moving too fast, instead of waiting for a pullback.

3. Not totally following my trading strategy, being impetuous, thinking I need to get a profit right then and there.

4. Impatience

5. Getting in when the price action is too far from the moving average rather than waiting until it's pulled back to the moving average, waiting for confirmation that it's moving in the same direction.

6. Not setting up my trades properly, meaning, putting my fib lines up and knowing exactly where the pivots or major areas of congestion or reversals.

--------------------------------

Since I did not meet my daily or monthly goals, I will once again set the goal of $300 net/day or $6000 for the month of August.

Avoidance, Position Size, Monthly Stats

This week I had 2 days where I had big costs, particularly Thursday. I'd really like to blame someone, but there is no one. Who has control over my trading? I do. The market can go up, down, or sideways. Though I have no influence or control on the market, I do have control over my trades (to a degree). If something catastrophic happens, and it could, barring those things.

But, for most traders or investors, we have a lot more control than we'd like to believe. You MUST have a plan to take profits, but also realize your position can turn against you and you MUST plan for that.

We don't want to be pessimistic or negative about attracting bad things to happen, but the fact is we live in a sinful world and bad things DO happen to both good and bad people. Why do you think we have insurance -- life, health, car, home, appliances, electronics, blah, blah. If a person is properly insured, insurance is a good portion of the budget. Why do we have insurance? For those things that happen that are not good. You basically want to be prepared.

Well, a trader/investor must think similarly. Yes, we all want to believe that we are attracting the best to us. However, it would be unrealistic to think you will not have costs in trading. Going back to 2005, where I was trading the QQQQs (options).

This was a tough lesson to learn when my account was much bigger. I had somewhere from 5-9 weeks of ALL profitable trades. I can't quite rememeber how many weeks in a row, but it was a lot. I was not daytrading, but holding overnight, basically doing overnight swing trades. It was probably 1-3 positions a day nearly daily. This was Darlene's $1 story.

At the time, I didn't have a good respect or humbleness towards the market. One of the things is if we do not learn the lesson, life has a way of repeating the lesson until we learn it by making adjustments and changes in our lives to show we've truly learned.

What is showing up in your life? Do you find yourself repeating mistakes over and over. Well, gosh darn it. Figure out what you're doing wrong and fix it, and if you cannot, seek professional help.

By the end of of those profitable weeks, I had gotten up to trading positions of 300 contracts. Mind you, I was buying options @ $1-1.50 each, so this position was over $30K. To take a position like this, I really should've had an account in the realm of over $500K, which I did not. This was a big portion of my account. It's embarrassing to say this, but it went against me and I did not get out and the options expired worthless. How devestating.

So, one of the things is that even if you have a small trading account and you can't do 2%, 5% of your trading account to minimize exposure in any one trade, do your best to keep it as small as possible. For example, if you have a $2000 account, and you're trading options, do your best to not exceed $200 for a position size. It's better to take a $100 position. You could do 1 contract of the Qs around $1, you'll make some money if you're getting in at the right time. The $100 is 5% of your account.

In the case of futures, it depends on your broker. For trading the ES, I've heard margins of $500-$6500 for 1 contract. It's probably a little less for trading the NQ (Nasdaq) or YM (Dow) with some brokers. So, you figure out what size account you need to do 5% or 10%. Dr. Alexander Elder and many other traders say to use 2%. If you can do this, even better.

Anyway, futures have particularly higher risk as you can stand to lose more than your investment, at times. Just take note.

To have 300 contracts of the Qs expire worthless was quite a shock. I think that was the only time I totally let that happen. I think my account was probably in the $100K range at the time. That's way too big of a position for that size account.

There is no get rich quick scheme, because the Bible states a fool and his money are soon departed. Are you doing foolish things?

There is a reason why professional traders who have been doing this for a long time tell us the things they do. It's not to waste their breath. It's live to trade another day, to truly grow your account, to minimize your risk, while steadily making gains in your accounts. It's taken me a long time to learn this lesson.

The past couple days, I really wanted to avoid meticulously going over my trades, especially since yesterday I nearly wiped out all my profits for July.

Some of the commitments I made to my trading were:

1. Trade every day Mon-Fri, unless there is a holiday or partial trading day.
2. Reconcile my trading platform, Excel spreadsheets, and broker statements every day.
3. Review what I did correct and incorrect in trading, as well as areas to improve on.

I already do stops and do my trading strategy, but the truth here is, I could MORE meticulously follow my trading strategy & do better.

The past 2 days, I really wanted to avoid reconciling things. But, I resisted the urge and did so, facing the cold hard truth. When you face the truth, make appropriate changes, learn, there is freedom and progress in the right direction.

Be Humble

I've found that overly confident traders really screw with my trading. Not sure what it is. Maybe it reminds me of myself. Probably.

I had 7-8 days in a row of profitable days. Granted, some of the profitable days were very small, but they were profitable. Today I end my day in a big costing day. Big is relative to my costs for this month. Out of 18 trading days, I've had 5 costing days, which includes today. This is the biggest day. Oh well.

Had my plan, traded it, at least as far as exits were concerned.

Things I did wrong:

1. Allowed myself to be distracted (listening to a trading video, chatting with someone online)
2. Didn't put up my fibs until AFTER I got into the trade. Saw that my entry was near the 50% retracement, which wasn't good.
3. Legged into the trade at a better point, thinking it would go down. It did, but not that much.
4. The legged in position caused me to have double the cost than had I just kept to 1 contract.
5. My actual cost stop was at the high for the day, but the reality is the better cost stop was at the 2nd trend line that was broken. That would've cut my cost in half. The reason why I kept my stop so far back is rarely does it ever get it and it was out of the way. Today it got hit.
6. Felt groggy, like I had brain fog. I normally rarely ever eat when trading. Guess what I ate caused me to be sluggish.

Things I did right:
1. Let my cost stop take me out. Actually, I got out 1 tick before it was hit, but it blew past that, so I guess I saved $25.


So, looking at the trade, I did a lot more stuff wrong than I did right. Tsk, tsk.

Live to trade another day. This trade basically wiped out my Thursday's profits and a little on Friday. Thursday was a big day for me. Friday was a small day for me.

Maybe later this evening I will be able to recoup some of those costs. We'll see.

More lessons learned. Keep humble (which I was), be respectful. Be prepared.

Top 6 Reasons Why Traders Lose Money

Rockwell trading really has a lot of great information that I've found useful and Markus' style resonates with me pretty well. Plus, he has a very sexy accent. Okay, that aside, back to business.

He lists the Top Six Reasons Why Traders Lose Money:

1. Lack of a Trading Plan
2. Lack of Discipline to Follow the Plan
3. Failure to Control Emotions
4. Failure To Accept & Limit Losses
5. Lack of Commitment
6. Over Trading

Let me address each of these from my own personal experience. By the way, I agree with him on all these.

1. Lack of a Trading Plan -- Up until mid-last year, I never had a real trading plan, at least not a detailed one. Though I had success in trading, keeping the money was a huge challenge. As I went through a nasty separation & divorce, this was imperative to have a good trading plan. I can't remember where I got my template for my trading plan, but it was something like starting out with 25+ pages of this. It took so long to fill out, but gave me a good idea of the right conditions to trade. This is like a business plan. How does a business succeed without a good plan in place? This must be written in detail and nothing left out. If you are vague, this leaves room for error. If you want a template for this, let me know and I'll forward one to you.

Also, your trading strategies would be listed & detailed in your trading plan. This would include setup, when to take entries & exits (profits & costs).

2. Lack of Discipline to Follow the Plan - This is a huge one for me that I still deal with. Originally when I had all my stuff written out, my strategies were so complicated, that I kept not following my strategies. Not good. This led to errors. Sometimes I would take big profits, but I also incurred BIG costs that often wiped out the profits and then some. If it didn't, the only one that really made money was my broker from all the commissions of the trades.

If your strategy says to execute the trade, do so, otherwise, don't. Do what it says.

3. Failure to Control Emotions - As I mentioned before, going through the personal relationship issues that created financial issues really has been quite emotional. To say to get rid of emotions is not realistic, so I've spent a great deal of time and money to get this under control. Still working here. This has caused me to really lose a lot of money in the market.

Sometimes when you incur a cost or two, then you begin a downward spiral of more costs, so you really have to have a system in place to manage your emotions. This should be spelled out in your trading plan. For example, if you're going to court that day on a fairly emotional thing, it's probably best to limit trading or not trade at all.

4. Failure to Accept & Limit Losses - I call this "hoping" which makes us really getting into a "doping" mode. I know of no successful trader that always make profits. Though my percentage of profitable trades is overall high in the 75-85% usually, I still make costing trades. I found that when I was not willing to accept & limit my costs, they became HUGE.

This also must be spelled out in your trading plan. You may say if the trade goes against me 10% you're out. Others have other criteria. Whatever that is, you gotta abide by that. A part of this is taking into account that you don't know truly what the market is going to do, so you must be prepared for if it goes in your favor OR if it does not and be okay with this. If you're not, don't trade.

Friday was a good example. I made 1 really nice profitable trade, however, the next trade took out 2/3rds of that profit. The next 2 trades, I was a bit nervous and for a period of time, it looked like they would be costs also. Profit & cost stops were set and things were getting real close to getting stopped out for cost stops on both positions. That would've not only wiped out my profits, but some of the day before's profits. However, that was the nature of those 2 trades.

If I recall correctly, it came within 2-3 ticks of being stopped out and I was really nervous. However, that was a part of my strategy and I was sticking to it. The one flaw I made was that it played around for so long getting nearly stopped out for costs, that I felt exhausted. I ended up moving my profit stops IN closer to get stopped out quicker. Had I just perhaps just walked away from my computer and just left things alone, my profits would've been double/triple what I actually got. Yes, a profit is always good no matter how big or small.

So, in this time, I did not follow my trading strategy and ended up with smaller profits. My error. This plays into the bottom line.

5. Lack of Commitment - This is something that I continually work on. Sometimes it seems I'm so committed to what I'm doing when I don't have a lot of distractions. But, throw in children, school, dogs, moving, working out, friends, etc., sometimes the fact of being able to trade any time can cause a person to lack commitment. I had to set on my schedule every day that I would trade, even if it's just one trade. Now, I do have a daily monetary goal, and that really helps me be more committed.

For a long time, I would allow people to call, IM me or something. But, starting at least 6 months ago or more, I told people to not call unless it's an emergency. It's helped so incredibly much. I don't answer emails or rarely chat or do many other things that distract me.

Set goals here, starting with small achievable ones. As you accomplish those, make them bigger. Achieve success with the next goals and keep changing, etc. I find that usually I have to put things on my calendar, so I will follow through.

6. Over Trading - I'm still working on this. I have often not completely followed my trading strategy, micro-managing, as I've had many trades ALMOST get there, but found that it doesn't get THERE to my target to reverse, so my mindset is take what I can and go back for more. As my trading account gets bigger and handle taking some hits, maybe my confidence will increase so I allow things to go its full course.

However, this is where I need to continually improve on my trading strategies so that if my strategy is telling me to get in too early or too late, that I make these adjustments.

Over trading leads to excessive commissions. I'm guilty of this. Scalping would be, I would guess, is overtrading.

Here's Markus' 35 min. video on this and more:
http://www.rockwelltrading.com/hsc-sample-5

BTW, I'm just agreeing with Markus and putting my own experiences here.

Timing, Entries


This is the 15 min. view of the ES for today, Thursday, 23-Jul-2009.

Look at the bullish candles from when it started to break out. 5 bullish candles up, pause, 3 candles essentially up, pullback a little, 2 bulls, etc.

Can you see the rhythm of the price action? The closer it gets to the moving average, the size of the candles get smaller and smaller.

Can you also see that as price action continues to go up, even a little, the RSI from about 8:30 am my chart settings, RSI is trending lower? If price action is going up and RSI is going down, that's bearish divergence.

Now look at volume. As price action is going up, bullish volume is decreasing. Also, watch the bearish volume. It's small compared to the bullish volume, however, the trend of the bearish volume is gradually increasing.

MACD is losing bullish strength as Price Action continues to increase.

We have 3 different indicators that are diverging from the price action. Sure enough, in the 1 pm time period, things start going more bearish.


This is the 1 minute period. I was not trading in the 1-minute time period, rather the 3 and 15 min. charts. But, this gives you a better view of my trades for today. I had 9 contracts, 8 different trades. The last one, I legged in.

It's sort of embarrassing to show this chart, as these are my actual trades in my funded account. As you can see, 2 of the trades, I got in at the wrong time. Both these trades, and actually one more, I got in too late. What this caused is for me to have to wait through some pausing before resuming to where it needed to be.

My cost stops were closer to the 20 EMA when it was more trending up, but as it was going sideways, the 50 EMA (blue line) was my stop, just below that. My cost stops were not taken out.



Today I ended the day profitably, and I praise God. It looked almost iffy whether this was going to be so or not. Let me share some learnings:

1. Don't panic. Often waiting to see what happens when the candle closes is better (at least for me). Sometimes they are testing to see if they are anymore sellers (if the trend is going up), or testing to see if they can bring in buyers (if the trend is going down).

When they test, sometimes what ends up is a long wick. These can seem sort of scary if this is going against you. You honestly don't know if it's really going to go far against you or really just come back.

2. When the market is moving, don't do a MARKET order. What I've found is there is too much slippage. Do a limit order or WAIT for another entry.
3. Wait for pullbacks or retracements to get in. If it's trending up quickly (you can wait until it pulls back to the 10 EMA or pauses. If it's starting to go sideways, then you can wait until it bounces off the 20 EMA or if it's really sideways, possibly the 50 EMA.
4. The markets, when they trend go in the following manner: surge, pause/pullback, surge, pause/pullback, surge, pause/pullback, etc. As it begins reaching it's resistance (in this case, an uptrend), the surges become smaller and smaller.
In the case of today, this is what it did in surges in point were:
6
6
3.5
5
4.5
4
2.75
3
2.75
Notice that each surge is getting smaller and smaller. That's another way to tell if you're nearing either resistance or support. Also, the time periods in surges (the pauses) get longer and longer.
5. For the ES, if you don't know exactly where to get out, since typically it has to go 1 tick past for you to be taken out (not always true, but typically for me), you can keep one tick ahead of where it's trading. Even if it hits the tick you're on, unless it goes one past, you most likely won't be taken out, so just manually move your stop. this sort of worked better for me today for a couple of the trades. Will attempt to do this more tomorrow.
I can see areas where I could've taken more, but didn't because I had limit stops set and just let them be taken out. Had I done the keeping 1 tick ahead, I should've been taken more from many of the trades.
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A Potential Pattern


This is a picture of the ES, which is very similar to the S&P500 (SPX). This is in a WEEKLY period. The patterns will be similar for the SPX, rather I had this up and decided to use this instead.
The pattern looks very interesting and it would be good to see how this plays out. Of course, I don't really know, but if this played out this way, it would be really cool. There is room in RSI for it to go in this pattern, as well as Volume could be supporting this.
No matter what my guess is, just play the pattern the market is giving you, keeping your opinions out. I could be completely wrong here.
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Wrong



Okay, I was wrong in the 933 pivot area. I thought for sure it was going to test this area more, but it did not and went through it quite bullishly.

This was kind of a weird inverted M shape, where the mid-point was were the rectangle is. It was like an inverted sagging "M". It breaking through the mid-point bodes that it's very bullish.

So, where to from here? The next "test" point I see, if it should test it, is 986, then 1005, then 1044. Volatility is decreasing, ending @ 23.43 today. It hasn't been this low since last Sep'08 before it began a freefall.
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S&P Market Daily Overview With Volatility (17-Jul-2009)



I don't have a feature on my trading platform that allows me to draw free handed, otherwise, I could make this look a bit different.

So, if you can imagine instead of the "W"'s and see each "W" more as one hump. The rectangle would be the bigger hump. This would be a Head and Shoulders pattern.

Volatility remains low, in fact a little lower than where it has been, but not hugely, as we see a hammer pattern, so are we at support for volatility?

The major pivot is 932-933 on the S&P. This will be slightly different for the ES, but close. As we look at this area, in the rectangle pattern, it was support. For the W's, it's the resistance. This is an important point and I would expect on Monday that we would test this area.

Also, the market does not like GAPS. Every time there is a gap, the market comes back to fill the gap. So, I expect that we will fill the gap in the 900-910 range next week. If we look at the patterns in either direction from April through to present, the S&P typically doesn't like to have more than 3 days in any given direction.

In the last March, early April, it did have 4 days up and mid-May 4 days down. So, we can say generally 3-4 days, then a pause or test, or a strong surge in the opposite direction (I sort of see this as a capitulation move just before).

The weekly chart, which I'm not displaying, really looks like an inverted head & shoulders pattern is forming, where the left shoulder & head are formed, so then we need to form the right shoulder. This could take another 6 weeks. If it breaks the pattern of the Inverted H&S, this is BULLISH. Really, if we break this 950ish area, the next major area up is congestion in the 1010-1046 range. Then up to 1224.

There really is the smaller Inverted H&S and a much larger Inverted H&S that begins 10/2008.

As I further look at May through present, this can also look like a regular H&S pattern where the left shoulder, head, and half the right shoulder is formed. If this is the case, the 876ish area is pivot for this.

Remain neutral in the market. Let it do whatever it wants. My opinion doesn't matter anyway. Just make sure you have your stops in place -- to take profits and to take costs, if your positions should go against you. It's never wise to trade on "HOPE". Hope = Dope.
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Record Keeping

I decided to go back to look at ALL my funded trades from last year and this year on the ES. There was something I remembered a friend of mine said to me more than a year ago about being honest with yourself and analyzing one's data and knowing your exact bottom line.

What I'm learning is anywhere where I am highly successful in my life, I'm highly organized. Trading is a business and it must become highly organized as I want to be extraordinarily successful. As one who has made lots of money, some really stellar trades, but also some real big doozy trades, it is emotionally taxing to be on such a wild rollercoaster ride.

Someone said probably more than a year ago that trading and consistently making money in the market once you know what you're doing and have the mental/emotional fortitude to do it can be quite boring. They used the words "consistently making profits". Thoughts that raced through my head were taking some huge profit daily would NOT be boring. How could that be?

Anyway, I pulled up every single trade and the details and began organizing, going through all the stats. It doesn't look all that pretty.

What I'm doing now every day is making sure my Excel spreadsheets, Trade Navigator (my trading software) and my broker's daily statements that all of them jive. This means reconciling every trade and every penny to the dot. No exceptions. There isn't a penny added or taken away without being accounted for.

As I now have things organized and not in some dreamy, obscure way to mask things through statistics (I used a lot of statistics in my engineering career, so I know how to make anything look good, almost), I decided to keep things simple.

When I revamped my trading strategies in Mar'09, I notice there is greater consistency in my trading. My average costing trades have gone down in magnitude by 60%. However, my average profitable trades have also.

Average Costing Trades
Mar'09 = <$194.64>
Apr'09 = <$107.29>
May'09 = <$94.08>
Jul'09 = <$77.88>

Goal: less than <$40.00>

The trend of the average costing trades is decreasing, so that is a wonderful thing. Praise God!!! However, I wonder if I'm being too overly cautious, which is reducing my profits, too?

Now you probably want to know what my profitable trades average is, right?

Average Profitable Trades
Mar'09 = $57.81
Apr'09 = $68.75
May'09 = $41.55
Jul'09 = $46.79

Goal: greater than $100.00

Perhaps I'm more overly cautious about having costing trades, as I've noticed I'm taking profits quicker overall, and those are typically smaller profits. So, I'm readjusting. Only half of July is over, and there is another 10 more trading days left. Let's see what I'll be doing.

July Data So Far

Here are some of my stats so far for July:

Goal: $300 net/day

Days Goal Met: 2 out of 12

Days Traded:
WW26'09 - 1, 2 (2)
WW27'09 - 6-10 (5)
WW28'09 - 13-17 (5)

% Profitable Trades
WW26'09 - 75%
WW27'09 - 77%
WW28'09 - 71%

% Net Profits (Ended Positive Each Week)
WW26'09 - 58%
WW27'09 - 17%
WW28'09 - 50%

#Profitable Days = 8
# Costing Days = 4

LEARNINGS:
1. Earlier in the month when I took bigger costs, it was because I panicked and micro-managed my trades. Rather than leaving my stops alone and letting the patterns work through, I got out too early, and for bigger costs, which wiped out my profits or at least a good part. Every costing trade was just checking for either more sellers or buyers.

2. When the urge is there to jump into a trade, don't. Those are usually the wrong entries, and have proven so, meaning, I have to wait a long time for it to retrace and then resume the direction. This causes anxiety.

3. Wait for the right setup as per my trading strategy.

4. Add to my position by legging in at a pullback as it is continuing in my direction.

5. If I realize I'm wrong about the direction, take the small cost and switch directions.

6. Don't sit and micro-manage trades. Set both my profits & cost stops as an OCO and let it do its work. Do something productive in the meantime and periodically come back to check the trade, but don't sit there having multiple conversations in your head.

7. Verbalize trades as to why I'm getting in and getting out.

8. The moving averages, fibs, S/R and areas of congestion are great areas where either retracements or reversals occur. Watch where RSI & Volume are for to confirm.

---------------------------------------------------------

COMMENTARY:
As I think I said in a prior post somewhere this month, I'm ONLY trading my funded account during market trading hours. The only times I will do any practice trades are when the market is closed, which is basically Friday afternoon through to Sunday mid-afternoon (I'm in the Southwest of the USA).

This is to get myself acclimated to trading with real funds all the time and to address any false beliefs, fears, mindsets, behaviors, habits, emotions that hinder my trading. A lot of fear has come into my trading, but I continue to work through these with my EMDR therapist, doing EFT on my own, prayer to God, study of the Bible. This is a process and not to be taken lightly.

In the past, though I trade funded nearly every month and every week, it isn't always every day. I mix all my results together, as it's all of my trading. However, since I'm not trading practice now during real market time, the results I'm reporting are strictly with real money.

It's a bit embarrassing to have some days that included practice where I've made oodles of thousands of dollars in one day and find myself challenged many days to even net $300/day. When I started this month, it seemed easy enough. However, starting off the first day of July in the negative, that sort of put a mindset in me. The next Monday, I took some big costs that were the opposite of what I intended to make. A couple days later, I took even bigger net costs.

So, within the first 5 days I traded in July, 3 of those days were net negative. I felt a big discouraged and really wanted to just go back to practice, but I pushed myself to determine what the deal was. There was anxiety & fear that was mounting in my trading, almost like grasping at straws.

Typically I have my EMDR sessions on Wednesday, and we must've collapsed some of my fears, because the next 4 days, I ended positive, though, smaller profits, as I was now a little gun shy. Each day I could've kept trading, but there was a point that I just stopped, as I felt fearful of giving back profits. Trading seemed much more challenging, like even making $25 was such a huge chore. I was taking trades smaller and sometimes even taking those smaller trades, they would last far too long.

On 7/15, another Wed, I had an EMDR session with my therapist. We collasped the target we were working on to a zero. Though I ended negative for that Wednesday before going to the therapist, the next day, I bigger profits, but once again, I did not keep trading after a certain amount was reached, even though it was not my goal.

Today I remained in a trade for far too long to barely take any money out of the market, but I was grateful that I was able to take profits nonetheless.

Where do I go from here?

Friday afternoon I backtested streaming Monday and Tuesday. I legged in up to 3 contracts at one time, but usually just traded 1 contract or legged in with a 2nd contract. I used some trailing stops, set my profit/cost stops, and went to do other things. This worked really well. For both days, I made at least $1K. I traded for a good portion of the day following my trading strategies. I wasn't making a lot of trades every day. Meaning, on Monday I only had 4 trades. Tuesday I had a bit more at about a dozen trades.

So, it is very possible to make my net $300/day, which really should be anywhere from 2-5 trades. I've made funded trades far more than this. It's not the market because it's done some pretty nice stuff, don't you think?

It's not my technical skills or knowledge, because those are good. It's really my confidence in my trading ability and my mental/emotional resiliency. As we can see, there is a lot of work ahead, but I'm chipping away at this daily.

I am very grateful to God that I'm able to trade daily and to still realize this dream to be consistently, profitably successful.

Today's Trading

Today I had 5 trades, at least for this trading day starting from 1:30 pm yesterday to 1:15 pm today. Four of my trades went in my favor, one against me. Today my profitability ratio is 80%. I ended the day profitably again. Praise God!!

I've made one trade for the next trading day and that is profitable. Today I've felt less fearful and taken smaller profits. However, I still am falling prey about getting out too early and moving my stop closer. Hmmmm. Usually the first instinct is really good and correct. In fact, it's been that way pretty much 100% of the time.

http://www.rockwelltrading.com/trading-secret

This is Markus H that talks about having confidence in your trading. I agree with him.

I'll summarize with his bullets:

1. RIGHT KNOWLEDGE
a. Chart Reading: patterns, trends, support/resistance (pivots, fibs)
b. Indicators: "Crutches" to read a chart
c. Risk Management: How do you protect yourself? Stops (costs, profits), money management, position size
d. Trading Strategy: How to trade spelled out
e. Tools: Charting Software (accurate, crisp clear picture), Trading Platform (access to market, good execution)

2. RIGHT MINDSET:
a. Trading IS a business!
b. It requires time, effort, and committment!
c. It can be simple, but it's not easy
d. There's more to trading than having a trading strategy

3. PRACTICE - (i.e., papertrading, backtesting)

4. EXPERIENCE - (learn from your own mistakes & successes)

TO SUCCESSFULLY TRADE:
1. Goals
2. Right Mindset
3. Basic Skills
4. Trading Strategy
5. Personal Trading Experiences
6. Feedback

A Little Bit Adds Up

Sometimes we just want to go for the big money, but I learned another valuable lesson today. I didn't want to trade before the gym, which meant I would not be back until the last 2 hrs of the market.

While I was up at 3 am, the market was making some moves, as well as when I went back to sleep and got back up at 7 am. The market for equities is from 6:30 am to 1 pm. The futures market is opened another 15 min. later than the equities market.

I left at 8 am to go do some cardio and hit yoga, and did not make it back until nearly 11 am. I figured that was good, as lunch back east is now over and the markets would move. I started trading not too long afterwards and it was soooo slow moving. Though there were many opportunities to take $50 again and again, I did not take it.

When I got in, it was at 11:21 am MST at 893.75 and out @12:37 at 894.25. That was just 1 contract for $25. My profit stop was actually at 896 and my cost sto was just below the 50 EMA. It came close a few times to tagging the 50 EMA, but it would've taken another 2-3 more ticks for me to be taken out.

So, I sat through over an hour to take on $25. Granted, it's still money and I'm very happy to have money no matter how much and from where. I could've just originally taken $12.50 and reversed my position to the short side.

RECTANGLE: The ES was trading in a rectangle compression pattern from 891.75 to 894.25. That's a 2.5 range. Surely just taking 1.5 points, which includes slippage, at least 6 different times 1.5 pts could've been taken. Heck, let's just say on a 0.75 to 1 point range, more than double the 1.5 pts could've been taken during the same period that I was in my one trade.

Even if I only took 1/2 point, that was totally possible to do take $25 again and again to amount to a few hundred dollars in this same period, but my fear kept me from closing my trade and just reversing. My thoughts were to go for the bigger money.

And you know what? As I got out of the trade and was just going to settle for the $25, that's when it took off. I got impatient. It not only met my 896 target, but exceeded it to have a high of 897.75. Once again, my intuition was right. I had all my stops (profit & cost) placed correctly, but because I sat here the whole time, I micro-managed the trade and felt my emotions through the trade, though, I did some prayer & EFT through it.

Now, it's okay to pray and recommended, so as long as you have your stops in place. If you are praying for something to happen and do not have your stops in place, then that's a different thing and foolish.

Anyway, my point in this post is that if the market isn't going to give you a good run for you to take a number of points, rather, it will only give you a very small, tight trading range, then just take what it will give. There is at least a 1 tick slippage. If the market is moving fast, you could have greater slippage than that.

This evening, as I traded after hours, I wasn't at the computer the whole time, rather just had my stops set. I was taken out of my trades with profits each time, as I did not sit and micro manage.

If you do take smaller, scalp profits, you will be having a greater percentage of your profits go to commissions, but in my case, doing $21.01 (after commissions) 10-20 times would've been totally more acceptable than just 1 time in over an hr. So what if I give 19% of my profits back in commissions. That won't be every time, but mainly for rectangular compression patterns.

S&P Market Overview With Volatility (Daily & Weekly)



This is the Daily period of the S&P 500. Isn't it a thing of beauty? Look at where we are. We closed at 879.13 today. Gee, what a surprise. Like I said earlier, we are at a pivot point and traders are testing this area.

This truly is a lovely pattern. If it cannot hold here, the next levels down will be: 857, 804, 748, 666. There may be some interim hesitation periods on the way down between those numbers. This is getting exciting to me.

The bottom pain is the VIX, which is volatility of the market. This is inversely proportional to the price action of the S&P.



This is the WEEKLY view of the S&P 500. This chart is even more beautiful than the daily as we get to see a more global view of the market. Another trader on Twitter pointed out this is the 4th week in a row the SPX has closed lower than the week before, so I decided to check out this view.

Notice the double tops? Isn't that excellent? This sort of looks like a "stick bird", which is another version of the "M". Not sure if there is a "rule" for this or not, as I've not seen this view before or recognized it. In order for the pattern to complete, the SPX would need to get to 803.

HOWEVER, as I turned this into a line format (closing prices), I now see an inverted head & shoulders (H&S). It could bounce from here and attempt to go for the 950 area again.

Either way, I'm a daytrader and I'll just go to wherever it feels like going.

Let's take a look at the VIX:

It's current week's VIX is near 29-30. The support is around 26.

What are times it was in the VIX = 26 range? 6/12/09 @ 946; 3/28/08 @ 1315. There is a difference of 369 points. That's a lot.

What is VIX telling me? The market doesn't believe right now it's going to tank. Volatility, relative to the past year, is low. However, I believe if things really close below 857, volatility will begin creeping up. Surely if it goes down to 800, it will rise some more.

Even if it does hit 666 again, volatility was at 49-50. As opposed to when it was at nearly 90 in October when it was 850-985 range, which is higher than where we are. Of course, the market has had time to adjust to falling prices. At that point, it was fairly new. Now we've had all of 2008 & 2009 to adjust. Though people don't like these low prices, they've accepted where we are, so it's less fearful.

The real fear will begin if we fall below 666 and close below this number.
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Unsure, Overconfidence

These are 2 emotions that can hurt a person's trading success and drain a person's accounts.

Being unsure, you tend to either wait too long to get into a trade, when the move is nearly over or you're not able to discern what is happening.

Being overly confident, you tend to stay in trades too long. This then tends to lead to "hope". Remember, "hope" rhymes with "dope". For those who have a strong faith in Jesus Christ, hoping here is still not a good thing. Yes, He can do anything, but it's still best to not hope. If a trade goes against you, get out.

This week, my trading was splattered with being unsure.

Right now, I do not have data for each week, only for the month. Maybe I should assess each week's trading?

CME


CME is another stock I liked trading, but sometimes it was wildly volatile and since I traded options, the option makers really sucked for this stock. Won't go into why. Traders here are also disciplined & cohesive.

This is looking at its 6-yr history on a weekly period.

Just a few weeks ago, it was at 38.2% retracement, which is great. Now it's headed south.



Downside targets are 220ish and 170ish. It's had 6 days in a row down, so we will probably experience a few days of hesitation to test the 267 around. This was an area in the March & April resistances.

RSI is in a downtrend and way in oversold.

Volume is very strong bearish, as is MACD.

This would be a bearish play for me.
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GOOG


GOOG traders are also very cohesive and disciplined. This is looking back at its 5-yr history, weekly period.

Currently, it's retraced 38.2%, another fib number I love. It's simply beautiful.

The major downtrend broke to the upside, but it seems iffy from price action, RSI, MACD, and volume that it will continue here. 50% fib retracement would be at 500. That's also a good number. We are near overbought range, but it still could continue to go up.



There is possibly more that this stock could move to the downside. Looking at RSI, it's in a downtrend. As it hits the RSI resistance, it can pull back down, which is highly likely. RSI is looking to trade into a wedge pattern, so I wouldn't see a strong move downward.
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BIDU


This is looking at the 4 yr history of BIDU on a weekly period.

This chart is absolutely gorgeous. The traders here are very cohesive and wonderful. I hope you can appreciate it. To go from $50 up to $425 in less than 2 yrs is absolutely insane. I had so much fun trading this stock during that time.

Looking at the fibs, the stock has retrace 61.8%, which is a lovely fib number. I can't help but salivate here. We are overall in a compression pattern (descending wedge). See it? The support is at 100 and the blue down trendline? We are currently @ resistance.

RSI shows we are at RSI resistance (overbought area), with the peaks getting lower. This signals bearishness.

MACD is showing weakness in bullishness.

Volume is decreasing in the bulls. Let's see if bears begin picking up.



BIDU is probably one of my more favorite all time stocks to trade. Though, I have not traded it well over a year, maybe even 1.5 yrs.
As we look at the most current price action, we have double tops where the right top is lower than the left top. This is bearish flavor. Support is in the 260-270 range. If it drops through this, the 215 area is the next support.
Will it see 105 again?
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Neutrality

It's important to keep in mind to have a sense of neutrality when trading the market. As many of you who have been with me for awhile, I'm a bear, but, really, money can be made in either directions and money is money.

Even if you love making money to the downside, staying neutral is important. It's when we have biases to either direction that causes us to have the need to be right is when we lose our edge on the market and make foolish mistakes, such as "hoping" things will turn in our favor.

Be okay with whatever direction the market or your stock goes to and make adjustments as necessary. If it means getting out of a trade that's going against you, do it. If it means adding to a position that is going in your favor, do it.

X


This is the past 18 yrs on a monthly period.

RSI is sort of coming out of a bearishness. Very strong bullish volume, but it hasn't really brought the stock up much relative to its highs. MACD is weakening.


It seems that bearishness is picking up. I'd be leery to go bullish. We are in oversold territory with RSI and it could be here for a bit.
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UPL


This is looking at 8 yrs on a monthly period.

$30 is the support. You can still play where it is now down to $30. If it breaks down through $30, go bearish. Bullish, TBD.



If it breaks above the 10 EMA, I'd go bullish. Man, lots of selling pressure. I'd really not go against the trend. The trend is your friend.
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SPWRB


The trading range is $20 - $30. It's just going sideways and big time compressing. Can you say sideways?


There's really not a whole lot to say. As it bounces here, go bullish to the $30ish area. At $30ish, go bearish. Of course, if it breaks these areas, then do the opposite.
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SOLF


This is 3 yrs worth of data on a weekly period.

I did not draw this on the chart, but it traded in a big descending wedge. When it broke out in the Oct'08 timeframe, it did not break out strongly. It just sort of dwindled. HOwever, it didn't have far to go down. As I brought the triangular descending wedge down further (the trendline), it's like we had 2 levels of support.

Now it's traded right into the corner of the wedge and sort of fizzling out. It's like what I said before in another stock, usually when a compression pattern gets traded right into the very corner, it sort of does not have a strong breakout.

That's exactly what happened here. In fact, it looks like it wants to perhaps test the $2.50 support again.

We can see it's compressing again as we look at volume. Bullish MACD is weak.



Yes, it could bounce here as it was a previous resistance point. If it doesn't, then $5 down to $3.75 and $2.50 would be your next downside targets. Upside targets would be in the $7 and $9 areas.
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POT


This is 20 yrs on a monthly period.

I do not have fibs on here, but where it's at is at 61.8% retracement from the high & low of POT. I have loved trading POT in the 2006-2008 timeframe. It was so much fun.

The bullish volume is not stronger than the bearish volume, though, that's been decreasing.

MACD is losing bearish strength.

RSI is still downtrend overall, however, it could be turning around.

Above $120, I would go bullish. Below $87, I would go bearish. These would be more longer term and not short swing trades.



Showing a compression rectangular pattern from $87.50 to $97.50. You could trade this area, but getting whipsawed is not my idea of fun. When it breaks out of this (closing prices), I'd get in whichever way it decides to go.
To the downside, $77.50 and $65 are the targets. To the upside, it would be $120. Good either way. This is a beautiful stock.
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PCX


This is over the past 2 yrs on a weekly period.

Since Oct'08, this stock really has been quite boring.

Bearish strength in volume. RSI is bearish. MACD is losing bullish strength.


This still looks more bearish to me. The range would be $3ish to $6ish. If it goes above $7, then the range would be $7-10 to trade. Not total yawn, but not big movements and I like more volatility.

Maybe some good iron condors or writing covered calls here.
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NVDA


This is looking at the last 10 yrs on a Monthly period. This is one stock where it was down in the dumps who DID come back. Good for you NVDA.

But, the one thing here is that it did not say in the low range for too long. That's good.

I see a pennant type wedge forming. It can probably compress some more.

However, volume is still quite strong, so I don't know that it's really compressing too much.

Low targets is aroung $5.80 and high target to be in the $15 range. We're about right in the center.


You can see the pennant a bit more clearly here. You can make some good money trading in between here. Make sure to keep your stops just outside of the pennant. It would be better to wait to get in at the outside of the pennant as to opposed to right in the middle. You would have greater move potential.
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MTL


This is the past 5 yrs on a weekly period.

This looks bearish and heading down to the $2.50 range. Volume is strongly bearish. MACD is losing bullish strength. RSI is strongly bearish.



Some interim stopping points are $5, $4, $2.50. Nothing more to add.
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MRO


This is looking at the past 13 yrs on a monthly scale. I love how disciplined the MRO traders are as opposed to the LUV traders. MRO traders are very disciplined and this is a stock I have loved to trade in the past.

Though I do not show in this chart, if you take the very high point and the very low point of MRO, the $35 is about the 50% retracement. That is wehere the 50 & 20 intersect.

Volume shows price action marching up with decreasing volume. That's with a more bearish flavor.

MACD is showing weakness in bearishness.

RSI downtrend is broken, but it could go for another wave to the downside.



In the May & June timeframe, this is sort of like a double/triple top. However, this $28-29 range is a pivot point. If it goes below here, I would take a position to the downside, using $25ish as an initial target, but have a longer target down at $20.
A bearish position would make more sense as we can see a lot of good strength in bearish volume over bullishness.
MACD and RSI are also bearish.
The double tops in June has the right top lower than the left. That's more a bearish tendency. I would draw a trendline of the highs of 6/11 and 7/1 and if it breaks this line closing price, I would go in for a bullish position (small).
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LUV


Okay, I don't have this as a chart here as I've not had to use a quarterly chart yet on the others. Anyway, a bit lazy here. Though I'm showing 34 yrs on a monthly period, this looks REALLY messy and hard for me to get a real clear big picture.

So, on my screen (which you can't see) is in quarterly period. Where we are right now is at the 200 EMA. It's had 2 strong quarters down, so now it's pausing.

The overall trend is still DOWN. Volume, MACD, RSI are all confirming down. Are we over? Not sure.


From this daily chart of the past 6 months, this is also a yawner. From $6.50 to $7.50 is the range this is trading from. You might be able to do an IRON CONDOR spread on this. Maybe even write some COVERED CALLS.

I like Southwest Airlines as an airline and have good friends who work for them.

However, this is not an exciting stock to trade as it goes sideways.
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LCC


This is over a 4 yr timeframe on a weekly period. This stock, like DRYS, looks simply like a yawner.

We're at support, it's nearly oversold territory on RSI, but could continue further down. Still a lot of bearishness in volume. Hardly anything in MACD. Yawn!


Support is about $1.90, if you want to be more on the money. However, $2.16 is really close.

Why trade this? It's hardly moving. Yawn, yawn, yawn.
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GNA


This is over 5 yrs on a weekly period. We are at a pivot point. See the beautiful "W" pattern. If it breaks above $7 strongly, then that's where you'd play bullish. Otherwise, it's ride it down to the $3 area.

Indicators are pointing that it will go back down to $3 area, after it stops at $5. MACD is lowing bullish strength. Volume is not really saying it's real strong in bearishness, though. We could be in a compression period.

If it breaks below $5.25, I would go bearish.



Okay, that point really is $5.50 to take a bearish position, and above $8, I'd go bullish.
Could you play in between. Yes, you can. Just keep your stops nearby.
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GGB


This is the past 11 yrs of data in the monthly period. This stock looks a bit more interesting and less dismal than DRYS. Though, I would have to admit, the big picture of DRYS was a bit fun to look at.

Right around where it's at right now, it's at 50% retracement to the downside. So, this is a pivot point. Will it go up or down from here? Last month was a doji, testing this 50% range.

Volume: Strong bullish volume. They will test to see if there is more bullish strength to take price action up.

MACD: Losing bearish strength.

RSI: Still in a downtrend. If you take the last 2 peaks and draw a line here, the trend is down. This would make sense if this is just a retracement and not a reversal.


The pattern that is forming is a descending wedge. It's really a beautiful pattern. If it breaks down below (closing daily price) $9.40 or the 200 EMA, that would be a good entry to the downside. I would wait until it broke above the down trendline in the price action to get in for a bullish position.

The past month, there is more bearish strength over bullishness, but it's not hugely there.

MACD remain bearish.

RSI is in an overall downtrend.
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DRYS


This is the past 4 yrs worth of data in weekly period. Wow, look at how beautiful this chart is. See the really lovely M? M does not stand for murder unless you were long on DRYS as it tanked. My 8-yr old daughter just confirmed that DRYS looks like a "M". She said she would not be buying this stock.

To have a stock go from the 120-125 range down to $5-6 range? NOT good.

Remember, there are thousands of stocks to trade. Find the best ones that can give you the best profits. For DRYS to pull back to even $30, it would take some huge miracles.

Lots and lots of selling, though, selling is started to dry out more. No pun intended.



Can you say BORING?
If you must trade this, I would question you why??????
Okay, maybe if it breaks above the 10/20/50 EMA, you can get in around the $7 range and ride it up to the $11. That would be about 50% profit. The thing is, it's moving SOOOOO slow. If you have a really low risk tolerance, DRYS might be okay.
If it can't hold where it's at now, you can get in to the downside at $5 and ride it down to $2.50.
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DAL


This is the past 2 yrs using a weekly period. We are in a downtrend, however, it looks like we're in a support area.

There is a lot of bearish volume.

The compression pattern that is occuring is one of a descending wedge. See it?

Volume: Bearish volume is overall decreasing. Not a lot of bullish volume. Compression.

If you're looking for a longer play here, unless your daytrading, I don't see a good play here. The more you compress into the wedge, the weaker usually the breakout. It's in a monetary trading range that is so small.

Support is in the $4-5 range. That's big for a stock in this price range. Yes, you could play this area if you really want. Lots of other better stocks to trade.


This daily view shows the bearish range to play is $5.25 to $3.50. I suppose that's enough. Cheap stocks like this do not excite me. I see greater commissions costs as you need to buy more to get money in your pocket. Okay, that's my bias.

For a bullish play, I would do it above the descending trend line I drew that is between the 50 and 200 EMA. See that?
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CF


This is looking back at the past 4 yrs on a weekly period when this stock started. The fibs that I use didn't work out real well here, so I won't be using those, though, we are in the 23.6% and 38.2% range. Many stocks are very precise on this, so CF looks a little sloppy here.

RSI: The peaks are descending and price action closing prices are rising at those same points. This signifies bearish divergence.

Volume: Bearishness isn't real strong, but bullishness is losing strength. This means some level of consolidation.

MACD: Losing bullish strength.

Even if we're losing bullish strength overall, it does not mean yet that we are ready to head back down. If it breaks below the 200 EMA, that would be greater confirmation of bearishness, otherwise, it's going to compress for a bit. This range would be 69 to 85. Still plenty of money can be made within this range if you get in for the right positions. Meaning, long at 69 and short at 85 (calls or puts, respectively).



We can see the daily volumes are getting lower and lower. Compression period.
The micro view (daily) is similar to the macro view (weekly). RSI shows bearish divergence.
MACD is showing a very SLIGHT loss in current strength over the prior period.
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BPO



Love this graph. It's over the past 10 years, monthly period. This is a derivation of the S&P 500 chart, but much delayed.


Notice we are at resistance. The $8.00 point IS significant. It may test this for a month or 2, though, in early 2007, it only had 2 months at this. This is the 2nd month. Often when we see strong moves in ANY direction, we can see some major pullback.


Truly, this would be really nice to have double tops.


Volume: The prior 4 months we had rising price action and declining volume, which signals losing strength in price action and a resistance is close. We can see where the resistance is on this chart.


RSI: RSI resistance is around 87, based upon the most recent as it's in overbought territory. This last peak is around 80. If we take the peak in RSI at 2007 and the most recent, the trend is DOWN. Price action is going up at those same points. So, if you have a downtrend in RSI and an uptrend in Price Action, that is called BEARISH DIVERGENCE.


MACD: Shows bullish strength, which is the opposite of the rest of the signals.





RSI vs. Price Action shows bearish divergence on this more micro scale. We are at the 20 EMA, however, looking at the big picture, it would not be unreasonable for it to drop to $4.00, which is where the 200 EMA is.


Volume is showing more bearishness in strength than bullishness, though, there are more bullish days.


MACD is looking more bearish.


The ONLY bullish position I would actually take is if it closes strongly above $8.00, otherwise, a bearish position makes more sense.
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BAM


This is the past 9 yrs on BAM with a monthly time period. As we can see, we are in an overall downtrend. Though I do not show this in this chart, if we take the Fibs from the very high point, which is about 42.50, and the low point of where we are right now around 11.30, it's currently in the 28.6% pullback, which is not a normal setting I have on my Trade Navigator.

I no longer pay for stocks or options on Trade Navigator and use the free version of Think or Swim. So, these charts look different than my Futures charts. Yes, Trade Navigator is much nicer than the Prophet charts, however, I don't believe one should waste money and pay for things one is not using. That would be wasting $68/month, which is more than the datafeed I pay month.

That aside, as it pulled back to 28.6%, it's now coming back down.

RSI is still bearish, even though the downtrend in RSI was broken, where it paused between the 12.50 to 17.50 range. But, it looks to be headed back down.

Volume is showing weakening of bearishness, but bullishness hasn't overridden the prior month's strength. So, if we have strong bullishness, but price action isn't marching up too much, be cautious here.

MACD is losing strength in bearishness, but it can do this during a pullback.

If price action closes below the $11.34 area, I would see $5 as the next target, then $2.50.


We've had 2 strong bearish days, really strong. Check out volume. This second chart is 6 months, daily. Though Thursday (not shown) is a doji day, after 2 strong bearish days, it's normal to hesistate (rest). MACD, RSI, Volume, and Price Action all show bearishness.

Where would a target be? 14, 12.50, 11.30. I'd keep the cost stop just on the other side of the 10 EMA.
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