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Probably not the best approach taking the most volatile stocks. The past huge movers are possibly on the overextended side aleady?!
The sectors are mostly in in-between spots at the moment. Energy is at its max, but this sector is also very small. I'll do one or two and look if there could arise maybe a short opportunity, but that also depends on if the general market drops or "they bought the dip" and we continue moving upwards in the primary trend.
Maybe Communication Services is not that bad, but no stress and no need to force anything.
AMAT
That's already on a short-signal
Relative strength
The Relative-Strength-Chart isn't on a short signal yet, but could possibly soon go on it and has room to come down.
NYSE-Bullish-Percent-Index also on a short signal, but in the 50% area, which isn't that favorable.
I gotta work myself into that all, but it makes sense to me so far and I especially like drawing the charts by myself. It's a lot of work, but I think it's a very "healthy" thing to do for getting it into my subconscious.
Drew three more chart pairs.
Also started to read A.W. Cohen's "How to use the three point reversal method of point & figure stock market trading".
That's basically the book that brought Dorsey into P&F. Cohen also used Relative-Strength charts for the sectors, which also sounds interesting.
Still a bit in question how I will manage all the charts and on which ones I should focus.
Trying to manage all 500 S&P stocks seems to be a lot. But I think it's better to focus on the larger typical companies everybody knows, rather than digging around in some junk and hoping to find the one in a hundred years gem.
Red trend now upwards. If it pulls back significant enough, I'll try to enter in the blue trend, despite the pink trend still being down. The red is my main leading trend which should be more important for me.
Thought briefly about entering here, but I though it not signficant enough, But it seems the problem is, that I can't compare the Oil personality to the MES at all and I don't want to waste money on mediocre trades I have no conviction in. So a lot insecurity at work here.
60min
Here the trend looks picture perfect.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Drawing charts all day long. Still thinking how I'll manage all this, but since the signals are very rare, I have to have a lot of stocks on the watch.
I saw in MAR a first possible setup.
Chart
We're right before a very wide spread triple top breakout. Also higher lows, everything fine.
Relative Strength
RS-chart also bullish, which would favor the trade
Sector Bullish-Percent
BUT
the sector is down and definitely not to buy at this moment! So I keep my feet still, because the "Barometer's" gauges are not in accord. But I watch it. Maybe later on when the circumstances get more favorable it could be worth a try. Also the NYSE-Bullish-Percent is currently not really favorable.
I think I noticed something today as a drew that particular chart.
CHTR
This one did some type of shakeout of the weak hands in the end of March after a two month accumulation phase. It then spiked straight in April.
The first half of the chart I always copy from stockcharts.com and the second half I draw by myself, just looking at the historical prices for getting some feel of the price.
The acculumulation period in May and July, just by "the rhythm of how the price fluctuated" seemed to be somewhat like if "they" accumulate for a further spike.
I'm more prone to learn from the old masters, and back in the day, pools where a huge part of the stock-market-world. I don't know if pools still exist, they are probably illegal, but as the laws evolve, the villains do as well. Or maybe funds could be seen as some type of "legal pool". Maybe when large funds build positions, they produce the same price action as pools did back in the day....
However, I tend to think a bit in terms of pools and trying to uncover what the big boys are doing, to swim with the tide they produce.
What I'm really trying to say is, that if I were a stock operator, observing the market for clues, I would suspect a pool operating in this particular stock.
Also finished A.W. Cohen's book on P&F charts and got a new idea out of it, which could be of use later on: Using options instead of a stoploss.
I haven't learnt much about options yet, but like Cohen states it, using the option, I can prevent getting shaken out unnecessarily from a position. I know the average time in which a pattern should develop, and if a shakeout should happen, it would happen in the beginning period, so I know what expiration period I'd have to take and if the trade takes longer, which means it's already on its way in the right direction, and the option expires, I could use a stoploss then.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Drew 4 chart-pairs and read in Wyckoff's "Stock Market Technique Number Two".
It's a smaller nice book containing articles out of his Magazine of Wall Street. I didn't know that he was an editor of such a magazine. It contains also parts of his life-story.
One interesting thing that stood out, which is an excerpt from another book in this book:
Nature is no mocker - it causes no desire to spring up in a living thing, unless it also endows that living thing with the faculties and powers to attain that which it craves.
as well as
THE LAW OF USE underlies all of nature's instinctive cravings. It desires that the living thing shall draw to itself the nourishment and material it needs, in order to use it.
And this desire for money on the part of man is governed by this sam law.
Nature wishes you to desire money - to attract it to you - to possess and acquire it - and lastly, and most important of all, to use it.
I think the part that money is not a general problemsolver but only a means to an end, gets often forgotten/unconsciously misinterpreted. There is no "when this and that.... then everything is perfect" and will never be and should not be the goal.
Thinking of stopping observing oil. Currently a picture perfect trend on the big pic, but my small entry-trend moves way to unfamiliar in oil and it's too much to focus on that as well. Getting my P&F - method running is more important at the moment.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Today it's a special day! It's been exactly 6 months that I started this journal. And I want to say a big thanks to nexusfi.com for being such a great forum! I have to say, I've avoided forums for the longest time, because I thought they will do probably more harm than good for my progress, which is probably true for most, but definitely not for this here!
This journal has become really important for me as its role of "being my boss I have to be accountable to", as well as being an outlet for my thoughts!
I'm looking forward to the next 6 months!
This gauge is still on a sell signal and in status "Bear Confirmed", which prohibits a long in general at this point. It's around the 50% level, which makes it a bit weaker sell signal I would say.
Industrial Average
Transportation Average
Interestingly Cohen mentioned the Averages and Dow-Theory briefly in his book. One thing I was wondering, was if something on the theory changed as the original Railroad-Average became the Transportation-Average. Cohen says no.
It's a bit of a question how sensitive these should be. I can influence the sensitivity by box-size and amount of boxes for a reversal. For now I took the same as the "traditional" is in all stocks.
I can theoretically say, that if they are both on the same signal, they "confirm",
So in this case Transportation is on Sell and Industrial on Buy, which would prohibit a trade as well.
Technology
Bear Confirmed, but already on the oversold side. Could become a good opportunity for buying in the green area if it drops further and then reverses
Financial
Seems to be a very strong sector currently, but I think too overbought for establishing a long position.
Healthcare
Ideally drops a bit further and then turns Bullish as the NYSE-B-% turns bullish as well
Industrial
Maybe this is more "sensitive to the confirming averages?!". Could be a buy as soon as the NYSE-B-% says yes.
Consumer-Discretionary
Could become a buy as well if NYSE-B-% goes up
Consumer-Staples
Seems to be pretty weak and generally slow-moving. Wait for further drop and possible reversal
Communication-Services
Seems to be a generally balanced sector. Currently more on weak side, but maybe slowly a bit on acceleration
Energy
This is on limit at 100%. Maybe for this sector, Crudeoil can be seen as a confirmiation or kinda index. Maybe if the entire market should turn down and oil as well, this could be a good short
Materials
If the general market starts to gain momentum again, could be buyable. Not the best, but for the matter of gaining experience still valuable I think.
One question that arises is, how should I handle overbought appearing situations? Should I just wait until they turn down for a short, or should I "not be scared" and still buy into strength if everything else is right?
I am aware that overbought looking situations can stay way longer this way, that I could likely imagine and so it could be also opportunities I miss, that I should take.
Had an order in, but didn't get reached and then turned south.
5min
60min
Not that perfectly clean. Also it appears that the blue and the red trend kinda merge a bit together at times and a bit of an "in-between" trend lurks through
I think a trait of the great men and leaders is, that they study history and try to learn from it.
The question I’m asking myself is: In trying to anticipate the future, based on their knowledge of the past, do they recreate the past?
They sow the seed, so to say, and the masses grow it, by following the leaders?
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Did my usual 4 chart-pairs drawing, which seems to be a reasonanble number per day so far.
There's one stock, HCA in the Healthcare-Sector, which acted very strong and Relative-Strength actually skyrocketed, whilst the other ones I have so far in this sector, as well as the Sector-%-Index, where very weak in the same time period.
So maybe when this sector starts to get momentum again, this could be an "extra strong leader stock"
Also read "The Point and Figure Method of Anticipating Stock Price Movements" by Victor deVilliers.
This one was written in 1933 and his approach is a bit different to Cohen's, but the core principles are pretty much the same. He uses also 1 point charts, but I think in most cases today that would make the charts probably unnecessary noisy.
It also contains a chart of the 1929 crash. There's also another more comprehensive book by the same author on P&F's which I think I'll get myself as well.
Usual four chart-pairs and started Wyckoff's "How I Trade and Invest in Stocks and Bonds". One name that very often occurs in the recent books is James R. Keene. Unfortunately there's no biography or some book of him out there, but he definitely was one of the bigger operators back in the day.
Also the old folks all talk about "the manipulation" as a plain fact and I start to take on this way of thinking about the market. Future longer term trades will give me more insight, but it would be a explanation why, at least for me, trends in small time frames just don't work. So I tend to start to consider, the very small trends as random fluctuations and the large trend on daily basis as having a reason to work, because "they" make them work.
One fun fact is, that people working with charts back in 1919 were seen as weirdos and were known as "chart fiends"
Healthcare-Sector Observation
That's yesterday's HCA observation. I think these type of clues could be valuable.
Stock
AMGN still further dropping after the solid triangle
R S
Relative strength way down from its high
_______________
Stock
UHS also dropping similar to AMGN
R S
Relative strength also significantly decreased over the recent years
______________________
Stock
And then we have HCA which was strong and holds its strength, despite the entire sector being weak and these other two stocks being weak
R S
And relative strength skyrocketed.
So what this tells me is, that I think if the sector should start to get stronger again, I should not be scared, even though HCA seems being "up too much", but buying this one and expecting it continuing being way stronger than the rest. And not like one could think, buying the weaker ones because they kinda look on the chart as if "they have more upside, because they pulled back more"
Is it better to put all eggs into one basket and watch that basket very carefully? Or is it better to distribute them into more baskets?
Carnegie seem to have had only one basket, but Wyckoff had a few baskets and recommends that for the market.
A few weeks ago I watched an interview with a man named Thomas Kaplan who seemed pretty wise. He appeared to be a one basket man.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Four chart-pairs and proceeded reading Wyckoff's book.
It's not really about his technique of trading, but more how he handles and diversifies his operations. He was an investor as well and do put weight in fundamentals. He also emphasizes all the time that experience is the only thing to make you successful in the market.
My suspicion, that his name gets used a lot in the industry for selling stuff that has almost nothing to do with his real trading, substantiates.
A name that also pops up often lately is E.H. Harriman. He was one of the big railroad dogs back in the day. There is some literature out there about him, which could be worth studying.
I tend to think that there's a type of "Grail-Scale" in my mind. I do know on a logical basis that there's no grail out there, but I think I still haven't realized that a full 100%, so that it still influences my way of tought in a slightly bad way. There's zero difference between wanting to become a trader or a lawyer. No shortcut in existence! Years of work, practising and experience! That's about it!
I noticed as I did my updating today, that more stocks than usual did a slight upmove yesterday, as well as some B-%-Indexes moved slightly to the upside.
It appears as if the dip of the general market holds.
When updating my charts, I noticed that the Transportation Average sprang up two boxes and is now on a buy signal. So I could see this as the "Averages confirming".
Also the Industrial-Sector did even 4 boxes upwards. Especially the railroads seem to have been strong on Friday, which makes sense with the Transportation Average rising.
Noticeable is, that Boeing seems to be a weak stock in this sector.
Also Consumer Discretionary advanced two boxes up, as well as Materials.
Packaging Corp of America seems to be pretty weak in the Materials-Sector.
Judging from my Sector-Percent-Indices, Industrials or Consumer Discretionaries could be worth considering buying, BUT the NYSE-B-% is still on a sell-signal.
Either this indicator is "especially wise" and kinda foresees a more severe secondary reaction of the bull-market, or it lags behind and is impeding me a bit at this point?!
Maybe it could be wise putting for more industrial like companies, in contrast to more tech or finance like companies, more weight on the averages, rather than the NYSE-B-%.
But this has to be figured out.
Also started another trading plan, which should eventually turn out more as a business-plan and will probably stay more a work in progress than being finished soon.
Started also Richard Russel's "The Dow Theory Today". Today meaning around the end of the 50s. It's pretty good to read and he refers a lot to Hamilton and Rhea, which is nice since I read their books already.
One thing is sure by now:
The theory focuses on the sequence of entire bull or bear-markets and can in no way be applied to intraday movements. The primary movement is the bull-market itself and what I thought of the "Secondary Trend" is the "Secondary Reaction" which is a pullback in the bull-market. And my "Tertiary Trend" is just "Daily Fluctuations" which can not be in some way tried to be forecasted or predicted by the theory.
Also Russel involves looking on the volume for judging tops and bottoms of bull and bear markets.
A passage from the book: The closing prices of the Dow Jones rail and industrial averages give us a complete index of everything known by anybody that can possibly affect the economy and corporate profits (excluding acts of God). Consciously or unconsciously, the movements of prices reflect not the past but the future.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
