Thursday, May 23, 2013

The Daily Note - $DJIA $SPX $NDX - Should You Stay or Should You Go

*****It's almost the end of May and the markets are getting nervous. So why the question if the May/Away in the markets keeps holding true. The question becomes more burning if you are still expecting profits and see the drop-off potential of the market. Certainly it looks threatening if we look at it myopically but if if we look at farther out patterns it is merely a blip on this mountain trek.

 Embarking on any climb it's good to know where and how high we are able and willing to go before turning back and generally speaking, the higher the climb the more people we need to support us. The danger comes if we are not prepared to stay longer and we insist on doing it anyway, because the higher we go the more likely a storm and colder temperatures. Also, if we attempt a Himalayan hike we better carry oxygen and enough supplies. It is where we need the most preparation and be able to keep good judgement about the possibility of inclement weather and certain death.

Traders who jump in at these lofty altitudes are the ones most likely to jump out too early and most likely to regret it. Also those who can't make up their minds may meander around looking for a better path while the weather is closing in on them. It behooves a trader to keep wits about them and therefore more crucial to have target and stops set just in case they lose their direction. Quick action can be a life saver if you know where it will lead and it is why in trading we need to know our escape path.

For a climber  daily/hourly  assessment of weather conditions is also crucial for our survival and likewise for a trader who wants to collect profits before a major turn of events.

So knowing some history, current events and basic facts becomes our survivor's almanac where past notes of trades and behaviors will help asses the possible future, be it short or longer term. Watching what others do may be a good indicator, but asking them what to do could lead to disaster. Knowing your own limitations on this climb is the better strategy and turning back early may be a survivor's tool rather than dishonor.  The key here is not to be complacent but be involved with your own finances.

Should I Stay Or Should I Go by Sunshiners on Grooveshark

Happy Trading, Living and Dancing

 The Daily Pick -$DJIA $SPX $NDX

 ©DayTrading with Anni 2007 - 2013 All Rights Reserved

Friday, May 17, 2013

The Daily Note - $DJIA $SPX $NDX - Taking a Chance on Tops and Bottoms

***** I've spoken about taking chances before and here once again when the markets seem to be topping it's those that take chances get rewarded; or so it seems.

Not everyone does well chasing tops or grabbing bottoms; my trading style is different yet I certainly admire those who do and do it well.  Trading tops and bottoms requires a certain stamina and a certain daring. More often than not, the market can turn against your direction rather quickly so taking profits too is a challenge and the style can become a scalping game.

The major challenge in this style  is to figure the top or the bottom of a direction, which in itself is a major study. Knowing your charts is crucial in any trade, but recognizing tops and bottoms requires mastering it.  It is not to say that you will not get it correct many times, but it takes years of  observation too, to see it unfold. Then also, when the time is right, the question becomes whether to take that chance and risk the loss if you're not correct because as I said, chancing a reversal has more probability of being wrong for the time being.

I say time being because as we go higher like in the Dow30 (DJIA) or the S&P500 (SPX) we do not know how high is high enough for most traders & investors. Being exact is difficult even with excellent charting because we only know that somewhere it will top and reverse, for short or longer term. First consensus has to be reached which for day traders one day is enough and for trend traders a longer term is needed and preferred, but in either case your conviction is tested.

Stamina is required to stay with the flow of a trade even if you are on the "right side" but your conviction gets tested each time a trade turns against your direction and when your only "comfort" is having a set stop.  Loss in any trade is painful but, in order to get those big winners on a direction reverse, traders have to take them and minimize them.

Where you set your stop is how you will manage most of these trades, as limiting loss is crucial and more wrong trades than right trades can turn into major losses if not managed well.  So if you have the stamina, the daring and are able to manage your loss well, this may be a style you prefer and remember that chances are only given to those who take them.

Taking a Chance on Love by Renee Olstead on Grooveshark

Happy Trading, Living and Dancing

The Daily Pick - $DJIA $SPX $NDX

©DayTrading with Anni 2007 - 2013 All Rights Reserved

Tuesday, May 14, 2013

The Daily Note - $DJIA $SPX $NDX Tuesday Update, Nothing More

*****Seems to me that everyone's waiting; and you know what happens when everyone's waiting, Nothing; and I have nothing more to say.... for now.

Wating Too Long by J.D. Crowe and The New South on Grooveshark

Happy Trading, Living and Dancing

The Daily Pick - $DJIA $SPX $NDX

 ©DayTrading with Anni 2007 - 2013 All Rights Reserved

Friday, May 10, 2013

The Daily Note - $DJIA $SPX $NDX Feel Forgotten?

*****Today I got reminded about an article that I wrote about the importance of timing when in comes to success. I was once again reminded because while waiting and betting on a correction, or lower low in 2009, the market started to move relentlessly upward. At the same time, everyone, but mostly traders and analysts, and gurus, were opining about how we needed to drop lower for a true correction.  Of course we were only 2 months into the reversal, so who knew what was to come?

In this business, or any business to a large extent, it matters not what you think should happen, because it's the consensus that will bring the change and until then many more have to become aware and realize it before  the markets will change.

Take a look on my weekly outlook below to see the pattern, and you'll see  how we got to where we are today, where once again I'm hearing the increasing grumblings of a needed correction.


Forgotten Casualties 
Published   May 09, 2009

Placing ourselves into a situation because of a belief has always been risky business. People who do it can become heroes but more often they become forgotten casualties. It's because beliefs are emotional.

I have no doubt that many of those casualties were correct in their belief but unfortunately their timing was wrong. Looking at history I'm sure that there were many who railed against British rule, Stalin, and Hitler and who we've never heard of, all heroes for what they tried to achieve but were picked off one by one because they lacked one important factor.... consensus. People have to be ready for change in order for change to occur and therein lies the other factor.... timing.

Change takes time; well, not really. Change takes an instant; it's the preparation for change that takes time. Awareness and acceptance are the steps prior to change and are the ones that take the longest and where most get picked off. Awareness is where one notices that something is not in harmony, whether it be justice, science, or art, something does not work as well as it could. Philosophical in nature, it becomes a thought and a pattern that manifests slowly over time.

Voiced it becomes more real and becomes a belief or conviction; its where the campaigning begins and where most casualties occur. Shout it from the rooftop all you want; if people are not ready to hear it, you're shouting to the wind. But once someone does hear it and campaigns with you from another rooftop, the chain toward acceptance starts and unless there's weakness in the philosophy it won't fail but the battle has begun.

This is when those that want to stay with the status-quo, those with different beliefs and those that feel threatened will come into the fight. The battle continues until a leader emerges consensus is reached and when most are on board, action takes place and change occurs. Notice I did not at anytime say which side is right/wrong nor does hope ever enter it. It just is.

The best analogy I can recite about the above is the fall of the USSR; although many knew by the time Stalin emerged as a leader, that the Communist philosophy does not work, it took another 30 years of murderous battle, when millions died, and another 20 years war of acceptance before a leaders emerged and action took place for change. The pivot point of that battle was the 1956 Hungarian Revolution and the first support was the 1968 Czech Uprising, second support was when Reagan emerged in 1980 and third final support was when Gorbachev came on board leading to capitulation in 1989.

When we as traders become convinced of a philosophy about how the markets should or not be, and the market continues against us, we are in the awareness stage; right or wrong makes no difference, we are where the market is not. Although change may occur in an instant, we have to worry about where we are on the way to that instant. Has the battle begun, and where is the consensus is, should be always on the mind; but unless awash in unlimited supply of currency, we cannot stay in a trade against consensus without loss and becoming forgotten casualties.

Soon Forgotten (Mono) by Muddy Waters on Grooveshark

Happy Trading, Living and Dancing

 The Weekly Outlook - $DJI $SPX $NDX

©DayTrading with Anni 2007 - 2013 All Rights Reserved

Wednesday, May 8, 2013

The Daily Note - Play Earnings, Play ~ $GMCR

***** Before you see the news or the headline or results, there are many people ahead of you that know it. Wise to remember that fact about all "news" because news is only new to the ears or eyes that see it for the first time.

Depending on what your sources are, of course, most of us have no clue about corporate earnings announcements unless we subscribe to services that keep ear to the ground and even with that we can only wait for the release. Yet there are many who already know the numbers or at least something about the likely announcement, and it's not just your friendly stock analyst, neighbor or whisperer.  We can argue about the ethical issues about this all year round, but the fact is that no one is going to stop it with regulations, or other ways, because far too much money is waiting to be made. Some companies have better controls than others but  it's like trying to stop sand from flowing through your fingers.

 We don't have to be plugged into everything to see what is happening or to make intelligent decisions. The charts are our eyes and ears to the market and news and we have several options how or when to trade earnings.  One is not to be in a trade, in other words, be all cash prior to earnings announcement. That is also the safest way to be. Of course that can mean missing out on a super move after hours, but when weighing the risks it's best because one can  play after hours with less risk. Calculating the  risk we wish to take and taking the rest of  holdings off the table, or balancing with options plays are some other ways we can use to reduce our risk or  we can choose not to hold stocks that are so volatile in earnings season.

Planning and sticking to a plan is very important and we must realize that we don't have to trade at all.  However, upon deciding to trade earnings results, the dilemma is where to find the advantage of earnings announcements because we know that at the moment the news is released, trading can become very confusing.  To avoid such confusion,  we can observe the charts for clues which can mostly be found in the last hour of the trading day, for after hours earnings releases.

Take a look at the 1 minute chart the hour before close for GMCR and you'll note the steady rise of the candles, unlike the rest of the day previous; that is clue number one. The next hint will be the steady rise in volume which means people know something about what is about to happen: The earnings announcement after hours. Observation of such moves can give a good advantage even if we do not fully know the reason. Taking a reasonable risk with such a trade can be rewarding.

Hot Coffee by Carl Anderson on Grooveshark

Happy Trading, Living and Dancing

The Daily Pick - $GMCR

©DayTrading with Anni 2007 - 2013 All Rights Reserved

Tuesday, May 7, 2013

The Weekly Outlook - $DJIA $SPX $NDX ~ With My Neck Out

*****I suppose my head is just a choppable as Marie Antoinette's  so I decided to stick it out officially and mark the chart with my earlier look at the possible.  My declaration then was a bit scary because it was at least 500  points away on the $DJIA.

I often say to trust your gut/intuition to traders so it also behooves me to practice what I preach, still, I know that numbers are the toughest to predict because the Universe does not think in our tiny linear time frame. Besides which, it is such a vast big Universe out there that most of us cannot even conceive yet alone comprehend, yet I got this number, I declared it and now, I published it.  Of course if we look and wait it may never happen and on the other hand if I ignore it, it most certainly will; whereupon I will be left saying, "I told you so" which I also dislike with a passion.

One thing is for certain, anything that appears to be close can be very far away or as close by is measured  in the Universe. Just look at a full moon for an illusionist comparison. Look, see how close it is and still so far? So you see, that very close look could be weeks, months away if we have a severe reversal.  Much can happen between now and then but if all is on track, around the 15th is when it's supposed to hit, barring  pullbacks, sidesteps and other weird dances that the market likes to do. So please stop your knitting Madame Defarge and don't roll out that guillotine quite yet.

McCartney,P&..-Wingspan1-16-With A Little Luck (DJ Edit) by McCartney, Paul  & Wings on Grooveshark

Happy Trading, Living and Dancing

The Daily Pick - $DJIA $SPX $NDX

©DayTrading with Anni 2007 - 2013 All Rights Reserved

Wednesday, May 1, 2013

The Daily Note - $DJIA $SPX $NDX ~ From the Possible

*****My motto since the beginning of 2012 has been the Latin phrase: a posse ad esse (from being able to being) or from possibility to actuality.   In various forms over the past five years I have written about the possible when it comes to life and markets. I doubt if many of you would argue against my premise that all things are possible but you may argue against my premise that from all those possible things it is your choice as to which you choose to make actual.

Another way to look at possibilities is choices. We make choices every day of our lives often not even thinking about the fact that we do. We take for granted the choices we have because we have so many of them; from the time we choose to get up to the time we retire, we constantly choose not only what we do and when we do it but also how we feel about what we do. In other words, we not only choose our action, but also our reaction. So it is possible for us to feel good or crappy about crossing the street as we make the choice to cross the street in the first place; but just before we make that choice to cross, we process a myriad of possibilities.

We process the possibilities from knowledge and history. Using those, we assess the crossing points as to where and when and what the possible outcome of each would be and because we know where we want to go, we choose our crossing point based on what we know, history and also on the desired outcome. So, crossing the street is not only possible because we can, ( ability ),  but also because we want the outcome, (actuality).

Crossing the street where we have done it before recalls the history and the outcome, crossing the street at another point incorporates our previous experience of crossing it as well as assessing the possible new outcome of what we would reach.  In other words, we have perhaps a new or different goal in mind which we wish to make actual.

Timing also plays a factor in the possible outcome of the action. Crossing the street at the height of traffic can certainly be more difficult. Choices may be more limited about where we can cross and the time we have to achieve the goal may most likely be reduced by the oncoming traffic. So choosing the time also becomes crucial to our experience and desired outcome.

It is also important to note that the history of  crossing the street not only brought a physical result but also an emotional one. When we achieved the actual, the feeling of achievement is always present, regardless of the mundane task. If we recall choosing to cross when we also nearly missed getting killed, will most likely make us more cautious about crossing and even avoid crossing at the same spot. A crossing experience where we meet and exceed out expected outcome will probably bring pleasant memories, may even bring a spring to our step and more confidence when stepping off the curb. This is also known as attitude and choosing which to remember is crucial to our reaching actuality.  

These steps are not different in any other part of out life. We just tend to think or notice ones that more likely bring emotion to the forefront. Trading being more emotional than crossing the street.  I bet not many of us thought so thoroughly through the process on the curb as in front of the computer platform. Irrational in reality because we can lose our lives by crossing the street but only our money by trading.

Definite Possibilities by Jeff Carson on Grooveshark

Happy Trading, Living and Dancing

 The Daily Outlook  - $DJIA $SPX

©DayTrading with Anni 2007 - 2013 All Rights Reserved

The Weekly Outlook - $DJIA $SPX $NDX Dance Around the Maypole

*****A while back I mentioned that I thought the $SPX is again the leading indicator of the markets. Today it broke out to a new high whereas the $DJIA is lagging behind.

The $DJIA has only 30 stocks which reflect the overall market and of those most have already enjoyed higher highs. Now that more enthusiasm has entered the markets, there is more money coming in looking for opportunity which can be found in the S&P 500, so momentum can be stronger and highs reached faster.

Next step is watching for overheating, in my opinion, along with summer temperatures. Remember, it is now May and many may still go away as soon as earnings reports slow down. Summer heat is no place for a meltdown, so keep your cool, eat an ice cream and enjoy it while it lasts.

Dance Around The Maypole by The Acid Gallery on Grooveshark

Happy May Day Trading, Living and Dancing around the Maypole

The Daily Pick -  $SPX _$DJIA $NDX

 ©DayTrading with Anni 2007 - 2013 All Rights Reserved