Author Archive

Somewhat Choppy

Really no change in the M48 model since last week.   For the most part the major indices have been choppy and unable to close above the 50 day.  Today we had increased volume with a price decline which is a negative.  If price decline persists w/ increased volume the model will exist any S&P long positions which is roughly 33% of the Model as of this post.

What a sad blood bath year for Wall Street! However I am very pleased w/ the M48 as are the subscribers because the model has continued to cut losses short and let profits run.  Human nature is to not cut losses and to not admit a wrong – but instead to hold and hope.  The M48 has preserved cash in ’08 which will enable the model to capitalize when a trend eventually takes hold. 

AAPL ran up to 100+ only to turn around and close at 95 today.  The stop is at 88.86.  A gap could be filled below 85 – so as always we will cut our losses short and let our profits flow.  If AAPL heads North – the model will sell 50% of the position at 110 and move trailing stops accordingly to lock in profit.  Keep in mind that Apple only makes up 2.5% of the M48 model.

Back to the S&P.  The S&P looks like it wants to roll over again and test 860 and then possibly 820 if the 850/860 area doesn’t hold.  Based on probabilities I think we will retest the November lows again if we break 820 on the S&P cash.  Remember we add as price and volume increase and therefore the M48 will add when and if the S&P moves through 900 and more specific, 918 on a close.

Watching Crude the Dollar and Gold using ETF’s:   You can play the long side of crude by purchasing USO, OIH or DIG and placing your stops at the most recent support which was last week.  You can short the buck by buying the short U.S. Dollar ETF – UDN.  I also like Gold long using the ETF – GLD.  The obvious decline in the buck is helping crude and gold.  I will let you know when and if the M48 takes a position in any of these.  Stops and fill prices will be included.

Christmas Rally?  If it’s coming – it better come soon.

Have a great weekend,

-Doug

ps- Always read the risk disclosure above.  View this for educational purposes only.  Each investor has a different risk tolerance and therefore this information may not be suitable and should not be considered as investment or trading advice.  Videos coming soon to help further your pattern recognition significantly.

Unemployment Report=Mental Stops For Friday

Tomorrow could be a very volatile session due to the unemployment numbers prior to the open.  

Even though our most recent AAPL purchase is only 2.5% of the M48 model account value – I will remove the hard stop and instead use a mental stop based on a closing price and not an intra-day swing where we could get stopped out only to see it possibly rally and close higher.

Discipline is everything  – especially in this market environment.

ps- the market gave back some recent gains today – the good news is that volume was lower.

Stepping In

The market seems to be shaking off all bad news for now and I therefore like the technical action in the last two trading sessions.  Obviously the market can flush just as quick and go test the lows.  That’s why we always use stops – hard and or mental.  Because everyone’s risk tolerance is different – please view the trades below for educational purposes only and not trading advice. 

The M48 model purchased the SSO and some AAPL today.  I wish I could show you a video (coming in Jan.) on these trades because it would allow you to see what I see w/ more clarity.  If the market trends higher I will add by using a combination of the SPY and SSO as mentioned in my previous post.  I would like to see a move through 90 on the SPY soon to increase the probabilities of a Christmas rally.

Long AAPL at 94.81 w/ my stop at 88.16 which is very near term support and 7% back from our entry.  Close today was 95.90.  I thought it was important for it to close above 95.  I was following it on a 1 minute chart and based on probabilities felt it would close above 95 -which it did.  If it goes, our next resistance is at 100 and then 110 roughly.  I prefer more volume.  At this time this APPLE trade is a small percentage of the M48.  I will add w/ increased price and volume.  If we get stopped out – that’s ok too.  I told the Pro Investor Show listeners to be out of AAPL at 162 when the price was 170.  Now they get to buy it back at a nice discount knowing that if it doesn’t work we will exit again. 

Long SS0 (ultra S&P ETF) at average fill of 24.54.  I would like to see it get through 26.63 before I add.  If we break 21.87 – based on probabilities I think we go lower.  I do see a gap that could get filled for a quick pop to the upside.

So what does all this mean?  The M48 is slowly buying into various positions and will add with increased volume and price.  If we are wrong we will exit w/ a small loss to preserve capital inside the M48. The trend is your friend – and so are my clients.

The Rest Is Just Commentary

It’s all about price and volume and the rest in just commentary.

It’s possible that the M48 model will not buy the S&P until we break through 900+ to the upside at which time the model will accumulate additional shares when and if price and volume continue to rise.  We shall see.  If we go to new lows – it becomes a new ball game.

No oil play or individual stocks yet inside the M48 today.   I’d probably have to see the exchange traded fund USO break out above 45 before the M48 takes a long position in crude.

I’ll let you know if the M48 puts on a short as well.

 

Always read the risk disclosure above.  View this for educational purposes only.  Videos coming soon to help further your pattern recognition.

Price and Volume

Good price action again today along with a break above of a downward trend line.  That’s all good news.

However we need volume.  Until we get more volume the M48 model will remain in 100% cash.

Happy Thanksgiving

If You’re Wondering…

We were filled at 26.44 per share on the SS0 (S&P 500 Pro Share Ultra).  Today the SSO closed at 23.65.  Even though we’ve had two huge days in a row we are still 10% lower than where we sold it last.  I hope we don’t have to buy it back higher – but if we do, we do.  

Obviously a huge day in the SPY.  We dumped the SPY at 85.35 in the M48 model.  Today it closed at 85.03.  The M48 is still 100% cash.  I’m looking at USO for the M48 model.  Looking – not buying yet.

Thoughts – not recommendations on Gold and Oil

We mentioned Gold last week on the Pro Investor Show and said it was a buy if it broke out above 775.  The DEC contract closed today at 819.50.  You can play this using the ETF – GLD.  GLD closed today at 80.91.   Resistance possibly at 82-84 range, definitely at 90.  I will wait for it to pull in a little and hold.  If you are already long, I would have a stop at 70 or maybe even tighter at 71.49.

If you are thinking about the Texas Tea – using the USO.  My stop would be placed at 39.36.  Closed today at 44.13.  If you  would like information on a crude futures contract(s) – please email me.

When inflation returns I believe Gold and Oil will trend much higher.  However, always use stops– regardless of time horizon.

Bloody Hands

Thursday night-

It is possible that we are facing a once in a life time opportunity here in the equity and commodity markets.

The SSO (S&P 500 ultra shares ETF) closed today at 19.01.  The high was 100 just 13 months ago.  What a bargain – even if we just get back to 30, that would be a 50% gain.  However, let’s not try to catch a falling knife (bloody hands).  Is this a bottom? – I don’t know. 

As always we will remain disciplined and not try to pick a top or a bottom but instead the fat in between.

For those who just sold you can follow me using the M48 model.  When we use the ETF ultra shares (double the ride w/ diversification) we can make significant amounts quickly to help heal your wounds.  Stay tuned and keep your head up – what you did yesterday is now old news. 

Time to move forward and continue to cut our losses short and let our profits flow.

For the traders who bought the SDS (ultra short S&P) via my last post.  Your entry should of been between 100 and 110.  Move your stop to 115 up from 99.05 to protect profits.   You may also want to sell half of your position here and keep the remaining w/ your stop at 115.  I would not add or initiate a new trade on the SDS.  The close was 128.19 but dropping in after hours.  Nice gain for two days.

 

Current Status:

M48 = 100% cash

Safe Money BPA Product you get 100% of the S&P 500 less a spread of 1.5% w/ absolutely no risk to your principal.  If the market goes up, you win.  If the market goes down, no risk to principal.  Perfect for IRA money.  It’s very easy to sleep at night with this product.

-Have a nice weekend everyone.

-Always read the risk disclosures

Dumped the SPY

The 25% long position in the M48 was sold today at 85.35.  I did not wait for it to hit the stop of 84.53.  I could see it rolling over around 9:20 am on a 1 minute chart.  So we are back to cash w/ a small loss again.  For you traders – keep an eye on the SDS – which is the Ultra Short ETF for the S&P.  The chart looks good.  My stop would be placed at 99.05.  I scalped it today for 2.5 pts as I watched the SPY roll over.

M48= 100% cash

-Have a good week

Key Reversal?

Now it’s getting interesting.  When I was trading futures full time – it was all about pattern recognition.  One of the patterns was to take out the stops parked below support (shake out) and then reverse and head higher w/ volume (key reversal).  This happened today on the SPY.  The upside target on the SPY now is back to 100 (resistance).  If it gets through 100 – than next is 105 and possibly filling the gap between 107 and 110.  Heading out to an appointment – will research more tonight and let you know tomorrow.  Still 100% cash today and feeling good about it.

Confirmation w/ Volume = Increase Model Exposure

M48 Model 

I will increase the M48 to 70% invested/ 30% cash from 30% invested/ 70% cash.

I will accomplish this by purchasing a combination of SPY and SSO during the next two trading days. 

Stops on the SPY will remain at 87.44.

 

 

 

Disclaimer:  The above information is for subscriber use only.  Please read all risk disclosures above.

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Welcome fellow traders and investors!

As Money Managers and Traders, the mission of our Blog and Radio Show is to go on record and further educate our readers and listeners in technical analysis and proper money management across all asset classes.

Our methods are not the traditional advice you hear repeated and repackaged over and over again, but that’s exactly the point and the reason why we know how to advance and prosper in every kind of market.

To Your Success,

Doug & Gary