Wednesday, March 31, 2010

Thanks you everyone!

Got the #3 spot on and got a free month! I can can put that money to use in other places! (like candles, yes I made that.... lol)

Thank you very much!

The Big Mo

I liking the look of the Big Mo Chart! A lower low on MO. The trend channel is in threat of a break. Maybe a quick bounce around in the moring and this triangle is finially decided for the Bears and Bulls.

GV put a really good McClellean Oscilator (MO) artical together if you haven't read it here. Give it a read, it's good stuff.

After the close update.

Bulls are still there and reluctant to give up. We hit that low channel hard and it looked like it broke but then a quick recap to take the channel back. Here is an update of the 10-minute chart below.

Before the close - A look at a possible bear count

Though this might be an interesting formation ending while we still continue to have a choppy side-ways motion.

Morning count update

I took some time to consider what count i'm ultimitally looking for to exit at the fib lines on the 60 minute chart. I believe it will be an "A" if it comes true.

After doing this I went back to the 15 minute chart to look closer and changed my micro count a little. Note: I still need to change the 1-10 minute count to reflect the 15 minute chart on my public charts.

I'm getting a little concerned from this count because it is very easy to see a bullish count where my Blue "A" could be a blue "C" and we got a solid looking 5 wave count up to 1177. Nonetheless, the daily and 60 minute chart are true to the Divergence Trade of 3's that i'm trading off of.

Tuesday, March 30, 2010

Post Market Update - Tuesday

Ended a flat day with little to glean from. See a mirco count below for my preffered count. It is very likely we get another push up past 1180 at this level, so be forwarned. I will exit my short if the break divergence breaks on the daily and wait for another top to occur. We had a low and high which neither of them are a lower low or higher high, so the battle tightens on the intra-day low and intra day high. Typical triangle patter breakdown on the longer-term charts which you still can day-trade but the money isn't as good.

Morning update

We got a clean break of the support trend. Next test is to  get to new lows if the bear arguement is true. 1 and 3 waves down at the end are looking very impulsive which is a good thing. Time will tell

Monday, March 29, 2010

Micro count update

Here is a microcount of today's action. Were higher on the fibs. than I like but all is not lost on my short position. I'm still green and we might even break a new high. The daily (the longest of the 3 chart time-frames) bearish divergence is well in tackt still. I'm a much better trader off of the 1,5,10 minute charts but do not have the $$ to trade it in that manner, so I'm forced out to the longer-term charts. As you can see from the 10 minute chart were ending a triangle here and we didn't get a new high at the close. Watch the support trend very closely, that might be the signal of a trend change.

The Real Trade

As I stated I am using SPXU, a 3x short ETF as the vehicle for this trade. I think it is very important to point out that SPXU is not SPX. Nonethless, SPXU is a tradible fund. take a look.

Sunday, March 28, 2010

Update on Documentation


My first page on documenting the Divergence Trade of 3's on the right labled "indicators in different time-frames" or simply click HERE. If you have questions or comments please share.

In addition, if you like what I bring to the blog to share. Support me by voting on my public charts. I get a free month if I get 3rd place and I'm in 3rd now, but want to have a bigger lead moving into the last week of the month. Link is on the right or simply click HERE

Thoughts about monday, 29th

I'm still in a full short position based on the daily, 60 and 30 minute charts. I am in high risk and know it from the 1-15 minute charts. 1161 was showing bullish divergence and now we have a completed 3 waves down. From a 1-15 minute stand-point I would exit the trade at the 1161 mark when the trend broke showing bullish divergence. Look at my prievious post for details. Nonetheless, I expect now a try to the fib lines from the 1180 top to the 1161 low. The real question for me is that if we opend down we will break the support channel on the 3 month (60-minute chart). I believe that it will hold and were get a correction up here over the next day or 2 until the the battle at the Fib's is decided. I will not sell my short postion until the bearish divergence is broken on the 60 minute chart.

Friday, March 26, 2010

Follup on the 3-day (5-minute) chart.

I was explaining on this chart how the 1,5,10 minute chart day trade using the "Divergence Trade of 3's". This is an update to that were we had an end to the down channel on bullish divergence @ the 1161 bottom. It is very hard to tell if we have divergence there on the 5 minute chart on left, but the 1 minute will give you a clearer look. (below)

Notice on the 5-minute chart once the sell criteria is met I make a new fib (pink) from the last low to high. RULE#1 = know your surrounding (look at longer-term charts to find key area's of support/resistance) I posted the 60-minute chart on my previous post to also know that 1161 is a strong support level.

On the 1-minute I saw bullish divergence and the trand break confirms it for me to get out of the possition.


This is the big pay off from my daily,60 minute, 30 minute chart. Look at the support trend and were we are right now. If this fails which I don't think it will without another retrace back up. It will be a massive explosion down if/when this line breaks.

Day 2 of short trade

In a bigger picture we are still in a up trend and need to break though these support channels to confirm a change in trend, see chart below.

On the smaller chart time-frames (see chart on left) this is a perfect structure for the Divergence Trade of 3's strategy. That shows all 3 types of trades. 1.) Bull Trend break short to the fibs. 2.) break from the fibs to existing high/lows and 3.) Bear trend break long to the fibs. Enter the postion at the top of a trend, in this case bull trend where bearish divergence is shown in at least 3 indicators between (CCI, STO, MACD, RSI, ADX). Once the trend breaks and your trade is making money, exit on the 3rd wave down when you see bullish divergence in 3 indicators in this case, the trend is broken and your in the range of 68%-31% of the fib retrace. . If trading off the 1, 5, 10 minute charts (day-trading) This exit signal happened @ 1173 yesterday at 3:00.

The second trade is that now that you reached the fibs, the bear/bull fight continues to make a run towards the old high or low. I had a longer-term bearish view of the market looking at the longer-term charts so I felt bearish argument would win this fib battle. (if I was day-trading). This type of trade is more complex and has greater risk than the other two. I will explain more in the documentation area later. We had a break yesterday at the 68% retrace where I would enter short in a bet to test the last low.

In the early trading hours this morning we had an exit signal at 1168. At this point the same criteria exists to as a long position, where you trade long back to the fibs. in a new Fib drawn on the last high/low. Where the exit of that long possition would be 1172. A new short postition would be made @1171. where we are currently and the trend down has not been broken and would be still considered live.

I hope this finds you well

Thursday, March 25, 2010

Entry @1180 Short!

This is my very first official post on this blog and I hope you like it and brings some sort of learning to what, I’m sure, you have already puts lots of efforts into. If you don’t know me let me first start off by saying hello! If you don’t let me give you a little background on me and why this blog post is important to me. I have been studying technical analysis (TA) for around a year in the leadership and direction of GV (blog here, and sign up if you havn’t). I used a $2k trade account to learn over the year with some good and bad times, but learning was the key to put real money in a trade is way different that paper trading. GV gathered an amazing group of people that I call my closets friends and we all have excelled. Many name you might now like Columbia1 (blog here), Binve (blog here) and many more that I will add to my blog later, but in those beginning at CAPs the CIL was born, (See columbia1’s blog on the bottom of the blog).
About 2 months ago I sold my 4-month standing SDS (Ultra Short S&P500 2x fund) position and traded with paper trades on Wall Street Survivor (WSS) account. I since then developed a system of trade that I believe works and made this blog define, refine and share it.

Ok, I know bla bla bla Russ. Anywho, Today I opened my first real money trade position shorting the S&P 500 (SPX) index using SPXU (3x S&P500 short) as a vehicle, based on my “Divergence Trade of 3’s Strategy” I’m trying to evolve. I am going to attempt to explain my trade as time goes on for gain or loss in conjunction to documenting this strategy and hopefully it comes together.
First things first, overall, I have not seen all chart time-frames oversold or overbought since the 1150 top. All time-frames were overbought from 1 minute to daily (Time Frames are 1,5,10,15,30,60 minute, daily, weeklcy, monthly) This allows me to not only move from the rule of 3 chart time frame which are daily, 60 minute and 30 minute, but to even move shorter in time-frame to exact a trade (This vary rarely happens).
Enough text, if you like me I scan talk and look at charts… lol
Daily chart (longest time-frame in my trade of 3’s)

From the longest-term chart you can really only see oversold or overbought conditions. This is the extent of your profitability of a trade. I will explain the low-high risk trades in the documentation later, but the main focus of this chart is that we see bearish divergence on the highs and I want to short the position some time. From this time-frame I cannot tell exactly but we do have hints. CCI break of +100 is huge for me. My first attempt of a trade strategy was solely based on CCI. It is like my truth stone, but it does lie from time-to-time. I think the most important thing to add here on this chart is that when I consider this trade a loss is when we have a “BREAK IN DIVERGENCE” this is my latest evolution in my original system that has forced me to define a trade bunk and take my loss. I have work to do on this topic to define it completely but if you look at CCI only, you see that down trend, the break of that down trend line = EXIT TRADE.

I’m going to get into the other 2 charts of 3 (Daily you got, 60&30 min. later)… I new at that time they are all overbought with bearish divergence (THIS IS THE KEY to THIS TRADING SYSTEM)… Ah, as I said this is not normal you can do this, but when you can it’s has the most potential for a exact entry to a position (and it still might lose guys. I’m not sure if I’m writing, just playing the system) you will see these other two charts in a minute. I went to another 3-chart frame pattern as if I was doing a different trade of the 3-chart time frame, which is the (1,5,10 minute) charts.
Here is the longest-term chart of the 3 short-term trades. (10 minute)

There are dozens of things that I focus on and making a trade system I need to narrow my focus but forget the short-term charts even the one I posted the “3 trades” are simply a break from an up trend to the fibs, a break from the lows to the fibs and bread at the fibs to test new low or highs… I will have an entire section on this on the documentation of this trading system..

Nevertheless, we got the 10-minute chart up and in the purpose to exact a top a break in that up trend to 1180 break I used to enter a long-term short position. Note: this is a chart of 3’s in a very short time frame where my original trade is off (30,60min and daily). As you can see on this chart above you have very slight understanding of the divergence, yet at 12:00~ish on that chart it was completely overbought… Lets take a closer look lets get to the 3 minute chart.


As you can see that I entered that position and yet we got a new high and I didn’t sell.. This is because we had continual bearish divergence on the new high. Granted, we could have much higher highs with my original (3 chart, daily/30/560) but it didn’t turn out that way. This was the perfect setting even for a short-term trade….
If we were taking a trade off just the (1,5,10 minute chart) in the 3 charts I have a continual bearish divergence until it rolled over to something major bearish. Let get really crazy and get to the exact top to the top chart where I made my bearish trade.. notice I held even on a new high on bearish divergence….

The ultimate micro of micro of my (30minute to daily) 3’s trade chart. The 1 minute chart......

Ok, now that I entered this position of short. I am not convinced and give myself a 58% chance of being right on the longer-term trade… This trade system is to identify tops/bottoms or breaks in the fib lines so now that I entered a short with an exact top of tops… Maybe I missed a $0.8 on the top here I’m looking for break in divergence and even on the 1-10 minute charts divergence was not broken. 60,30 minute and daily charts… I will consider this trade a loss if daily bearish divergence is gone and I’m just using CCI for an example at this time. In the future I want to expand divergence and break in divergence, but for now, CCI is my #1 if you look at the 3 chart time frames.
It is hard as hell to explain to people what I’m doing in trades. As humans we act on impulses conscious or subconscious, but we act nonetheless…. When I’m day trading I act on the core of some of what I outlined but seeing the charts “tell me the future”… this is like asking a pro surfer how he knows what to do. ..
I thought I could explain this strategy to anyone and this is my stop… I have an gift to understand charts. Not to brag, but when I focused on charts and did day trading on WSS…. I got almost every turn in the market. I think it’s 2 fold… Can you ask Larry Bird how to make 3 pointer shots… and then you know?
Nonetheless, there is a core of understanding we all can grow from. Nonetheless, the stock market is one crazy bastard and if you think you understand it. That is the moment when you don’t.
Ok, I’m done for the night but I will leave this blog post that if divergence in CCI on the daily is broken when I call it a losing trade. Defining a losing trade is way more important than how to exit a winning one.
This was the perfect time to start a blog for me to have all chart time frame lined up. (And yes we might get a new high, but I will only leave the trade if my longest-term chart breaks divergence)

Good night brothers! I will have a post tomorrow night if not during the day!