Daily Short Trade Setup - SPX

See my public charts below to see setup in detail
http://stockcharts.com/public/1589139/tenpp

Below is the Daily Chart.

Below is weekly chart SPX

~Happy Hunting~

2012 - short-term trade setup

Happy new year! Thought I would hit it off by posting a quick trade setup that I'm seeing in the 30 minute chart. This won't make you a fortune, but just wanted to spend some time getting back into TA (a little stretching of the muscles from my long break. www.facebook.com\occandles (what I've been working on)

I posted most of what I wanted to say in the chart. This is essentially the same setup of a trade setup I posted way back in....June/July of 2011. I haven't updated it in months and I never changed the core design of the trade. Anyways, here it is.

As aways I hope the best for everyone and Happy Hunting~

Orange Coast Candles

I know it's been a almost a year (to the day) that I've posted anything on my blog, but I've taken a year off of stock research to develop a standard product for me and my wife's aromatherapy business. We are in the first stages of continuing the product line and please to announce our website launch.

Here is our new website. Please spread the word!

www.orangecoastcandles.com

We just have the two votive candles but will grow the scent line of votive and new products like pillars.

Here is a sneak preview of future pillar line.

Thank you and happy holidays.

Out of Trade

Sorry it has taken me so long to post this. My work has been out of control and I've had little time to do any trading documentation. I am now out of the trade in cash licking my wounds. I am very happy that this actually happened. You have now seen the worst case scenario of a failed trade of the divergence of 3's. I will be honest, this trade system for me has worked much better using the (5/10/15 minute) charts rather than (30/60/daily) charts. Waiting 3 days to exit rather than 3 weeks on a loosing trade is way less painful. My next blog post will be a trade off the 5/10/15 minute charts and I will use the "Low Risk" example. Win or lose, it will be educational for myself and hopefully for you.

I'm sorry for those following along that were looking for a winning trade but that is not how trading goes. It is much more important to know how to leave a losing trade than a winning one from my experience. The real emotional stress is that looking at the charts now, you see negative divergence all over the place and signs everywhere that "if I just held a little bit longer". An example of that is that the positive slope of the MACD trendline held but it could break anytime giving us a larger down turn that what just happened.

Here is the exit of the trade and I look forward to posting my next Start-to-Finish trade!

The top of the mountain never looked so high.

I haven't posted in a very long time, we did not have a clear break in divergence on the 60 minute chart, but the daily tells me we did. I am itching to get out of this trade but once the divergence is broken you just don't simply exit out of the trade. First rule of trading and hitch-hiking through the galaxy is NOT TO PANIC. I do not have a "X- criteria is met, LEAVE TRADE". I have a symbol or point of recognition that if divergence is broken it's now time to focus on exiting the trade and forget any pipe-dreams of making money of this trade. I am at this point now.  It only gets more complex when divergence is broken on the longest term chart. This does not mean that I will not make money on this trade still, but my delusion of it DOES, more importantly is that this is the time where you don't sit on a trade and forget about it. Exiting is the right thing to do if you have any doubt but yet, exit smartly if you can.

I cannot count how many time that divergence has broken, yet this is exactly the time the larger trend changes. I'm down 16% currently from this trade using SPXU as of today. I really do not expect to get a gain from this trade but I'm not going to leave the trade because divergence was broken. (See 60-minute chart for trade entry) I am going to hold onto this trade with a very loose grip. Because I trade in charts of 3's (time-frames daily, 60/30 minute "on this trade") they are all showing different stuff. 60 minute tells me that we are still around the last extreme highs yet we are breaking major trend lines. Holding to my rules, based on 60 minute divergence wasn't broken yet the daily tells me otherwise. (I'll get to the daily later). The rule is that we are now in a down turn (who knows how big) that might end up being a small correction or not. The important thing is that we are still going down holding the fib 61-38% retracements  intact in some sort of down trend. We just started this new down turn and that is what I will be watching to exit. (see 30 minute chart below) I made very simple as two what I'm looking at.

I really hope that was clear on that chart... When I enter a trade I will allow for new highs... Now I will not and I'm out. I'm forcing a DOWN policy that MUST happen if not I'm out and you see that now on the 30 minute chart above.

Now the 60 minute chart (this is expanded more than my normal look at it see 2 months on my public charts), you can see that we have reached historic highs yet, divergence is not completely broken and you have many things that make me stay in my short position. (See the 1-X list below) When we got that massive push up on the Nov, 4th, we broke all sorts of stuff, from divergence breaks, trend line breaks, Major MA's, etc etc... I could see the Bulls singing in the street naked pouring honey on each other..... "We won, we won" I hear the bull crowd cheering... It's at these times we have seen exact tops (and bottoms) when things turn around.

1.) CCI (20) & RSI broke it for a second but it shot back below very fast.
2.) MACD trend line that I've been waiting to break for about 4 months finally broke.
3.) Historic highs in almost all occasions from a historic standpoint. (MACD, RSI, CCI 20-160, ADX)
4.) Trend line break, bears on this rally have been scratching their heads at what is an actual trend line break to get this trend to chance. I have held off from this topic for a very long time because typically it is easy to draw a straight line but when a real trend break occurs you get signals with this obvious trend break by "stock price" but what gets people is that when a real trend break happens something else happens major in other indicators or something that has happened on something that is not even on that same time-frame chart (i.e. 30 minute). Nonetheless, let me digress..........   With this new trend break we broke parallel trend lines + MACD trend has broken that has held true for almost 6 months!!

Ok, so let take a stab at the longest of the 3 chart time-frames. The DAILY... In the daily you don't get the divergence that you get on the 60 or 30 minute charts. In this example of my trade you get COMPLETE DIVERGENCE BREAK. This is the key at which all the thought processes of getting out of this trade turned into motion.



Notice the CCI(20) trend  that is not showing divergence yet is moving up. You have an up trend that is almost identical as the uptrend in April 09. More importantly is that you  have a break in the trend of up movement on most indicators including CCI (20), RSI, and STO.
If you take a look at the trend of the indicators you can see an exact trend from CCI and RSI.. and that you have up  trend that is completely broken on this last down run...

I trust that everyone can gather the proper information to get their own conclusions of what is right and wrong with charts technique and with other people.  Happy dreams brothers!

A closer look at Low-Risk vs. High-Risk exit on losing trades.

I find this to be the biggest grey area of my trading. Before I jump into trading with more capital I want to nail down this part. First you have to know what kind of trader you are and I've been playing high risk most of the time (especially in longer trades.) I'm going to document this trade through to the end and as I see it we might hold on this bearish divergence and even top 1200 SPX and I'll still be holding short. This is the high risk part of holding through a tight break in the divergence trend. (see chart below)

Notice in this chart that we had a break in the divergence trend on the 60minute chart. (Note, this trade is 30/60/daily time-frames). I believe the 60 minute chart shows the breakdown better and the full range of the trade history. One think to note about not exiting on the "low risk" exit and hold to see if the "high risk" breaks is that your chance to exit near the bottom fib. retraces lines (below 50%) decreases as far a profitability of the overall trade. As you can see from the chart below we are now on a new bearish divergence slope from the test of the existing highs of the indicators (CCI,MACD,ADX,RSI). Also you can see how the channel resistance breaks along with test of the previous highs on the indicators.

NOTE: I'm still short because the "High-Risk" criteria was not met (breaking existing high's on the indicators), even though it was very very close.

I'm back and nothing has changed

Well, I'm back from my journey across the US and I wish I had something better to post but I'm still holding onto my short position and the more the market goes up the less I will get from my profits if my trade becomes true. Not exactly what i like, but documenting the process of a losing trade is more important to me than documenting a winning trade. The problem is that when your still holding on to a losing position, the fib lines get expanded and based on the trade exiting around the 61.8% and 38.2% Your overall profitability in the trade decreases. Instead of a large gain you end up exiting round the same price you entered the position. Whipsaws, overbought, oversold conditions mulling around is the killer of this type of trade.

I'm playing this trade as "high risk" which means I am expecting the previous highs of the indicators like CCI (20) and RSI on the chart below to hold which it did. If you look at ADX indicator you see +DI holding true to the bearish divergence. ADX is a great indicator because with -DI (Sellers) is more holding around previous bottoms while + DI (buyers) are getting less and less. This tells me that buyers are getting weaker and losing conviction while sellers are waiting for opportunity to jump in. As we know from general market understanding, the market inches up and drops very fast. 60 minute chart posted below.