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.

Off next week.

I will be traveling next week and will not have access to the internet. I'm still holding short as long and this bearish divergence in the daily,60/30 minute charts stay in place.

Good luck everyone and happy hunting.

I will still have access to email so if you want to contact me click on "feed back" on my publich charts. (link on the right)

Why 1163 high?

Interest look at the weekly chart. Maybe this why were getting some resistance at the 1163~ish mark. I tie this with the divergence trends as well as a good stop on this rally. I'm forgetting my first rule of looking at the biggest pictures first.

Bearish Divergence being tested but still intact

If you see the CCI(20) and MACD the bearish trend line is in tach but we need to hold the high today or I am in risk in my trade. Using SPXU (spx 3x ETF) in this short trade, I'm currently down 3.8%. Exiting a losing trade is 2 fold, high risk and low risk. For lower risk, exiting off of the bearish divergence trend line shown below and higher risk where CCI(20), RSI, MACD make a new high. from your entry of the position. Here is the 60 minute chart below:

Short trade progress

After the market mulling around on top waiting for the trend to change, I have had nothing much to post but to rather wait. Today we tested that dreaded 1132 support line. This is a key for us to break from a short prospective. Tonight I am going to post the 3 trade chart time-frames (daily,60,30) and see what is taking place. I put notes on the charts where I thought it was important to do so. Let take a look at the longest time-frame, the daily.

We continued on our bearish divergence and now CCI(20) is breaking 100. You really see the momentum building up in this chart for a trend change. Also, you can see we have plenty of room to go down for a longer-term trade. If everything works out correctly, CCI (20) will break -100 and I will exit before it breaks -100 again. I will use the 30/60 minute charts to exact the exit while the Daily chart gives me an idea of how much potential I have for profits. For more information on this CCI concept look to the right links on the Divergence trade of 3's, more specifically "Indicators with different time-frames" Here is the daily:

Below we see the 60 minute chart:

Below you have the 30 minute chart. We got a double whammy going on with the 20 Day Moving Average and the dreaded 1132 support area. I would be surprised if we break through this tomorrow, but I've seen crazier things. I'm expecting some kind of right shoulder to form here we another stab at the 1132 line. If broken, look for the 200/150 MA's then the gap to be filled bellow the MA's with a back test at the 1120~ish area then we head down with a strong wave 3/C wave to the Fibs, shown in the 60 minute chart.

~Good luck and Happy Hunting~

Still in the game. Holding Short!

Even though we have gotten 2 new highs since I went short, the divergence is still in tact. Topping takes some time. I was hoping for us to break down to the daily MA's but we still have some positive momentum that needs to be shaken out.

Step 1 down

It was a rough battle but the bears took control and broke the first support barrier @ 1132~ish. On the 30 minute chart were looking over sold so I expect a short correction up to the 1132~ish range and would like to see that the bears hold that line in the sand. Step 2 is underway after that.

GAME ON!!!!!!!!!

I entered short today after the very long time holding. First I would like to take a look at the bigger picture before we get in the the micro chart of the trade of 3's. The 3 chart time-frames are (daily, 60 minute, and 30 minute). I'm not going to post the daily chart, but take a look at my public charts if you want to see it. The main thing for me is that you see bearish divergence on the CCI (20) on the daily and RSI is topping at 70. A lot more information is in the 30/60 minute charts. This is a "type 2" trade. If you want to know more about this type of trade please see my notes on the right for more information.

Ok, so big picture first. Here is a very extended 60-minute chart to capture the full picture. I see a down turn were we are held within the MACD trends. Also if you look at the average over the last 4 months of the ADX the + and - DI have reached topping and bottoming levels. This is definitely overbought based on this history. You also see my target exit that also falls in-line to a retest of broken resistance trend and also the 50% retrace from the most current rally 1040 - 1150. You also see a very similar pattern in the RSI from the last trend change.

Now for the micro chart, the 30 minute chart. I might of got in short too soon, but I took the risk. the 1130~ish HARD resistance line from previous highs now turn support needs to be broken. Also you have a very solid up trend in place still. Tomorrow we have some very tough levels to break if we head down. (see chart, yellow spot for tomorrow), If broken I see us heading down to the MA's ranges. I'm planing on an exit near the 50% retrace but the 200/150d MA range is another touch zone to break. If your low risk and are following along, this might be a good exit at the 200/150 day MA range to see if that is broken. Play the risks as you see fit in your trades.

Holding Forever???

I think not. This is why I'm very hesitant to go short until we get a very clear break in the trend. First lets take a look at the overall market and see where we are. I only trade the S&P 500 at this time, but knowing where the other index's are is important as well. This is not a public chart of mine, but have used it in the past when we get to a critical level. Now I'm looking at the 6 month drop and how the current price is related to that via fib. retrace.

One focus is the 61.8% fib retrace and where these other indexes/sectors are into relation to it. RUT has some room but topping, along with NASDAQ. NYA also is showing a very interesting resistance line that we are getting to. XLF has a little more room left before we reach it's critical resistance.

Here is a look again at the SPX and my current (shortest chart out of the charts of 3's [30,60,daily]) If you notice you get a break in bearish divergence. I never really clearly defined this before, but in this chart you can see that it is clearly broken. If you look at my daily chart (see right side for my public charts to see) You do not have this happening. It's just starting to roll over and reaching the previous high (for CCI) for example that shows bearish divergence. It really depends on how active of a trader you are, but you can see on the chart below (30 minute) that you also have High and Low risk exits on bearish divergence break. I am still holding cash waiting for this trend to top and the trend line to break.

Bulls have won a very strong battle at the 1032~ish mark and I look at that as another level of support to break to get a correction from this most current rally.

Holding, Take 3!!!!!!

200 and 150 day MA's (1118~ish) seem to still support the market. 1118~ish is also the trend line support channel. If broken expect a down wave to end around 1110~ish, support from the weekly MA's.

Still Holding!!!!!!!!!!!!!!!!!!!

SPX has broken one critical support trend but is still held up by the second. Entry into a short position at any point here is possible with higher risk but i'm waiting for the second trend to break. Notice that we are now riding up the broken support now turned resistance. This is a major warning to the bulls as a topping process. I'm not saying we will not get a new high before the correction but the bull side is very risky at this point.

Holding !!!!!!!!!!!!

This bull run just doesn't want to stop. We got some top resistance @ 1130~ish. I still short on WSS but holding for this trend to break to go short with real money. We have broken past the 200 and 150 Day MA's @ 1118~ish. That will act as support now so we will have a 1130-1118 bounce around until one is broken.

HOLD!!!!!!!!!!!!!!!!!!!!!!

Chart update on current trade setup. Not ready yet, but it's getting very close.

New Trade Setup 9/09/2010

I am currently short in WSS but am out in my real cash trade account from the break posted from the chart below. I will re-enter short when this trend breaks. Looks like were in a tight gap for trading Top 1115 - 200&150 Daily MA's + 150 weekly Ma.. Bottom 1080~ish with the 10/50 daily MA's. Also 1080~ish is the 38.2 retrace from the 1010-1130 rally run. 1080~ish is alos the 50% retrace of the most recent 1040-1010 rally + support channel. Look for the market to flip over soon to get to that 1080 test. From 1080... I give it a 60% change to go lower and 40% chance to new highs past 1110. I'm betting the the 1115 holds out and we test the fibs from the chart below.