Trading Plan – The weekly chart is not yet indicating direction.
Looking at the weekly chart on the S&P500 emini futures market for April 2016. In our trading plan let’s look at this past week. Once again, we see last week’s price action is contained within the previous candlestick’s high and low, with a down move of 25 points. This indicates no real direction for a continuation for this week. The range last week was 40 points and showing more commitment on the seller side volume.
The sellers have taken a little of the steam away from the buyers but have not made a big enough commitment to carry through to break the next level of support. Watching for the buyers to move in and bring this back up 15-20 points before loosing momentum and turning back over to sellers to continue this move down the previous psychological support level around 2000.
If we see large buyer support at the 2000 area and some follow through in the days that follow this could be enough to engulf this past weeks price action and keep moving towards the market highs of 2100.
If we see sellers commit to more volume and a move through the 2000 support then we could see a test to previous swing lows shown at 1975. **Note the uptick in volume last week on the sellers moving in.**
Where could the top be for this Trading plan?
Resistance may be coming in at 2065, with the previous swing high in 2087-2092. Our long term market high is 2100, psychological resistance, which remains as a good target for buyers. This was tested last year in May, June and July of 2015.
The weekly chart is an easy way to catch the direction of the market. It shows you the price action without all the noise and makes the major support and resistance from trend lines and previous price action very easy to follow. Using these previous swing highs and lows, you can then transfer them to a shorter time frame for targets and risk management.
Trading is high risk and care should be taken, if you are not familiar with the market it is best not to trade it at all. Using a trading plan can be part of your risk management. Always trade with a stop, and never risk what you can’t afford to loose.
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March 30, 2001 we have a cross with divergence showing us a 600 point sell off from highs.
December 31, 2003 Bullish cross with a 700 point rally to the up side..
July 31, 2008 a bearish cross with a 900 point sell off from highs.
April 30, 2010 bullish cross with a 1450 point move to the upside.
May, 2016 upcoming cross or continuation to the upside?
We shall see.
Standing on this what is considered to be an over bought market, where the markets have bought too much, risk is not represented with a 0% interest rate, and a Central Bank policy of never ending printing and purchase of bonds and stocks. A reversal may not occur.
The question is: What kind of intervention will we see on the next sell off?
Will the Fed save us if we retrace to previous support and then sending us on to our next round of highs for 4 more years of corporate expansion?
Upside target of 2950.
Is this our reality? If you see that the market has direction then buying the dips could be part of the monthly trading plan.
If we break the major support at 1800.
If The market reverses, our next major support is 1550 to 1580 then 1350.
Major sell off support at 950.
We shall see.
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Traders have many superstitions which are backed by some correlations and timing. One of these is: as the first day of market goes so goes the week, so goes the month and so goes the year. If this is the case then this could be a down year for the market. We have a few more days to go so we shall see.
Inverted Head and shoulders could extend the buyers move up to resistance 1911, 1940, then 1956.
If sellers execute off this possible flag pattern, then we could retest the support at 1865, 1849. then 1804. If the market sells off then watch for 1769.25 as next major support.
Lots of volatility headed into this market with no clear direction in this consolidated area with smaller range candlesticks during this past week.
Will we confirm this past move down to 1804? Will we execute off of support and buyers control the next move up from the Inverted Head and Shoulders?
Conflicting patterns. Short term day trading of support and resistance based on commitment of traders are giving the most solid signals.
Next we look at a trading plan for Gold and how buyers are getting squeezed on all the reversals from lows. News is pushing this market around with a lot of volatility. If you are new to trading it is best to stand on the side and practice your entries and stop management in a simulated trading account. There is no real direction in the market with a lot of media claiming we are oversold. This could be a consolidation zone where the market is resting to gain strength either for a reversal or continuation of the move down. We will see who commits to the direction of the market soon as our daily price range is decreasing.
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With the Fed raising rates by .25% this past Thursday I have received many questions about this supposed bear market that the US. First let’s look at the S&P500 emini futures.
A bear market occurs when the market stays below a 20% move from the swing highs.
On this daily chart, we can see the high was 2100. If we take off 20% from the high the price the market would have to stay below is 420 points lower around 1680.
A bear market will occur when we are below the 20% drop in the market from its high.
Presently, the buyers are still in control to the blue zone where sellers will have to be in control to keep direction moving us towards the Next blue zone around 1700.
The market is in a consolidated range. We are in a 200 point range where price is looking for a commitment to either move higher or lower. Our present pattern is buyers are in control so we would be a buyer of dips, until price breaks below 1960 where sellers are in control for the short term.
If you look at a 20% decrease in the price of gold from 1900, then price below 1500 will be in a bear market.
Price has been below $1500 since April 2013. We don’t know when it will change direction and become bullish, but as US debt increases many of the “Gold Bugs” believe it is bottoming.
Technically, gold looks like it still has a little bit more to go and could break the psychological $1000 an ounce soon.
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We started the week thinking the S&P500 emini futures could be heading to new highs, even though the news was nothing exceptional which normally means a rally, sellers moved in and took control of the direction.
Sellers took price to through the 200 MA just as we were getting the Bullish Cross of the 50 Moving average and the 200 Moving Average.
Support has come in as the previous swing lows just above 2000 (the psychological support)
1998 to 2004 is first support, next support coming in at 1980
Then Previous point of control at 1960 for direction and possibility of moving to 1938.
Where will be the major supports for a major sell off? First we would look for 1860 then a double bottom at 1820 confirming the previous swing low on major seller price action. These are the targets for a sell off.
|Dec 16||2:00 PM||FOMC Rate Decision|
Stay away from the news on this, you are going to hear them crying over which way to go and how it could effect this or that and give us some of the biggest margin calls in history and the collapse of the bond market.
Trading the News is for the il-informed trader. Never speculate.
Stay away, wait until it has direction and then join in. Don’t try and guess the markets. Wait until you see the direction of the market.
Normally when everyone is crying doom and they bring out the doomsayers you haven’t seen in years, I would search for the contrarian positions. It seems like everyone is thinking “this could be bad”.
I am watching for consolidation on both Monday and Tuesday with a possible move down to the next support level.
Being a buyer of dips could be expensive here as there could be quite a bit of volatility.
Remember, you don’t have to trade. You can wait for a market condition you are more familiar with or you have experience trading in with proper risk management.
It is the end of the year, do a little self reflection, write in a journal, project where the markets could be going. Go over you system and see what works, needs some work and what could be thrown out. The key is mastering the education you have and leveraging it a risk management system that protects your capital.
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With the world in a slightly precarious position with Russia and the US squaring off for Dog fights over Syria and Turkey, Europe invaded by refugees, and China in the US playing Chicken over an island with an air strip you would think that gold would be skyrocketing like all the closet crazy economists have been saying (for 3 years). But gold is not playing. Gold is not playing by the rules which everyone is expecting. In fact gold has just showed us the the Key resistance of $1200 is not where it is going and that there will be a squeeze and stop run to a lower support.
Today we started with just over a 2% sell off and have slowed as we moved into the Japanese open where the BOJ Bank of Japan has announced it will not be easing for this quarter. Boo hoo, the US has to get another patsy for stock buying and currency devaluation.
Needless to say, it does look like we could be consolidating in a $150 range that could be quite profitable if you can buy on the dips and sell into the resistance. Gold trading is very risky and you can have a lot of exposure defendant on your leverage and how you manage your risk. It is best you have a Gold Trading Plan.
$1132 is a major decision point for Gold. We can consolidate in this range or if sellers step in, we could see a move back to the psychological $1100 and possibly a move to previous swing lows around 1077,
Watch for slow periods, most traders get caught in a dull market. This is where we can see agressive buyers move in and blow out any short sellers. If we do break below $1077 then watch for a move for a full extension that could test to the $1000 area. I don’t see anything pushing the market this far. But be forewarned, when gold price action slows down, it is normally to break to new levels. The last two and half weeks have been slow. We are just approaching the resistance on this bearish trend so watch your risk.
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The US Dollar index has a Death Cross (see previous article), this could be a turning point for the dollar or it could be a brief period of consolidation then a continuation to new highs. Presently, price is at 94.90 area and has been moving down breaking a supporting trend line. If the dollar index price closes below this area then we can look for a continuation to the next support at 94.255, the previous swing low, which could be support. If sellers pick up volume we could see price test to 92.60.
The volume on the Dollar Index DX 12-15 is decreasing with a slight bump up on the daily as sellers moved in breaking the supporting trend line. Take note that from the move down on August 21 we have large capitulation volume sell off. this topped 140,000 contracts. average volume this past week has been 26,704 contracts and has been under the weekly average drawing it down.
Sell side to support through October, will be selling the rallies and shorting in to any continuations if meets risk criteria. November, watching for a buy side opportunity after some sort of downside support or capitulation revealing the Market Makers levels. November is typically a strong month for the dollar index, although last year we saw mostly consolidation.
China is also back from vacation and it looks like they will continue their own Quantitative easing program. Their best interest seems to devalue the Yuan. More on this later.
Outliers to watch for: Ukraine has been quiet as the US has been played out of our unseating of Syrian Assad. This could be a hot point as many international player have brought planes, boats and missiles to the game. Europe, could see more unrest as immigrants fleeing the previously mentioned situation are thrown into the winter months and no place to live. Demonstrations could be on the social menu both for better living situations, and those opposed to the refugee numbers moving in. There are to many financial outliers to list as derivatives, ETF’s, credit swaps, and other financial products are soaring.
Next week, more on the catastrophe hedge, Gold.
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The death cross is used in technical trading and occurs when the 50 moving average crosses the 200 moving average on a daily chart. This can some times show a reversal of the general trend. The implication of the Death Cross is that we are switching from a long term bull market to the beginning of the bear market Sometimes it can also show a correction for a further continuation of the major trend as we saw in 2011. Presently we are in the middle of this pattern and haven’t seen the break in either direction. In this chart it could mean that we are in a start of a Bear Market.
We’re focusing on a daily chart for the S&P 500. Price action on the S&P 500 is in a consolidating range from 2020 to 1830. There is an 80 point range which buyers and Sellers have been pulling price around. Price under the 50 MA has been very volatile.
In early September we experienced the “Death Cross” Where the 50 moving average has crossed the 200 moving average.
This happened four years ago, August 2011, where we had a similar pattern of a selloff with a consolidated range where buyers and Sellers were fighting for direction and then after 4 tests down on the daily charts we passed through the 200 Moving average and then continued in The bullish direction of the market. Once price broke through the 50 moving average and the buyers were in control price tested back to the point of control where support was found and then we continued back through the 200 moving average and on to new highs.
The Death Cross can be a reversal pattern or a continuation pattern. Joel Wissing
The Death Cross typically means the 50MA has crossed below the 200MA signifying the emergence of the bear market. This is where we will see a dominant selling of rallies until Market makers have flushed out the investors. This will give Market Makers a new base to trade from as they start to accumulate at the lower price levels.
Watch for support and volume at the approach of the support and resistance levels.
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Calgary Day traders is inviting Joel Wissing to lead a three day Money Maker Edge™ trading session October 17 to October 19, 2015. We will have two days of intense training and one day of live trading with a professional trader. The Calgary day trading course focus is to get fundamental skills for Mastery, you don’t have to trade alone there is 25 weeks of follow up in a live trading room included.
Calgary Day traders is Alberta’s largest group of traders which meets monthly. More information here:
We will be covering:
• Business strategy
• Trade rules
• Recording and quantifying results and keeping a trade journal
• Precise Entry points
• Price and Direction
• Trade Strategy
• How to set daily targets.
• When to trade and when not to trade
• Trading plan
• How to let the trades come to you.
• Trading with targets and how to manage risk.
• How to get your income, wealth and freedom trading.
• How to spot the highest probability trade
• Mastering your strategy
• How to be responsible for your trading and level of choice in the market.
• Specific times to trade and not to trade.stoc
• Responsible trading practices
• The real working s of the market place and how to use these to your advantage.
• The difference between direction and hope.
• How to enter the trade and minimize risk.
The markets mirror many natural conditions and environments. This past week we have seen the first group of three class 4 hurricanes in the pacific in recorded history occurring at the same time.
Global Class 4 market conditions.
There is just so much financial fraud you can inject in the system before the storm washes it away.
Financial Fraud is happening in the world wide markets.
The VIX in the US has hit new highs. Much like 2008. There is a global meltdown. This makes the 2008 crisis look like a light mist compared to the storm on the horizon.
It will be lead by:
The reality is interest rates are so artificially low that the ponzi scheme they have played for 10 years all the money rushing in went to the emerging markets causing collapse.
Markets like Canada (soon to be in a recession, property bubble in commodity’s regions and currency collapse), Brazil (currency at 37 year lows), Australia (property bubble and dollar about to collapse), they are going to suffer as their currencies continue to loose in the international marketplace and inflation. Commodities are the only market which expose the financial Con imposed by market manipulation and the Fed’s artificial rates. The Bloomberg commodity index is below the 2008 Financial crash levels with our markets still holding at only a slightly corrected price.
Money forcing rental rates up in London, New York, Vancouver and San Francisco are actually flight money from the international rich moving(escaping) to safe havens. The worlds weathy are moving into these safe havens to protect their money and the lives. There are more Russian billionaires in London and New York than in Russia. Property prices in these cities do not reflect a robust economy, the reflect the growing gap from rich to poor and that middle class incomes will displaced from these cities as the prices go higher.
You have probably seen the presstitutes releasing articles like this:
Libya, Syria, Afghanistan, Iraq and the poorest countries like Yemen are bombed out and refugees are flooding out probably not to return. The press is calling it migration, the truth is that these people are refugees from a war torn environment that can not support the inhabitants. Europe should be sending the US a bill for the refugees fleeing from our corporate sponsored war in the middle east and Asia minor. This will be a tragedy for Europe as we see the poor rushing into countries that can not employ them. These refugees will more than likely never return to their home countries. Millions will be fleeing.
This could signal the start to the end of what we have known Europe to be. Get ready for the borders to close, restrictions to travel to occur and an ever increasing unemployment rate as millions from Asia minor, and Africa pour into an unprepared and unorganized EU political base. Watch as gradually each country will declare that they solely determine the number of refugees allowed in and then Germany have to pay for them.
Rental affordability has steadily worsened in most cities across the US. Median rental rates are now over 30% of renters income. The quantitative easing and suppressed interests rate has made it so that companies like Blackstone and Berkshire Hathaway can own and control countless billions of US rental properties.Huge private equity groups are buying single family homes and apartments across all the top tier housing markets in the US. Even ghetto rental rates have increased. Warren Buffet also swooped in and bought properties at 10% of market value now to charge the highest rental rates in US history. 30 % of midtown Manhattan is occupied less than three months of the year. Los Angeles renters now devote 49% of their income on rent. This is the norm? We have a global deflationary class where their real income is decreasing, real wages are decreasing and their rents are increasing and the fed induced mis-allocation of capital which created a glut in supply which you can see in the Baltic dry index (which has collapsed). The price to send goods from China (the worlds manufacturer) to Europe and US (the consumers) are at the lowest rates since early 2000’s. This reflects part of the global slowdown.
The normalization of interest rates that the FED mentions is not enough to balance the risk in the markets and the amount of leverage that plutocrats use for hard assets stolen from the middle class.
Social and Geo political storm is on the rise. The world economy is in a recession and the refugees headed into Europe from the middle east and Africa will create the next biggest unemployment and social storm to hit their markets. A complete market collapse in Europe could occur as the social and financial implications of the Central Banks destabilizes and creates more inequities between the rich and the middle class which is the new poor.
Low interest rates, market manipulation and destruction of the middle class will create the financial storm that will prevail this next few years.
China is not the point of this world correction or the reason the world is going into a recession. China has acted as the catalyst for world supply and demand this past 12 years being a major supplier of cash to purchaser of US treasuries, and a large part of demand for international commodities consumption. The Bank of China is interceding in their market place and going by the play book that the US has used many times before. Although jailing journalists for using inflationary speech is a new way to control the market. This is actually not effecting the international market place as much as the devaluing of their currency and the probability that the next steps are going to be devaluing their currency more through some sort of quantitative easing and no longer purchasing US treasuries. We could even see an increase in Treasury note sales by China which in effect could be reversing the US’s own quantitative easing. So blaming the Chinese for an international recession is not even close to reality as the US, Europe and other countries have had a full out currency war this past few years and injecting money in to markets through artificially low interest rates so corporations buy their own stock back..
The Fed has lost its way, interests rates used to be valued to the amount of risk, and the present rates do not reflect risk.
What is your planB?
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