Posts Tagged ‘patterns’

Long Downside Wick…Dollar testing support

Long Downside Wick…Dollar testing support

By Chris Kimble

Downside wicks usually take place at market lows or at support.  The chart below, highlighting several downside wicks and a bullish falling “PATTERN” was the reasons to go long the 5oo index on 9/1  (see post here).

Click on Chart to Enlarge

The S&P 500 had its best September in 70-years bouncing off this support, after it created these “downside wicks.”

The U.S. Dollar is testing key rising support and created a fairly long “DOWNSIDE WICK” yesterday, in the chart below.

dollar chart

Click on Chart to Enlarge

With the Dollar on support, only 3% Dollar bulls and now with this long “downside wick” taking place, all the more respect for this pattern is at hand and understand that a rally in the Dollar, could be ugly (see post here) for many asset classes!!!

KEEP STOPS TIGHT TO PROTECT GAINS…


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Danger Zone? Nasdaq 100

Danger Zone? Nasdaq 100

Courtesy of Chris Kimble

Are we entering a “Danger Zone” right now?

The phrase “Highway to the Danger Zone“  (theme song here) became popular due to the movie “Top Gun,” starring Tom Cruise. 

I share information with several types of investors…long-term (retirement/401k plans) that don’t move monies often, (which “harvested” at the April highs).  Medium term investors, that feel comfortable moving monies once a month/6 weeks and shorter-term investors that are open to adjustments frequently, yet are NOT day traders. I am not interested in day trading!!!

This post would be for the shorter-term audience, that are aggressive and open to “attempting to score on defense!”

The NDX 100 is at the top of its trading range and the VXN has created a falling wedge.  During this trading channel,  when the NDX is at the top of the range, wedges have formed, followed by lower prices in the NDX. 

For any medium-term investors that are long the NDX, stay long and keep the 3% stop in play!   For those aggressive short-term investors that are comfortable attempting to score on defense, take the inverse position here (Buy PSQ).  Momentum and trends remain a positive so far. This is totally a “Power of the Pattern” play for short-term investors. 

If this pattern really forces the NDX lower and changes it momentum, I will follow-up with more suggestions per scoring on defense. 


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Cyclical Growth, Form and Fibonacci

Here’s a terrific article by Tim at The Psy-Fi Blog about Fibonacci numbers and Elliott Wave Theory.

Brief Intro:  Elliott Wave Theory, introduced in 1933 by R.N. Elliott, is based on Fibonacci numbers and is used to describe market trends.  Robert Prechter’s socionomic theory is an ambitious "theory of everything" based on Fibonacci numbers and fractals (patterns in nature), and extending to the ups and downs of markets, social mood, length of women’s skirts, measures civil unrest such as crime and war, etc. The theory is that all are related, dictated by the numerical series. How, is never answered unless you go mystic. While Elliott Wave counts appear useful for traders, the reason may be that many others use these numbers and patterns for determining buy and sell points. Also, the general notion that markets go up and down in waves, reflecting our collective psychology, makes sense without the grander notions of an all encompassing theory. – Ilene

Cyclical Growth, Form and Fibonacci

Courtesy of Tim at The Psy-Fi Blog

Ancient Ideas, Modern Setting

As an up-to-date in-your face sort of blog we like to make sure our readers are well informed about the financial world as we see it. So, starting back in Ancient India in 200BC and taking in medieval Italy and some early twentieth century anti-Darwinian evolutionary thinking let’s take a look at plant growth and snail shells, how twentieth century humanity’s inclination to see the Man in the Moon translates into modern financial theory and why physics may simply be wishful thinking.

At the root of this journey is a simple mathematical progression named after a man who never discovered it and was more concerned with accountancy than trading. Still, he’s still remembered a millennium after his death, which is more than most of us can ever aspire to.

The Golden Ratio

In 1202 the Italian mathematician Leonardo of Pisa, aka Fibonacci, wrote Liber Abaci, a book which has three claims to fame in financial circles. Firstly it was one of the first books to introduce the Arabic numbering system to the West. Secondly it laid out the foundations of modern bookkeeping. Thirdly it presented the number pattern known as the Fibonacci sequence, although this had been known long before by Indian mathematicians. Only the latter has little significance in the development of science and business but, naturally, it’s the one


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Insiders

Are insiders still NOT buying?  Allan looked into this question and reports as follows. 

Insiders

 
Are Insiders Buying or Selling?

So what if they are?

What do they know?

With the help of the following charts from SEC Form-4, an excellent service for Insider Buying/Selling data, let’s see if we can’t answer these questions.

Starting with a couple of sector-specific charts, since they reveal so much, so clearly and unequivocally. [Click on charts for larger images]:

Technology

 

insiders buying and selling
The above chart represents the ratio of Buys/Sells by insiders in the Technology sector (blue line). Against that ratio is plotted a chart of the Nasdaq (red line). Notice how all of the peaks of insider buying corresponded with important market lows. Conversely, all of the lows in insider buying correspond with important market highs. Finally, look at how insider buying in technology peaked at the November, 2008 lows and then peaked at a lower level at the early March, 2009 lows.

Financial
 


insider buying and selling
Same analysis, same colors, same uncanny correspondence of Insiders buying/selling at key market reversals. The only difference is that unlike in the Technology sector, the peak of Insider buying in early March, 2009 was higher then the peak in November, 2008.

Total Market

insider buying and aelling
Opening the same analysis up to the total market, a similar correspondence is evident. It looks like insider buying levels currently are about what they were in the first six months of 2008. We all know what happened next.

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Insiders – Part II

Here’s Part II of the insider buying/selling study, more charts.  Courtesy of Allan.

Insiders – Part II

 
insider buying and selling
[Click on charts for larger images.]
 
Above weekly chart of the XLF Financial ETF annotated with the levels of Insider Buying from previous post.

insider buying and selling
The above weekly QQQQ chart with Insider Buying annotations.

Below, weekly SPY chart with Insider Buying annotations:

insider buying and selling
***** 

For a free subscription to Phil’s Stock World, click here (it’s easy, no credit card required) – Ilene

 


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Kimble Charting Solutions

Banks Creating Pattern Similar To 2007 Highs?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The left chart above looks at the Bank Index (BKX) over the past 13-years. In 2007, the index diverged with the broad market as it was creating a bearish descending triangle. Once support of the descending triangle broke, selling pressure ramped up. This pattern took place while “interest rates were actually moving higher, which is often good for banks.”

This year the bank index has been diverging from the broad market while forming a bearis...



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Zero Hedge

Italian Bonds Slide After Official Warns Credit Rating Downgrade Possible

Courtesy of ZeroHedge. View original post here.

After starting off strong, Italian 10Y Yields have leaked wider all morning after a senior government official said on Wednesday that Italy’s 2019 budget may be rejected by the European Commission and a credit rating downgrade is also possible.

"Let’s say that the premise is there" for the commission to start an infraction process over the budget, Stefano Buffagni, cabinet undersecretary for regional affairs...



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Insider Scoop

Marvell Holds Attractive Risk-Reward, BMO Says In Upgrade

Courtesy of Benzinga.

Related MRVL Benzinga's Top Upgrades, Downgrades For October 16, 2018 The Week Ahead: Q3 Earnings Season, Canada Decriminalize...

http://www.insidercow.com/ more from Insider

Digital Currencies

Tether Tumbles Below Critical $1 Threshold As Dollar-Pegged Crypto Doubts Soar

Courtesy of ZeroHedge. View original post here.

Update: Careful to quickly assuage any potential loss of the narrative and 'full faith and credit' of the 'stablecoin', Tether released a statement on USDT drop:

"We would like to reiterate that although markets have shown temporary fluctuations in price, all USDT in circulation are sufficiently backed by U.S. dollars (USD) and that assets have always exceeded liabilities."

See, nothing to panic about.

*  *  *

The only cryptocurrency not rallying right now is the one pegged to the U.S. dolla...



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Chart School

Weekly Market Recap Oct 14, 2018

Courtesy of Blain.

Wednesday and Thursday finally brought some fireworks to a very complacent market.   The S&P 500 had not had a 1% move in 74 days until Wednesday’s drawdown.

Rising yields were nailed as the culprit but months of rallying eventually require some sort of shake out – whatever the catalyst.  Wednesday’s sell off was the worst day for the S&P 500 since February and the worst for the NASDAQ since June 2016.

The market losses are “a reaction from investors finally realizing we are in a higher interest-rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Higher interest rates typically bring on tighter ...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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