Long Arch Coal

Victory! Despite a very good presentation by the plaintiff's attorney, we were able to ward off the civil claims against my clients and leave the courtroom victorious yesterday by a unanimous jury verdict...although we did not win our counter-suit, but that's not surprising, especially since we really only filed a counter-suit for leverage against the plaintiff. It appears that the market continued its nose dive while I was in court yesterday and the market was pretty oversold going into the open this morning.

I opened a little position in Arch Coal (ticker ACI) this morning at the open. This is a stock that I've had on my watch list for a couple of weeks and I've been waiting for it to hit oversold levels. I told myself last night that I would go long ACI if the market opened in the positive today, which it did following this morning's GDP report. Here's the ACI chart:
We'll see how this one goes...the whole market seems a little shaky right now, which probably means it's a good time to open a new long position. I've still got a position in FCX along with a couple of energy plays...name of the game is commodities for the time being.

Have a great day.

TLT

Preparing for a Jury Trial

I have a jury trial set for tomorrow. This trial has taken quite a bit of time away from trading this week and I'll be out of pocket for at least tomorrow and possibly Thursday. I have closed out a couple of open trades as they hit my stop loss points but I have also opened up a new position as a small starter position. It will be interesting to see if the market continues with this correction or if the dip buyers will appear and keep the "most hated rally" alive.

Wish me luck, this will be a highly contested civil trial and there will probably be some fireworks. I will be representing the defendants who are being sued for 2 different issues, but we counter-sued the plaintiff so we may be able to not only ward off his harassing suit (which is all it is), we might be able to stick it to him at the same time...that will depend on how good a job I do. I'll let you know.

Good luck trading and keep an eye on energy prices, oil stocks look pretty bullish.

TLT

Weekly Wisdom Quote

"Not risking is the surest way of losing. If you do not risk, risk eventually comes to you. There is simply no way to avoid taking a risk. If a person postpones taking risks, the time eventually comes when he will either be forced to accept a situation that he does not like or take a risk unprepared."

David Viscott, M.D.
Commodity Trader's Alsmanac, 1989

Failed to Pull the Trigger: WFSL

Here's a stock that popped up on one of my screens on Monday and it had a near perfect trade setup...but I did not pull the trigger. I went long several stocks yesterday as the market started pulling back a little and I nearly bought WSFL, but for some reason I passed it up. Don't get me wrong, I miss all kinds of trades, even ones that I look at closely, but this one stood out to me...probably just because of the major pop that it had today.

Here's the setup:

• the stock is in a confirmed uptrend in the daily timeframe as it is trading above it's Volatility stops (ATR stops) and it's moving averages (20-50-200) are in perfect order;
  
• the stock pulled back on the daily chart to the point where the stochastic registered an oversold reading and, very importantly, the stock stayed above its Vstop level;
• the weekly chart shows a long basing pattern with a breakout above the vstops, the macd is bullish as it recently crossed the zero line, and there was a huge spike in volume on a break recently.

All of the above provide a great setup for entering a long position. Here are the charts:About as perfect of a setup as I could ask for and then bammm...the price rallied from 15.60 to 17 and some change. Like I said, this actually happens quite a bit, I just thought it would be fun to point this one out.

I'll post sometime next week on how my other stocks are doing. One that should be interesting is FCX, one that I've held since August and it continues to make new highs. Others include an oil play and a tech company. We'll see.

TLT

Follow up on the Eur/Gpb

Last week I pointed out a potential trade in the Eur/Gbp pair and asked if the recent dip should be bought. The time has come for the trade as the pair has pulled back to the 50 day exponential moving average and the TLT Trender v2 has maintained a green buy/uptrend signal. To top everything off, the Stoch hit oversold levels and is now turning up...a bullish indication. Here's the updated chart:Remember, this is just a trade idea, not a forcast of the future. This setup tells me that the Eur/Gbp is likely to move up from here but there is always the possiblity that the pair will keep falling and for that reason it is important to use proper position sizing and a hard stop loss.

I'll post an update soon.

TLT

Stock to Watch: TEX

Terex Corp (TEX) is making new 52 week highs as it breaks out in a strong looking trend. As you can see from the chart below, TEX broke out of a range back in September, had a quick pull-back and is now off to the races. The weekly chart is showing a rounded bottom pattern and the weekly MACD has just crossed the zero line...both bullish signs. Also note that it is trading above it's 20, 50 and 200 day moving averages and the averages are in perfect order (short averages are above the long ones). Here's the daily and weekly charts:Bottom line, I like this stock. It looks very strong. However, take caution as it is over bought right now and is probably due for at least a small pullback. The stochastic is overbought on the daily chart and I will wait for the stochastic to pullback to neutral territory before buying in. One last thing, I put a potential profit target on the chart just above $40...where did it come from? It's the 50% fibonacci retracement level from the weekly chart...it also happens to be the nearest overhead resistance.

Overall, interesting stock and it should definitely be on your radar.

TLT

Weekly Wisdom Quote

"Anyone who is unaware of the fool in the market probably is the fool."

J.P. Morgan

Eur/Gbp: Buy the Dip?

Some interesting action going on with the Eur/Gbp. The pair pulled back sharply this week and now the question is: Do we buy this dip? The pair is still in an uptrend as far as my system is concerned...the green bars are my TLT Trender v2 indicator and green means uptrend. We're gonna have to watch price action closely on the intraday charts next week to get a read on this situation. For starters, I'll be looking to enter the pair as it nears the 90.00 level...gotta watch those round numbers. Here's a daily chart with the TLT Trender v2 indicator:Buying pullbacks can be a very rewarding strategy, the only catch is that you have to be disciplined in setting and sticking to a hard stop level...as the pullback might turn into a reversal and you should be out of the position long before a reversal is confirmed.

Have a great weekend.

TLT

And the Rally Continues...

Equities continued to move higher today and I pared back a little by unloading some long positions. Did I sell too early? Maybe, but I've still got some exposure, just not confident in the current risk/reward in the market right now (a combination of earnings release risk and being short term overbought is creating my uncertainty). Here's a daily chart of the S&P 500 with my TLT Trender v2 indicator (the indicator that paints the candles green for uptrend and red for downtrend):As you can see from the above chart and comments, the Stoch is overbought and the fisher MA is positive but failed to make new highs. One thing to remember is that the fisher ma is lagging, given that it's a moving average, so it might just be gearing up for a move higher...the important thing is that it's positive because a dip below zero is a good indication that the trend is likely over.

Happy trading.

TLT

Weekly Wisdom Quote

"I learned that there are only two points of view: The other person's and the best one. What I think is of no consequence. Mine must become the best one. Nowhere is this more true than in a zero-sum game."

Trader X

Dancing With Lions

Today's Market Leaders

Keep an eye on these four individual stocks...they are certainly some of the market leaders that the rest of the market tends to follow. Bottom line, if the market is moving higher, these stocks need to be moving higher also and, more importantly, if these guys start moving lower, watch out! The four to watch: AAPL, AMZN, GOOG and GS. Here are the daily charts: What's there to say about AAPL besides...it's one of the strongest and most innovative companies out there and the market loves it...thus, we need to watch it.America's retailer...this is the new economy and Amazon is where it's at.Google rules the world right now...period.King of the club is "Goldman." As I heard on Bloomberg radio the other morning..."Where Goldman goes, so goes the market."

There are other important market leaders and some etfs, such as the emerging markets funds, that are helpful for gauging risk appetite but these four stocks are worth watching closely.These four alone will offer clues and insight about the market...look to them for upside confirmations and watch them for warnings of market vulnerabilities. The warning signs will be very significant because if and when this market makes a move lower, it will be swift.

Have a great weekend!

TLT

S&P Rallying After Earnings

The market is liking earnings right now...some notable movers are AA, GS and FCX. Goldman is an important stock to keep an eye on because it is definitely a market leader who's price action tends to dictate the tone for the market as a whole.

The S&P has been rallying in the futures market since today's close...good for longs. Here's a 30 minute chart with today's action with the TLT Trender v2 and a nifty short term volatility indicator:We'll see what the follow through looks like for tomorrow and we'll have to keep an eye on the 1078 gap level that is quickly approaching.

TLT

I Bought the Market Today...

Went long with a leveraged ETF today as the S&P began pulling out of oversold levels. Will it continue going up? I don't know, but you have to be willing to step up and buy during times of uncertainty when you see a tradeable setup. For me, the setup is a pullback to oversold levels on the stochastic while an uptrend stays intact...the uptrend is indicated by the green bars painted by the TLT Trender v2. Here's the daily chart that shows the oversold level and the green bars:The daily chart gave me the signal to start looking for a long entry and a specific stop loss level. To determine this, I use the TLT Trender v2 on the 15 minute chart along with a volatility indicator to pinpoint the entry. The volatility indicator looks for rising short term volatility, which confirms a breakout. I'll post later on in the week about the volatility indicator and how I use it...don't really have time to right now.

Hope everyone's week is going well so far.

TLT

Weekly Wisdom Quote

"Anyone who buys or sells a stock, a bond, or a commodity for profit is speculating if he employs intelligent foresight. If he does not, he is gambling."

Richard D. Wyckoff

Action in the VIX

Watch the VIX levels. Look for the VIX to confirm moves in the equity indexes. It's at a pivotal rally point where it will either briskly fall back down (and stocks will keep rising) or it will break out of it's current range (and stocks will fall). All of the recent rallies have quickly fallen back down...will it happen again? Here's the daily and weekly charts:Have a great weekend!

TLT

Bearish on the GBP/USD

The Pound recently attempted to rally against the dollar--a rally that could have provided a tremendous break out but it failed. Now the Pound is looking rather bearish and I present these two charts to illustrate my opinion. The first is a daily chart of the GBP/USD with the TLT Trender v2 indicator (an indicator that paints the candles green and red) applied to the chart. As you can see, the TLT Trender v2 has given a fresh sell short signal which indicates that the trend is down for the time being (note that the TLT Trender v2 is a trend following incidator and as such, it can give many false signals when the market action is choppy because trend following systems take lots of losses while waiting for a big trend to emerge). As noted on the chart, I'll be looking for some new short term lows to confirm the bearish trend on the daily time frame.

Next, lets take a look at the 4 hour chart.The most important thing to take away from the above 4 hour chart (besides the red TLT Trender reading) is that the prior 3 rallies have sold off rather quickly. This indicates that the market does not have faith in the pound and traders have been fading the rallies. So how am I going to play this? I will look to short the pound whenever the stoch on the 4 hour chart hits the overbought level as long as the general trend of the currency is bearish as indicated by the TLT Trender v2, however, I will use hard stops to prevent losses in the event that the rally continues upward...always a danger when fading rallies.

I'll post another update on the pound within the next week or two.

TLT