WINNing

I couldn't help it...a Charlie Sheen reference is just to good to pass up.  But seriously, $WINN is exhibiting some interesting trading and it looks like it's ready to explode to the upside.  Check out the daily chart:

WINN is setting the stage for an accumulation break out.  After long sideways consolidations, these types of moves can be rather large.  Personally, I've taken out options positions for this trade as the options on WINN seem a little cheap...probably because of the lack of volatility lately.  The confirm dots in the chart are just a trend following indicator that I've been playing with that seems to have some promise.  It's basically just an updated version of the turtle trading break out method with a couple of small twists.  I'm finding that combining different trend following models that base their signals on different variables offers good trades.

I'm pretty sure Charlie S. would give WINN the Warlock seal of approval (okay, no more Charlie Sheen references).

Have a good weekend.

TLT

$SBUX, Trend Following and New Nifty Add Arrows

One of the few winners today was Starbucks.  The market gave a very favorable reaction to the news of Starbucks and Green Mountain Coffee working together for a Starbucks single serve coffee.  Notice that this stock is in a Strong Up Trend, as indicated by the rising price and the "Strong Up Trend" label in the top left hand corner of the chart below.  This chart shows the latest version of my trend following indicator, the TLT Trender.  I've been referring to this one as Trend Fuzz, as it uses a little fuzzy logic to help determine trends and add levels.  Here's the chart:

Note the Nifty Add Arrows.  This is a very new addition to the system that I finished coding today.  They seem to have promise, although I haven't fully tested them yet.  For those of you that read Moaxian's blog, recently you've heard him mention the importance of adding to winners.  There's a lot of truth to this, as the point of trend following is to suck out as much profit from good trends.  I'll post more about this once I spend some more time on it. 

For now, we need to add SBUX to our watchlists, as it is showing amazing relative strength. 


TLT

Maybe time to buy the dollar now...right now?

In a recent post, I outlined a trade idea that had to do with buying the dollar when it touched the upper linear regression trend line. If you haven't/didn't read the post, here it is. Coming up with ideas for trades can be a very helpful exercise but being flexible and nimble in your forecasting is a prerequisite for successful trading. Unfortunately, the Eur/Usd pair has not rallied back to my entry target but that's okay because I can tell when I'm wrong and I was wrong...at least for the time being.

Here's an updated 4 hour chart of the Eur/Usd pair:As you can see from the above chart, the Eur/Usd did not hit it's upper regression trend line. Although that would have been an excellent entry, it's not mandatory for a good short entry into the pair (short being long the dollar). Actually, my trend following system just flashed a sell signal and I've taken a small position with the intention of adding to it if it starts making money.

Below is the same chart as above but, it's zoomed in so that you can easily see the sell signal. Here it is:The red circle outlines the sell signal from my system. Notice that both lines around the price are red (this is the multiple trend following systems signals) and the bottom histogram (BB width) is above it's break out zone (the purple line). These signals tell me that it's probably time to sell the pair (buy the dollar) because it's the path of least resistance. We'll see how it plays out...because nothing is even close to a sure thing and my trend following signals are certainly not an exception.

On a different note, here's my weekly ranking with the CNBC portfolio challenge. Like I said, I'm not actively managing my portfolio anymore, I'm just going to let it play out. As you can see, I finished the week in the top 0.2% of the challenge but I've actually fallen back to the 961st position...apparently lots of participants had huge gains on Friday because I actually had considerable gains but still fell back position wise. Here's a screen shot of my ranking:
Next week should be really interesting, both with currencies and stocks, and I look forward to posting some opinions on the price action. Be careful trading because we seem to be at a potential turning point...especially with stocks.

Good luck out there.

TLT

LIve Trade: USD/CAD

Tonight I caught a great sell signal with my trend following system on the USD/CAD and entered a trade. The signal was generated in the 5-minute time frame. Here's a shot of the chart. The sell signal is highlighted with the red circle. Notice that both trend lines are red...that's the sell signal. Also, in the top left of the chart, the signals for the different time frames around the 5 minute period all say down or indicate that they're about to say down. The final factor that confirms the sell is the BB width indicator at the bottom of the chart. The BB width line is below the green line and it's turning up, which indicates the currency pair was basing and is beginning to break out.

This is pretty close to an ideal trade for me as all the indicators are working in conjunction with one another. One final thing to note is that the pair is selling off rather quickly and it continues even while I'm writing this post. I've noticed that price moves that immediately follow and confirm a buy/sell signal generally have a better chance of moving further than when the price stalls after a signal. Odds are that this trade will close out while I'm asleep tonight considering that its about 10:30 p.m. right now. I've already entered my stop and limit orders so everything is on auto-pilot now. I'll check the outcome in the morning and post a follow-up chart to show how it plays out.

Good luck out there.

TLT

Multiple Trend-Following Systems Combined: Attempting to Achieve

Lately I've been exploring the use of a couple of independent trend-following systems used in conjunction with each other. I have finally found something that seems to work like I intended when I undertook this project. It combines 2 separate trend following systems and it waits for confirmation from both systems before an entry is generated.

Basically, it combines a moving average crossover system with a volatility break-out system. This seems to work pretty well, however, there is still room for improvement. The improvement comes with multi-time frame analysis. For this, I've integrated a brilliant indicator that tracks MACD readings for 9 different time frames (look at the upper left-hand text within the chart below). Below is a screen shot.In order to get a signal, there must be both green or red lines on the trend following signals (the band looking lines that surround the price and change color: green=buy, yellow is caution/sell, and red is sell/sell short) and there must be a correlation to the signals with multiple time frames on the MACD for an entry. Just how many and which signals I will leave for you to experiment with...if you're so inclined. I've found that it depends on your time frame and also on your profit target.

Bottom line: combining volatility and moving averages with multiple time frame readings can give you some excellent trend following entry signals. Just remember, the hardest part of trend following is getting out of the trade. Trading is like law in that you always practice it(as in "practicing law") and there is always room for learning...no matter how long you've been doing it. I give you these ideas in hope that they will influence a trader to think a little more or maybe even for someone to turn the corner and become profitable. It's one big challenge that attracts the best of the best...and we all hope that's us.

Good luck out there.

TLT