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Monthly Archives: July 2012

  • Downside Up?

    Hawk’s Scan Sentry Report July 30

    This week’s analysis of the S&P futures contract is nearly the opposite of last week’s.  As I see it, the path of least resistance now is to the upside. Nonetheless, I expect the American equities markets to begin the week by moving lower than they ended last week.  Here is why. The rally which began on Thursday and continued on Friday managed to confirm higher lows and higher highs… the textbook definition of an uptrend.  Yet, since our shorter term charts are showing bearish divergences and some overbought indications, this suggests that we may see some downside movement in the markets early this week. The medium term outlook at this point, however, is bullish.   The daily S&P futures chart shows bullish indications from Radars 1,2, and 3 as well as the from the Triple Trender; and to top it all off we just got a bullish Pullback 23 signal too. As mentioned last week, since Friday closed above the previous resistance level of 1375,  I am now anticipating tests of the previous highs above 1400. The key is to watch the Radar1 Fear/Greed indicator to see if it keeps making higher highs. Until it tops the previous high from July 3rd on the daily chart we are going to continue to have bearish divergences. We all know, however, that a market can rally for quite a while in spite of  these divergences.

    As I have said before, when trading these markets we must be as objective as possible and allow our outlook to be as dynamic as the markets are themselves. It is important not to be blinded by past expectations or our current positions. As wiser men than me have said, “Hope is not a trading plan”.

    As always, I will be prepared with opportunities both long and short. To create my weekly watchlist I use the Arps Scan Sentry Tools. I’ll share with you below some of the equities on my list this week and why they are there. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    CVH

    ( A breakout of the down trendline accompanied by a bullish Pullback 23 and preceded by a nice bullish pivot divergence in the Radar2 Price Leader. This causes the Triple Trender to synchronize bullishly. Also note the strengthening Radar1 Fear/Greed indicator).

    AMGN

    ( A breakout of a Bull Flag pattern to new highs accompanied by a bullish Pullback 23 ).

    WIBC

    (Another breakout to new highs. Note the recent Pullback 23 ).

    _____Shorts_____

    AMRN

    (Denied at the $16.00 resistance level with bearish divergences in Radars 1 & 2. Also, on Friday when the rest of the market was blasting off, this dog went down… a lot ).

    APKT

    (We tested new lows and pulled back to the level that was previously support. We are in the midst of a Bear-Flag breakdown. Note the bearish divergences in Radar2 Price Leader. Also note that Radar 1 Fear/Greed just turned bearish again after a pullback divergence).

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.
  • Up, Down, or Nowhere

    Hawk’s Scan Sentry Report July 23

    It’s important to remember that markets can go in three distinctly different directions. It can go up, it can go down, and it can go nowhere. Truly, it is when the market is churning sideways that traders’ often experience draw-downs on their accounts. This is because it is more difficult to make money when the trend is weak as it has been for the past month. So please be careful during these dog days of summer. These days, I’m doing better with my day trading account than my swing trading account. That is because it’s easier to find and work with trends on the shorter term intraday charts in markets like our weakly trending current one. Using intraday charts  doesn’t matter to the indicators I use; the technical analysis works the same way on intra-day futures charts as it does on daily and weekly stock charts.

    As predicted in last week’s blog, the S&P e-mini futures contract started the week by going down and testing 1340 where it found support. Then, on the bounce back up it found resistance around 1375 and created a double top there, which is commonly a sell signal. In the process we can now start to identify on the daily chart a bearish pivot divergence forming in our Radar1 Fear/Greed and Radar2 Price Leader oscillators.  To me this indicates that the near term path of least resistance is once again downward for this market.

    If we drill down to an intraday 180 minute glimpse of the same contract we can see the same divergences, only the last two or three days have formed compounding bearish pivot divergences. This leads me to believe that we could see a downside test of 1320  this week and perhaps 1300 if 1320 doesn’t hold. However, if the bulls maintain control of this market after the current correction and close above resistance at 1375 then I would expect to see a test the of yearly highs above 1400.

    As always, I am creating a watch-list created by the Arps Scan Sentry Toolkit with equities poised to move in either direction. I share some of those with you below. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    CX

    (Here we see simultaneous breakouts from a Bull Flag pattern and the down trendline after the bullish pivot divergence in May/June ).

    PPG

    (A breakout to new highs as the Radar1 Fear/Greed strengthens beyond previous highs).

    _____Shorts_____

    FHN

    (A breakdown from the up-trendline following a bearish pivot divergence in Radar1 Fear/Greed and Radar2 Price Leader ).

    NKE

    (A bearish Pullback 23 with an overbought Trend Exhaustion 1 sell signal occurring at a gap fill resistance line ).

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.
  • Which Way Are We Going?

    Hawk’s Scan Sentry Report July 16

    Looking back at the analysis from last week one would have to say that the Scan Sentry Report did pretty well. Last Sunday I wrote that I thought the US equities would go down for a few days and then bounce back up…. this is exactly what they did.  I also wrote that one must continuously re-evaluate one’s analysis; you must not become too attached to a potentially outdated perspective. The markets are a dynamic stream of ever-changing data; and as such our analysis must also be equally dynamic. So what do we see for the coming week? Let’s take a look.

    There are a lot of different ways that people like to look at the price movement of financial markets. Specifically, there are a lot of different ways to draw a chart. There are line charts, market profiles, candlestick charts , Renko charts , range charts, tick charts, daily charts , weekly charts , minute charts, and many others . One of my favorites for futures contracts is the volume chart. Rather than using time to delineate the beginning and end of each bar on the chart, a volume chart uses the number of contracts traded to determine the beginning and end of each new bar. This is especially useful when looking at equities index futures products that may not change very much during the hours when the underlying markets are closed and trading volume is slim. In this way the indicators are always calculating equally relevant bars; and you do not need to add a volume histogram to your charts either. Let’s do some analysis of the S&P futures contract using both daily and volume charts.

    On the S&P futures contract our daily chart shows that we have pulled back into a relatively bullish Triple Trender; and the Radar3 Trend Strength Indicator is identifying a moderate bullish trend. However, our Radar1 Fear/Greed indicator shows that the bears have a slight advantage over the bulls right now, and the June  price highs created a bearish pivot divergence… which from a longer term perspective created a bearish pullback divergence.  Conclusion: we are bouncing up within a bullish pullback within a longer-term bearish market.

    We see a similar pattern on the shorter term 100,000 share volume chart.  We have a bearish pivot divergence in the Radar2 Price Leader which created a longer term bearish pullback divergence easily seen in the Radar1 Fear/Greed indicator. However, our Triple Trender is currently quite bullish as is our Radar3 Trend Strength index.

    So what do we conclude from this data? Using the information provided by these indicators I would expect to see the S&P once again go down early in the week (Radar2 bearish divergence), at least to the 1340 area and maybe as far as 1320. If 1340 holds, then look for upside tests of 1370.

    As always I am creating a watchlist created by the Arps Scan Sentry Toolkit with equities poised to move in either direction. I share some of those with you below. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    CBSH

    (An early trend opportunity with Triple Trender synchronicity, bullish Radar3 Trend Strength, and strengthening Radar1 Fear/Greed.  Beware, we are likely to get a TE1 overbought signal soon which may provide a slight pullback opportunity ).

    NNN

    (A breakout of the horizontal resistance trendline. All other indicators are quite bullish ).

    DO

    (Another early entry opportunity following a bullish pivot divergence in Radar1 Fear/Greed. Note that  Radar1 is making new highs while we get a nice breakout of the down-trendline and the Triple Trender synchronizes bullishly ).

    _____Shorts_____

    XRX

    (Recent bearish Triple Trender after a bearish pullback divergence. Watch for support at $6.80 ).

    CY

    (A breakdown from the up-trendline and increasing bearshness in Radar1 Fear/Greed and Radar3 Trend Strength ).

    TGI

    (A pullback 23 combined with a TrendExhaustion 1 overbought sell signal, one of my favorites ).

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.
  • Giving Up Hope

    Hawk’s Scan Sentry Report July 9

    When trading, one of the more difficult challenges is to keep an open mind. As is the case with life in general, the objectivity of our perspective on the markets is tainted by our preconceptions, expectations, or hopes for the future. However, when trading, hope is not a welcome companion… as Dante quoted “Abandon hope all ye who enter here”. The price movement of the market is not invested in your personal positions,  past predictions, or current analysis;  and 'hope' is not a trading plan. While we are trading it is sometimes difficult to keep an open mind and see clearly what messages the current market is showing us, but this is what we must do at all times. We must not invest too much of our present market analysis on our past analysis or on our hopes or trading positions. We start to give back our profits or dig our losses deeper when our analysis is influenced by the positions that we are holding. Although we experience our analysis as subjective thoughts, we must be vigilantly objective.  That is why it is so important to have very responsive and dynamic trading tools, and know how to use them.

    So what is our analysis of the markets today? Looking at the daily S&P we see a generally strengthening Radar1 Fear/Greed, a recent bullish orientation in Radar3 Trend Strength, and a bullish Triple Trender.  At the same time we see an overbought sell signal from Trend Exhaustion 1 and a downswing in the Radar2 Price Leader. From this I would expect to see short term (1-3 days)  movement to the downside; but the medium term (1 week +) the outlook is bullish.

    In preparation for my trading week I am, as always, creating a watchlist with equities poised to move in either direction. I share some of those with you below. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    ATRS

    (A breakout from congestion to new highs. All of our indicators are bullish ).

    RJET

    (I like the Pullback 23 as we approach the breakout price of the Bull Flag pattern ).

    _____Shorts_____

    ASML

    (Here is a combination bearish Pullback 23 with an Overbought TE1 sell signal. This occurs at resistance while a bearish pivot divergence formed with Radar1 Fear/Greed and Radar2 Price Leader ).

    BKD

    (An overbought sell signal from Trend Exhaustion 1 accompanied by a bearish pivot divergence with Radar2 Price Leader ).

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.
  • Careful Now

    Hawk’s Scan Sentry Report July 2

    Here in the States we are approaching our big Independence Day holiday. A lot of American  traders are likely to be on vacation at this time. As a consequence I would expect the volume on the U.S. equities markets to be a bit light this week making it easier to move the price one way or the other.  This could present the ideal opportunity for the market powerhouses to attempt to move the market in a direction opposite their longer term expectations… a ‘head fake’ if you will. You may even see the significant moves this week happen during the Asian or European sessions. Looking at the current daily chart of the S&P futures contract, our indicators are slightly more bullish than bearish with the Triple Trender, Radar1 Fear/Greed and Radar2 Price Leader all pointing up; but none of them are screaming any trade signals right now. Furthermore, the contract closed Friday at resistance making upward movement a little more difficult to accomplish and the Radar3 Trend Strength is not confirming the bullish Triple Trender. This may be a good week to protect the fruits of our labors up to this point and stand aside until clearer signals show themselves.

    Nonetheless, I have created a watch-list of potential opportunities both long and short from our Scan Sentry Toolkit Scanners for your perusal. I am using relative industry strength to filter some of the selections this week to better hedge my bets in an ambivalent looking market. Let’s take a look at some of the specific equities that are on my watch-list for this week and why they are there. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    BUD

    (Here a nice breakout to new highs confirmed by stronger Radar1 Fear/Greed, and recently synchronized Triple Trender and Radar3 Trend Strength ).

    FMX

    (Another breakout to new highs, this one accompanied by a Pullback 23 signal after retesting the breakout price).

    BZH

    (Following a nice bullish pivot divergence we see a bullish Triple Trender and now bullish Radar3 Trend Strength. Since we are currently at resistance, look for Radar 1 Fear/Greed to cross above the purple alert line for confirmation. )

    _____Shorts_____

    AET

    ( One of the very few stocks that actually went down during Friday’s rally. This one broke below the up trendline and synchronized the Triple Trender bearishly).

    LKQ

    (After a nice bearish pivot divergence we see a breakdown from the up trendline and the Triple Trender now bearish, and Radar3 Trend Strength almost posting negative numbers. This one may need to finish filling the gap around $34.00  before continuing down ).

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor and their tax advisor to determine the suitability of any investment.

5 Item(s)

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Full Risk Disclosure

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