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Monthly Archives: August 2012

  • Analyzing the Recent Highs

    Hawk’s Scan Sentry Report August 26

    The bears, they sold in May and went away… In June the 'summer bulls' came back to play… using the light volume to drive the price their way. The consecutive higher lows and higher highs confirm what the Triple Trender has been showing us (and I have been noting in this blog) since the middle of June;  that we have been trending up since that time with the steadiest part of that rally happening over the last 4 weeks on nearly half of the year’s average daily volume. Hey, the account balance doesn’t care about the volume. Rallies typically trade at lighter volume than sell-offs anyway.  So, as we predicted several weeks ago, the S&P e-mini futures contract finally ran some stops above the April 2 highs and has now backed off slightly from the double top which was formed by that event. I’ve heard some of the old-timers say “See a double-top… Sell a double-top”, which I stated as my plan in this article two weeks ago.  However, since the trend is clearly upwards, I expect to be ready to cover my shorts and buy a confirmed dip if I see the right confluence of indications. These could include a bullish Pullback 23 or a 'pullback divergence' if the market continues to back off this week; or a confirmed breakout of the resistance line to new highs if it doesn’t start falling seriously.  Notice that, although we are seeing the typical  Radar1 Fear/Greed pivot divergences  which accompany rallies like this, the Radar1 Fear/Greed value is actually considerably higher now than it was in April when we hit these price levels last time. If I see the Radar1 Fear/Greed  value exceed the alert-line at the previous oscillator high of 45.55 I’ll be convinced that this rally has some serious staying power.

    Below are some charts of some symbols that the Arps Scan Sentry Toolkit has helped me identify for my weekly trading watchlist. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    WPI

    (This is a good example of a breakaway gap from the down trendline to new highs accompanied by a nice Pullback 23 signal )

    CTL

    (A 'Pullback 123' which is a Trend Exhaustion 1 signal accompanied by a Pullback 23. As is often the case this creates a nice pullback divergence which is evident in the Radar2 Price Leader. Also note the general strength of the Bulls identified by Radar 1 Fear/Greed . The Wave counter shows that we are just completing a Wave 4 and we may be looking for a confirmed Wave 5 start.)

    _____Shorts_____

    DBD

    (A pullback into the bearish Triple Trender which coincides with the down Trendline value. Also note the bearish pivot divergence in Radar 2 Price Leader at the resistance line. )

    MNST

    (A bearish Pullback 123 at resistance accompanied by a bearish pivot divergence in the Radar 2 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.
  • Raptors and Prices Floating on a Lot of Hot Air

    Hawk’s Scan Sentry Report August 13

    There’s no denying that we’re in a Summer uptrend.  As I wrote several weeks ago, once the S&P index found support around 1320 we could see tests of 1400 and higher. Well, we’ve been making higher highs and higher lows ever since then and the next resistance level is now the post meltdown high around 1413. I would not be surprised to see the market test that mark  this week and we may even witness a little ‘stop-running’ beyond that price level. However, this market reminds me of the hot air columns that raptors float upon to carry them higher with seemingly little effort. This bullish grind to test our 4 year high is being accomplished on the back of very little volume and even less buying pressure. The bulls are not putting much effort into this rally, but instead floating upward on the invisible hope of further accommodation by the central bankers of Europe and the USA. Look at this 180 minute chart of the S&P futures contract. Each successive higher high is coming about with consecutively lesser readings in the Radar1 Fear/Greed indicator. We do have a bullish Pullback 23 signal which may give us enough push upward to test those March highs; but the weak volume and the weakening Radar1 Fear/Greed indications  are a warning to me that this rally does not have a lot of conviction behind it.  Up to 1415 the path of least resistance right now is still up; however,  I will likely be selling that ‘double top’ if we make it there. Otherwise, if we get a confirmed breakdown below the up trendline on the chart below I will look to sell the likely pullback up to that trendline.

    Below are some charts of some stock symbols that the Arps Scan Sentry Toolkit has helped me identify for my weekly trading watchlist. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    GFA

    (This was on my unpublished watchlist last week and I am still bullish on this one this week. Last week it broke out above the down trendline, this week it broke above resistance. Triple Trender and all three Radar tools are bullish. It will probably test $3.00 again before continuing up to at least$4.30 . Note the Price Magnet® target at $4.50  )


    PPL

    ( Here is a nice Pullback 23 leading into a breakout of the resistance line drawn by the Auto-Trendline tool. )

    _____Shorts_____

    AWI

    ( After a serious gap down, we have now retraced almost to the gap-fill. Note the bearish  Pullback 23 warning signal on the price chart right at the pullback to the short-term trender. )

    SHFL

    (A breakdown of the up trendline reinforced by a bearish Pullback 23 signal.  Notice the pullback into the bearish Triple Trender. Also note that this is a continuation of the bearish ‘Pullback Divergence’ which peaked in mid-July.  )

    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.
  • Sound Bytes in 2012

    Hawk’s Scan Sentry Report August 6

    The markets are thin and nervous... (but at least they are reacting pretty much as my last several blog posts have predicted).  As a mini-swing trader I don’t generally trade off of the news, I figure that the news is usually already factored into the price by the time it gets broadcast to me. But in a jittery market like this one it seems that a few carefully chosen words can have as much or more effect on the markets than just about anything. This makes our jobs as technical analysts even more challenging.

    Speaking of well picked  (and over-used) words, consider this idea… everyone seems to be using the phrase “Fiscal Cliff” these days.  What is the effect of this? Well, obviously it is meant to instill fear in the hearts and wallets of investors, consumers, and probably voters. When one phrase gets over-used by so many pundits it takes on the propaganda-like nature of a ‘talking point’ or ‘sound byte’. We all know that talking points are promulgated with an agenda behind them. So what advantage is there to pumping fear into the markets? Well, for one thing it puts the ‘trading masses’ on the wrong side of an up move. At the same time it makes it possible for the bulls to buy at a low price. Ironically, the whole time that we have been inundated with this phrase ‘Fiscal Cliff’ the markets have been making higher lows and higher highs. That seems like the opposite result of what one would expect given the economic doomsday that this phrase portends. I mention this simply as an observation, a theory,  and NOT as analysis of the the markets. However, it does supply one non-technical reason to support a bullish outlook during these 'Dog Days of Summer' ... as we march intrepidly toward the precipice of this fiscal cliff.

    In addition to the higher lows and higher highs, the thin volume we typically see this time of year is the norm in a bullish trend, whereas bearish markets generally trade at higher than average volume.

    Now for some technical analysis. Below are some charts of some symbols that the Arps Scan Sentry Toolkit has helped me identify for my weekly trading watchlist. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    GNK

    (This is bottom fishing. Note the bullish pivot divergence in the Radar1 Fear/Greed indicator and the breakout of the down trendline. Also note that all three Radar tools are now giving bullish indications).

    TWX

    ( This is a breakout to new highs supported by all the typical technical indications with the Bull Flag target within tradable distance).

    _____Shorts_____

    ETP

    (Here we see a breakdown from the up trendline accompanied by a Pullback 23 signal and bearish divergences in Radar2 Price Leader. Also, the Triple Trender has turned bearish ).

    DLB

    (After the pullback into the Triple Trender we now see a breakdown from the up-trendline).

    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.

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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.

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