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Monthly Archives: November 2012

  • Turn up the Volume!

    Hawk’s Scan Sentry Report November 26

    Today I want to talk about trading and holidays. This past week we celebrated Thanksgiving in the US. Even though many of the markets were open most of the week, for many American traders this was a week to focus on gratitude for the other parts of our lives. One would expect to see very light volume on a week like this and we did. For example, in the S&P futures contract the average weekly volume is 8.6 million contracts/week, but last week it was only 5.25 million contracts. Although some traders prefer to trade the index contracts on lighter volume because the price moves are generally less volatile, I did not participate last week. Like many, I was with family enjoying other aspects of life while I can. For me, trading is a means to an end, not an end in and of itself. I trade to manifest riches, but my life is enriched by my relationships with family and friends.  For those relationships I am grateful.

    But now we are in the final month of the year and I expect to see the markets turn up the volume for the next couple of weeks; and I plan to be participating through the last waves of 2012. I want to show you how I am looking at a few of my favorite markets this week. As predicted in last week’s blog, the US indexes rose through the holidays on light volume, and most are currently pressing against resistance levels. They have moved pretty far pretty fast so I expect to see stronger sellers than buyers to start off this week. On the charts below I explain my analysis for several of the most commonly traded markets using some of the most highly regarded technical indicators available. These are used by both institutional and private traders across the globe and are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools.

    The Charts and Analysis

    Index Futures:

    NASDAQ

    ( This leading index has moved up from last Friday’s lows to the next significant resistance level at 2636 and trendline resistance as well. The  Radar 2 Price Leader is overbought, the Radar3 Trend Strength Index is still bearish, and Radar1 Fear/Greed has formed a bearish pullback divergence so I would expect to see this  up-move slow down or reverse early this week.)

    Equities Setups:

    WYNN- Wynn Resorts

    (A bullish pullback from the up trendline preceded by a bullish Trend Exhaustion 1 and Pullback 23. Next target $115.00 )

    Commodities:

    GOLD

    (Since the price has broken above the high of the Bear Flag consolidation, the Bear Flag breakdown of November 2nd has been negated .We have since closed above the down trendline and are one Trender away from a synchronized bullish Triple Trender. Radar1 Fear/Greed is beginning to indicate that the buyers are regaining the upper hand. I am looking for bullish confirmation in the Radar3 Trend Strength indicator.)

    CRUDE OIL

    (This is still a sideways market , dangerous to trade without a clear trading signal. Radar1 indicates that buyers are beginning to step up.  The current range is $89.50 and $84.70).

    Forex:

    EURUSD

    (We got our bullish confirmation early last week when the Radar2 Price Leader crossed the zero line. Now all three of the Triple Trenders are bullish along with the Radar 3 Trend Strength and Radar1 Fear/Greed. I expect this upward move to continue at least until we see a test of  the down trendline around $1.3100 .)

    May the trend be with you,

    Hawk

    Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment adviser 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.
  • Follow the Leader

    Hawk’s Scan Sentry Report November 19

    Last week I introduced the new format to "Hawk's Scan Sentry Report" and have already gotten several positive responses from regular readers. Thanks for the feedback.

    As many of you know, I like to compare indexes and their derivatives to see if one is leading the other and thereby observe which has a better chance of moving in which direction. We all know that all of the American equities markets have been dropping since mid October.  The next significant support level for all of the major American indexes is the lows established and tested last May and early June. This week I note an interesting phenomena… the NASDAQ and Dow are already very close to that level of support whereas the S&P still needs to drop 3-4% to reach that mark. It is likely that the NASDAQ futures contract will test those early summer lows and run through whatever stop-loss orders may be resting there. If the NQ tests those lows in the next few days and then we see a rally, I would expect the ES to follow the rally without testing that support level .  One likely scenario is that that some of the indexes will test those early summer lows, then bounce (perhaps toward the end of the year for a nominal ‘Santa Clause Rally’). Normally I would look for a subsequent retest of those lows to follow, but a lot is riding on the markets perception of the American legislators' ability to avoid the ‘Fiscal Cliff’.   If they succeed then it’s likely that the buyers will once again become more numerous than the sellers and prices will rise without retesting that support level. If a compromise is not reached and austerity measures are enacted, then we can expect to see the markets continue drop due to low demand from American consumers.

    On the charts below I explain my analysis using some of the most highly regarded technical indicators available. These are used by both institutional and private traders across the globe and are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools.

    The Charts and Analysis

    Index Futures:

    S & P

    ( All of our indicators are currently quite bearish for the S&P. Historical  indications show the NQ contract leading the ES contract on this move down so I will watch how the NQ contract responds to its early summer lows. Next support levels for the ES contract are 1315 and 1285, resistance around 1390. )

    NASDAQ

    (We are close to the early June lows which coincide with a Bear Flag target at $2426.75. We also see a bullish  oversold Trend Exhaustion1 and a bullish Trend Exhaustion 3 signal. I expect a test of support at 2444 and if Radar1 Fear/Greed does not cross below its previous threshold  of -172 that will create a bullish pivot divergence and good upside potential. )

    Equities Setups:

    C- Citigroup Inc.

    (A bullish Pullback 23 ,and Trend Exhaustion 1, and Trender Pullback at support created by a previous high. A stop-loss should be placed relatively close to this bullish signal. )

    Commodities:

    GOLD

    (Last week I suggested we look for a bearish Pullback 23 which we got.  Now I see that that created  a  bearish ‘Pullback Divergence’ in Radar 2 . I would expect to see gold continue to the downside at least as far as the up-trendline. )

    CRUDE OIL

    (Little has changed in this market over the past week. We are still in a downtrend, resting at a trendline support level looking to achieve a Bear Flag target. Since  Radar1 Fear/Greed is not yet showing us signs that the buyers are stepping up, the path of least resistance is still down).

    Forex:

    EURUSD

    (A bullish Pullback 123 creating a Pullback or “Trend” divergence at support which is going against a bearish Triple Trender. Since this is a bullish setup in a bearish trend  I would like to see the Radar2 Price Leader move above the zero line into acceleration for bullish confirmation. )

    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.
  • A New Approach

    Hawk’s Scan Sentry Report November 12

    This week I would like to introduce a little different approach to “Hawk’s Scan Sentry Report”. Instead of scanning a universe of equities for trade setup opportunities, as this report has been doing for the past several years, I would like to follow a few specific markets every week to note how the technical analysis of those markets develop. In that way we familiarize ourselves intimately with just a few symbols rather than looking at something new every week.  Don't worry, some things will not change. Many of you faithful readers know that I follow the S&P emini futures contract regularly in this blog, and I will continue to do so. I may also occasionally refer to some of the other stock indexes when looking at more than one index seems particularly relevant. In this new format I will still try and note one or two particular equities each week and explicate the technical analysis of those as I see fit.

    However, in addition to the S&P futures contract and a well known stock or two I will also follow the Crude Oil and Gold contracts (CL and GC) and provide my analysis of those. There are a lot of traders (including myself) who like to trade these contracts.    I also plan to include some forex analysis each week.  Although I ‘day-trade’ most of these instruments, the emphasis in these weekly postings will be on the general trend orientation and trade setups as they show themselves early in the week.  Since these seem to be the most popular markets that people like to trade, I hope that with these changes this blog becomes more relevant to more readers . Please let me know your thoughts and feedback on this new format as I endeavor to make these postings more useful to you.

    On the charts below I will explicate the technical analysis using some of the most highly regarded technical indicators available. These are used by both institutional and private traders across the globe and they are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools. And now I present……

    The Charts and Analysis

    S&P

    (The Triple Trender, Radar3 Trend Strength , and Radar1 Fear/Greed are all bearish. As noted last week, I expect 1360-1365  to serve as a support level. Since Radar2 Price Leader is oversold I wouldn’t be surprised to see a pullback into the Triple Trender early this week. )

    PGR

    (A bullish  Pullback 23 at support after a pullback into the Triple Trender. Radar1 Fear/Greed and Radar2 Price Leader have both formed a bullish ‘Pullback Divergence’.)

    GOLD

    (The Triple Trender has synchronized bearishly and made its first pullback into the short and medium term Trenders. The Radar3 Trend Strength index indicates a pullback in the down trend as well. We could potentially be setting up for a bearish Pullback23 in the next few days.  Although Radar1 Fear/Greed indicates we are seeing more selling than buying it has recently created a bullish ‘Pullback Divergence’. Radar2 Price Leader recently showed a short term bullish ‘Pivot Divergence’ as well. )

    CRUDE OIL

    (The bears have control of this market as indicated by the Triple Trender, the Radar3 Trend Strength Index, and the Radar1 Fear/Greed indicator. We are currently resting at a long term support level which could hold, but we have a BearFlag target at $81.04. The next support level is $79.22 )

    EURUSD

    ( After weak buying pressure near the October highs indicated by Radar1 Fear/Greed, we see the price at resistance and the Triple Trender bearish, and Radar2 Price Leader oversold. I am looking for a buy this week for a pullback into the Triple Trender. I’ll be watching the Radar3 Trend Strength indicator for insights into which direction the longer term trend will develop.  )

    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.
  • Bulls, Bears, Donkeys, and Elephants

    Hawk’s Scan Sentry Report November 5

    Many traders expect the American stock market to drift without commitment one way or the other until after the US elections and then respond to the outcome of the election by charging up or down.  Some bloggers are even trying to predict how the market will react if one or the other candidate wins. Personally, I do not see it as my job to predict the markets…. It is my job to be ready to meet the markets.

    I don’t know how the market will react to the election results. I do know, however, that since our current president took office in 2009 the stock market has doubled in value. This is due in large part to the accommodative financial policies (free money to the bankers) of men like Bernanke and Geitner, who also worked with previous Republican administrations and, like so many of our treasury officials over the last several decades, came up through the ranks of Goldman Sachs and other large banks.  The point is that Wall Street is heavily invested in both political parties, and the power brokers in the markets that we trade will likely have their way regardless of who lives in the White House.

    The truth is that the wealthiest financial and corporate institutions have always looked for ways to buy influence in governance. It is just easier now.  In the old days buying influence was called bribery and was patently illegal. Now it’s called ‘investing in politicians’ and ‘lobbying’ by Super PACs.  Since the 2010 decree of five partisan Supreme Court justices that ‘corporations have the same constitutional rights as persons’ and as such ‘money represents speech in the political sphere’ (two notions that I believe our revolutionary founding fathers would wretch at) money has become a far more powerful influence on our electoral process. Have you noticed exponentially more political ads this year? I have. And the dangerous thing is, there is no transparency as to the source of that money. Some of our candidates were even hosting political fundraisers in foreign countries this election season!

    Please excuse my digression... the point is that I don't use politics to analyze the markets; I much prefer technical analysis. So how am I preparing to meet the coming markets? Well, my bearish orientation on the markets is unchanged from last week.  Once again looking at the S&P eMini contract, we got a pullback into the Triple Trender as expected. The Radar 3 Trend Strength Index is still strongly bearish, and the Radar1 Fear/Greed indicator is  indicating that there is quite a lot of selling compared to buying going on in this market at this time. As noted last week we are still looking for support at 1400, 1385 and 1365 and resistance around 1420 and 1460.

    Although I am currently generally bearish (at least until we see signs of a  “Santa Claus Rally”) I always look for opportunities in both directions. Below you will find daily charts from selections on my weekly watchlist  with possibilities in both directions. As always, I do my best to explain the setups on these charts; but if you  have any questions about any of the indicators on these charts please follow this link to a legend describing these tools.

    _____Longs_____

    AIZ

    ( A bullish Pullback 23 and Trend Exhaustion 1 signal at the up trendline. Note how this forms a bullish Pullback divergence in the Radar2 Price Leader.)

    DWA

    (This Pullback 23 signal coincides with a nice breakout of the resistance trendline. Note the recent pullback into the Triple Trender.)

    FBC

    (This Trend Exhaustion 123 is setting up to catch a breakout of the trendline at the recent highs .)

    _____Shorts_____

    PAG

    (A breakdown from the up trendline following a bearish pivot divergence in Radar1 Fear/Greed. Beware, Radar3 Trend Strength is still bullish. )

    GXP

    (Radar 3 Trend Strength recently went bearish as the price breaks below the up trendline and all three Triple Trenders are now bearish. )

    MDF

    (Another Trend Exhaustion 3 signal accompanying a bearish pivot divergence with Radar1 Fear/Greed. Again, be careful, Radar 3 Trend Strength still shows strong bullishness.)

    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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