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Monthly Archives: February 2013

  • Getting it Right, or Making Money?

    Hawk’s Scan Sentry Report Feb 25th 2013

    A lot has been written about the difference between being right in your technical analysis and making money with your technical analysis.  Analyzing the market correctly and making money with that analysis are two different issues. How many times have you foreseen a market continuation, reversal, or correction and gotten into a trade only to find that the market had one more thrust against you, taking out your stop just before moving in your direction. Or maybe the market ran away from you before you took an opportunity to enter. Perhaps the technical analysis is correct but the execution is not clearly defined or precisely executed. Trading psychology and a good trading plan are both important to help with this issue. There are countless trading psychologists out there to help address this problem, but that is not my purview. Specific rules in a trading plan are essential, and the plan must be verified with testing and experience.

    A good trading plan should not only focus on the technical analysis, but also include risk tolerance, stop loss, and trade management (including profit targets and trailing stops). However, having a viable trading plan is not enough in and of itself; you have to follow the plan as well.  A trading plan is like a gym membership, it is only worth anything if you use it; otherwise it will just cost you money. A well respected trader once said, “Your trading rules are your employees; in order to make money you must let them do their jobs”. I couldn’t agree more. It is important that your trading career be based on a good foundation, so I encourage you to write out your plan, and then test it, and then test it some more. There are two ways to test it: 1.) execute it manually on a simulated account, or 2.) program an automated strategy to run and test on historical data. I recommend both approaches. If you need help programming your ideas for testing purposes, be sure to contact us at inf0@janarps.com and we can point you in the right direction.

    And now for some technical analysis….

    Our short gold trade over the last couple of weeks was ‘spot on’ netting 87 points on the move to our target at 1560. We also did well shorting the S&P last week.  In my previous post I  discussed watching the Russell and NASDAQ charts to anticipate action in the S&P. Well the Russell didn’t take off, and the NASDAQ didn’t breakdown yet. Let’s see what we have in store for this week. You will find charts and analysis below.

    For those of you not familiar with “Hawk’s Scan Sentry Report”, on the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools 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  Futures

    (We got the pullback into the Triple Trender we have been anticipating since the Trend Exhaustion 3 signal 6 bars ago and the recent Bearish Divergence in Radar1 Fear/Greed. Our trend indicators are still bullish, but I would not be surprised to see this correction move as far down as support at $1462. Note Radar1 Fear/Greed is starting to show sellers stronger than buyers.)

    Russell  Futures

    (Our analysis shows this correction as a pullback in a bullish market. Note that we don’t see any divergences or significant selling strength yet in Radar1 Fear/Greed. Also neither the Triple Trender nor the Radar3 Trend Strength Index have confirmed a bearish trend.  )

    NASDAQ  Futures

    (This market did move downward but it has not yet broken down. It is still trading within the narrow range by which it has been bound since the new year. However, Radar 1 is showing that the sellers are stronger than buyers at this point. A close below the long-term Triple Trender will cause me to be significantly more bearish on the American markets in general.  )

    Equities Setups:

    (Sell Short) ESV- Ensco plc.

    (A bearish pivot divergence with Radar1 Fear/Greed  at the recent high. Radar 3 Trend Strength and Triple Trender both confirmed bearish. A trendline pullback signal to the downside, and the wave counter suggests we have completed wave-5 and are beginning reversal wave-A. )

    (Buy) ZNGA- Zenga.

    (A bullish Pullback 23 setting up after a pullback into the recently synchronized bullish Triple Trender. The pullback was also to the breakout price which is good support.  Upside target is the gap-fill at $4.45 )

    Commodities:

    GOLD

    (Gold dropped to a significant support level around $1560 this week. If it closes below $1540 the next downside target would be around $1515. More likely we will see it move sideways for a while.  )

    CRUDE OIL

    (Last week I noted the strengthening sell pressure in the Radar1 Fear/Greed and the trend strength change in Radar3 Trend Strength. This bearish orientation is now confirmed in Radar3 and the Triple Trender. Note the bearish breakdown from the up trendline this past week. Since Radar1Fear/Greed is currently making lower lows a bullish 'Pullback Divergence' could be developing in the next few weeks. Look for this current down move to find support around $91.25. A close below the Bull Flag low of $92.52 will negate the current Bull Flag and the green target dots will stop plotting )

    Forex:

    (Sell Short)-USDCHF

    ( Bearish Trend Exhaustion1 at the down trendline. Radar1 Fear/Greed did not give us a bullish reversal divergence at the last low, so I expect another thrust down. Beware: Radar3 Trend Stength is bullish! )

    May the trend be with you,

    Hawk

    www.janarps.com

    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 adviser to determine the suitability of any investment.
  • President’s Day

    Hawk’s Scan Sentry Report Feb 18th 2013

    This is a blog about the technical analysis of financial markets, but on Monday our financial markets are closed to celebrate Presidents Day, originally meant to commemorate the birthdays of Abraham Lincoln and George Washington. Closing the stock exchanges is a big deal, so let us look at why we do that.

    Lincoln was one of the most violently disliked presidents up to that time in our nation’s history. As we know, his presidency came before the industrial revolution, when much of our nation’s economy was based on our vast expanses of farmland and the agrarian products and lifestyle that land produced. In economic terms the plantation owners were the CEO’s of that period, and the economic status quo throughout the southern states depended on slaves as labor. Making slavery illegal and freeing the slaves was an important step in our nation’s moral coming of age. It acknowledged that our founding principles were based more on the fundamental rights of people (although the slaves were not legally considered citizens) than on the ‘freedom’ of the aristocracy to make exorbitant sums without regulation. (After all, freeing the slaves was regarded as a regulatory action on business at the time).  Although the emancipation proclamation was an attempt to entitle all men to the fundamental rights of life, liberty, and the pursuit of happiness it did so at the expense of the economic structure of the rebel states. And for his courageous and just position on the abrogation of slavery, Abe Lincoln was one of the most reviled presidents in our history. In fact he was assassinated for those principles.

    George Washington rose to power via his role in the war we fought for independence, inspired by issues like taxation without representation. The Boston Tea Party was a rebellion against the fact that British corporations like the East India Company had political clout over our lives in the new world while the citizens of the colonies had none. These days, post Citizens United, when money represents speech in the political world it seems that, once again, the powerful corporations are represented in the halls of power at the expense of the citizenry.

    Monday Feb 18,2013 the American markets are closed in these men’s honor. On this President’s Day perhaps we should remember the battles these two presidents fought on behalf of a government representing the rights and well being of persons instead of those of the financial powerhouses.

    And now for some technical analysis….

    Here’s an update from our analysis of last week. As predicted, the indexes continued their tentative climb. Our published stock pick (MCK) briefly went in the right direction but we got stopped out at break-even on Friday. Gold finally confirmed our bearish inclination by closing well below support on Friday.  In fact we are looking for opportunities to add to our short position this week if we see a pullback to the breakdown level. Unfortunately we exited our short GBPUSD too early as it clearly continued to head south last week, but we did make a little on our short EURAUD trade.

    Watching the American stock indexes this week, it seems that the movement in the S&P and Dow futures contracts are caught between the rapidly rising Russell and the simultaneous ballast of the stubbornly unmoving NASDAQ.  If the NQ starts to rise, or the TF begins to stumble I will expect to see the S&P follow suit.  I will be watching these markets in concert as a part of my day trading strategy this week.   For a mini-swing trade I will be focusing on our short gold trade, looking for another entry opportunity to add to my position to the down side. You will find details on the charts below.

    For those of you not familiar with “Hawk’s Scan Sentry Report”, on the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools 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  Futures

    (This is still very bullish in the Triple Trender and Radar3 Trend Strength. However we have a Trend Exhaustion 3 signal and even though Radar1 Fear/Greed is very strongly bullish, we do see a bearish divergence forming.  That divergence is mirrored in a decelerating Radar2 Price Leader. I am anticipating a pullback sometime soon and I will be watching the other indexes for confirmation.  )

    Russell  Futures

    (This market  appears to be a driving force to the upside. When this rally loses steam I would expect to see the S&P start to drop as well. )

    NASDAQ  Futures

    (This market often leads the S&P but seems to have ceded that role to the Russel for the time being.  If the NASDAQ starts to rally strongly, I would expect the S&P to follow suit.)

    Equities Setups:

    (Buy) FMC- FMC Corp.

    (A "Pullback" or “Trend”  Divergence identified by the Arps Auto-Divergence tool. A Trend Exhaustion1 OS signal and a Pullback 23 signal combining to create a “Pullback-123” trade. Although Triple Trender has turned bearish, note that the Radar3 Trend Strength is still bullish. )

    Commodities:

    GOLD

    (Since Friday’s breakdown we see that the Radar1 Fear/Greed is confirming the bearish strength by making new lows below the alert line set at the Radar1 valley two valleys back. I’m looking for pullback opportunities to add to my short position.  Our downside target is the support line around $1560.)

    CRUDE OIL

    (This market is becoming more ‘two-faced’ this week. Although we are still in a Bull flag pattern, the asynchronous Triple Trender and weakening Radar3 are haunted by  stronger selling pressure seen in the Radar1 Fear/Greed indicator. This is a “wait and see” market for me. )

    Forex:

    (Sell Short)-NZDCHF

    ( An oscillating market like one this can offer low risk ‘fading’ opportunities. Note the bearish Trend Exhaustion 1 signal and “Trend” divergence signal. I usually wait for Radar2 Price Leader to cross under the green slow line to confirm entry. )

    May the trend be with you,

    Hawk

    www.janarps.com

    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.
  • Let the Good Times Roll

    Hawk’s Scan Sentry Report Feb 11th 2013

    As we move through the end of ‘Mardi Gras’ or ‘Carnival’ season this week, a lot of people around the globe are taking intentional time to enjoy life and express themselves through music, dance and pageantry. I applaud these cultures. Expressing the joy of living through these mediums is one of the characteristics that that set humans apart from other beings in this Creation. Please don’t misinterpret me, other creatures do sing and dance and present themselves flamboyantly, but rarely en mass and with so much forethought and abstraction of messaging. So, although I’ll be in my office working this week to see which markets look tradable, I still say ‘Laissez le bon ton roulet” or “Let the good times roll”.  After all, we are working hard at trading so that we can enjoy life in general.

    So, while wearing my Mardi Gras beads I share my thoughts with you on the technical analysis of financial markets below. Many of the markets I typically trade have not trended strongly this past week. Gold is moving sideways, Crude Oil is pulling back a bit, and the American indexes edged up only slightly. Even the strongly trending Japanese Yen seemed to settle for a bit at a support level. I include charts with technical details below.

    For those of you not familiar with “Hawk’s Scan Sentry Report”, on the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools 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  Futures

    (Everything about this chart is still bullish. However, with the weakening Radar2 Price Leader I would not be surprised to see a pullback into the Triple Trender as suggested last week. )

    Equities Setups:

    (Buy) MCK- McKessonCorp.

    (A Pullback Divergence with Radar2 identified by a Trend Exhaustion1 OS signal and Pullback 23 signal. Although Triple Trender has turned bearish, note that the Radar3 Trend Strength is still bullish. We also have another Bull Flag setting up. )

    Commodities:

    GOLD

    (This market is clearly range-bound with a slight bearish bias. However, Radar1 Fear/Greed shows that the sellers are weakening.  Nonetheless, at this point the path of least resistance still appears to be bearish.)

    CRUDE OIL

    (This market continues to have bullish indications in spite of the recent pullback. However, a close below the long-term Trender will change my orientation from bullish to ‘sideways’; until that happens we are still working our way up to the Flag target at $100.16 indicated by the line of green dots above the current price. )

    Forex:

    (Sell Short)-EURAUD

    ( A bearish pivot divergence with Radar1 Fear/Greed at resistance accompanied by a Trend Exhaustion1 sell signal. Best to wait for and see selling pressure in Radar1 Fear/Greed identified by downward pointing red histogram bars. )

    (Exit Short)-GBPUSD

    (Last week’s GBPUSD moved to 1.5602 as predicted. Now I see this currency pair reversing to the upside. Note the bullish pivot divergence in Radar1 Fear/Greed and Radar2 Price Leader while the price is at a significant support level. I would like to see the down trendline breakout hold and see the Radar3 Trend Strength turn blue showing weakness in the bearish trend  accompanied by rising green Radar1 buy strength before entering long. )

    May the trend be with you,

    Hawk

    www.janarps.com

    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 Look at this Week’s Markets

    Hawk’s Scan Sentry Report February 4, 2013

    Welcome back to “Hawk’s Scan Sentry Report”. Last week’s EURAUD trade has been working out as planned hitting our first target in short order, crude oil futures are still climbing as predicted, and gold is moving sideways in a bearish trend. Last week’s published stock pick didn’t work out very well and we are out of that trade at a small loss. Although we would like for all of our trades to be winners, that will never happen. Losing trades are an important part of this business; it's how you manage them that counts!

    Now, I offer you some ideas and analysis for this week’s trading.  On the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools 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  Futures

    (This chart is still quite bullish. However the recent Trend Exhaustion 3 signal and the bearish divergence in Radar 2 Price Leader portend a pullback into the Triple Trender.)

    Equities Setups:

    (Buy) ATI- Allegheny Technologies Corp.

    (A down trendline and Bull Flag breakout. This could be an early trend entry. )

    (Sell Short) HST- Host Hotels and Resorts Inc.

    (Note the bearish Pivot Divergence at the same time as the bearish Trend Exhaustion 3 signal. Also note how the Trend Exhaustion ‘OB-1’ signal occurred at the beginning of the pivot divergence. This strengthens the bearish Pivot Divergence that occurred at the next peak. Bearish confirmation would be a close below the bullish long-term Trender and a pink bar or two in the Radar 3 Trend Strength indicator.  )

    Commodities:

    GOLD

    (Although the Radar1 Fear/Greed shows weakening sell strength, there is still no buy signal here. At this point the path of least resistance appears to be bearish at least down to about $1640.)

    CRUDE OIL

    (This market continues to have bullish indications in all of the Radar tools and the Triple Trender. Still working our way to the Flag target at $100.16. )

    Forex:

    (Sell Short)-GBPUSD

    ( This GBPUSD looks like a nice short as it has broken below support @1.5826  with signifigant selling strength in Radar1 Fear/Greed. There is also a nice pullback into the Triple Trender. First target is 1.5602 as identified by our Support/Resistance lines.  )

    May the trend be with you,

    Hawk

    www.janarps.com

    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.

Full Risk Disclosure

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