Chart Rooms

Traders love to talk about their trading.

It’s much more comfortable for most traders to talk about what COULD BE rather than WHAT IS.

They love to talk about some chart setting up, their view of the political situation surrounding the stock or market…. whatever.

We all know that talk is cheap.

Intellectually, we know that the chart says everything we need to know, but as emotional beings, we are always looking for the “insight” or the “intuition” to put us a step ahead of everybody else who are all looking at the same charts we are.

If we don’t have the “eye to the future”, maybe a trading friend has it.

Sometimes all you have to do is call up a trading buddy and say, “Hi, how are you today?” What you’ll get in return will be, “Boy, have you seen the ’so-and-so’ chart today?

If that breaks the XY level, it’s going to really take off!” He continues, “And with that unstable political situation, this could really be a big trade.”

Why should we care?

We shouldn’t.

I guess we could take a look at the suggested chart and apply our trading parameters to it….. and if it passes scrutiny, well, that would be alright to trade, right? Yeah, OK.

You have to watch yourself, though. You see, you can have a tendency to want to MAKE a trade fit.

After hearing all about the great fundamentals, you can (subconsciously) view the chart with “I wanna buy” eyes, meaning that you can tell yourself that an almost-confirmation is close enough (with all those fundamentals going for it!).

That’s the danger.

It’s always best, I think, to come across a trade yourself. You see a price falling….. and falling….. gosh, when will it bottom? Your system says, “Don’t guess, be patient”.

Here’s one of my favorite expressions:

“I’d rather be out of a market (or stock) wishing I was in, than in a market wishing I was out.”

So, the market has a nice reversal day…. new low during the day with a higher close. Getting close to a buy, but not yet. The price goes higher for a few days and then starts to come back down.

It’s looking good.

The low holds, the market breaks the rally high and BOOM, we pull the trigger and we are in.

The system rules.

THAT’S the way to take a trade.

Every trader (you, included) has his or her own agenda. Only you know what works for you, system-wise and emotion-wise.

Trust in your tested trading system. It will serve you if you stick to it.

People think I’m crazy when they hear me talking to myself.

My close friends know that I’m just getting good trading advice!

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 6: Ten-Year Note)

For the next few weeks, we will examine opportunities in the futures markets that are dictated by price movement and an exponential moving average: the T8. In each example, we will be reviewing previous opportunities and speculating on how to become involved in the near future. All charts will be presented in the form of weekly candlesticks and will feature three moving averages and one momentum oscillator. As you will see, these simple tools can unlock the door to profits.

Part 6 features a chart of the Ten-Year Note using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend in the Ten-Year Note is definitely up. Our rules are simple. We only want to initiate trades in the direction of the trend. Therefore, rule #1: Initiate trades in the direction of the trend. Secondly, we want to buy weeks that open below the T8 when it is in an uptrend and sell weekly openings that are above the T8, providing the T8 is negative. Rule #2: Buy opening retracements to the moving average in the direction of the trend. That’s it. A simple approach to trading the futures markets.

Using this strategy, you could have bought the opening price during the following weeks at the prices stated: 10/13/07 @ 108 24/32 and 12/22/07 @ 112 4/32. At the time of this writing, The TYH (March Ten-Year Note) was trading at 116 10/32 (with a recent high of 119 3/32). These two opportunities are enjoying nice profits at the current level. The Ten-Year Note is not unique to this situation. Currently, over fifteen commodity futures contracts have demostrated similar patterns.  You might want to read other blogs that discuss Crude Oil, Cocoa, the US Dollar, the Japaneses Yen and Coffee.  These previous postings show the same circumstances and the subsequent profits resulting based these simple rules.

During the next three weeks, we sill see over two dozen examples of the same trading set up. THIS IS NOT A MAGIC TRICK. These specific circumstances happen again and again. We will examine precious metals, interest rates, grains, currencies and other interesting commodity futures for exactly the same set up.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

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T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 5)

For the next few weeks, we will examine opportunities in the futures markets that are dictated by price movement and an exponential moving average: the T8. In each example, we will be reviewing previous opportunities and speculating on how to become involved in the near future. All charts will be presented in the form of weekly candlesticks and will feature three moving averages and one momentum oscillator. As you will see, these simple tools can unlock the door to profits.

Part 5 features a chart of Coffee using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend in Coffee is definitely up. Our rules are simple. We only want to initiate trades in the direction of the trend. Therefore, rule #1: Initiate trades in the direction of the trend. Secondly, we want to buy weeks that open below the T8 when it is in an uptrend and sell weekly openings that are above the T8, providing the T8 is negative. Rule #2: Buy opening retracements to the moving average in the direction of the trend. That’s it. A simple approach to trading the futures markets.

Using this strategy, you could have bought the opening price during the following weeks at the prices stated: 1/08/08 @ 130.60 and Tuesday morning’s opening (1/22/08) @ 130.20. At the time of this writing, Coffee was trading at 134.25. These two opportunities are enjoying nice profits at the current level. Coffee is not unique to this situation. Currently, over fifteen commodity futures contracts have demostrated similar patterns.

During the next three weeks, we sill see over two dozen examples of the same trading set up. THIS IS NOT A MAGIC TRICK. These specific circumstances happen again and again. We will examine precious metals, interest rates, grains, currencies and other interesting commodity futures for exactly the same set up.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

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Weekly Charts 12-13-07 (Thursday): An occasional look at important weekly technical developments.

ETF’s (SPY; DIA; QQQQ): End game for the indices?.

The three charts that are contained in this post are all ETF’s (exchange traded funds).  The DIA is a synthetic stock that tracks the DJIA (Dow Jones Industrial Average); the SPY tracks the S&P 500; and the QQQ is the synthetic stock for the NASDAQ 100.   Each of these issues are presented here in a weekly candlestick chart. 

The DIA is in the process of posting a dark cloud this week.  This is the same candle pattern that is repeats on the both the SPY and the QQQ charts.  Dark clouds are warnings of futures storms on the horizon.  Our trend definer, the T8 exponential moving average, has pointed down for over a month.  We constantly suggest selling when price hits or moves above a negative sloping T8.  That’s exactly the type of conditions we see in all three of the charts.  If the CMO, our momentum oscillator, turns negative, the Dow will have tough sledding through the beginning of the winter months.

The SPY has additional problems when examining the weekly chart for clues about future direction.  Not only does it have to contend with the large dark cloud, the momentum oscillator has already turned down.   This is usually a very bad sign…especially in the weekly charts.  In weekly time frames, it takes a long time for a momentum oscillator to climb up or move down to its extremes.  The negative turn in momentum could mean that it will be a long time before the market continues on it’s upward path.

 The QQQ features the same negative dark cloud…looming its shadow over any attempts of future advance.  The negative hook in the Chande Momentum Oscillator is not a good sign for the QQQ.  The QQQ has been the strongest of the three indices that we are featuring.  After drawing three long wicks to the downside (blue circle), the QQQ rallied.  Unfortunately, the advance was met with a T8 that had just turned down and it has stopped the advance of price beyond the recent highs of late last week and early this week.  Unless the markets post stunning advances on Friday, we could see significant declines over the next few months.

 ***Volatility alert:  During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points (in the Dow), sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. This volatility cycle is in its early stages and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

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