Teach Talk Trade Day Trading & Technical Analysis

04-29-08 Market Directions: A Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

Last November, the T8, our moving average that defines trend, turned negative.  The market began to slide and continued down until mid-April (when the T8 turned positive).  After the market turned down, it gave traders three opportunities to sell weekly openings, above the down-sloping T8 on three Monday’s in December (13,649; 13,540; & 13,423).  The market continued to slide and punched down to under 11,500.

Above the candlestick chart is our momentum oscillator, the Stochastic RSI.   As we can see, the StoRSI made a bottom in late January and with the exception of testing that bottom in March (and creating a positive “double bottom”), the market has gained substantial points (+2300) since bottoming out.  Unfortunately, the momentum oscillator has now traversed to its upper levels and the market is now in danger of retracing once again.

The T8 (maroon line), our moving average that defines trend, is gaining positive inclination.  Price has now drifted higher and is substantially above the moving average.  As in most cases, “price tends to revert to the mean”.  Usually, if price spurts up or down and gains space between itself and the moving average(s), price usually draws back to these averages.  

 Altough the “double-bottom” bodes well for creating a floor in the market, don’t be surprises if the market pulls back over the next month.  A retracement to the T8 would set up a buying opportunity in the future.  In the meantime, “keep your powder dry”.

***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, 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. The current volatility cycle has just started its volatile period. We feel this volatility will continue and we 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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Market Directions: Technical Analytical Views of Stocks, Futures, Eminis and Forex for Traders and Investors.

04-23-08 Yen Continues Upward March

As we have pointed out in the past, we love to buy issues that have openings below their moving average trend indicators.  As the maroon line, the T8, continued to move up in the Yen, Monday gave us an additional opportunity to purchase below this supporting indicator.  

 The T8 (maroon line), our moving average that defines trend, has been in a postive posture since last summer.  This weekly strategy has prompted us to buy on seven different Monday mornings.  This relaxed approach to the market can be applied to all major futures markets. 

***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, 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. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility 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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DOW Directions 02-22-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow stumbles and closes down -142.96.

Thursday’s market opened higher and soon begin its negative, downward drift…closing just above the lows for the day.  The market continues to to be volatile, yet it continues to trade in a narrow trading range.

The daily StoRSI, our momentum oscillator, has turned down once again.  Typically, the StoRSI draws large sine curves that trace from top to bottom of its range.  Currently, the market is chopping in a narrow range and the StoRSI reflects the mood of the market.  Seldom does this indicator spend much time in the middle of its range.  When the StoRSI spends time in the middle of its range, the market is in a consolidation phase.    Sideways markets are very tough to trade.

 The T8, our moving average that defines trend, has turned flat during the last two weeks.  Without a strong angle pointing up or down… identifying a trend a very tricky proposition. During the last week and a half the trend has gone from down to up to down and up once again. This choppiness in direction has caused the the indicators to go flat. Make no mistake about it: even though the market is chopping back and forth, this choppiness is very volatile.

Thursday’s candlestick was a “dark cloud”. This is a bearish candle. A dark cloud is created by a gap up opening that closes down into the body of the previous day’s candle.

***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, 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. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility 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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T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 7: Gold)

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 7 features a chart of the continous Gold contract, using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend of Yen 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: 08/04/07 @ 659.50 and 08/25/07 @ 667.00 and again on 12/08/07 @ 789.40.  At the time of this writing, Gold was trading at 910.50. These three opportunities have turned out to be big winners since the first signal in August. Gold 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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Monday, 28-Jan-2008

Wednesday, 30-Jan-2008

Thursday, 31-Jan-2008

Friday, 01-Feb-2008

T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 2)

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 2 features a chart of Cocoa, using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend of cocoa 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.  Sometimes, the simple approaches outshine the complicated paths to profits.

 Using this strategy, you could have bought the opening price during the following weeks at the prices stated: 2/03/08: $1566; 5/05/08: $1782; 6/09/08: $1873 and 10/13/08: $1812. This week, cocoa has appreciated to $2175.  It’s easy to calculate the profits in these positions.  It’s even easier to trade this approach.  With this set up, traders are not forced to make swift decisions.  If the market opens below a positive T8, in the weekly charts, traders have all week to position themselves at a better price (providing price cooperates).  Multiple time frames are preached by many outstanding technicians.  We are also big believers in examining weekly time frames and letting the larger time period dictate the direction of our trades.  Once the weekly charts create a buying opportunity we can then drill down to daily time frames and try to catch a reasonable retracement to position ourselves long. 

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.

The Future of Futures: 12-07-07 (Friday): A Daily Technical Analytical View of  Futures

OJH (March orange juice): Moving average squeeze provides upside juice!

Orange juice posted its best upward day since mid October.  This strong move has pegged our momentum oscillator, the CMO, to the top of its range.  We admit that the market is overbought here, but we will present strong reasons to buy retracements in the following paragraphs.

The direction of the T8, our exponential moving average and trend definer, continues to point up.  This positive turn arrived two weeks ago and has caused seven of the last eight days to have closing prices above their openings.  Rallies back to the T8 are opportunities to BUY orange juice. Remember, as the market starts to climb: the steeper the angle of the T8, the further this market can rally.  Thursday was a classic example of a market coming down to support (T8) for the first time after the moving average has turned up.

The red circle represents an area where the T3, T5, and T8 have consolidated or “squeezed” together.  We like to call this a “pocket rocket” or simply: compression.   When moving averages compress and form a pocket, many times there is swift movement to the upside (as we are witnessing in orange juice).

Chilly winds blow through the next three months.  Florida is no exception.  Long positions, due to the weather, are always something to consider in OJ, during this time of the year.

 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 Tactics 12-06-07 (Thursday): A periodic look at Tim Tillson’s T8 and how to apply it to the markets for fun and profit.

The T8 is the most useful tool I’ve stumbled across during the last ten years.  Since January of ‘98, when Tillson first published, the T8’s remain under the technical radar.  I’ve collected many helpful formulae during my 35 years in the business.  The T8 is the most fascinating indicator I’ve have encountered.   The T8 is an exponential moving average that defines trend in many of our mechanical trading approaches.  After many years of testing, the T8 shines in two areas:  a. as a trend identifier  b. as suport/resistance.  This is a vast improvement over the hundreds of moving averages I have analyzed over the years.  Two great features in one solid indicator.   

The direction of the T8 is obvious on the March Copper chart.  The T8 is the maroon line.  The T8 seldom waffles.  If the trend turns down, count on a extended run to the downside.  The T8 is sensitive  to important directional changes.  As you can see on the chart, copper and the T8 turned down in tandem.  The timely turn at the top of the Copper chart is typical of its interaction with price.  The larger red arrows, on the chart, are days when price opened above the T8.  The smaller red arrows are retracements to the T8 intraday.  All of these red arrows were strong selling opportunities.  Since the T8 has turned up in the last five days, until further notice, we will be only buying copper (HGH) on retracements to the T8 or openings below the T8.

 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.

Interest Rate Directions 12-05-07 (Wednesday): A Technical Analytical View of Futures, Eminis and Forex for online and day traders.

TYZ (December Ten Year Note): Stariway to Heaven?

Since 10/17/07, when the T8 turned positive, TYZ has trending up, yielding six points to long participants.  In commodity money, this equates to over six thousand dollars.

 We continue to preach the advantages of taking long positions on price retracements to the T8.  Going back to Halloween, there has been seven price retracements to the T8.  All of these opportunities would have been handsomely profitable through Tuesday’s close.

The CMO3, our momentum oscillator, has not smacked its upper trigger level.  Tuesday, the CMO closed at 84.31 and has plenty of room to move higher.  The CMO is such a swift judge of momentum, the indicator is deemed overbought, only at +100 (and then at times, it will stay overbought at that number).  

The direction of the T8, our exponential moving average and trend definer, continues to point up, and has been a strong trend indicator for the last 30-plus trading days. Any retracements to the T8 should be considered as buying opportunities.

Tuesday’s black candle, a spinning top,  is a sign of market indecision and not a reliable candle. Candles don’t give signals everyday and when they do, the signals don’t last forever. 

The Dollar may have well run into the Perfect Storm…..  The Central Bank in Europe is likely to raise interest rates just five days prior to the FED’s meeting where the FED is expected to lower interest rates.  Inflation in Europe has picked up and it seems likely that the European Central Bank will raise short term interest rates to 4.25% from 4%.

This would be a boost for the Euro and a negative for the Dollar.  This may result in higher prices for Gold and other precious metals as well as Oil.  The European Central Bank is facing an increase in inflation in October to 3.3% and economist have raised their estimates to 3% from an earlier 2.7%.  They will be looking at a trend  that may well be headed higher.

The big problem for the European Central Bank is that they publish inflation targets and they have pledged to keep inflation “below but close to 2%” so they will have a problem here.  With a reading of 3% at this time, this is the highest reading in inflation in six years.  At the same time the German inflation rate is at 13%.  The European banks have suffered huge losses because of the mortgage backed securities meltdown.

So the European Central Bank has alot on its plate, and the 19 member governing board has made statements that it is undecided on what it will do.  I see it this way….. I believe the European Central Bank will keep its eye on inflation and increase the interest rate .25% and infuse cash into the financial markets.  If the European Central Bank increases rates and the FED cuts rates, then the gap between both will be reduced to .25%.

And the likely outcomes are:

The Dollar will fall
The Euro will climb
Gold will climb
Oil will climb
US equities will rally but then fall off

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 with analysis and suggested trades) & The Mechanical Monkey where we discuss our mechanical trades with entries and exits.