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.

 

 DOW: Play Now | Play in Popup | Download (582)

DOW Directions 03-27-08 (Thurday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Weekly trend caps upside market movement.

Wednesday’s market continued its choppiness and closed down -109.74.  Volatility still is the name of the game.  Whether we move up or down on a daily basis, we continue to chop in a volatile manner. 

The daily StoRSI, our momentum oscillator, turned down once again. This is the fifth or sixth directional change in the StoRSI in the past two weeks. The important fact is that the StoRSI penetrated the upper trigger level on Tuesday and is now moving down from that lofty area.  It is quite clear, on the chart, that the market reacted to the downside during previous penetrations of the upper trigger level.

The T8 (maroon line), our moving average that defines trend, changed directions last week and the market has responded with mostly upside action.   This new leg to the upside could be short-lived when we consider the negative technical aspects of the weekly chart.  The daily charts tell one story, the weekly charts can at times, tell a very different story.    We expect price to retrace to the uptrending T8.

Wednesday’s candlestick formation is a “evening star” pattern.  The can be a very significant candlestick pattern.  Monday’s action was a strong white candle.  On Tuesday we saw a spinning top and then on Wednesday a weak black candle.  This formation tends to stop price direction to the upside.  Look for lower prices from this formation.

***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.

 

 DIA: Play Now | Play in Popup | Download (934)

DOW Directions 03-12-08 (Wednesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW logs best day in five year!

Tuesday’s market pushed to the fourth all-time highest gain and the highest point gain in five years. The amazing +416.66 gain recovered most of the -500 loss the DOW experienced during the previous three days.   Yesterday, we stated that the DOW deserved a “dead cat bounce”…due to its oversold situation.  The DOW didn’t bounce, it leaped into the sky like Superman.

The daily StoRSI, our momentum oscillator,  powered up from its oversold position on Monday.  After a week of wallowing below its lower trigger level, the StoRSI moved more than halfway up toward the upper trigger level.  Yesterday we blogged: “This market is set up to make a “dead cat bounce”.”   It bounced like a superball!   Any strength on Tuesday will send the indicators and the underlying price to resistance areas.  Three scenarios are possible:  a. the least likely is that Tuesday’s action is the beginning of a new major trend to the upside  b. the market rallies on Wednesday and the StoRSI moves over its trigger level, price moves to the downtrending T8 and we resume the downtrend that we are currently in c.  the market moves to the resistance area on Tuesday and turns down without fullfilling its upside momentum potential (the most logical scenario).

The T8 (maroon line), our moving average that defines trend, continues its downward direction. Even with all the upside movement of Tuesday, this continues to be a negative sign. Yesterday we stated: ”…as price drifts away from the T8 and creates a large distance between the two (price and the T8), the tendency is for price to revert to the mean (T8). We haven’t seen this type of distance between price and the T8 since the low of January 22nd.”  Yesterday, we basically imitated the action we saw during the third week in January.

Tuesday’s candlestick was a big white candle. This is always a good sign, but of no significance in this case. Candles draw patterns of supply and demand. These supply and demand patterns have a high degree of predictability. 

***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.

 

 DIA: Play Now | Play in Popup | Download (421)

DOW Directions 03-06-08 (Thursday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow’s recent “spinning tops” adds to confusion of market direction.

Wednesday’s market went up and down and closed with a bit of a spurt.  The confusion continues as the market continues to trade in a consolidation pattern.

The daily StoRSI, our momentum oscillator, has finally penetrated its downside target (the lower trigger level). Usually when the momentum sinks below the lower trigger level, the odds start to favor a bounce to the upside.  What we like to see is a “V” - bottom when powering out of the lowest momentum levels.  Instead, the StoRSI continues to skid along its lowest level.  At times, this inability to reverse direction can be troubling and lead to lower prices.

The T8 (maroon line), our moving average that defines trend, is gaining momentum to the downside.  The steeper the angle becomes in the T8, the more trouble the market will have gaining upside momentum.  Price and the T8 have been confined to a tight trading range and until we break out of the trading range (red-dashed line) direction will be difficult to discern.

Wednesday’s candlestick was a spinning top.  Spinning tops are signs of indecison and the market continues to demonstrate confusion at this level.  Tuesday’s hammer should hold price movement to the downside as we continue the sideways action this week.

***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.

 

 DIA: Play Now | Play in Popup | Download (385)

Our mission is to empower traders with timely information for improving stock and commodities portfolio results with technical analysis. How do we accomplish this, access, research and feedback.

It is well known that human emotions can interfere with making sound decisions when managing stock and commodity market commitments.  Teach Talk Trade has developed mechanical trading approaches designed to remove the emotional factor from your stock market decisions.  Online trading using technical analysis along with using Metastock is a key you your success.
Test drive our services for FREE.  Sign up for the 7 Day Free Trial.  You will get access to The Morning Call which is a 25 minute audio with over 40 charts.  We discuss Commodity Futures, ETF’s, E-mini’s and Equites.  Uncle Steve will layout the pre market conditions and discuss many of the charts with possible entry and exit points.

Most importantly, we offer an objective and consistent approach to trading. The information, contained at this site, can be used as a tool to increase your ability to manage short-term market volatility. These signals can supplement your existing research with powerful market-timing tools.

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.

Trading Tips in this Volatile Market….

 No matter what the trading  environment that you are in, all good traders know that the key to staying in the  game is maintaining a good risk & money management strategy. While most traders will simply define risk management as “loss control”, there is really more to it. Risk management should be the constant modulation of risk exposure to a constantly changing market. What is this exactly?

Most traders will set their entire risk management strategy to setting and adhering to “stop losses.” But this falls far short of what risk management really is. Risk management strategy just using simple stop losses would be equivalent to saying “I am safe in my car because I have brakes.” Needless to say, the “brakes” are only part of an entire system of managing risk in a constantly moving environment such as street traffic. The markets are similar to the streets. There are far more actions we can take to minimize risk besides the brakes: there is steering, controlling the throttle, the path you take, “your trip preparation,” mapping your route, the times you drive, the amount of driving you do, not driving while “under the influence,” there are so many factors that affect risk levels, that we cannot possibly reduce the entire risk control strategy down to “brakes,” or in the case of trading, “stop losses.”

How we make and lose money is the end result of our interaction with the market. If we do not interact, we neither win nor lose. If we interact too much or too little, we assume higher levels of risk. Risk management should be the constant “adjustment” of our risk exposure based on market conditions and our very own performance.

How can you modulate your risk exposure? There are 3 primary ways:

* SIZE: How large or small our positions are, based on our account values. The more we expose our account, the “larger” the exposure.
* FREQUENCY: How often we are in-and-out of the market. The more frequent we trade, the more we are exposed to the markets motions over time, the more risk we assume. Also, commission costs become a factor that significantly affects risk levels as we increase frequency.

* DURATION: The longer we are in each trade, the more opportunity the market has to travel, the higher our risks will be.

To properly modulate your risk you have to assess and adjust all three areas of exposure - size, frequency and duration. As you increase one, you must compensate by lowering another.

The biggest single error most traders commit is to place too much of an emphasis on one area of risk exposure while ignoring the other areas. In the end, by ignoring some of the other exposure areas, a trader is left watching his trading account dwindle in size as the losses mount.

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 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.

 

 GC: Play Now | Play in Popup | Download (441)

DOW Directions 01-31-08 (Thurday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Buy the rumor, sell the fact.

Wednesday’s action saw the DJIA slide down -37.47.   After the FED announced its rate cut, the DOW rallied, only to peel off all the rally points and end in negative territory for the day.

The StoRSI, our momentum oscillator, has penetrated its trigger level of +90 and now is headed in a negative direction.   This high StoRSI level and subsequent turn to the downside suggests downside action for the near term. The weekly momentum is a completely different story. The weekly StoRSI is bottoming and this is a very positive sign for the market. We always suggest and encourage traders to look at and analyze the weekly charts.

The market continues to affect the T8 in a negative fashion.  Although the T8 is trying to turn up, we have no evidence that it will happen.  As long as the T8 is negative, we will continue to approach the market from the short side.

Wednesday, the market posted a “shooting star”.  Shooting stars are supply and demand days when the market traces a large wick to the upside and closes at the bottom of the range, leaving a little solid body.  This is a directional stopper to the upside.  Seldom does the market rally after posting a shooting star. 

Please keep and mind and read the following thoughts on volatility. We have been preaching about volatility since August and we don’t believe that things will calm down for many, many 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, 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.

 

 DIA: Play Now | Play in Popup | Download (441)

DOW Directions 01-29-08 (Tuesday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market jumps +176.72 as volatility continues.

Monday’s action saw the DJIA climb up +176.72.   The DOW continues to swing wildly on a day to day basis.  Friday’s big drop was matched by Monday’s large gain.  Volatility continues to be the outstanding feature of this market.  Last Friday, the market attempted to continue its rally and was met with resistance when the market opened above the downtrending exponential moving average (T8).  Monday, the market opened below the T8 and closed above the T8 (our exponetial moving average).

The StoRSI, our momentum oscillator, has penetrated its trigger level of +90 and is now overbought by our objective standards.   Near term appreciation could be difficult.  The weekly momentum is a completely different story. The weekly StoRSI is bottoming and this is a very positive sign for the market. We always suggest and encourage traders to look at and analyze the weekly charts. For the moment, comparing the daily and weekly charts leads to a somewhat confusing picture: expected weakness in the daily charts, but expected appreciation in the broader, weekly time frames.

Last Friday, the market opened above the downsloping T8 and we sold the market based on those circumstances.  Tuesday’s opening could easily be higher than the T8 and we will be pursuing the same strategy: shorting the DIA if it opens above the downsloping T8.

Monday’s candle was a large, white candle of little or no consequence.  

Please keep and mind and read the following thoughts on volatility. We have been preaching about volatility since August and we don’t believe that things will calm down for many, many 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, 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.

 

 DIA: Play Now | Play in Popup | Download (457)

DOW Directions 01-28-08 (Monday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Bearish engulfing pattern could lead to further downside.

Friday’s action saw the DJIA down -171.44…as the DOW continues to swing wildly on a day to day basis.  Last week’s attempt at rallying was met with resistance when the market opened above the downtrending exponential moving average (T8).

The StoRSI, our momentum oscillator, has climbed almost back to its upper trigger level and as of Friday, began to lose its strong upward inclination.  As we eluded to on Friday, the momentum for the DIA is near exhaustion on the upside.  A weakening at this level is negative.  The weekly momentum is a completely different story. The weeklies are bottoming and this is a very positive sign for the market. We always suggest and encourage traders to look at and analyze the weekly charts.  This leads to a somewhat confusing picture:  expected weakness in the daily charts, but hope in the broader, weekly time frames.

As we said on Friday:  “Openings above the T8, on Friday, should be viewed as selling opportunities.”  This opportunity set up in most of the stock indices and many individual stocks.  This strategy, if followed on Friday, led to large profits on the close.

Friday’s candle was a large, black candle that is termed a “bearish engulfing” candle.  This “outside day, a day when price gaps up and then closes below the previous low, is a very negative candle.  It usually leads to weaker prices.    

Please keep and mind and read the following thoughts on volatility. We have been preaching about volatility since August and we don’t believe that things will calm down for many, many 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, 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.

 

 DIA: Play Now | Play in Popup | Download (415)