Sunday, June 28, 2009

Wk25: Market Recap

Half the year is over, this is a good time to look back and reflect on trading thus far. As we look at the first 25 weeks on a weekly chart of the S&P500, we are essentially right back where we started, trading in a range for the past 8 weeks.
All charts are now clickable to access larger version!
The internals opened Monday weak to the downside with -2000 readings on the NYSE A/D line. The Federal Reserve’s FOMC Meeting Announced they will continue to hold rates the same and see the pace of economic contraction slowing.
The 20-Day and 50-Day Moving Averages continue to act as areas of consolidation and pivots for the markets. In week 24 we broke down below the 20-Day MA. In week 25 we put in a lower high and closed below the 50-Day MA only to rally back up above the 20-Day MA resulting in a choppy non-trending market. The NASDAQ continues to act as the top line figures leader.

Wk26: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
While we have established a down trend over the past two weeks, it remains in the context of a larger bull trend, which remains in a sideways trend on the year. As we pull out to larger timeframes it becomes clearer why the markets move in such whipsaw motions at times. Traders and investors trading multiple timeframes, strategies, and biases on the same security or instrument results in market movement in the search for equilibrium or market balance.
The short week may provide for light trading as many go on holiday. The three-day weekend will let trader’s recoup and relax.
For us swing traders, we see a range of 880-930 on the S&P500 which are the key short term support and resistant levels at this time. Regardless of which indicators used on the chart, it is important to always begin with price and volume as they are ALWAYS king.

Wk26: Stocks to Watch

With the NASDAQ acting as the market leader at the moment, we called for AAPL, AMZN, and GOOG to remain on your radar in week 25. The three broke above their 20-Day Moving Averages last week and continued higher.
If you didn’t take the trade, ask yourself why not? Was it because you we’re uncertain of which way the broader market was headed? Did you not have a hedge against your long? Was there something about the stock that was not attractive, an indicator, price point, or fundamental data?
As we close the halfway mark on the year, it is a good time to go back and look at your individual trades (winners AND losers) to see what things you could have done better, where you entered successfully, and where your emotions we’re during the trade to name a few.

Reflecting is key to improving in the future.

New highs outweighed new lows for week 25 about 6:1. Short-term swing trades will likely be the most profitable in the week ahead until the whipsaw action ceases and we break out of the current trading range. We didn’t find many stocks providing entry signals, however we do have a bullish bias and have a few stocks on our radar.


CERN, CPSI, RDY (proceed with caution as they are retesting prior all-time highs which could act as major selling areas)

For those option traders, understanding how “verticals” can limit your risk can be a beneficial way to hedge yourself on a particular stock.

Wednesday, June 24, 2009

Trading Lingo

Here you will find terms and lingo used at TJMacTrading and in the Trading World.

Ask - The price someone is willing to sell the stock for.

Ask Size - The number of shares/contracts in supply at that point in time.

Asset - An item of economic value owned by a person or company which can be converted into cash.

Bid - The price someone is willing to buy the stock for.

Bid Size - The number of shares/contracts in demand at that point in time.

Consolidation – A period of indecision in the market where a stock trades sideways. The upper range of this move would be considered resistance and the lower range considered support. The consolidation period is over when one of these two areas (support or resistance) is broken.

Equity - Ownership interest. The monetary value of a security, property or entity less any outstanding debts.

Inside Day - A day in which the entire days range is within the previous days range.

Leverage - The use of derivatives or borrowed capital, such as margin, to increase potential Return on Investment (ROI).

Liquidity - The ability to turn an asset into cash at fair market value.

Offer - See "Ask"

Open Outcry - Auction process where traders gather in the pits and verbally shout their bids and offers to one another.

OPEX - Options Expiration aka. Options Expiry. The third Friday of the month when options expire.

Quadruple Witching - Friday expiration where stock index futures, stock index options, stock options and single stock futures all expire.

Resistance - A price level which a stock or index has difficulty breaking above (ceiling). It is important to go out to larger time frames when looking at support and resistance in order to not overlook past historical congestion areas.

Return on Investment (ROI) - Used to calculate the return or expected return of an investment. The formula is ROI = Net (or expected) Return / Cost of Investment.

Slippage – The difference in the expected price of a trade, and the actual price you are filled at in the trade. (ex: If your order is set to execute at 900, but it actually filled at 900.25 your slippage would be .25)

Support - Price level at which a stock or index has difficulty breaking below (floor). Once support is broken it will typically become new resistance and vice versa, once Resistance is broken to the upside, it will typically act as new support.

Top Line Figures - The four broader market indices S&P500, Dow Jones Industrial Average, NASDAQ Composite, and Russell 2000.

Trader - Someone who buys/sells securities with the goal of profiting from short term swings in the markets.

Underlying – A derivatives base security. In option terms, the underlying is the stock that the option price is derived from. In futures terms it is the commodity the future is derived from.

Volatility Index (VIX) - The VIX is a measure of the market's 30-Day implied volatility expectations. It is calculated using S&P500 index options traded on the Chicago Board of Options Exchange (CBOE). The VIX is most commonly used as a gauge of fear in the market, with a high VIX reading (typically over 30) seen as a highly uncertain and volatile market.

Sunday, June 21, 2009

Wk24: Market Recap

As we continually look to the internals for market confirmation, we want to keep in mind that the Breadth, A/D line and Tick should be used in conjunction with one another to more accurately confirm or deny a move in the markets. The Breadth would be considered the lagging internal of the three indicators with the tick being the front runner an showing the first sign of weakness or strength in a market.

With all the top line figures (S&P500, Dow Jones Industrial Average, NASDAQ Composite, Russell 2000) showing the same trend pattern, we will look at the SPY weekly chart to get a better perspective of what is happening.
We see the potential formation of an inverse head and shoulder pattern on a weekly chart of the SPY, a sign of a strengthening market. Zooming into a daily chart however, we find that a potential head and shoulders pattern is setting up, a sign of a weakening market. Nevertheless, a pattern is not confirmed until it breaks out and after the past weeks consolidation we expect a move to be someone strong.

Wk25: Market Forecast

In the week ahead look for these news announcements to act as potential market movers…
· Tues:
Redbook 8:55 AM ET
· Tues:
Existing Home Sales 10:00 AM ET
· Weds:
Durable Goods Orders 8:30 AM ET
· Weds:
New Home Sales 10:00 AM ET
· Weds:
FOMC Meeting Announcement 2:15 PM ET
· Thurs:
GDP 8:30 AM ET
· Thurs:
Jobless Claims 8:30 AM ET
· Fri:
Personal Income and Outlays 8:30 AM ET
· Fri:
Consumer Sentiment 9:55 AM ET

Lots of economic data and announcements to be had this week so make sure your overnight positions are hedged and you are positioned accordingly for potentially wild moves in the market.
We have three key resistance points to watch out for on the S&P500.
1. The January high.
2. The prior swing high and potential left shoulder of a H&S Pattern.
3. The backside of the up-trend line.

Remember, the market will usually travel in the path of least resistance.

If we cannot push above 930 on the S&P, we will expect to retest the 880 level. If we do however push through the 930 S&P level then 956.23 will be the next resistance point.

Wk25: Stocks to Watch

Continuing our focus on the tech sector as we did last week, GOOG, AMZN, and AAPL are beginning to look rather attracting and are show signs of potential setups. We continue to scan for stocks making new 52-wk highs and 52-wk lows each evening at the close.
As trading slows for the summer this week’s economic announcements should set the tone for the months to come. Most of the market’s “big hitters” have packed up their things and are headed to their favorite vacation hot spots for the next few months. On their return come September however, be prepared to see increased volatility and larger price swings.

Sunday, June 14, 2009

Ready to Rock!

Trader Tim and J-Mac are back and ready to Rock!

LA Traders Expo!

The Los Angeles Traders Expo, June 3-6 was a blast to say the least! Along with listening to speakers like John Carter, Toni Turner, Alexander Elder, Jeff Greenblatt, Don Kaufman, and Jon Najarian we got to mingle with all the guys who run thinkorswim including the one and only, the president of TOS, Tom Sosnoff.
The co-founder of the Trader’s Expo Tim Bourquin also conducts interviews through, where my interview on market psychology and philosophy can be found.Nevertheless another successful expo full of education, great people, and great sites to see, the next Trader’s Expo will be in Las Vegas from Nov. 18-21. We’ll look forward to seeing everyone there!

Wk24: Market Forecast

In the week ahead look for these news announcements to act as potential market movers
· Mon: Housing Market Index 1:00 PM ET
· Tues: Housing Starts 8:30 AM ET
· Tues: Producer Price Index 8:30 AM ET
· Tues: Industrial Production 9:15 AM ET
· Weds: Consumer Price Index 8:30 AM ET
· Thurs: Jobless Claims 8:30 AM ET

Friday is Option Expiry along with a Quadruple Witching, meaning contracts for stock options, stock index futures, stock index options, and stock futures all expire on the same day.

Looking forward, we see a sign of technical strength across the board in the markets, the 200-Day (Exponential) Moving Average has been broken to the upside in the NASDAQ, S&P 500, and Russell, and the Dow is closing in. With the S&P 500 breaking above this level and holding, as we saw with last week’s consolidation is an incredibly bullish sign.
In past bear markets it is the tech sector that has lead the market back to higher price levels. Over the past 3 months the NASDAQ has done just that, breaking its Nov 08 highs long before the Russell, followed by the S&P500 and now we wait for the Dow to follow suit.

Looking for a break of S&P 956.23 to the upside.

Wk24: Stocks to Watch

Watch for a move over last week’s consolidation level on the S&P should send stocks higher. If a breakdown is to occur we would expect to see it happen in one day with heavy selling and high volume. Watch tech stocks like GOOG, AMZN, and AAPL to lead the market higher.

Wednesday, June 10, 2009

TJMacTrading...Who are we?

A short-term trading resource for a long-term future...

TJMacTrading is run by Trader Tim and J-Mac, two traders and long-time friends who deliver their market knowledge, stock picks, and technical analysis to you each week. Short term, day and swing trading is their forte. Concentration is placed on overnight swing trades and intraday E-mini Trades. TJMacTrading brings weekly market forecast, recap analysis, video trading watch lists, trading education and much more the table for users to enjoy!