Someone once told me that women don't make good traders. Many others told me that if one hasn't developed a penchant for trading and investing in the very early years of their life, or for making money, it's highly unlikely they will make it in the field of trading.
And I fall under both categories.
First, I have never been big on matters related to investment. Given a choice, I didn't even want to know my own financial status. I hated filling up my income and expense sheets and I hadn't an inkling what my networth was. The only thing I was very mindful about was not to pay the credit company a single cent in interest, and I use credit cards only to accumulate points (Maybe I have something against the notion of profiting from people who are either not matured, or simply not sensible enough, to not use money they haven't had.)
Secondly - and I'm serious about this - I used to think that people who aspire to accumulate great wealth are self-serving individuals who are not worthy of my respect. I'm not blaming my Dad for inculcating that sort of mindset in me though - he was just concerned that I could grow up materialistic given that things had always come easy for me since I was born.
To cut a long story short, sometime in 2007, something happened and I decided to take a good look at all my assumptions and rules regarding how one is to live his/her life, and question many mental models I had which were limiting my potentials and stifling me. One thing leads to another, and I found myself taking an interest in trading and exploring what seems like a really disastrous career path for someone with my disposition.
"How I trade for a living" by Gary Smith was the first book I read on trading. I had stumbled upon it while browsing at a bookstore. It was sitting on one of those shelves that are hard to reach - says a great deal about how nonconforming it must be. My kind of book. My suspicion was somewhat proven when I flipped to the author's profile page. Without any disrespect to the author, his picture convinced me that this trader (I avoid books on trading that are written by people who don't trade themselves, or have no concrete results to show that I can learn anything from them) probably cares about nothing else but trading. I bought it, because I believe in learning only from people who are obsessed with what they do. Most call that "passion". I prefer to use "obsession", just to make sure I get my point across.
I've since gone on to read many books written by great traders and people who interviewed them. "Reminiscence of a Stock Operator" is one of my favorite. But Gary Smith's is my companion. I've asked a number of traders and none of them have heard of him. Totally explains why he was chucked in an inconspicuous corner of the bookstore.
I suck at doing book review, and I am so glad to find a quality review done by this guy who's helped (not directly, but in his capacity as a software programmer or something along that line...) Smith (who's mathematically challenged...yup, I totally love a trader with a damaged left brain...) to find a way to figure out how much tax he had to pay on the annualized returns the latter was making within a 5-year period.
Check out what he has to say about Gary and his book here
And interestingly, Smith is among those who believed that if you have a passion for something, you probably started showing signs of it as a child. I agree with him whole-heartedly. My brother loved airplanes as a child and he joined the youth flying club when he was in elementary school, and traded his engineering degree (he was 3 months from graduation) for a once-in-a-life time opportunity he couldn't miss to join the SIA. He's now a First Officer. Seabloke loves anything that has a high probability of killing her, and she now helps to run a diving centre after retiring from rescue diving (she especially loves those deep dark caves that are 3000 feet down). Me, I used to want to be a brain surgeon coz I thought it's noble to want to save lives. Then I wanted to be a singer coz...well, i love to sing. Then I just wanted to do something that wouldn't bore me after 3 days of doing it and something that will make me feel like getting out of bed for EVERY morning.
I can't wait to get up to get to my charts and all my trading books now - EVERY morning. So I guess I found my passion. And I want to make a living out of it. Smith and the others might/ would have seen that as an unwise decision on my part. But I've proven time and again to be able to do anything that people say I can't pull off, as long as I'm obsessed in proving them wrong.
But in all honesty, I do love trading. And I don't care about people's opinion and beliefs surrounding the topic in question.
Saturday, July 12, 2008
Thursday, July 10, 2008
Pre-Market Analysis - GS 7/10
GS Daily Chart
GS closed yesterday at the support of my blue channel.
I see a Bullish Hidden Divergence, which tells me that assuming that there are no news that will have bearing on the sector, GS is likely to continue to trade within the channel and very likely to trade within yesterday's range.
With the tug of war going on between buyers and sellers, it looks like GS is going to trade in a range again for most part of today's session.
Had a nice long chat last night with someone I have a lot of respect for, and he shared so much about trading that I went away realizing how little I know about the business. I took a break and didn't trade last night.
In fact, I'm taking a break from scalping and will be doing something different. Holding my position for more than one candle has always been a challenge to me. But I really want to overcome this psychological barrier.
I am grateful to M, who's taught me many things about trading last night, And I'm most grateful that he made me laugh on a day like yesterday.
GS closed yesterday at the support of my blue channel.
I see a Bullish Hidden Divergence, which tells me that assuming that there are no news that will have bearing on the sector, GS is likely to continue to trade within the channel and very likely to trade within yesterday's range.
With the tug of war going on between buyers and sellers, it looks like GS is going to trade in a range again for most part of today's session.
Had a nice long chat last night with someone I have a lot of respect for, and he shared so much about trading that I went away realizing how little I know about the business. I took a break and didn't trade last night.
In fact, I'm taking a break from scalping and will be doing something different. Holding my position for more than one candle has always been a challenge to me. But I really want to overcome this psychological barrier.
I am grateful to M, who's taught me many things about trading last night, And I'm most grateful that he made me laugh on a day like yesterday.
Wednesday, July 9, 2008
Pre-Market Analysis - GS 7/9
I'm making some notes on yesterday's trading session.
GS 7/8 (5-min Chart)
Apparently there was more than short-covering that went on yesterday. The bulls and bears REALLY fought.
Dow fluctuated wildly - it was a choppy market from session open to around 2:30am EST.
As far as GS was concerned, sellers continued to have an upper hand at the open,and found support at the base of the "box range" in my weekly chart (refer to my weekly analysis from Jul 8) - at around 167. A bullish morning star then sent GS up.
GS' climb didn't see it reversing the trend set by the evening star (formed 5 mins after session's open). It did however, succeed in moving price up to Fib level 50%, before it was stopped by a bearish harami/ inside bar, a doji and a hanging man.
From there, GS dipped below the support from previous day's hammer, rallied (2nd rally) back up again to resistance set by previous day's 2 spinning tops.
The 2 shooting stars that formed at this top served to reinforce the resistance (which should become a strong SUPPORT in the session/s that follow, as and when GS pulls back) set by the 2 spinning tops . The validity of this resistance was proven when the 1st rally stopped below it, and again when the 3rd rally stopped at around the level of the first.
Basically, GS traded sideways / in a range until a break out of that box range happened after a series of positive news in the market, including oil's pulling back to hover near 135.9, stabilizing home sales, favorable news from various companies, etc. Finance sector really performed and GS went up steeply for 20 mins after 2:20am EST, and then steadily til session closed.
My trades yesterday were 2 puts bought on GS' decline at the open. As market was erratic, and my indicators were showing mixed signals, I merely sat to watch the very interesting attacks and counter attacks (yes, I'm intrigued by candlestick patterns) that went on when GS was ranging.
Truth is, I had really wanted GS to fall through support, so I can buy a put (because despite what I said about it going up for the week, I just can't get the image of that grisly bear out of my mind! So there's no way I'll be confident holding a call position), only to remember what I said in my pre-market analysis about it showing signs of bullishness (bullish hidden divergence suggesting continuation of upward move that began on Jun 12), and that it should trend with the market. But market was sending mixed signals well into lunch, and oil was going up. Didn't expect the market to go into positive zone, and with GS gradually showing signs of reversing to an uptrend, what I saw was a lack of good reason to continue to trade for the day.
__________________________________________________________________
Pre-Market Analysis for Jul 9's session
GS Daily Chart
Yesterday's price low was lower than that of the previous day's, while MACD's histogram has become less negative.
What this is telling me is that I can still depend on my blue channel for support and resistance. Profit taking will likely continue, and more buying is possible should the positive market sentiments prevail.
GS 7/8 (5-min Chart)
Apparently there was more than short-covering that went on yesterday. The bulls and bears REALLY fought.
Dow fluctuated wildly - it was a choppy market from session open to around 2:30am EST.
As far as GS was concerned, sellers continued to have an upper hand at the open,and found support at the base of the "box range" in my weekly chart (refer to my weekly analysis from Jul 8) - at around 167. A bullish morning star then sent GS up.
GS' climb didn't see it reversing the trend set by the evening star (formed 5 mins after session's open). It did however, succeed in moving price up to Fib level 50%, before it was stopped by a bearish harami/ inside bar, a doji and a hanging man.
From there, GS dipped below the support from previous day's hammer, rallied (2nd rally) back up again to resistance set by previous day's 2 spinning tops.
The 2 shooting stars that formed at this top served to reinforce the resistance (which should become a strong SUPPORT in the session/s that follow, as and when GS pulls back) set by the 2 spinning tops . The validity of this resistance was proven when the 1st rally stopped below it, and again when the 3rd rally stopped at around the level of the first.
Basically, GS traded sideways / in a range until a break out of that box range happened after a series of positive news in the market, including oil's pulling back to hover near 135.9, stabilizing home sales, favorable news from various companies, etc. Finance sector really performed and GS went up steeply for 20 mins after 2:20am EST, and then steadily til session closed.
My trades yesterday were 2 puts bought on GS' decline at the open. As market was erratic, and my indicators were showing mixed signals, I merely sat to watch the very interesting attacks and counter attacks (yes, I'm intrigued by candlestick patterns) that went on when GS was ranging.
Truth is, I had really wanted GS to fall through support, so I can buy a put (because despite what I said about it going up for the week, I just can't get the image of that grisly bear out of my mind! So there's no way I'll be confident holding a call position), only to remember what I said in my pre-market analysis about it showing signs of bullishness (bullish hidden divergence suggesting continuation of upward move that began on Jun 12), and that it should trend with the market. But market was sending mixed signals well into lunch, and oil was going up. Didn't expect the market to go into positive zone, and with GS gradually showing signs of reversing to an uptrend, what I saw was a lack of good reason to continue to trade for the day.
__________________________________________________________________
Pre-Market Analysis for Jul 9's session
GS Daily Chart
Yesterday's price low was lower than that of the previous day's, while MACD's histogram has become less negative.
What this is telling me is that I can still depend on my blue channel for support and resistance. Profit taking will likely continue, and more buying is possible should the positive market sentiments prevail.
Tuesday, July 8, 2008
Pre-Market Analysis - GS 7/8
GS Daily Chart
I see a Bullish Hidden Divergence for period Jun 11 - Jul 7, and that tells me that GS is Not likely to close below my blue channel (refer to chart above). In fact, after the sell-off yesterday (which continued after-hours), I'm expecting some short covering in the first part of the trading session.
Charts aside, outlook remains grim for GS. Bloomberg reported that the company has "lost money on 20 trading days during the quarter, including 9 days with losses of $100 million or more..."
Light sweet crude fell further (65cents down) but not enough to boost investors confidence. Dow, Nasdaq and S &P futures are all down for now. Will see what happens after Bernanke's speech later today.
My view on where GS is going today: the first move is probably up, (GS is currently trading below yesterday's close and is likely going to open lower than this closing price), followed by a dip or a plunge, depending on how bearish market sentiments are.
Truth is, I can't see a definite trend. Gut feel tells me that GS is going to be trading sideways for the week.
GS 7/7 (AAR)
In my pre-market analysis yesterday, I said that as far as the week goes, GS is going to be trading within a confined range of 167 - 184. And if it breaks out of 184, it might just have enough momentum to hit 203.5.
I also said that it's possible GS could trade up at yesterday's session, as the market seemed rather upbeat over the drop in the price of oil.
At the time of my journaling, Brent Crude futures was down just $1.75, and as I mentioned, I expected it to continue to drop further because of the bearish patterns (bearish engulfing pattern at top of uptrend; bearish MACD divergence) I noticed on its chart:
I was not expecting GS to follow the general trend of the market (ever so often, it displays its own trend), but I was willing to be flexible given the very bullish mood in the market then.
And that was all before I caught the news about the regulations that Fed announced it was going to impose...which hit the finance industry, in particular, GS, really hard. This was how much worse GS did compared to her counterparts:
In any case, when yesterday's session began, DOW was going up, up and up, and GS looked set for on a free fall (it did pause now and then on its way down - by consolidating - and only rallied during the last half hour of the entire session).
By then, of course I had gotten wind of the bad news that hit the financials. Actually 2 hours before market opened I did. I told D that I might have to buy against the direction of where I said GS would go for the day, effectively breaking a promise to myself that I wouldn't do that.
But then again, as I said in my earlier entry, whatever analysis I've done, I'm ready to change my views whenever new information surfaces that warrants my reassessing what I've thought and said prior to that.
On top of that, I always keep the big picture in mind.
At the back of my mind is always a huge grisly bear engulfing GS, drooling all over her and waiting for the right time to consume her.
Hence, I bought puts throughout. 3 scalps that I showed in my previous entry.
The 5-min chart that I look at for scalping & daytrading:
At the appearance of a hammer (look for candle in a red box in the chart above) at 1pm EST , whose low incidentally sat on my fib 161.8, I waited for GS to rally coz I wanted to take the ride down if it ever rallied up to 172.3 (where the tip of the upper shadow of a shooting star was touching - more on shooting star later).
But the market had turned so bearish (thanks to financials) by then that even a hammer (2 in fact, side by side) couldn't do much for GS, and it found resistance at Fib 138.2 %.
2 spinning tops sent GS back down but I was not ready to enter a put.
Hammers have an effect on me. I respect supports that come from a hammer at the bottom of a strong down move.
I wanted GS to break down below the support at 161.8 (where the hammer sat), come back up again in the form of a healthy rally, hit what I saw as a key resistance from the shooting star I mentioned above (refer to GS' 5min chart and look for the candle in a blue box), and then I would take the ride down from this top.
"You've exceeded your target for the day, let's turn in early", said D, after I told him my plan.
D probably didn't think a rally is going to happen.
But I expected it to, coz there had been only one very meagerly profit taking before 1pm EST - after the completion of each bullish pattern, which would otherwise have encouraged buying, GS merely went sideways - and I found it hard to believe that there would not be a real rally at least once for the session.
But I went to bed anyway.
And this morning, it was D who went to check the charts the first thing after he got up.
"It happened! At 3:35pm EST! You would have had to wait til then!" He reported excitedly from our study's as I was struggling out of bed.
"Dear, I used to trade in that window, whenever you were sound asleep".
*&$%#@%&*@#(*!
It would have been a nice ride down, as I would have stayed in the trade longer, letting my profits run. Why the confidence?
Coz what halted the rally was an engulfing pattern. Most importantly, the engulfing pattern validated the resistance produced by THE shooting star from 1240pm - the one I had counted on to put a robust ceiling over the bulls. It was a resistance level that I would have trusted.
I accept that trading involves risks, and that losses are inevitable and are part of the cost of doing this business. What I don't, and will never accept, is the taking of unnecessary risks. To go short on a stock that has tested an unconfirmed resistance just once, is, to me, not too different from betting on a horse that has just won its first race.
But in the event that I have taken all the necessary steps to defend my trades, and still make a loss, I would accept that particular loss and take whatever learning lessons it has to offer (sometimes, there's just nothing to learn coz the reason behind a losing trade might not surface immediately, or ever, and I also accept that).
Well, I'm happy with my 3 winning trades, and, 4 hours of beauty sleep.
I also said that it's possible GS could trade up at yesterday's session, as the market seemed rather upbeat over the drop in the price of oil.
At the time of my journaling, Brent Crude futures was down just $1.75, and as I mentioned, I expected it to continue to drop further because of the bearish patterns (bearish engulfing pattern at top of uptrend; bearish MACD divergence) I noticed on its chart:
I was not expecting GS to follow the general trend of the market (ever so often, it displays its own trend), but I was willing to be flexible given the very bullish mood in the market then.
And that was all before I caught the news about the regulations that Fed announced it was going to impose...which hit the finance industry, in particular, GS, really hard. This was how much worse GS did compared to her counterparts:
In any case, when yesterday's session began, DOW was going up, up and up, and GS looked set for on a free fall (it did pause now and then on its way down - by consolidating - and only rallied during the last half hour of the entire session).
By then, of course I had gotten wind of the bad news that hit the financials. Actually 2 hours before market opened I did. I told D that I might have to buy against the direction of where I said GS would go for the day, effectively breaking a promise to myself that I wouldn't do that.
But then again, as I said in my earlier entry, whatever analysis I've done, I'm ready to change my views whenever new information surfaces that warrants my reassessing what I've thought and said prior to that.
On top of that, I always keep the big picture in mind.
At the back of my mind is always a huge grisly bear engulfing GS, drooling all over her and waiting for the right time to consume her.
Hence, I bought puts throughout. 3 scalps that I showed in my previous entry.
The 5-min chart that I look at for scalping & daytrading:
At the appearance of a hammer (look for candle in a red box in the chart above) at 1pm EST , whose low incidentally sat on my fib 161.8, I waited for GS to rally coz I wanted to take the ride down if it ever rallied up to 172.3 (where the tip of the upper shadow of a shooting star was touching - more on shooting star later).
But the market had turned so bearish (thanks to financials) by then that even a hammer (2 in fact, side by side) couldn't do much for GS, and it found resistance at Fib 138.2 %.
2 spinning tops sent GS back down but I was not ready to enter a put.
Hammers have an effect on me. I respect supports that come from a hammer at the bottom of a strong down move.
I wanted GS to break down below the support at 161.8 (where the hammer sat), come back up again in the form of a healthy rally, hit what I saw as a key resistance from the shooting star I mentioned above (refer to GS' 5min chart and look for the candle in a blue box), and then I would take the ride down from this top.
"You've exceeded your target for the day, let's turn in early", said D, after I told him my plan.
D probably didn't think a rally is going to happen.
But I expected it to, coz there had been only one very meagerly profit taking before 1pm EST - after the completion of each bullish pattern, which would otherwise have encouraged buying, GS merely went sideways - and I found it hard to believe that there would not be a real rally at least once for the session.
But I went to bed anyway.
And this morning, it was D who went to check the charts the first thing after he got up.
"It happened! At 3:35pm EST! You would have had to wait til then!" He reported excitedly from our study's as I was struggling out of bed.
"Dear, I used to trade in that window, whenever you were sound asleep".
*&$%#@%&*@#(*!
It would have been a nice ride down, as I would have stayed in the trade longer, letting my profits run. Why the confidence?
Coz what halted the rally was an engulfing pattern. Most importantly, the engulfing pattern validated the resistance produced by THE shooting star from 1240pm - the one I had counted on to put a robust ceiling over the bulls. It was a resistance level that I would have trusted.
I accept that trading involves risks, and that losses are inevitable and are part of the cost of doing this business. What I don't, and will never accept, is the taking of unnecessary risks. To go short on a stock that has tested an unconfirmed resistance just once, is, to me, not too different from betting on a horse that has just won its first race.
But in the event that I have taken all the necessary steps to defend my trades, and still make a loss, I would accept that particular loss and take whatever learning lessons it has to offer (sometimes, there's just nothing to learn coz the reason behind a losing trade might not surface immediately, or ever, and I also accept that).
Well, I'm happy with my 3 winning trades, and, 4 hours of beauty sleep.
Over and Done With
Seabloke, thanks for having stood by me throughout these 4 really lousy months.
There must have been a dozen times that I was so close to throwing myself out my 27th storey unit that I have made it a point to steer clear of my windows.
There were times that we discussed - over kaya toast and nicotine breakfast - what would be the most comfortable way to die and even took into consideration what effect the method with which we use to kill ourselves would have on our fresh corpse.
You've been a gem. Coz you know me so well :-) Never once did you make an attempt to talk me out of thinking morbid.You joined me instead and made fun of death. Never once did you deliver any motherhood statements. You *bleep* more than me, and seemed even more pissed than me over things that bugged me.
I'm done being mad. Am taking down the angry entries and putting things behind me. Life is so short. For everybody.
By now, I've lost track of who started it first.
I just know I want to let live. And I want to make peace - with myself.
Say bye bye to the *bleep* *bleep* entry :-)
Love ya!!
There must have been a dozen times that I was so close to throwing myself out my 27th storey unit that I have made it a point to steer clear of my windows.
There were times that we discussed - over kaya toast and nicotine breakfast - what would be the most comfortable way to die and even took into consideration what effect the method with which we use to kill ourselves would have on our fresh corpse.
You've been a gem. Coz you know me so well :-) Never once did you make an attempt to talk me out of thinking morbid.You joined me instead and made fun of death. Never once did you deliver any motherhood statements. You *bleep* more than me, and seemed even more pissed than me over things that bugged me.
I'm done being mad. Am taking down the angry entries and putting things behind me. Life is so short. For everybody.
By now, I've lost track of who started it first.
I just know I want to let live. And I want to make peace - with myself.
Say bye bye to the *bleep* *bleep* entry :-)
Love ya!!
Monday, July 7, 2008
Pre-Market Analysis - GS 7/7 (Weekly Analysis)
5-Year Monthly Chart
At a glance:
Primary Trend is Up
Secondary Trend: Consolidation after Correction
On closer look, these are what I see:
Although bulls have been in a steady climb since 2005 with only 3 relatively mild bearish months in 2005 and 2 in 2006, the picture changed drastically in 2007, where bears took control half the time.
Granted that the beginning of the 4th quarter saw bulls taking just 2 months to accomplish what the bears took more than 3 months to pull off, bears had succeeded - month after month for 5 consecutive months - in recovering all that they've lost, and price was back to around where it opened in Sept 07, from where the bulls began their 2-month rally.
The length of Feb 2008's candle is an indication of increasingly bearish sentiments.
The following month, however,saw the bears taking a break.
One would think that the hammer that formed would have given buyers some confidence to come in since a hammer after a strong downward move typically spells trouble for the bears, especially when the low of the hammer is reinforcing a support from 2006.
But that didn't happen.
It didn't seem that the bulls were ready to take the helm. Although we did see some buying interest in the month that followed, the rally was short-lived. The month after saw bears taking from the bulls as much as 75% of what the latter had gained.
What I'm seeing is that although the bears have gone on another holiday, the bulls are hardly a threat. In what is primarily an uptrend since 2003, the bears are making increasing bigger corrections and for longer periods each time.
Nobody can predict what's to come, but it's logical to infer that the prevailing sentiments (well, charts' all about sentiments, isn't it?) towards the ailing financial sector, rising oil prices, and a sluggish US economy will definitely continue to put downward pressure on GS' prices (overlay a dow and S & P chart on GS' and you'll see them dancing together, with GS sometimes taking the lead!).
I'm not optimistic about GS's rebound (at least not within this year) from the 50% Fib level it's sitting at now to its high in Oct 07.
Again, simply put, I can't see any indication of a major reversal to the upside for GS in the next few months to come. At least not according to what I see on my monthly chart.
Zooming in to my weekly chart, For the Week of Jul 7
I'm seeing patterns that counter one another:
- A hammer in late Aug sending GS up, only to have
- A shooting star in late Oct took it all the way down
- A bullish engulfment disrupted the plunge but didn't send prices back up immediately despite the long bullish candle
- A short rally ensued after 4 weeks of consolidation and found resistance at April's support, which was also resistance from Dec 2006
- GS corrected to support level shown in red dotted line (reinforcing late Aug's hammer's support)
- A bullish outside bar in the week of Jun 9 was formed and GS rallied for a week
- A bearish engulfing pattern is formed in the week of Jun 23, but whether it will halt the rally will depend on how determined the bulls are and on this week's general market sentiments.
If oil prices indeed continues to slide (Brent crude oil chart showing bearish divergence and also a bearish harami), market's going to move up accordingly. When that happens, and if GS' going to trend with the market, we should see a spike in GS's prices. Why? Because for GS to move up against its longer-term downtrend, there will have to be a heap of optimism and/hence momentum!
So this is what I see:
- Oil has come down by $1.75 from thurs, sending Dow up
- GS has a reinforced support at around 167
- On its intraday chart, GS has closed higher than it's previous day's high on an uptrend (on 5 min chart)
Putting everything together, it seems unlikely that GS will drop today.
For the week, it looks like GS will trade within the box range defined by the the support at 167 and resistance at 184. If it breaks through the ceiling of the box, it's likely to aim for 203.5
It looks possible to me that GS could be trading up today.
At a glance:
Primary Trend is Up
Secondary Trend: Consolidation after Correction
On closer look, these are what I see:
Although bulls have been in a steady climb since 2005 with only 3 relatively mild bearish months in 2005 and 2 in 2006, the picture changed drastically in 2007, where bears took control half the time.
Granted that the beginning of the 4th quarter saw bulls taking just 2 months to accomplish what the bears took more than 3 months to pull off, bears had succeeded - month after month for 5 consecutive months - in recovering all that they've lost, and price was back to around where it opened in Sept 07, from where the bulls began their 2-month rally.
The length of Feb 2008's candle is an indication of increasingly bearish sentiments.
The following month, however,saw the bears taking a break.
One would think that the hammer that formed would have given buyers some confidence to come in since a hammer after a strong downward move typically spells trouble for the bears, especially when the low of the hammer is reinforcing a support from 2006.
But that didn't happen.
It didn't seem that the bulls were ready to take the helm. Although we did see some buying interest in the month that followed, the rally was short-lived. The month after saw bears taking from the bulls as much as 75% of what the latter had gained.
What I'm seeing is that although the bears have gone on another holiday, the bulls are hardly a threat. In what is primarily an uptrend since 2003, the bears are making increasing bigger corrections and for longer periods each time.
Nobody can predict what's to come, but it's logical to infer that the prevailing sentiments (well, charts' all about sentiments, isn't it?) towards the ailing financial sector, rising oil prices, and a sluggish US economy will definitely continue to put downward pressure on GS' prices (overlay a dow and S & P chart on GS' and you'll see them dancing together, with GS sometimes taking the lead!).
I'm not optimistic about GS's rebound (at least not within this year) from the 50% Fib level it's sitting at now to its high in Oct 07.
Again, simply put, I can't see any indication of a major reversal to the upside for GS in the next few months to come. At least not according to what I see on my monthly chart.
Zooming in to my weekly chart, For the Week of Jul 7
I'm seeing patterns that counter one another:
- A hammer in late Aug sending GS up, only to have
- A shooting star in late Oct took it all the way down
- A bullish engulfment disrupted the plunge but didn't send prices back up immediately despite the long bullish candle
- A short rally ensued after 4 weeks of consolidation and found resistance at April's support, which was also resistance from Dec 2006
- GS corrected to support level shown in red dotted line (reinforcing late Aug's hammer's support)
- A bullish outside bar in the week of Jun 9 was formed and GS rallied for a week
- A bearish engulfing pattern is formed in the week of Jun 23, but whether it will halt the rally will depend on how determined the bulls are and on this week's general market sentiments.
If oil prices indeed continues to slide (Brent crude oil chart showing bearish divergence and also a bearish harami), market's going to move up accordingly. When that happens, and if GS' going to trend with the market, we should see a spike in GS's prices. Why? Because for GS to move up against its longer-term downtrend, there will have to be a heap of optimism and/hence momentum!
So this is what I see:
- Oil has come down by $1.75 from thurs, sending Dow up
- GS has a reinforced support at around 167
- On its intraday chart, GS has closed higher than it's previous day's high on an uptrend (on 5 min chart)
Putting everything together, it seems unlikely that GS will drop today.
For the week, it looks like GS will trade within the box range defined by the the support at 167 and resistance at 184. If it breaks through the ceiling of the box, it's likely to aim for 203.5
It looks possible to me that GS could be trading up today.
A New Approach to Using the RSI (Part 1)
Check out this link and see how the RSI - a widely used indicator - is being used with a twist: http://www.tradingacademy.com/news/TradersJournal_BrandonWendell.pdf
If you don't at least take a quick glance at the above before reading on, it's likely I'll lose you...right about...NOW.
This is the journaling of my backtesing of Connie Brown's method (please refer to link above for detailed description of the said method). I'm doing this for the friend who sent me the link and also for my own learning purposes. I've not used the method to trade at all and I strongly advise those who intend to apply it in their trading to first do their own backtesting, then paper trade first before using it in real-money trades.
As Connie Brown's method requires trend confirmation before it can be used effectively, I've added these moving averages for trend determination: EMA 7 & EMA 21. I've decided on these numbers after testing out various other combinations of periods. Backtesting is done on the stock that I'm actively trading: GS.
If you're trading a different equity or instrument, you will have to play around with the number of periods, and also see if the EMA or SMA, or a combination, fits more with the price data of what you are trading. Which MA you use, and the number of periods used, will be based on such factors as the volatility of what you're trading, its trending characteristic, and your personal trading style.
The number of periods most commonly used are: 21, 50, 89, 150 and 200 days. Certain equities use periods of 70 and 100.
I've chosen EMAs and the periods 7 & 21 because I am a very short-term trader, and this setup's degree of sensitivity to signals suits my risk appetite.
I've also adjusted the oversold line for bearish trend to 20 from the 25 that Connie Brown uses, because when tested on GS, 25 sends premature exit signals too frequently. Based on my observation, divergences above the adjusted 20 line make better exits.
The following chart shows an example of how I MIGHT use Connie Brown's method:
In the RSI panel, you'll see various overbought and oversold lines. Ignore the 2 white lines representing 70 and 30. The ones we are looking at are:
For bullish trend - Blue solid line that represent the OVERBOUGHT line ; Red solid line for OVERSOLD
For Bearish trend - Blue DOTTED line that represents the OVERBOUGHT line; Red DOTTED line for OVERSOLD
Briefly on GS' movement prior to May 7: GS was trending down for 2 days on May 2 and May 5. On May 6, it climbed up to a high that's slightly higher than May 2's open, then took a slight dip but still closed above its open and near its high.
On May 7, the session opened with GS gapping up just a little from its previous day's close. As seen in the 5-minute chart above, GS's first move was a dip. The 2nd candle that I've labeled S1 seems like a good place to short the stock because:
1) RSI has crossed over the 50 overbought line (represented by the blue solid line in the RSI panel) from above
2) MA is seeing a bearish cross-over
3) MACD is also showing bearish cross-over and going into bearish region
However, I wouldn't enter a trade here for the follow reasons:
1) S1 sits on May 6's support - given GS' tendency to vacillate markedly in the first hour of the trading session, I'm not sure "down" is the direction it'll continue to take. The length of the bearish candle before S1 would have made me really uncomfortable as i would expect some profit taking following that.
2) To enter at S1, my stop loss would have to be at the high of the 1st candle of the session - the risk I would have to take is far too big for an unknown profit potential. Putting it in another way, the cost of this trade would be too high for me personally.
So much for today. Examples of 2 trades that I would enter will be shown in Part 2 of this topic.
If you don't at least take a quick glance at the above before reading on, it's likely I'll lose you...right about...NOW.
This is the journaling of my backtesing of Connie Brown's method (please refer to link above for detailed description of the said method). I'm doing this for the friend who sent me the link and also for my own learning purposes. I've not used the method to trade at all and I strongly advise those who intend to apply it in their trading to first do their own backtesting, then paper trade first before using it in real-money trades.
As Connie Brown's method requires trend confirmation before it can be used effectively, I've added these moving averages for trend determination: EMA 7 & EMA 21. I've decided on these numbers after testing out various other combinations of periods. Backtesting is done on the stock that I'm actively trading: GS.
If you're trading a different equity or instrument, you will have to play around with the number of periods, and also see if the EMA or SMA, or a combination, fits more with the price data of what you are trading. Which MA you use, and the number of periods used, will be based on such factors as the volatility of what you're trading, its trending characteristic, and your personal trading style.
The number of periods most commonly used are: 21, 50, 89, 150 and 200 days. Certain equities use periods of 70 and 100.
I've chosen EMAs and the periods 7 & 21 because I am a very short-term trader, and this setup's degree of sensitivity to signals suits my risk appetite.
I've also adjusted the oversold line for bearish trend to 20 from the 25 that Connie Brown uses, because when tested on GS, 25 sends premature exit signals too frequently. Based on my observation, divergences above the adjusted 20 line make better exits.
The following chart shows an example of how I MIGHT use Connie Brown's method:
In the RSI panel, you'll see various overbought and oversold lines. Ignore the 2 white lines representing 70 and 30. The ones we are looking at are:
For bullish trend - Blue solid line that represent the OVERBOUGHT line ; Red solid line for OVERSOLD
For Bearish trend - Blue DOTTED line that represents the OVERBOUGHT line; Red DOTTED line for OVERSOLD
Briefly on GS' movement prior to May 7: GS was trending down for 2 days on May 2 and May 5. On May 6, it climbed up to a high that's slightly higher than May 2's open, then took a slight dip but still closed above its open and near its high.
On May 7, the session opened with GS gapping up just a little from its previous day's close. As seen in the 5-minute chart above, GS's first move was a dip. The 2nd candle that I've labeled S1 seems like a good place to short the stock because:
1) RSI has crossed over the 50 overbought line (represented by the blue solid line in the RSI panel) from above
2) MA is seeing a bearish cross-over
3) MACD is also showing bearish cross-over and going into bearish region
However, I wouldn't enter a trade here for the follow reasons:
1) S1 sits on May 6's support - given GS' tendency to vacillate markedly in the first hour of the trading session, I'm not sure "down" is the direction it'll continue to take. The length of the bearish candle before S1 would have made me really uncomfortable as i would expect some profit taking following that.
2) To enter at S1, my stop loss would have to be at the high of the 1st candle of the session - the risk I would have to take is far too big for an unknown profit potential. Putting it in another way, the cost of this trade would be too high for me personally.
So much for today. Examples of 2 trades that I would enter will be shown in Part 2 of this topic.
Sunday, July 6, 2008
Shell
This is NOT an entry about SHELL the oil company.
Shell is what my home is to me.
This blog entry is about my new home (I have to give Seabloke some incentives to check in here now and then...she's complaining that my blog's getting very BORING)
I love my new home.
Ok, that's an understatement.
I LOVE, LOVE, LOVE my new home!
This 100 square meters living area totally confused the curtain guys (all of whom I like to call the "blind men" coz I have more blinds than curtains...haha...yup, EVIL's moi's middle name....) when they first came in. They couldn't identify the rooms; they couldn't find any, in the first place.
That's because all the walls within the unit, with the exception of the one that forms the building's pillar, have been hacked. In their place I've put in 1) a glass door & panel, 2)a dark wooden sliding door (which is actually the door of my mammoth study cabinet and 3) NOTHING.
The men were looking for my bedroom, which was concealed behind the studies.
My study room - my favorite hangout - is separated from the main living space by a glass panel and door that are usually wiped so clean by my cleaning lady that you probably won't be able to make them out, visually, until you knock your nose (or your forehead, whichever is the one that's jutting out) against it.
On most days, I would "unhide" my bedroom and open all my blinds and curtains. The unit becomes a bright and spacious studio.
Did I mention that my home has only 2 colors?
Black and pale lilac. My favorite colors.
In black are: the flooring, the cabinets and wardrobes, the sofas, the settees, D's lazy day-bed, the piano, the platform bed (from where I can see the entire night sky with its twinkling stars when i lie down to sleep - I live high enough to not have any buildings block my view), etc.
In pale lilac: my walls
Everything else that's not black or lilac is glass. Well, except for Al and Keisha. Al is bluish gray, and Keisha is beige.
I know Seabloke thinks my home is COLD. But that's the way I like it, and COLD is so ME.
I've never liked the warm and earthy colors that Seabloke loves - the brown, the orange, the red, the yellow-beige - and I don't really fancy bright colors (the only bright-colored thing in my home is a bright green stool which serves one key purpose: for my little nieces to sit on when they take off and put on their shoes during their visits).
And I utterly hate clutters. The fewer things to get in my way as I move around the house, the better. Hence there's absolutely no loose, dangling decoratives or displays - everything is mounted on the wall and all things that are not fixtures are hidden from view. The place is designed to allow lots of space for Al and Keisha to dash around wildly without having to make an e-brake every 2 meters.
My home is a model of what I want my life to be - clean, cool and bright, with lots of space, no messy clutters, no standing ornaments to trip me nor delicate displays to maintain. My curtains and blinds are made of pure synthetic material (D likes to call it "non-organic") - I made sure they are, coz I don't want anything eating and growing on them.
Yes, I have to agree whole-heartedly with Seabloke (ok, honey, I know you've never said it, but I can see it written all over your face :-) ) that my home is cold. But like I said before, and I cannot emphasize this enough: I LOVE it COLD.
I've gone through enough to appreciate a colorless life. Everything I'm looking at now gives me the visual comfort that I cannot find any place else.
Besides, I do get my healthy and regular dose of color and warmth - from Seabloke, my darling nieces, Pilot, and Ken.
And occasionally, I get more warmth than I ask for from D. But those are more aptly called "fires" - the kind that you FIGHT.
:-D
Shell is what my home is to me.
This blog entry is about my new home (I have to give Seabloke some incentives to check in here now and then...she's complaining that my blog's getting very BORING)
I love my new home.
Ok, that's an understatement.
I LOVE, LOVE, LOVE my new home!
This 100 square meters living area totally confused the curtain guys (all of whom I like to call the "blind men" coz I have more blinds than curtains...haha...yup, EVIL's moi's middle name....) when they first came in. They couldn't identify the rooms; they couldn't find any, in the first place.
That's because all the walls within the unit, with the exception of the one that forms the building's pillar, have been hacked. In their place I've put in 1) a glass door & panel, 2)a dark wooden sliding door (which is actually the door of my mammoth study cabinet and 3) NOTHING.
The men were looking for my bedroom, which was concealed behind the studies.
My study room - my favorite hangout - is separated from the main living space by a glass panel and door that are usually wiped so clean by my cleaning lady that you probably won't be able to make them out, visually, until you knock your nose (or your forehead, whichever is the one that's jutting out) against it.
On most days, I would "unhide" my bedroom and open all my blinds and curtains. The unit becomes a bright and spacious studio.
Did I mention that my home has only 2 colors?
Black and pale lilac. My favorite colors.
In black are: the flooring, the cabinets and wardrobes, the sofas, the settees, D's lazy day-bed, the piano, the platform bed (from where I can see the entire night sky with its twinkling stars when i lie down to sleep - I live high enough to not have any buildings block my view), etc.
In pale lilac: my walls
Everything else that's not black or lilac is glass. Well, except for Al and Keisha. Al is bluish gray, and Keisha is beige.
I know Seabloke thinks my home is COLD. But that's the way I like it, and COLD is so ME.
I've never liked the warm and earthy colors that Seabloke loves - the brown, the orange, the red, the yellow-beige - and I don't really fancy bright colors (the only bright-colored thing in my home is a bright green stool which serves one key purpose: for my little nieces to sit on when they take off and put on their shoes during their visits).
And I utterly hate clutters. The fewer things to get in my way as I move around the house, the better. Hence there's absolutely no loose, dangling decoratives or displays - everything is mounted on the wall and all things that are not fixtures are hidden from view. The place is designed to allow lots of space for Al and Keisha to dash around wildly without having to make an e-brake every 2 meters.
My home is a model of what I want my life to be - clean, cool and bright, with lots of space, no messy clutters, no standing ornaments to trip me nor delicate displays to maintain. My curtains and blinds are made of pure synthetic material (D likes to call it "non-organic") - I made sure they are, coz I don't want anything eating and growing on them.
Yes, I have to agree whole-heartedly with Seabloke (ok, honey, I know you've never said it, but I can see it written all over your face :-) ) that my home is cold. But like I said before, and I cannot emphasize this enough: I LOVE it COLD.
I've gone through enough to appreciate a colorless life. Everything I'm looking at now gives me the visual comfort that I cannot find any place else.
Besides, I do get my healthy and regular dose of color and warmth - from Seabloke, my darling nieces, Pilot, and Ken.
And occasionally, I get more warmth than I ask for from D. But those are more aptly called "fires" - the kind that you FIGHT.
:-D
Saturday, July 5, 2008
Pre-Market Analysis - GS 7/3 (Correction: No Belt Hold)
Pulled up GS' daily chart today and noticed that the candle for Jul 3 is different from that which was initially captured.
This is the updated chart showing a candle with a smaller body and a longer upper shadow (hence effectively disqualifying it as a belt hold):
This is what I see when I look at the daily chart: granted that GS gapped up for 2 consecutive days, the body of the bullish candles were getting smaller and the upper shadows are getting longer (upper shadow represents sellers). The high of Jul 3 has also hit what is by now a 5-month resistance.
Volume has dipped significantly from above average on Jul 2 to way below average on Jul 3 - but given that Jul 3 was the eve of a major holiday, the dip is hardly a surprise. Of course I could choose to look at the unimpressive trading volume as a sign that a reversal of the primary trend (ie. DOWN) is at least NOT around the corner.
Simply put, when I look at GS' daily chart, I just don't see it going up from where it is now in the next few trading days.
Zooming into the intraday (hourly) chart, this is what I see: in an uptrend (more precisely, a 3-day rally in what seems to me to be a general downtrend), GS has gapped up moderately, then dipped gradually and continually to its close. In a full-session trading day, if GS' uptrend has any strength, it ought to have rallied from its first dip back up to at least its open price. Since Jul 3 was a half-day session, it's difficult to tell if its closing without having ever rallied from its dip (after gapping up in an uptrend) actually means anything.
For now, based on the daily chart, it seems that GS' upward move from Jul 1 has lost momentum.
Personally, I like to do a thorough analysis on my weekly and monthly charts for the bigger picture once a week or whenever the prevailing trend seems to be losing strength or when I am totally confused by what I'm looking at on the daily chart.
But that's not going to happen tonight...In any case, charts can tell whatever stories they want to tell, what's fact is real-time price movement.
In a nutshell, before the market opens on Monday, it's rumors, news (on GS, on the other sector leaders, etc), the things that Fed says and does, general market sentiments (movement in the indices) , movement in oil prices (which should be reflected in overall general market sentiments anyways, so I'm going to forget my crude oil chart - I'm going nuts looking at charts!) that will have a more immediate effect on the movement of GS.
This is the updated chart showing a candle with a smaller body and a longer upper shadow (hence effectively disqualifying it as a belt hold):
This is what I see when I look at the daily chart: granted that GS gapped up for 2 consecutive days, the body of the bullish candles were getting smaller and the upper shadows are getting longer (upper shadow represents sellers). The high of Jul 3 has also hit what is by now a 5-month resistance.
Volume has dipped significantly from above average on Jul 2 to way below average on Jul 3 - but given that Jul 3 was the eve of a major holiday, the dip is hardly a surprise. Of course I could choose to look at the unimpressive trading volume as a sign that a reversal of the primary trend (ie. DOWN) is at least NOT around the corner.
Simply put, when I look at GS' daily chart, I just don't see it going up from where it is now in the next few trading days.
Zooming into the intraday (hourly) chart, this is what I see: in an uptrend (more precisely, a 3-day rally in what seems to me to be a general downtrend), GS has gapped up moderately, then dipped gradually and continually to its close. In a full-session trading day, if GS' uptrend has any strength, it ought to have rallied from its first dip back up to at least its open price. Since Jul 3 was a half-day session, it's difficult to tell if its closing without having ever rallied from its dip (after gapping up in an uptrend) actually means anything.
For now, based on the daily chart, it seems that GS' upward move from Jul 1 has lost momentum.
Personally, I like to do a thorough analysis on my weekly and monthly charts for the bigger picture once a week or whenever the prevailing trend seems to be losing strength or when I am totally confused by what I'm looking at on the daily chart.
But that's not going to happen tonight...In any case, charts can tell whatever stories they want to tell, what's fact is real-time price movement.
In a nutshell, before the market opens on Monday, it's rumors, news (on GS, on the other sector leaders, etc), the things that Fed says and does, general market sentiments (movement in the indices) , movement in oil prices (which should be reflected in overall general market sentiments anyways, so I'm going to forget my crude oil chart - I'm going nuts looking at charts!) that will have a more immediate effect on the movement of GS.
Friday, July 4, 2008
Pre-Market Analysis - GS 7/3 (Belt Hold)
I was looking at GS' daily chart and noticed that yesterday (Jul 3)'s candle is a Bearish Belt Hold(circled in green on chart). The high of the candle touches a 4-month resistance that I've drawn by using the low of the hammer that was formed on Jan 9.
The resistance was broken only on Apr 24 with the closing of a long bullish candle above the line. GS subsequently came back down, broke through the line and went further down before going back up to test the resistance again in mid June.
The appearance of a bearish Belt Hold candle suggests either a reversal of the upward move from Jul 1, or a consolidation. The belt hold line is significant when it confirms a resistance - in this case, the 4month resistance mentioned above.
Should GS close above this line in the coming week, it will be a signal that it will continue its uptrend along my green channel (refer to chart).
I will be looking at the weekly and monthly charts to get a bigger picture.
Meanwhile, the daily chart's telling me that 182.3 to 183 is GS' very short-term resistance.
GS 7/3 ( AAR)
So today turns out to be a really bad day to trade. Session ended early at 1am. Might as well...
Was having a breather with D and talking about my trade when he told me that several times during the session, he had wanted to buy a put after I exited from my trade. I asked him for his basis for wanting to enter.
To which he replied,"coz you said it's a down day. And you went and bought a call. hahaha..."
**&%#(*#$*&%%##!
Ok, I did tell him that. I have this habit of telling him just prior to market open, after he knocks off from work, how I think GS is going to move for the day. Most time, I tell him whether it's going to be a bearish or bullish candle on the daily chart, what the range is and how long the body is going to be. For today, I told him GS' going down.
But of course GS gapped up from its close of 178.79 yesterday and opened at 181.95 today.
D stared at his screen and gasped,"GS's going up!".
I was looking at something else on my screen (probably reading my mails, surfing some unrelated sites, etc)."It will come down" I commented casually.
I usually ignore the first half hour of the action coz GS behaves erratically at the start of the session frequent enough for me to not want to waste my time and energy staring at the screen.
When asked how much it will go down, I told him about my green channel and said it should stay within.
So when GS was around $181.2 (shortly after I close my losing position),where price was not too far down from the day's high, D was tempted to buy puts - he figured the only way it's going from there is DOWN. Coz I said so, according to him at "confession time" (see, I always ask D for reasons he wants to enter a trade, just to ensure that he actually has a strategy, and not just using his "gut feel").
And so after market closed at 1am, when we were having a smoke outside our home (the common walkway with a scenic view 27 storeys below shared by us and our only neighbour), D started counting the number of winning trades he would have made had I not stopped him from executing them. I was amused and teased him about his "gambling" style of trading.
He quickly countered that I was worse, and that in future, I should print out what I wrote on my blog and have my "prediction" highlighted so I'll not trade against it.
He got me :-)
Was having a breather with D and talking about my trade when he told me that several times during the session, he had wanted to buy a put after I exited from my trade. I asked him for his basis for wanting to enter.
To which he replied,"coz you said it's a down day. And you went and bought a call. hahaha..."
**&%#(*#$*&%%##!
Ok, I did tell him that. I have this habit of telling him just prior to market open, after he knocks off from work, how I think GS is going to move for the day. Most time, I tell him whether it's going to be a bearish or bullish candle on the daily chart, what the range is and how long the body is going to be. For today, I told him GS' going down.
But of course GS gapped up from its close of 178.79 yesterday and opened at 181.95 today.
D stared at his screen and gasped,"GS's going up!".
I was looking at something else on my screen (probably reading my mails, surfing some unrelated sites, etc)."It will come down" I commented casually.
I usually ignore the first half hour of the action coz GS behaves erratically at the start of the session frequent enough for me to not want to waste my time and energy staring at the screen.
When asked how much it will go down, I told him about my green channel and said it should stay within.
So when GS was around $181.2 (shortly after I close my losing position),where price was not too far down from the day's high, D was tempted to buy puts - he figured the only way it's going from there is DOWN. Coz I said so, according to him at "confession time" (see, I always ask D for reasons he wants to enter a trade, just to ensure that he actually has a strategy, and not just using his "gut feel").
And so after market closed at 1am, when we were having a smoke outside our home (the common walkway with a scenic view 27 storeys below shared by us and our only neighbour), D started counting the number of winning trades he would have made had I not stopped him from executing them. I was amused and teased him about his "gambling" style of trading.
He quickly countered that I was worse, and that in future, I should print out what I wrote on my blog and have my "prediction" highlighted so I'll not trade against it.
He got me :-)
Thursday, July 3, 2008
GS 7/3 (Trades)
Losing trade.
Bought a call in an uptrend and entered on technicals.
Good setup in both 5 and 10 min time-frame.
Exited/cut loss once a doji emerged.
GS consolidated and went down in a series of long-bodied candles after that; at the time of my writing (at 1130pm), GS has never gone up to the level where I entered my trade.
I'm glad I cut my loss in the nick of time.
Mistakes and failures always offer a lot more to learn than successes. What I learn from this trade is:
1) Volume is important - despite the good setup, volume was low, way below the average
2) NEVER to trade against my own view of the direction of the stock - this is my third loss since I started trading with real money and on all three occasions, I traded against the direction of what I thought GS would go for the day. It could be a confidence issue, or it could simply be that all my preparation prior to the open of the session has given me a fairly accurate prediction of GS' trend and I should really adhere to my view...
3) Never to enter during a choppy session - market has been really choppy and GS has been going up and down with the market. Inspite of that, I entered. Pure arrogance on my part to think that I can now trade in the window that I have before today always avoided trading in.
4) Doji is magical. Almost always halts an on-going trend.
Bought a call in an uptrend and entered on technicals.
Good setup in both 5 and 10 min time-frame.
Exited/cut loss once a doji emerged.
GS consolidated and went down in a series of long-bodied candles after that; at the time of my writing (at 1130pm), GS has never gone up to the level where I entered my trade.
I'm glad I cut my loss in the nick of time.
Mistakes and failures always offer a lot more to learn than successes. What I learn from this trade is:
1) Volume is important - despite the good setup, volume was low, way below the average
2) NEVER to trade against my own view of the direction of the stock - this is my third loss since I started trading with real money and on all three occasions, I traded against the direction of what I thought GS would go for the day. It could be a confidence issue, or it could simply be that all my preparation prior to the open of the session has given me a fairly accurate prediction of GS' trend and I should really adhere to my view...
3) Never to enter during a choppy session - market has been really choppy and GS has been going up and down with the market. Inspite of that, I entered. Pure arrogance on my part to think that I can now trade in the window that I have before today always avoided trading in.
4) Doji is magical. Almost always halts an on-going trend.
Pre-Market Analysis - GS 7/3
Very briefly, my take is that GS is continuing in its current downtrend within my pink channel. Range is probably 175 - 180 (enveloped by my green and pink channel). Given the bleak market outlook and sentiment, GS is not going up further from it's slightly upward move yesterday. At least not today.
GS 7/2 (Trades)
There's only one word to describe tonight's session: havoc.
I missed the only good setup to buy calls (In my earlier entries today, I did mention that I was expecting gs to continue to trade within the uptrend channel on my daily chart)- coz I had gone to take my nice warm shower...$%*#(@(* - and bought mostly puts (going against my take on gs' movement...well, I was being flexible and going with the trend...after all, trading is more of an art than hard science to me...)
Anyways, today's definitely not the most fantastic day to trade.
Nonetheless, I did 5 scalps, and none was based on technicals. 4 was profitable; 1 was a loss. Net loss: 13cents per contract.
Something I learnt about myself - trading is more like a game to me than a way to make my living. I am quite sure I'm starting to get addicted to scalping...I'm not as sure that it's necessarily a bad thing though.
Anyways, here's a snapshot of my trades today:
GS' daily chart showing today's candle (traded up my green channel indeed):
I missed the only good setup to buy calls (In my earlier entries today, I did mention that I was expecting gs to continue to trade within the uptrend channel on my daily chart)- coz I had gone to take my nice warm shower...$%*#(@(* - and bought mostly puts (going against my take on gs' movement...well, I was being flexible and going with the trend...after all, trading is more of an art than hard science to me...)
Anyways, today's definitely not the most fantastic day to trade.
Nonetheless, I did 5 scalps, and none was based on technicals. 4 was profitable; 1 was a loss. Net loss: 13cents per contract.
Something I learnt about myself - trading is more like a game to me than a way to make my living. I am quite sure I'm starting to get addicted to scalping...I'm not as sure that it's necessarily a bad thing though.
Anyways, here's a snapshot of my trades today:
GS' daily chart showing today's candle (traded up my green channel indeed):
Wednesday, July 2, 2008
Pre-Market Analysis - GS 7/2 again
Think I see a Bullish Divergence too...gs could be going up towards channel's resistance in the next few sessions.
Was just looking at DOW's daily chart and noticed a long-legged doji followed by a hammer; on top of that, i see a bullish divergence. I'm seeing bullish signals. Job data looks really bad, and oil is hitting higher highs - throw in credit crunch issues and inflation concerns - and I see a downtrend that's continuing. If DOW goes up today, it'd merely be another correction.
Was just looking at DOW's daily chart and noticed a long-legged doji followed by a hammer; on top of that, i see a bullish divergence. I'm seeing bullish signals. Job data looks really bad, and oil is hitting higher highs - throw in credit crunch issues and inflation concerns - and I see a downtrend that's continuing. If DOW goes up today, it'd merely be another correction.
Pre-Market Analysis - GS 7/2
On GS 1 Jul 08
Candle for yesterday's session is sitting on the floor of the green channel that was drawn yesterday (see entry on GS 1 Jul 08). Candles are not forming any significant patterns - other than the tug of war that's going on between the bulls and the bears at higher than average volume in the past 3 sessions. Bears seems to be losing steam and bulls are making some progress..but given that yesterday's bullish candle closed so near to the low/close of the bearish candle 2 sessions before, I tend to think that gs' likely to trade quite flatly today.
Now, on non-farm payroll... Well, that's tomorrow, and I really think that the market has already priced in their expectations by now. So I'm going to skip it. Life's complicated enough.
Back to my daily chart above. I see a Bullish Hidden Divergence - which means that I can still assume that my green channel is reliable, provided that there's no surprise coming from the market or the US government...
Without too much else to rely on, and to make my life simpler, I'm going to give my channel a little faith ie. gs is not going to go down further. My gut feel (very bad words, I know. Can't help it. I haven't a crystal ball. Who does anyways??) is that GS' likely going to go sideways, with small bodies and within a moderate range of $4-6.
Ok, I'm done playing prophet for the day.
Candle for yesterday's session is sitting on the floor of the green channel that was drawn yesterday (see entry on GS 1 Jul 08). Candles are not forming any significant patterns - other than the tug of war that's going on between the bulls and the bears at higher than average volume in the past 3 sessions. Bears seems to be losing steam and bulls are making some progress..but given that yesterday's bullish candle closed so near to the low/close of the bearish candle 2 sessions before, I tend to think that gs' likely to trade quite flatly today.
Now, on non-farm payroll... Well, that's tomorrow, and I really think that the market has already priced in their expectations by now. So I'm going to skip it. Life's complicated enough.
Back to my daily chart above. I see a Bullish Hidden Divergence - which means that I can still assume that my green channel is reliable, provided that there's no surprise coming from the market or the US government...
Without too much else to rely on, and to make my life simpler, I'm going to give my channel a little faith ie. gs is not going to go down further. My gut feel (very bad words, I know. Can't help it. I haven't a crystal ball. Who does anyways??) is that GS' likely going to go sideways, with small bodies and within a moderate range of $4-6.
Ok, I'm done playing prophet for the day.
2692
Thanks, 2692, for your comments.
I don't know who you are, but based on how much you know, I'm guessing you're from within the circle.
I appreciate your advice. The result of my trades tonight is an indication that my state has not been affected ie. I've let live :-)
Thanks for having made my night. :-)
I don't know who you are, but based on how much you know, I'm guessing you're from within the circle.
I appreciate your advice. The result of my trades tonight is an indication that my state has not been affected ie. I've let live :-)
Thanks for having made my night. :-)
GS 7/1 (Trades)
4 Scalps for now (1st half of trading session). Time for a nice warm shower...
Today turns out to be a really nice day for both scalping and momentum trading. 2 divergences after 1225pm- one bullish, followed by a bearish - offered 2 very clear trends based on which one can make quite a killing during the 2nd half of the session.
Here's a snapshot of all my scalps today:
Today turns out to be a really nice day for both scalping and momentum trading. 2 divergences after 1225pm- one bullish, followed by a bearish - offered 2 very clear trends based on which one can make quite a killing during the 2nd half of the session.
Here's a snapshot of all my scalps today:
Tuesday, July 1, 2008
Pre-Market Analysis - GS 7/1
Daily Chart
I see a Bullish HIDDEN Divergence for the 2-day period 29-30 Jun, which I interpret as a possibility that the downtrend (pink channel) is ending
To help me visualize where GS could go, I've drawn an uptrend channel (dotted lines in green). I'm thinking that today could either be another day with a close that's not far off from the open (ie. GS' consolidating), or, a mildly bullish day with GS trading up and within my green channel.
As far as sentiments among the financial sector are concerned, nothing much has changed ie they aren't good. But I was telling D last night that because sentiments are so negative, contrarians will probably start going long, so will those who have been waiting to scoop up fair-value stocks especially if they think that financials have bottomed out. The industry is currently being monitored rather closely by regulators and several changes in policies have been imposed on them; some have taken the initiative to do something ie. reviewing corporate governance rules. All these at first glance seem to be taking the wind out of the industry's sails, but could just prove effective in winning back some investors confidence
Yesterday's very choppy session with relatively long bullish and bearish candles tells me that the views on financials are quite polarized now, mirroring those of the market in general.
So I'm going to shut up now and suggest that as scalpers, we make sure to watch our technicals, keep the news on (briefing.com is a blessing), always wait for price confirmation before even considering an entry, then check to see if indicators are telling consistent stories, and use at least 2 time-frames for entry and monitoring of our positions.
Also, watch the indices. Although sometimes i wonder which is leading which (market leading or individual stocks leading), and GS has this habit of not trending with the market, i still think it's a good practice to keep tabs on the movement of the major indices. For those who find it easier to look at changes in absolute value rather than percentage, simply enter the index's symbol on your trading window like this:
I see a Bullish HIDDEN Divergence for the 2-day period 29-30 Jun, which I interpret as a possibility that the downtrend (pink channel) is ending
To help me visualize where GS could go, I've drawn an uptrend channel (dotted lines in green). I'm thinking that today could either be another day with a close that's not far off from the open (ie. GS' consolidating), or, a mildly bullish day with GS trading up and within my green channel.
As far as sentiments among the financial sector are concerned, nothing much has changed ie they aren't good. But I was telling D last night that because sentiments are so negative, contrarians will probably start going long, so will those who have been waiting to scoop up fair-value stocks especially if they think that financials have bottomed out. The industry is currently being monitored rather closely by regulators and several changes in policies have been imposed on them; some have taken the initiative to do something ie. reviewing corporate governance rules. All these at first glance seem to be taking the wind out of the industry's sails, but could just prove effective in winning back some investors confidence
Yesterday's very choppy session with relatively long bullish and bearish candles tells me that the views on financials are quite polarized now, mirroring those of the market in general.
So I'm going to shut up now and suggest that as scalpers, we make sure to watch our technicals, keep the news on (briefing.com is a blessing), always wait for price confirmation before even considering an entry, then check to see if indicators are telling consistent stories, and use at least 2 time-frames for entry and monitoring of our positions.
Also, watch the indices. Although sometimes i wonder which is leading which (market leading or individual stocks leading), and GS has this habit of not trending with the market, i still think it's a good practice to keep tabs on the movement of the major indices. For those who find it easier to look at changes in absolute value rather than percentage, simply enter the index's symbol on your trading window like this:
GS 6/30 (Trades)
Havoc day, but it's been fun :-)
Momentum Trade
My first momentum (paper) trade:
Bot 10 GS Jul08 180 Put $8.30
Sld 10 GS Jul08 180 Put $9.06
Didn't capture a screenshot of the trade before logging out of the simulated platform and trade record was not there anymore when I logged in again...
Momentum Trade
My first momentum (paper) trade:
Bot 10 GS Jul08 180 Put $8.30
Sld 10 GS Jul08 180 Put $9.06
Didn't capture a screenshot of the trade before logging out of the simulated platform and trade record was not there anymore when I logged in again...
Monday, June 30, 2008
Pre-Market Analysis - GS 6/30
Am in the midst of putting up some sort of a tutorial material to share more about technicals with D, using GS as an example, since we are trading it actively anyways. (Besides GS, I'm also looking at RIMM, DRYS, MON, MOS and...
...ERHE - grotesque looking chart but I've to watch it coz someone in the family has been holding this for 3 years and I'm plotting to execute a swift exit on her behalf once I get D's greenlight to go ahead)...
Briefly on GS' very short-term trend
Everything I see tells me GS is continuing its downward move within the pink channel that I've drawn in my CCC (crazily chaotic chart). Not expecting GS to do anything out of the ordinary today. Been tuning in to CNBC (which was playing in the background as I worked) and haven't heard anything that's changed my view of where GS' heading in the next few days (I'm not going to think beyond that for obvious reasons - the market's irrational, common sense's not common, and Fed is erratic).
More on GS today maybe later if I can find time.
Today's D's birthday and I'm taking him out for dinner after he knocks off. For this year, instead of a proper hallmark card, I've made him a very personalized e-card (Seabloke, in the unlikelihood that you want to see it, you'll have to drop by with my favorite breakfast, coz I can't seem to send it out via email at all...I had to send the file to the folder shared by D and me and had him open it from there...totally spoilt the surprise...E&%(#%%&**....)
It's called an eye for an eye after he gave me an e-cake 15 years ago.
:-D
...ERHE - grotesque looking chart but I've to watch it coz someone in the family has been holding this for 3 years and I'm plotting to execute a swift exit on her behalf once I get D's greenlight to go ahead)...
Briefly on GS' very short-term trend
Everything I see tells me GS is continuing its downward move within the pink channel that I've drawn in my CCC (crazily chaotic chart). Not expecting GS to do anything out of the ordinary today. Been tuning in to CNBC (which was playing in the background as I worked) and haven't heard anything that's changed my view of where GS' heading in the next few days (I'm not going to think beyond that for obvious reasons - the market's irrational, common sense's not common, and Fed is erratic).
More on GS today maybe later if I can find time.
Today's D's birthday and I'm taking him out for dinner after he knocks off. For this year, instead of a proper hallmark card, I've made him a very personalized e-card (Seabloke, in the unlikelihood that you want to see it, you'll have to drop by with my favorite breakfast, coz I can't seem to send it out via email at all...I had to send the file to the folder shared by D and me and had him open it from there...totally spoilt the surprise...E&%(#%%&**....)
It's called an eye for an eye after he gave me an e-cake 15 years ago.
:-D
GS Story
On GS 27 Jun 08 (Fri)
After posting my entry at around 2am, GS went fairly flat and finally consolidated half an hour before market closed. Even though it moved up and down within a narrow range from 2:20am to 3:35am, I had chosen not to enter because the setup I was waiting for simply never appeared.
On the few occasions that D spotted an opportunity for entry, I would point out the reasons that I would not enter if I were him. It's simple for me: Once I see 2 elements that ruin my "perfect" setup, I'll stop counting and just not trade. More often than not, I welcome the chance for a break and will happily go for a stretch or a nice, warm shower.
I don't care about "missed opportunities". It's happened so many times: a nice long trend developed and I didn't do a thing. I know for a fact that had I gone in and made a killing, it would have had been a fluke if I had gone in without first seeing the setup for a proper entry.
GS Story
Anyways, at 9am on Sat (28 Jun), as I was about to do an AAR (After Action Review) on Fri's session, I noticed that D looked like he was rejuvenated enough for a brief tutorial on MACD. So I scrapped my idea of doing an AAR (ok, in all honesty, I doubt I had really wanted to do it in the first place...) and showed him how to identify divergences on monthly, weekly and daily charts.
About 2 hours into the session, D's attention started to dwindle and I was also getting really tired of listening to my own voice.
That was when I decided that putting everything in writing for him would be a better idea.
Something I forgot to mention- I had used a story-telling approach as I went about showing D the trends of GS since 1999 (when it went public). For me, charts always tell me stories. They are very much alive to me and I can look at them for hours and hours without taking my eyes off the screen. I draw lines and channels on them and insert comments and labels and I usually have to capture my messy charts and save them before clearing all the drawn items to draw new things for a different perspective on the same chart.
And below's a screenshot of my crazily chaotic GS daily chart for the period spanning Sep 07 - 27 Jun 08. This is the chart I'm using to tell D the story of GS when it was being traded during that particular period.
After posting my entry at around 2am, GS went fairly flat and finally consolidated half an hour before market closed. Even though it moved up and down within a narrow range from 2:20am to 3:35am, I had chosen not to enter because the setup I was waiting for simply never appeared.
On the few occasions that D spotted an opportunity for entry, I would point out the reasons that I would not enter if I were him. It's simple for me: Once I see 2 elements that ruin my "perfect" setup, I'll stop counting and just not trade. More often than not, I welcome the chance for a break and will happily go for a stretch or a nice, warm shower.
I don't care about "missed opportunities". It's happened so many times: a nice long trend developed and I didn't do a thing. I know for a fact that had I gone in and made a killing, it would have had been a fluke if I had gone in without first seeing the setup for a proper entry.
GS Story
Anyways, at 9am on Sat (28 Jun), as I was about to do an AAR (After Action Review) on Fri's session, I noticed that D looked like he was rejuvenated enough for a brief tutorial on MACD. So I scrapped my idea of doing an AAR (ok, in all honesty, I doubt I had really wanted to do it in the first place...) and showed him how to identify divergences on monthly, weekly and daily charts.
About 2 hours into the session, D's attention started to dwindle and I was also getting really tired of listening to my own voice.
That was when I decided that putting everything in writing for him would be a better idea.
Something I forgot to mention- I had used a story-telling approach as I went about showing D the trends of GS since 1999 (when it went public). For me, charts always tell me stories. They are very much alive to me and I can look at them for hours and hours without taking my eyes off the screen. I draw lines and channels on them and insert comments and labels and I usually have to capture my messy charts and save them before clearing all the drawn items to draw new things for a different perspective on the same chart.
And below's a screenshot of my crazily chaotic GS daily chart for the period spanning Sep 07 - 27 Jun 08. This is the chart I'm using to tell D the story of GS when it was being traded during that particular period.
Saturday, June 28, 2008
GS 6/27 (Trades)
3-Min scalp:
Bought GS Jul 08 180 Put $7.55
Sold GS Jul 08 180 Put $7.75
Exited TWS to let D trade before capturing my trade...
2nd scalp was a loss:
.JPG)
I'm thrilled though, coz it's my first experience at cutting loss.
What happened was that I entered at a point that was quite close to the support of my channel. I would have made a profit had I long the stock instead of a put.
Chose 180 put with a 0.4 delta because gamma was slightly higher than 185 put.
Bad choice. As price dipped, price of my put option was not catching up.
Although the setup was close to perfect, and 5min chart was agreeing with 10-min as I entered, stoch was in oversold region with a bullish cross over in the making and floor of channel was providing good support.
2 minutes into the trade, I noticed the bullish MACD divergence. I exited at a loss of $64 seconds later, immediately after the formation of a spinning top.
I'm happy. I could have lost all that D and I have earned today. I did not reverse my trade and buy a call though. I stuck to my rule and traded according to what appears to be GS' short-term trend. And I was mindful that I was scalping and I wasn't going to turn it into a day-trade just coz I couldn't bear to take a little loss.
At this point, D and I have pocketed a nice profit of $360 for the night, all in a few mins' work. Am now sipping coffee and waiting for an entry.
GS has tanked to 161.8 fib level since the beginning of its session and is now retracing to 61.8.
We'll see what happens next.
Bought GS Jul 08 180 Put $7.55
Sold GS Jul 08 180 Put $7.75
Exited TWS to let D trade before capturing my trade...
2nd scalp was a loss:
.JPG)
I'm thrilled though, coz it's my first experience at cutting loss.
What happened was that I entered at a point that was quite close to the support of my channel. I would have made a profit had I long the stock instead of a put.
Chose 180 put with a 0.4 delta because gamma was slightly higher than 185 put.
Bad choice. As price dipped, price of my put option was not catching up.
Although the setup was close to perfect, and 5min chart was agreeing with 10-min as I entered, stoch was in oversold region with a bullish cross over in the making and floor of channel was providing good support.
2 minutes into the trade, I noticed the bullish MACD divergence. I exited at a loss of $64 seconds later, immediately after the formation of a spinning top.
I'm happy. I could have lost all that D and I have earned today. I did not reverse my trade and buy a call though. I stuck to my rule and traded according to what appears to be GS' short-term trend. And I was mindful that I was scalping and I wasn't going to turn it into a day-trade just coz I couldn't bear to take a little loss.
At this point, D and I have pocketed a nice profit of $360 for the night, all in a few mins' work. Am now sipping coffee and waiting for an entry.
GS has tanked to 161.8 fib level since the beginning of its session and is now retracing to 61.8.
We'll see what happens next.
Friday, June 27, 2008
Pre-Market Analysis - GS 6/27
.JPG)
GS closed slightly above my support at 175.7 yesterday. Will it bounce back up again and reverse the downward trend that began in early May? Beats me. The above-average volume that accompanied yesterday's bearish candle tells me the bears are wrestling over control. Resistance is at high of 186.5... GS is trading at 176.06 now - lower than its close yesterday.
Fundamentals are not telling much. Granted there were reports of not-so-shabby earnings, the sentiments out there are not exactly great because the integrity of GS' financial report has been questioned. Furthermore, GS, along with the other leaders in the sector, are being downgraded - by each other. The sector sucks now. And will be so for as long as the housing and global credit crisis issues continue to plague the sector. On top of that, I'm really not expecting the public to believe that the Fed can continue to offer their helping hand... We're not seeing the bottom yet. Maybe when the rest in the sector begin to plunge in sympathy, that will be a sign...
That said, I'm wondering if there'll be some short-covering today.
Or will the bearish momentum pick up, pushing GS down to my support of 169.84?
Whatever the case, I don't think I'm going to go long on any GS calls in the near term. Esp not with the Dow setting a new 52-week low record...
Have not gone through option prices today. But I'm not expecting cheap puts today.
They were cheap yesterday though(at least for the first half of the trading session). With decent delta and gamma, I was able to pocket about $300 in profit in the first hour of the session, in 2 scalps that lasted merely 3 mins in total.
D was not exactly thrilled though- coz they were just paper trades. Ha ha.
Anyways, puts got pricey generally after lunch but I managed to find good bargains still.
By around 1:15 am, 2 candles with super small bodies and super long upper shadows began calling out to me. The 2nd candle closed below one of my supports, MACD was in bearish region and Stoch was coming down from overbought area. Checked against 30min time-frame to get another affirmation, and then I was in! I had 2 supports that were not too far down, one being a channel (which became support for the 1:30 candle and then a 2nd time for the 2:45 candle).
Barely 4 mins later, I was out. $136 profit. Real money. My first real money trade and first real money profit. Calls for celebration.
So at 2am yesterday, I went out for a smoke with D in my sexy lingerie. Woo hoo!
Thursday, June 26, 2008
Pre-Market Analysis - GS 6/26
On 23 Jun, I mentioned that for at least the next few days, GS is going to consolidate or turn back down after its rally that began 12 Jun.
.JPG)
From the daily chart, it looks like GS is consolidating now. I see a bearish divergence for the period 19 - 25 Jun 08.
The candles seem to be telling a story that reinforces my view that GS is heading back down post consolidation :
Bulls lost momentum on 16 Jun after its rally that began on 12 Jun and bears took control the day after 16 Jun. Bulls made another attempt to seize back control on 18 Jun, lost momentum again on 19, giving up to the bears in the 2 days that follow. Yet another attempt was made by the bulls on 24 Jun, and, finally, a small-bodied bullish candle that closed near its low wrapped up yesterday's session.
.JPG)
From the daily chart, it looks like GS is consolidating now. I see a bearish divergence for the period 19 - 25 Jun 08.
The candles seem to be telling a story that reinforces my view that GS is heading back down post consolidation :
Bulls lost momentum on 16 Jun after its rally that began on 12 Jun and bears took control the day after 16 Jun. Bulls made another attempt to seize back control on 18 Jun, lost momentum again on 19, giving up to the bears in the 2 days that follow. Yet another attempt was made by the bulls on 24 Jun, and, finally, a small-bodied bullish candle that closed near its low wrapped up yesterday's session.
GS 6/25 (Trades)
This shall be a reminder to me to never trade against my view of where GS' going in the very near term ie. for the week:
Wednesday, June 25, 2008
Tuesday, June 24, 2008
Pre-Market Analysis - GS 6/24
As mentioned in my earlier entry, my personal take on GS is that it's either going to consolidate or go down for the rest of the week.
For today, I'll trade according to the support I see on GS' daily chart, which is in the range of 169.8 - 175.7
GS is now trading at 178.24, down from its market close of 178.59 yesterday. Taking this into consideration, I'll include my fib 138.2 level for support. At fib 138.2, GS is at around $163.76.
These are the support levels that I'll use for my scalps tonight, should I decide to trade tonight:
S1 - 175.7
S2 - 169.8
S3 - 163.76
GS & MACD Divergences (for the week of 23 Jun 08)
On GS 23 Jun 08
Here's the text message I left for D an hour and a half before the market opened yesterday, before leaving to pick him up from work:
"178.5 - Support on GS daily chart. Bearish both hidden and classic divergence on monthly, weekly and daily charts. Negative news and sentiments all over. Candlestick pattern also pointing towards a south-bound GS."
And this is GS' daily chart from May to yesterday:
GS' intraday chart from yesterday:
__________________________________________________________________________
Now back to GS 24 Jun 08 (Today).
On GS' monthly chart, these are the 2 consecutive bearish divergences which I hadn't the time to capture yesterday:
There's clearly a divergence for the period spanning Jan07 and May07 (prices reached a higher high on an upward move while MACD failed to do the same), followed by another one for the period between May07 and 0ct07. Both indicate the possible end of the upward trend that started in 2003. And indeed GS began to slide first in June, taking GS down to a fib level midway between 61.8 and 50. The 2nd correction takes GS down to below 61.8, and today, GS is sitting on 61.8 retracement level. Given the generally negative sentiments over financials, a sector that's taken a beating from a credit problem that doesn't seem to get any better, GS might just retrace further and consolidate, or reverse to a downward trend.
_________________________________________________________________________
On GS' weekly chart - Following Oct 07, the weekly chart shows GS going through a period of consolidation from mid Oct to Dec 07 with price hovering in the high range of 201 - 250.
We first see a bearish divergence for 5 - 12 Nov 08, indicating a possible end of the upward move from Sept 07. Indeed price fell to 140 in Mar 08 from Nov 07's 238. In the 2nd week of Apr, we see price going up after 3 weeks of consolidation.
On the week of 28 Apr, GS closed at 200. Here's where a bearish HIDDEN divergence is seen forming - MACD is at a higher value on 28 Apr while GS is at a lower value (when 12 Nov 07 is used as the point of reference) - indicating that the DOWNTREND that began in Nov is likely to continue. Hence I tend to think that the rally in the 2nd and 3rd week of June is but merely a correction in a continued downward move.
On the weekly chart below, the red line shows where the bearish divergence is, and the blue shows the HIDDEN divergence.
______________________________________________________________________
On GS' daily chart - We see a bullish divergence for the period 23 May to 11 Jun, and GS indeed reversed from a low of 161 on 11 Jun into an upward move the day after 11 Jun to close at 187 on 19 Jun.
Zooming out, we see a bearish HIDDEN divergence for the period 2 May - 19 Jun - and this tells me that the downward trend that began on 2 May is going to continue and that the rally from 12 - 19 Jun could be just a minor correction in the downtrend.
On the daily chart below, the red line shows where the bullish divergence is, and the blue shows the HIDDEN divergence.
Zooming out further on the daily chart, we clearly (ok i notice the paradox) see a bearish HIDDEN divergence for the period spanning the end of Oct 07 and 19 Jun 08.
The way I look at this is that the downward move from end Oct 07 is going to continue for a long, long time, and as far as the next few days is concerned, my take is that GS is going down or sideways, not particularly in that order though.
The daily chart below shows the hidden divergence:
Here's the text message I left for D an hour and a half before the market opened yesterday, before leaving to pick him up from work:
"178.5 - Support on GS daily chart. Bearish both hidden and classic divergence on monthly, weekly and daily charts. Negative news and sentiments all over. Candlestick pattern also pointing towards a south-bound GS."
And this is GS' daily chart from May to yesterday:
GS' intraday chart from yesterday:
__________________________________________________________________________
Now back to GS 24 Jun 08 (Today).
On GS' monthly chart, these are the 2 consecutive bearish divergences which I hadn't the time to capture yesterday:
There's clearly a divergence for the period spanning Jan07 and May07 (prices reached a higher high on an upward move while MACD failed to do the same), followed by another one for the period between May07 and 0ct07. Both indicate the possible end of the upward trend that started in 2003. And indeed GS began to slide first in June, taking GS down to a fib level midway between 61.8 and 50. The 2nd correction takes GS down to below 61.8, and today, GS is sitting on 61.8 retracement level. Given the generally negative sentiments over financials, a sector that's taken a beating from a credit problem that doesn't seem to get any better, GS might just retrace further and consolidate, or reverse to a downward trend.
_________________________________________________________________________
On GS' weekly chart - Following Oct 07, the weekly chart shows GS going through a period of consolidation from mid Oct to Dec 07 with price hovering in the high range of 201 - 250.
We first see a bearish divergence for 5 - 12 Nov 08, indicating a possible end of the upward move from Sept 07. Indeed price fell to 140 in Mar 08 from Nov 07's 238. In the 2nd week of Apr, we see price going up after 3 weeks of consolidation.
On the week of 28 Apr, GS closed at 200. Here's where a bearish HIDDEN divergence is seen forming - MACD is at a higher value on 28 Apr while GS is at a lower value (when 12 Nov 07 is used as the point of reference) - indicating that the DOWNTREND that began in Nov is likely to continue. Hence I tend to think that the rally in the 2nd and 3rd week of June is but merely a correction in a continued downward move.
On the weekly chart below, the red line shows where the bearish divergence is, and the blue shows the HIDDEN divergence.
______________________________________________________________________
On GS' daily chart - We see a bullish divergence for the period 23 May to 11 Jun, and GS indeed reversed from a low of 161 on 11 Jun into an upward move the day after 11 Jun to close at 187 on 19 Jun.
Zooming out, we see a bearish HIDDEN divergence for the period 2 May - 19 Jun - and this tells me that the downward trend that began on 2 May is going to continue and that the rally from 12 - 19 Jun could be just a minor correction in the downtrend.
On the daily chart below, the red line shows where the bullish divergence is, and the blue shows the HIDDEN divergence.
Zooming out further on the daily chart, we clearly (ok i notice the paradox) see a bearish HIDDEN divergence for the period spanning the end of Oct 07 and 19 Jun 08.
The way I look at this is that the downward move from end Oct 07 is going to continue for a long, long time, and as far as the next few days is concerned, my take is that GS is going down or sideways, not particularly in that order though.
The daily chart below shows the hidden divergence:
Monday, June 23, 2008
Pre-Market Analysis - GS 6/23
Bearish Divergence Nov 2007 on monthly chart suggests that GS' uptrend since 2003 might just reverse or see a major correction. GS is now sitting between fib level of 61.8 and 50 - if it retraces to 38.2 or even 23.6, we could be looking at a reversal. For now,I'm cluelss as to where it's headed.
Bearish Hidden Divergence on 28 Apr 08 on weekly chart suggests a continuation of the downtrend that began in Nov 07
Bearish Hidden Divergence on 19 Jun 08 on daily chart suggests a continuation of the downtrend that began on 5 May 08.
News on GS has been negative mostly. And there are questions regarding the integrity of their financial reporting etc. Certain comments out there alluded that the cutting of jobs in its investment banking arm is necessitated by the lack of performance in their private equity and hedge funds. Hear say, will keep that at the back of my mind regardless.
Bearish Hidden Divergence on 28 Apr 08 on weekly chart suggests a continuation of the downtrend that began in Nov 07
Bearish Hidden Divergence on 19 Jun 08 on daily chart suggests a continuation of the downtrend that began on 5 May 08.
News on GS has been negative mostly. And there are questions regarding the integrity of their financial reporting etc. Certain comments out there alluded that the cutting of jobs in its investment banking arm is necessitated by the lack of performance in their private equity and hedge funds. Hear say, will keep that at the back of my mind regardless.
Friday, June 20, 2008
Thursday, June 19, 2008
Sea, Air & D
My week to date has been plagued by bouts of migraine attacks and depression.
But there were moments of rapturous bliss – and I have Seabloke and Pilot, my little sister and brother, to thank for them.
Seabloke dropped by this morning with my favorite hotcakes. We had breakfast, caught 2 episodes of Desperate Housewives, gossiped, smoked and badmouthed people. The intriguing thing about Seabloke is her ability to make me feel happy for no good reason. She tickles me the way that no one else could. Everything she says makes me laugh. Even when she’s complaining, she’s delightfully amusing. When it was time for her to leave, I walked her down to the main road to get a cab. She didn’t want me to wait with her under the sun and so we hugged and parted. I took a slow walk back to the lobby, and for the rest of the day, I couldn’t forget the warmth I felt from the sun (I’ve not stepped out since Sunday), and mainly from Seabloke.
Pilot, my little brother, a man of few words and who hardly calls, called in the early evening to tell me he found out that he can have 2 HDB flats under his name and so he can jointly own another flat with a sibling, as long as the sibling fulfils the criteria of not earning an income of more than $XXX. Thinking that he wanted a flat but not a wife, I joked that Seabloke meets the criteria coz she’s a housewife who supposedly earns nothing (ok, Seabloke’s going to bring up the topic of the true economic value of a housewife again– something like $20k per month??). To which Pilot replied: “you didn’t get it, did you? I’m saying I’m an available option”. I was dumbfounded. The only thing I could say after I regained my composure was that I love him. How could I not? He was offering me the assurance that if I ever found myself alone, I won’t actually be, because he’s going to be there for me. I love my little brother, deeply.
Seabloke and Pilot are 2 of a few reasons that I love my life regardless of what curve balls it throws at me. I don’t expect to be loved, because I have come to realize that the onus is on me to love myself. Seabloke and Pilot, and even D, are a gift and blessing from Him that I’m learning not to take for granted.
But there were moments of rapturous bliss – and I have Seabloke and Pilot, my little sister and brother, to thank for them.
Seabloke dropped by this morning with my favorite hotcakes. We had breakfast, caught 2 episodes of Desperate Housewives, gossiped, smoked and badmouthed people. The intriguing thing about Seabloke is her ability to make me feel happy for no good reason. She tickles me the way that no one else could. Everything she says makes me laugh. Even when she’s complaining, she’s delightfully amusing. When it was time for her to leave, I walked her down to the main road to get a cab. She didn’t want me to wait with her under the sun and so we hugged and parted. I took a slow walk back to the lobby, and for the rest of the day, I couldn’t forget the warmth I felt from the sun (I’ve not stepped out since Sunday), and mainly from Seabloke.
Pilot, my little brother, a man of few words and who hardly calls, called in the early evening to tell me he found out that he can have 2 HDB flats under his name and so he can jointly own another flat with a sibling, as long as the sibling fulfils the criteria of not earning an income of more than $XXX. Thinking that he wanted a flat but not a wife, I joked that Seabloke meets the criteria coz she’s a housewife who supposedly earns nothing (ok, Seabloke’s going to bring up the topic of the true economic value of a housewife again– something like $20k per month??). To which Pilot replied: “you didn’t get it, did you? I’m saying I’m an available option”. I was dumbfounded. The only thing I could say after I regained my composure was that I love him. How could I not? He was offering me the assurance that if I ever found myself alone, I won’t actually be, because he’s going to be there for me. I love my little brother, deeply.
Seabloke and Pilot are 2 of a few reasons that I love my life regardless of what curve balls it throws at me. I don’t expect to be loved, because I have come to realize that the onus is on me to love myself. Seabloke and Pilot, and even D, are a gift and blessing from Him that I’m learning not to take for granted.
Wednesday, June 18, 2008
GS 6/17 (Trades)
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One 6-min scalp and two 2-min scalps using Gimme Bars setup (Indicators: BB(10, 1.9) and RSI (4)).
Very nice setup during 2nd scalp as RSI was turning upwards towards and then passed 25, while first bullish candle after a downward move touched the lower band.
Tuesday, June 17, 2008
GS 6/16 (Trades)
1105 EST Shorted GS @ 182.43
1115 EST Covered GS @ 181.90
1220 EST Shorted GS @ 180.91
1225 EST Covered GS @ 180.74
Entry signals from BB, SS, RSI, Fib and 5-day S/R. Was more comfortable going short though weekly and daily chart suggested a short-term rally. GS closed higher than I expected. Depending on earning result tonight, it might just retrace beyond my fib 50 level towards fib 38.2.
1115 EST Covered GS @ 181.90
1220 EST Shorted GS @ 180.91
1225 EST Covered GS @ 180.74
Entry signals from BB, SS, RSI, Fib and 5-day S/R. Was more comfortable going short though weekly and daily chart suggested a short-term rally. GS closed higher than I expected. Depending on earning result tonight, it might just retrace beyond my fib 50 level towards fib 38.2.
Friday, June 13, 2008
Pre-Market Analysis - GS 6/13
GS indeed went up and closed at 166.75 yesterday.
A bullish Harami pattern has formed on the daily chart, which serves to reinforce my belief that GS is going up at least for the next 3 to 4 trading days until it hit my resistance of 177.55 - 177.78.
A bullish Harami pattern has formed on the daily chart, which serves to reinforce my belief that GS is going up at least for the next 3 to 4 trading days until it hit my resistance of 177.55 - 177.78.
Thursday, June 12, 2008
Pre-Market Analysis - GS & MACD Divergence
Started paper trading GS again in early June. Picked up FX again simultaneously and realized that it's still my favorite trading vehicle. But D loves GS...and that is good enough a reason for me to learn to trade equities well.
While I have done endless research on the best indicators to use for short-term trading, and love to experiment with them, I need to settle on one set to help D trade GS comfortably (especially when he's trading real money account!).
Since early this month, the indicators we've been using for price AFFIRMATION were SS(8,3) and RSI(4). We put in EMA7 (NOT for entry, but only for alternative exits from trades) but have hardly used that. I tend to wait for price confirmation firstbut D is usually impatient and will enter based on his usual method (what it is I have yet to figure out...).
Profits from my paper trading activities in Feb (a couple of days), Mid-Mar (a couple of days) and June (3 days to date) is a humble US$1,374.
I haven't an inkling how much D has made in his real money account...he trades almost everyday, and sometimes, i wonder if trading is more like a game to him than a way to get rich...er...?? In anycase, I'm happy that he gets satisfaction out of it. I'm inclined to believe that successful traders are the ones that aim to trade well, not to get rich.
Above all, I think trading shouldn't be TOO boring an activity. Anything that we do shouldn't be boring, for that matter. We can find joy in every activity we engage in; we can find joy in executing the most mundane tasks like folding of clothes and washing of dishes and separating of our dirty laundries into colors and whites. I call that the joy of doing anything or even nothing, in solitude.
I can't quite remember how it started, maybe it was Michael who reminded me, but I was prompted to throw in MACD again for my GS trades after deciding it's a lousy indicator to use for FX trading. I am interested purely in looking for divergences between the MACD and GS's price to identify potential reversal and/or trend continuation.
To complicate matters (my default mode), I look at MACD using a top-down approach (by studying monthly charts first, then weekly and finally daily)and I look for both classic and hidden divergence.
Classic Divergence
Bullish Divergence: In a DOWN move - Lower lows in price which is NOT matched by lower lows in the MACD
Bearish Divergence: In an UP move - Higher highs in price which is NOT matched by higher highs in the MACD
Classic divergences can happen at price tops or bottoms (suggesting possible reversals)as well as at price corrections
Hidden Divergence
Bullish HIDDEN Divergence: In a UPTREND - Lower lows in MACD which is NOT matched by lower lows in price (can be found in corrections in an uptrend and price retest of lows - suggest strength in upward move)
Bearish HIDDEN Divergence: In an DOWNTREND - Higher highs in MACD which is NOT matched by higher highs in price
Hidden divergence suggests trend continuation.
Anyone who's pulled out the GS chart would notice that since the issuance of its IPO in 1999, GS only started its gradual upward trend in 2003. In May 2005, it began to climb steeply from $95 to $230. It retraced once before in Aug 07 to around $162, the level at which we see GS hovering around now, providing what i see as a support for the next few trading days.
I've been telling D since Mar that GS is going DOWN. That's why i've always been more comfortable buying puts and shorting the share. But then again, I noticed that I have no loyalty when it comes to trading - i trade in whichever direction that seems right at that moment (I scalp and I can only scalp), though always keeping at the back of my mind the long-term and short-term trend. I also chuck the issue of value and morals out of the window - i don't know who I'm trading against and I don't want to know. I short as much as,if not more often than, I go long. Since I started trading GS in Mar (I was only into FX before that), I have not been able to stop conjuring up the image of a HUGE polar bear whenever the letters GS comes to mind...
Anyway, today is the first time I'm using MACD on GS to see what I can find and use for my trades tonight. This is NOT my trading plan. It's just a recce of sorts...
MACD Monthly :
+1.JPG)
MACD Weekly:
+2.JPG)
MACD Daily:
+1.JPG)
The way I would interpret the above is as follows:
Monthly Chart showing 2 consecutive bearish divergence (Apr06-Jan07; Jan07-Oct07)and 1 bearish convergence (Aug07-Mar08)tells me that the months to follow will see GS going south ie. it seems its uptrend since 2003 is ending (with GS peaking at 240 in Oct07).
Weekly and Daily Chart both showing bullish divergence suggests potential correction from previous days' downtrend and within the long-term downtrend. There's a possibility for GS to rally up to Fib 61.8 level @ $177.78 (which incidentally is very near my 2 year S/R level @ 177.56) in the next few days. As always, I'll look for price cofirmation.
While I have done endless research on the best indicators to use for short-term trading, and love to experiment with them, I need to settle on one set to help D trade GS comfortably (especially when he's trading real money account!).
Since early this month, the indicators we've been using for price AFFIRMATION were SS(8,3) and RSI(4). We put in EMA7 (NOT for entry, but only for alternative exits from trades) but have hardly used that. I tend to wait for price confirmation firstbut D is usually impatient and will enter based on his usual method (what it is I have yet to figure out...).
Profits from my paper trading activities in Feb (a couple of days), Mid-Mar (a couple of days) and June (3 days to date) is a humble US$1,374.
I haven't an inkling how much D has made in his real money account...he trades almost everyday, and sometimes, i wonder if trading is more like a game to him than a way to get rich...er...?? In anycase, I'm happy that he gets satisfaction out of it. I'm inclined to believe that successful traders are the ones that aim to trade well, not to get rich.
Above all, I think trading shouldn't be TOO boring an activity. Anything that we do shouldn't be boring, for that matter. We can find joy in every activity we engage in; we can find joy in executing the most mundane tasks like folding of clothes and washing of dishes and separating of our dirty laundries into colors and whites. I call that the joy of doing anything or even nothing, in solitude.
I can't quite remember how it started, maybe it was Michael who reminded me, but I was prompted to throw in MACD again for my GS trades after deciding it's a lousy indicator to use for FX trading. I am interested purely in looking for divergences between the MACD and GS's price to identify potential reversal and/or trend continuation.
To complicate matters (my default mode), I look at MACD using a top-down approach (by studying monthly charts first, then weekly and finally daily)and I look for both classic and hidden divergence.
Classic Divergence
Bullish Divergence: In a DOWN move - Lower lows in price which is NOT matched by lower lows in the MACD
Bearish Divergence: In an UP move - Higher highs in price which is NOT matched by higher highs in the MACD
Classic divergences can happen at price tops or bottoms (suggesting possible reversals)as well as at price corrections
Hidden Divergence
Bullish HIDDEN Divergence: In a UPTREND - Lower lows in MACD which is NOT matched by lower lows in price (can be found in corrections in an uptrend and price retest of lows - suggest strength in upward move)
Bearish HIDDEN Divergence: In an DOWNTREND - Higher highs in MACD which is NOT matched by higher highs in price
Hidden divergence suggests trend continuation.
Anyone who's pulled out the GS chart would notice that since the issuance of its IPO in 1999, GS only started its gradual upward trend in 2003. In May 2005, it began to climb steeply from $95 to $230. It retraced once before in Aug 07 to around $162, the level at which we see GS hovering around now, providing what i see as a support for the next few trading days.
I've been telling D since Mar that GS is going DOWN. That's why i've always been more comfortable buying puts and shorting the share. But then again, I noticed that I have no loyalty when it comes to trading - i trade in whichever direction that seems right at that moment (I scalp and I can only scalp), though always keeping at the back of my mind the long-term and short-term trend. I also chuck the issue of value and morals out of the window - i don't know who I'm trading against and I don't want to know. I short as much as,if not more often than, I go long. Since I started trading GS in Mar (I was only into FX before that), I have not been able to stop conjuring up the image of a HUGE polar bear whenever the letters GS comes to mind...
Anyway, today is the first time I'm using MACD on GS to see what I can find and use for my trades tonight. This is NOT my trading plan. It's just a recce of sorts...
MACD Monthly :
+1.JPG)
MACD Weekly:
+2.JPG)
MACD Daily:
+1.JPG)
The way I would interpret the above is as follows:
Monthly Chart showing 2 consecutive bearish divergence (Apr06-Jan07; Jan07-Oct07)and 1 bearish convergence (Aug07-Mar08)tells me that the months to follow will see GS going south ie. it seems its uptrend since 2003 is ending (with GS peaking at 240 in Oct07).
Weekly and Daily Chart both showing bullish divergence suggests potential correction from previous days' downtrend and within the long-term downtrend. There's a possibility for GS to rally up to Fib 61.8 level @ $177.78 (which incidentally is very near my 2 year S/R level @ 177.56) in the next few days. As always, I'll look for price cofirmation.
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