Last Day of August: Strategy

I thought about doing a series of tweets but this should be more coherent.

On Friday SPY printed an NR7 candle, which is to say that it was the most narrow candle in at least seven sessions. We can use this range to plot our strategy for Monday.

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Note that the last such NR7 occurrence, on the 18th of this month, kicked off a vicious decline, all too knowingly predicated by deteriorating breadth throughout the summer. My observation this weekend has been that there are far too many people in the ‘V-bottom-continues’ camp, but I will not let that blind me to the possibility of additional upside.

If SPY breaks above Friday’s range, the plan is to stick with long ideas. Only a stubborn mule can’t see the potential to tag the 20sma & former support near $204. If however we open nicely & things unravel to go red, shorts can be initiated with requisite stops at or near the high of the day.

On the other hand, if we break below Friday’s action, seek to get short, as chances are prices stay red, & at the very least we’re likely to fill the recent gap near $194. Here again, this is not to be treated as an entrenched viewpoint. Be willing to reverse course if the market does the same by going from red to green.

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Detailing Watchlist Function

So I spend a lot of time putting watchlists together, but you may wonder how I use them.

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– grand idea is to stack odds in my favor by putting perceived best ideas in front of my face when the bell rings
– always seeking continuation of trend, reversal trades are like kryptonite for me
– those above a 50day sma are longs & vice versa for shorts

A given stock starts moving, then what?

– generally avoid gaps, especially sizable ones, at least until an hour or so has past
– want to see an impulse of between 1 & 3% in planned direction, accompanied by good relative volume
– less than 1% I feel is likely ambiguous move, and over 3% I may be chasing/late
– sit & wait for 15min opening range break, then pounce
– can use mid point of opening 15min bar as a stop

– get rid of noise..within 30mins I’ve eliminated ideas that didn’t move in planned direction, or equally important: have lackluster volume pace
– consult secondary watchlists..these are stocks whose setups I like but didn’t think they’d trigger quite yet..sort them by highest percentage of average daily volume & bring over the movers to focus list

Later, when seeking additional action, I turn to several custom Trade Ideas scans, as well as my filtered view of twitter. At the same time, I’m always keeping tabs on Keith’s chat. Seems like everyday, he nails something big.

Soon after market close, the distillation process begins anew.

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Trader Tip: Tweaking Tweetdeck to Tap Technicians

2015-04-19_0716I am a long time fan of tweetdeck used in combination with twitter’s list feature.  Here I will explain the details of one particular column I’ve created within the application. Lately this is the only content that I watch intraday, and it is the only column that I fully digest..meaning, I never miss a post.  I check it morning, noon, and night.

What I have done is taken my core list, created a column for it in tweetdeck, & then I use the filter feature to scan for tweets that include both a dollar sign ($) and the word ‘photo’. The feed will therefore only show me tweets about stocks that contain charts uploaded to twitter.

(Note, the actual url for pictures hosted by twitter contains the word photo; the pic.twitter.com domain that we see is a shortened version to allow users more free characters when composing a tweet.)

Twitter bought tweetdeck for $40 million after a bidding war in May of 2011.  I use the desktop version, it has been extremely stable, and I have noticed twitter is still improving it, most recently allowing for a full sized view of images when navigating to something specific while the app is maximized.  Try it out if you haven’t already.

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Open Letter to @szaman

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Wanted to begin by saying thank you for the countless charts you’ve shared. I’ve been piggybacking off your work for years.  One of the last things I do after conducting my scans and before going to bed each night is to check the blogs of several accomplished chartists, yours included. I use @feedly which means instead of navigating to various websites, everything is sent directly to me.

Sometimes when I see a particularly compelling setup.. for sake of ease I’ll just straight up screen capture it right there and publish to twitter. Usually, I let the reader know where I got it. In fact, you may not remember, but I used to tag you often.

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However, not once did I get so much as a favorite, let alone a response. After a while I figured you did not care. Which made sense to me, because I don’t care.

I say spread my charts far and wide. Go ahead, do so without attribution. I know deep down that what goes around comes around, and besides.. imitation is the sincerest form of flattery. Acknowledgement is simply a welcome bonus.

So yes, I selected FSLR as the best chart from your watchlist on Monday, shared it, and you only noticed because I was right.  Let it be known that never did I claim it as my pick, nor my chart.

Equally important is this: Avid followers will attest to my regular twitter community give back.. by way of hat tips, compliments of, frequent follows, re tweets, shout outs, etc. What you see above is not an exception.  Please add a logo to your images if you feel it necessary, but one should not expect to always be cited in a transitory, micro blog format.

In closing, I respect your skills & do not thrive on confrontation.  I share the best charts I can find.  Recently one of yours fell into my lap.  I sincerely wish you & the entire bulls crew raging success. I will also let you know the next time I fancy one of your charts.

Cordially,

@chartseer

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2015 Action Plan

I am working hard to let the following conditionals guide my daytrading:

When it comes to going long—

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Basic mechanical framework for deliberate alpha capture (versus acting spontaneously)
1) Market open at least 10mins, with minimum 20mins left in the session
2) No longs if SPY is red by more than one percent
3) Relative volume: run rate minimum 5% greater than SPY.. stocks w/ light volume = no trade
4) Stock is trading up between 1% & 10%
5) Average daily volume no less than 300k
6) No market order until at least 10mins on watch.. avoid impulsivity
7) No limit order until at least 5mins on watch.. never buy tips or scan hits w/ immediacy
8) Stop loss must be determined prior to inserting buy order & is not to be more than 2 tics below 15min 20sma
9) Place stop loss in order book immediately following entry

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Mandatory moving average locations (adherence to which prohibits counter trend trading)
10) Price above daily 8sma
11) Price above hourly 8sma
12) 15min 8sma positioned above 20sma
13) Seek to execute near rising 15min 8sma with stop below 20sma

Overheated indicators (fools rush in)
14) Price must not be near or above daily upper bollinger band = froth, too overbought*
15) Price must not be near or above hourly upper bollinger band = relax, wait for 15min pullback to 8sma*

*exception: allow for entry above upper bollinger bands when they’re contracting, especially after prolonged pinch, or even when they just begin to expand.. but after multiple bars & cycle of volatility, banging on upper bollinger band —avoid setup.. sheep chase / too late

And then conversely, when shorting—

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Basic mechanical framework for deliberate beta capture (versus acting spontaneously)
1) Market open at least 10mins, with no fewer than 20mins remaining in the session
2) No shorts until SPY trades below open for at least 15mins
3) Relative volume: run rate minimum 5% greater than SPY.. stocks w/ light volume = no trade
4) Stock is trading down between one half & 5%
5) Average daily volume no less than 300k
6) No market order until at least 10mins on watch, avoid impulsivity
7) No limit order until at least 5mins on watch, never buy tips or scan hits w/ immediacy
8) Stop loss must be determined prior to inserting short order & shall not be more than 2 tics above 15min 20sma
9) Place stop loss in order book immediately following entry (never more than 1%, lessen size if necessary)

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Mandatory moving average locations (adherence to which prohibits counter trend trading)
10) Price below daily 8sma
11) Price below hourly 8sma
12) 15min 8sma positioned below 20sma
13) Seek to execute near declining 15min 8sma with stop above 20sma

Overheated indicators (fools rush in)
14) Price must not be near or below daily lower bollinger band = blood = too oversold*
15) Price must not be near or below 15min lower bollinger band = relax, wait for relief rally

*exception: allow for entry below lower bollinger bands when they’re contracting, especially after prolonged pinch, or even when they just begin to expand.. but after multiple bars & cycle of volatility, banging on lower bollinger band —avoid setup.. sheep chase / too late

**rules are subject to change, but only after the market has closed

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