277 replies to this topic
Posted 07 January 2007 - 12:08 PM
To honor Dr. Bontchev and keep his old thread alive, I thought I would use some of his old trading styles and post a chart of the NDX (QQQQ) weekly.
I learned a lot from Dr. B.
Wish he was still part of this board......
Heres what I use to help me decide on which side of the fence to be on.
I came up with this basically to use as a quick glance type of thing. Either be it long or short.
I'll show it on the weekly NDX here, but I use it for individual issues also.
It all relies on the half year (26 week) moving average (blue line moving average). When it points up, trade from the long side only. When it points down, trade from the short side only.
For long trades, when the MACD is positive (thick black line above thin gray line) then all systems are go with little consideration about entries. When the MACD line crosses over and is opposite but the 26 week ma is still pointing up (such is the case now) then I use daily oscillators at low points for my entries and high points for exits, but still trading from the slope of the 26 week ma.
I use the opposite for short positions.
The Force Index and the slope of the MACD histogram aids in confirmation. When both are positive (or negative for shorts) then I can pyramid my positions and increase the trade size.
So whats it saying now: The 26 week ma is still pointing up so its: trade from the long side. The MACD is saying trade with caution and use the dailies for over sold entry points.
I'll be the first to admit the market looks prime for some consolidation or a nice decline, but until it shows its hand I'm playing it from the long side.
Posted 13 January 2007 - 12:44 AM
I like the word "aids".....used in that fashion. The angle of the slope gives a higher probability that the other indicators will be correct or something along those aligns..
Posted 13 January 2007 - 11:30 AM
Well, you get the drift...thanks.
Heres an update for the weekly NDX. (Q's)
Whats it saying now?
Basically the same as above, except more bullish. The 26 week (thin blue line) is clearly pointed up. The 4 week (green line) made a new high. The short term MACD (lower of the two) had a crossover. MACD histograms turned up. Force Index moved up.
If your not long already, the only way to play it is to look for weakness on the daily charts and then enter a long position. We should get some kind of a pullback as many indicators on the dailies are hitting extremes. I'll post a daily chart below to look for entry points.
I'm not saying we can't get a decline from here (at some point we will) but until we see signs that the market truly wants to turn, I would stay away from trying to pick a top.
Posted 13 January 2007 - 11:51 AM
Heres a simple daily chart from Doc's chart link on the left column top of page. You can use any indicators you like to help find entry points. To make the example simple, here I used only one indicator, the CMO (Chande momentum oscillator). Blue circles show decent entry points (weakness on the daily charts) when the trend is up ( weekly charts above). When I can find the time, I'll talk about money management, the most important part of a trade, because at some point the "buy the dips" part wont be the right trade. Now class is dismissed.
Posted 13 January 2007 - 12:11 PM
I had to change that avatar of Abby.
The "new" one is Abby from 1969 before she turned into the Ape Woman.
Posted 14 January 2007 - 12:27 AM
This is OT but is that really the way she looked in high school, or is that photo stretched a bit. If that is really the proportions of her brainbox, then possibly the APEllation APE-woman is well deserved.
I have many opinions; but I strive not to act on them.
Posted 14 January 2007 - 11:23 AM
Ya, its kinda hard to believe, but that was 38 years ago. Aging does strange things to people. I can't verify the photo, but I did lift it from the Business Week Archives so I think its the real deal.....link is here: http://www.businessw...22/b3580007.htm
X 38 years =
Posted 21 January 2007 - 11:34 AM
OK, lets look at what we have now.
This is once again the NDX (Q's)
The 26-week ma is still pointing up. The ST MACD has crossed over again. Notice as the ma's have moved higher, the MACD signal line, histogram and Force index have traced a more shallow high. These kind of divergences often precede price movements in the opposite way.
Right now we are in one of those tough places in the markets. Earning season has begun and many companies have less than rosy numbers. On the other hand many charts in other sectors look poised to break out (biotech, transports, etc.)
Bottom line: we are still going to give the uptrend the benefit of doubt, but will enter only smaller positions on over sold daily chart conditions. I'll post a simple daily chart below.
Posted 21 January 2007 - 02:03 PM
Heres a simple daily chart of the NDX.
The pullback on Wednesday and Thursday relieved some of the overbought condition on the CMO-3day. Notice the 11/34 ma crossover got close recently but did not occur yet. Still, going by the weekly, we are going to trade from the long side only. An entry here with a tight stop and sound money management will be the ticket.
I use my 2/2 rule for money management. Quite simply, the first 2 represents days and the second a percentage.
If I put on a trade and it closes against me for two closing prices, then I close it out and evaluate from the sidelines. I can always re-enter, but if it is going against me from the start, I need to look further into it. No wish full thinking here, either it performs or I run. Sure, you will run into a whipsaw now and then, but I would rather play it safe than sorry. That rule applies only for the first two daily closes, not a week or two later if I still own it.
The second 2 involves 2% of account equity. If a trade goes against me by 2% of my entire account equity, I bail. Likewise, if a trade looks good, but a logical stop would be greater than 2% of my account equity, I either trade a smaller quantity or pass on the trade all together. The 2% rule has helped me keep my losses to a minimum. It really works well.
Posted 21 January 2007 - 02:11 PM
Heres a look at the transports as mentioned above. With oil falling the transports look to benefit. Waiting for the break...could come any day, but a pullback within can't be ruled out.
Posted 27 January 2007 - 11:26 AM
Pretty much the same situation as last week. Lots of indicators are looking tired. Still, until the 26 week ma turns down and Force Index breaks the zero line we have to play from the long side only- but with caution as noted earlier. Looks like this week could be telling if we get a downdraft to change the indicators. Lots of bearishness out there. Can they all be right? We shall find out soon enough.
Posted 27 January 2007 - 11:36 AM
Here is the daily NDX. (Q's)
Notice the last time the CMO 3-day bounced. It moved above the zero line, pulled back and then shot up. This past week it started the same pattern, but with a little less gusto and a lot more volume to the down side. It will need to get above the zero line soon with volume behind it for this rally to continue.
This pattern that we see here is similar to last year at this time with a slow grinding sideways up (swup), that is difficult to trade in but can be profitable if you are nimble.
Once again, tight stops and sound money management are the rule here.
Posted 30 January 2007 - 11:16 AM
Heres a chart that somewhat contradicts the weekly stuff. Its my version of the Rydex Ratio. There has been some talk of another type of Rydex Ratio on the main board lately, but this is the one I've been watching for years.
Actually, its just a simple ratio chart of the Rydex Q's bull and bear funds. Since Stockcharts only uses the closing prices, I've eliminated them and just use moving averages in its place.
Quite simply it signals to go long when the blue line is above the red. Short when the red is above the blue. Usually you can catch one or two decent moves per year (last year had two very large moves ). The only problem with this ratio crossover method is the whipsaws. The period we are in right now is whipsaw time. That is mainly why I follow the weekly trend first, then look for the Rydex Ratio chart to "lock on" to the trend.
So even though the Rydex Ratio says go short now, we shall wait for the weekly to confirm before going short and try to avoid the whipsaws.
I'll try to post this ratio weekly so we can keep an eye on it.
Posted 04 February 2007 - 11:17 AM
Same old story. Last week the Q's had a decent week and the long side was the right way to play it! Some sectors look good, others are due for a rest. Still, we are not ready to try top picking and short this right now.
Trades should be from the long side only and only on weakness in the daily.
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