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  • #261
  • Aug 21, 2012 12:17am Aug 21, 2012 12:17am
Split, to take our convo out of PM, we are in a slow season for PMs naturally.

A lot of people are on vacation, another Indian buying season will start in September. And the price usually starts to swing to the tune of 50 bucks or so a day for Gold.


Base metals are very, very, reliant on demand and who is seeking them.

The PMs are now even more than ever considered an investment and something to hold onto long term.

The only base metal I hold LT is copper b/c I see huge upside potential above 5 USD per lb. futures.

Steel? No, not gonna hoard that, - not saying it can't make you cash, but, base metals have more rapid, unpredictable swings than do the PMs.

I hope this makes sense.....

The chart can change.
XAU-XAG/USD_Gold n Silver Trader's Thread = Technicals, Fundamentals & News
  • #262
  • Aug 21, 2012 6:00am Aug 21, 2012 6:00am
Quoting XTrade
Split, to take our convo out of PM, we are in a slow season for PMs naturally.

A lot of people are on vacation, another Indian buying season will start in September. And the price usually starts to swing to the tune of 50 bucks or so a day for Gold.


Base metals are very, very, reliant on demand and who is seeking them.

The PMs are now even more than ever considered an investment and something to hold onto long term.

The only base metal I hold LT is copper b/c I see huge upside potential above 5 USD per lb. futures.

Steel? No,...
X,

I totally agree with the fact basic metals are driven by physical demand. And with news that China is headed for a hard landing and the EU going into an economical crisis. The XME should be expected to plummet, but that is not what my chart is telling me. To me, only price pays, fundamentals are good however, they only support price.

My chart on the XME tells me that a breakout above $43.50 could initiate a strong bull move in all types of metals. I am already slightly a biased bull on gold especially if it takes out the well known $1650 level. A breakout in XME will confirm my bullishness in gold due to the fact that the two move in tendon and the fact that XME lead gold on several occasions in the past (my post above).

It will be interesting to see how things play out.
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  • #263
  • Aug 21, 2012 9:41am Aug 21, 2012 9:41am
Here is one stock that is lining up perfectly, almost too perfect to be true.

The stock is also backed up fundamentally as the grand daddy of stock investment, Warren Buffet has invested in it!!!
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  • #264
  • Aug 22, 2012 2:42pm Aug 22, 2012 2:42pm
Hi Split, would you consider to buy a long swing if price closes above $35,50 with SL at $33,50 and 1st target at $38,50? I think that it has good fundamentals... what do you think about it?

Is it relevant the fact that tomorrow presents earnings?

Thanks.
Greg
Attached Image(s) (click to enlarge)
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  • #265
  • Aug 23, 2012 1:15am Aug 23, 2012 1:15am
Quoting gregofx
Hi Split, would you consider to buy a long swing if price closes above $35,50 with SL at $33,50 and 1st target at $38,50? I think that it has good fundamentals... what do you think about it?

Is it relevant the fact that tomorrow presents earnings?

Thanks.
Greg
Hi Greg,

The stock ADSK that you picked is AWESOME! It is almost perfect! even though I try to refrain from such comments because nothing is perfect in the financial markets. ADSK looks to be very solid fundamentally and technically. I would trade your trade setup any time on any day! Your SL placement is excellent (you gave the trade enough room to sustain your idea), however, I suggest you place your stops at odd numbers like 33.49 to avoid stop hunts.

I also REALLY like ADSK because its in the strongest sector at the moment, which is the technology sector as I identified in a previous post on the XLK, AAPL & GOOG. You have a large potential winner on your hands. I will share my thoughts with you as time passes by. I also want you to prepare yourself mentally if you got stopped out (god forbid). I want you to re-enter if it goes bad after your initial entry. Re-entries are key to my trading, should you get stopped out and price goes further down and reverses and starts heading up, I want to re-enter at your initial entry.

Now that you have studied the fundamentals, managed risk and picked your spot through technical analysis and identified strength in the sector/industry (XLK in your example which has an 80.77% correlation with ADSK) you should have enough conviction to buy and hold your trade. You should also have the belief to re-enter if things go bad.

Again, good job on the trade and all the best
  • #266
  • Aug 23, 2012 10:55am Aug 23, 2012 10:55am
Hi Split, thanks for your comments!!! I entered long at $36.

Since I started using your suggestions, I have progressed a lot and I am happy about that. I still have a lot to learn, but I am on the way now...

Thank you very much for this thread and for sharing your knowledge with others!!!

Greg.

PD: How the hell can I rate this thread????? I dont find the link...


Quoting split_unit
Hi Greg,

The stock ADSK that you picked is AWESOME! It is almost perfect! even though I try to refrain from such comments because nothing is perfect in the financial markets. ADSK looks to be very solid fundamentally and technically. I would trade your trade setup any time on any day! Your SL placement is excellent (you gave the trade enough room to sustain your idea), however, I suggest you place your stops at odd numbers like 33.49 to avoid stop hunts.

I also REALLY like ADSK because its in the strongest sector at the moment, which...
  • #267
  • Aug 23, 2012 11:31am Aug 23, 2012 11:31am
Quoting gregofx
Hi Split, thanks for your comments!!! I entered long at $36.

Since I started using your suggestions, I have progressed a lot and I am happy about that. I still have a lot to learn, but I am on the way now...

Thank you very much for this thread and for sharing your knowledge with others!!!

Greg.

PD: How the hell can I rate this thread????? I dont find the link...
I am sure you will progress, you certainly have the desire along with the ability to succeed, I have no doubts about it my friend. lol I don't think I ever enabled the rating thing, but I will now if I figure out how to do it.
  • #268
  • Aug 23, 2012 12:07pm Aug 23, 2012 12:07pm
Quoting gregofx
Hi Split, thanks for your comments!!! I entered long at $36.

Since I started using your suggestions, I have progressed a lot and I am happy about that. I still have a lot to learn, but I am on the way now...

Thank you very much for this thread and for sharing your knowledge with others!!!

Greg.

PD: How the hell can I rate this thread????? I dont find the link...
Concerning your trade, I do see that it is heading south at the time of my typing. Don't get upbeat, not all trades work out. That is why I emphasized on a re-entry should you get stopped out and why I emphasized on small stocks so that you dont lose alot when you lose. The whole market is pulling back, not just your stock which means that your idea is valid. Its just that timing was abit off, the market should have headed north but it head south at resistance, am sure even the best traders got caught in this one.
  • #269
  • Aug 23, 2012 4:55pm Aug 23, 2012 4:55pm
Quoting gregofx
Hi Split, would you consider to buy a long swing if price closes above $35,50 with SL at $33,50 and 1st target at $38,50? I think that it has good fundamentals... what do you think about it?

Is it relevant the fact that tomorrow presents earnings?

Thanks.
Greg
I really hope your not too hurt...Every once in a while disaster strikes... it happens either on earnings, guidance revision, analyst upgrade or down grade, corporate event or a special situation catalyst...you were in the wrong stock at the wrong time...
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  • #270
  • Aug 23, 2012 6:43pm Aug 23, 2012 6:43pm
Well, luckily I am in Demo...

At least, I think this answers my question: "Is it relevant The Fact that presents earnings tomorrow?"

Quoting split_unit
I really hope your not too hurt...Every once in a while disaster strikes... it happens either on earnings, guidance revision, analyst upgrade or down grade, corporate event or a special situation catalyst...you were in the wrong stock at the wrong time...
  • #271
  • Aug 24, 2012 4:21am Aug 24, 2012 4:21am
Quoting gregofx
Well, luckily I am in Demo...

At least, I think this answers my question: "Is it relevant The Fact that presents earnings tomorrow?"
You're very lucky! Earnings are important at points like now when all corporate earnings are at record highs. Some like ADSK will miss earnings and crash! This is the begining of a new cycle where earning will start to miss now as they mean revert. APPL and GOOG both have earnings at record highs and were making new highs helping the XLK make record highs. ADSK is in the same sector, and should have posted higher earnings, the fact that it didn't is not good for the stock market as a whole. A bear market always starts when the little guys start missing earnings and with that major miss in ADSK warning bells have been rung.

Tech is the market leader at the moment, and when people realize the fact that I wrote above, things should start heading south.

The VIX had been elevated for quite some time, the summer seasonality affect of low volatility is also starting to wear off, these are all caution signs that shouldn't be ignored.

Similar to what happened in ADSK is my example in MCP, but they were both in different sectors. One was a leader (Tech ADSK) and one was a lagger (MCP Basic Materials).

You got a real life illustration of why you should trade small, REALLY small and build a portfolio around those small positions to eliminate unsystematic risk.

The SPY has failed at resistance at 142.80 and is now heading down. The SPY was also at the channel resistance prompting a mean reversion (which is underway). I won't be entering any positions long now, until the dust settle and the SPY shows me where it wants to go. Note that the XLK and XME also failed.
Attached Image(s) (click to enlarge)
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  • #272
  • Aug 24, 2012 4:53pm Aug 24, 2012 4:53pm
A friend recently asked me what an ETF was. An ETF as of investopedia is:

"A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold."


An ETF is an exchange traded fund. They trade like stocks, meaning you could buy them from the exchange through a broker like stocks. The have a share price like stocks and could be sold short like stocks.

I won't get into the complicated mechanics of ETF's but I will just let you know what you need to know to understand their purpose, ETF's are funds that have specific components, for example take the SPY, the SPY a fund that invests its holdings into the S&P 500 stocks and thus mirrors the S&P 500's movements. The availability of the SPY eliminated the need to buy S&P 500 futures contracts and made life much easier for financial managers, traders and investors.

ETF's made it easier for investors to gain exposure to different market segments without the need of holding each investment individually, in other words it gave financial managers the ability to diversify under one position which was the ETF. The managers could easily own all the S&P 500 components without own in the futures contract or own each stock individually. The SPY currently trades at $141.51 per share, which means that you need $141.51 x 100 shares = $14151 to have 100 shares of the SPY! Which owns 500 stocks.

Now imagine what you could do with other ETF that invest in other items other then the S&P500, you get a world of ETF's where you could invest in anything you wanted, from bonds to agricultural stocks to the EUR/USD FOREX pair which has the FXE ETF that invests solely in the EUR/USD and mirrors the pairs movements.

There are plenty of ETF's out there and I personally follow a ton of them, specifically I follow sector specific and industry specific ETF's. One of the ones I follow is the XLK which invests in the largest tech stocks in the US. If the XLK goes down, that means that the tech sector in general is going down and when its going up it means that the tech sector in general is strong. I use that along with my analysis on individual stocks to make better trades.

Another ETF that I like is the USO that invests solely in crude oil and mirrors the price of the crude futures almost flawlessly. The price of the USO is $34.68 a share which means that you need $3468 to gain exposure to oil if your interested without the need of having very deep pockets.

ETF's are an excellent way to gain exposure to a financial instrument, I don't trade ETF's most of the time but I do use them for my analysis as they give me a clear picture of how my individual stocks are performing. I have a list of stocks and I know each ETF that correlates really highly with my stock and that makes it easier for me to analyse stocks, a few examples can be found below:

Stock - ETF

GOOG - XLK (Google - Tech Sector ETF)
KO - XLP (Coca Cola - Consumer Staples Sector ETF)
ABX - GDX (Barrick Gold Corp - Gold Mining Industry ETF)
JPM - XLF (JP Morgan Bank - Financial Sector ETF)
SBUX - XLY (Starbucks - Consumer Discretionary Sector ETF)

(note: a sector is larger than an industry, industries are a part of sectors e.g. the SMH is a part of the XLK sector namely the semiconductors are a part of the technology sector)

Course the list could go on and on, almost all stocks have counter part ETF's but some don't have any ETF's that reflect their price an example would be UAL (United Continental Airlines) which has no ETF cause there isn't a major airlines ETF set up out there making it hard to track the industry.

Hope this makes sense.

Split
  • #273
  • Aug 25, 2012 7:32am Aug 25, 2012 7:32am
I thought I'd share a day trading setup that works pretty well in all market environments, the setup is as follows:

*A stock with a catalyst (earnings, restructuring, corporate event...etc)
*A stock that is down or up more than 5%
*A stock that fits my stock selection criteria, identified in a previous post
*A stock that can move that has an ATR of over $0.75 intraday. I also have a previous point discussing ATR's and how I use them.
*A stock that has clear S/R levels I can take advantage of.

Lets look at an example, we have the stock ADSK for that, first lets start with the first and second points. I have a screen shot for both which both occured prior to the market open and were written at marketwatch.com:


http://www.forexfactory.com/attachme...1&d=1345897853

Now lets move on the third and fourth criteria which is a stock that fits my stock selection process:

http://www.forexfactory.com/attachme...1&d=1345897853

Now for the final criteria, the chart below proves this point.

http://www.forexfactory.com/attachme...1&d=1345897892

Of course this was just an example, I didn't get into the mechanics used to read order flow in hyper active, volatile moves like these. I use the tape to analyse the strength of the bulls and bears in "time and sales". A skill that could only be gained through screen time, you need to watch it in order to learn it.

I also refrained in the past from posting posts like these to avoid confusion, however, this example was too good to pass by and though I'd share it.
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  • #274
  • Aug 25, 2012 11:01pm Aug 25, 2012 11:01pm
Quoting split_unit
Heres one industry on fire, biotechnology. With these 2 stock in particular leading the industry ALXN being the rocket fuel behind the IBB engine.
Well this post was written back on July 8th, AMGN has ripped the hell out of everything and has taken one hell of a ride. It was always known that the stock would out perform due to the strength in both the SECTOR & INDUSTRY. Both the XLV (health sector ETF) and IBB (bio technology ETF) were acting strong breaking out of their bases with AMGN which followed suit.
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  • #275
  • Aug 26, 2012 12:51am Aug 26, 2012 12:51am
Heres a chart of MA and it speaks a thousand words!
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  • #276
  • Edited 11:56pm Aug 26, 2012 11:09pm | Edited 11:56pm
Concerning the PSX trade, it does tend to occur over and over again through booms and busts. You just have to catch the cycle and identify the obvious before everyone else, add put the pieces together to build conviction and your ready to go.

I know that you might already know this but the key difference between a trader and an investor is that for a trader the market is always right but for an investor it is almost never right. You should try to identify value both technically and fundamentally before the masses. The elements I watch out for to identify value are (in no order):

* Technical pattern.
* Solid fundies when compared to peers.
* A catalyst that could drive the stock higher (if I identify it before the masses).
* Institutional and/or insider interest (marketfolly.com told me about Buffets interest and as for the insider interest the spinoff mechanics were enough to tell me that insiders were interested in the stock, you can find these in the prospectus at the SEC website under the companies listing, or at finviz that also shows insider transactions).
* Sector/industry potential strength/weakness.

That is basically it in a nutshell. Am sure that the PSX example demonstrated all these elements, they didn't however occur all at once and that is why I entered small with a core position and held onto it as more information came to light.

I will continue to post other examples should I come across such examples. However, not all trades/investments work. I have been fortunate on my thread due to favorable market forces, I am abit cautious at the moment due to the market being abit over extended and will avoid posting trades unless I come across something interesting.


Split

P.S. PSX looks like its taking resting abit up here.
Attached Image
  • #277
  • Aug 28, 2012 11:34am Aug 28, 2012 11:34am
When I was going through finviz to look for the stocks with the highest yield, I came across stocks that yielded something like 16% and I was blown away! When I came to check these stocks, they turned out to be REIT’s with its VNQ ETF.. The sector has propelled higher it was triggered by operation twist and QE2, they also had an impact on the prices of HYG, LQD, TLT and XHB.

With QE2 the fed affectively added fuel to the fire initiating a bond bubble TLT which automatically sent bond yields lower and prices higher, the fed also directly intervened in to the MBS market by investing 600b to lower yields and revive an anemic real estate sector. The effect of the fed intervention has had a widespread impact on yields, it has brought them down and has forced yield hungry investors to look for substitutes. It is a known fact in finance that when the riskless rate goes down (US Treasuries in our world) all other yields follow suit, this forced investors to look into high yielding instruments such as investment grade bonds LQD and high yield bonds HYG along with REIT’s VNQ.

REIT’s were a fantastic place to park cash, given the high security of these instruments that invest mainly in real estate which is considered a physical asset. Investors were also aided by the fact that the fed would have done ‘‘what ever it took’’ to revive the real estate market. Europe also helped this bubble start with the uncertainty surrounding its economy, money that fled Europe had to find somewhere to park itself, and what better place than the US that had the Fed with its printing press.

QE2 affect didn’t stop there, by money flowing into REIT’s, REIT’s had to put that money into action, building projects and like a chain reaction money eventually found its way into the homebuilders sector XHB, which recently broke out and held! The fed hot off of its heels in the subprime 2007 – 2008 crisis have effectively put in the foundation to a new bubble. This bubble however, is still in its infancy, making the breakout in XHB valid. Should my analysis be correct, I would expect strength to also persist in VNQ and to some extend in LQD & HYG, the TLT on the other hand has to only remain at elevated levels for this bubble to manifest and persist, if treasuries remain at high prices and yields remain low, then my thesis holds. Everything in this market is integrated, and when one component gets some action, all other components react.

I'd be looking at stocks in XHB, I am also prone to mistakes like anyone else, and if anyone sees things differently, I'd like to hear why for both my benefit and everyone elses.
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  • #278
  • Aug 30, 2012 9:21pm Aug 30, 2012 9:21pm
Hi Split,

Excellent Thread!! I am learning a lot from you. Thank you for your time & efforts!

Q1. As I can't daytrade, do you think I can use the same techniques that you are teaching to trade stocks on short term basis (let's say to hold stock from 2 - 30 days)?

Q2. Once you posted the following chart (that displayed Stock Price, Rev, EPS, & Dvd). Could you please tell us which website that I can go to view this kind of chart for other stocks?

Thanks!
-bzx

http://www.forexfactory.com/attachme...1&d=1346379448
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  • #279
  • Aug 31, 2012 5:03am Aug 31, 2012 5:03am
Quoting bzx
Hi Split,

Excellent Thread!! I am learning a lot from you. Thank you for your time & efforts!

Q1. As I can't daytrade, do you think I can use the same techniques that you are teaching to trade stocks on short term basis (let's say to hold stock from 2 - 30 days)?

Q2. Once you posted the following chart (that displayed Stock Price, Rev, EPS, & Dvd). Could you please tell us which website that I can go to view this kind of chart for other stocks?

Thanks!
-bzx

http://www.forexfactory.com/attachme...1&d=1346379448...
Hi bzx,

I am glad you learnt alot, and welcome to the thread!

Concerning Q1, the type of trading your referring to is known as swing trading. And yes, it is more than possible to trade in that manner. As far as I know, technical analysis plays a larger role than fundamental analysis in this type of trading, fundamental analysis is only used to gauge the overall sentiment on a stock (to identify catalyst and momentum), unlike value investing where it is used to identify mispriced equities that are held for a long time until they rise and return to higher values. Some setups, such as breakouts work on a time-frame of 2-30 days. Other setups such as the volatility setups (inside days) I previously posted, take advantage of momentum for a day or two.

Swing trading really is a field on its own, and am happy you know what you want which should make your learning curve shorted and which should help you. I could share my limited knowledge on swing trading setups if you wanted to learn more by posting example.

As for Q2, that function can be found when conducting fundamental analysis on the IBIS software (Interactive Brokers Information System) its a paid service that costs about $100 (with an excellent news service), that price is for individuals without accounts at Interactive Brokers. And if you need anything else, you can let me know

Split
  • #280
  • Aug 31, 2012 7:03am Aug 31, 2012 7:03am
Below are two charts, one of the Dow Jones Industrial and the other of the Dow Jones Transportation. The transportation has clearly diverged from the industrial with a breakdown being imminent. A breakdown should have some repercussions on the market by sending it south. I use the IYT as the and DIA as ETF's for those two indexes.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: 2012-08-31_1529_IYT.jpg Size: 185 KB
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