Market Curiosity: Exploring Markets And Systems

May 1, 2010

Timing and trade setups (updated Feb 2011)

Time is everything: five minutes makes the difference between victory and defeat. — Horatio Nelson

Investments, timeframe of months
Buy when the 20 week simple moving average crosses above the 50W SMA by more than 1%. Karl Denninger has a great little explanatory video.

Swing trading, timeframe of weeks
I use Raymond Merriman’s astrological information. I like his turning points. He offers a free weekly preview, and a yearly forecast book. Bulkowski’s Book Review: Swing Trading 6 great summaries.

Entry timing
+ Consider buying when the CCI (10) of the inverted Put Call Ratio is around -100 ish.
+ Best time to buy is often the first 45-60 minutes after the market opens.
+ Wait for a correction and then a trigger that suggests the correction is over.
+ Triggers can be the high of a narrow range 7, a trend line, or the 34 EMA is turning up.
+ Buy when price exceeds the high of the previous day.
+ Can buy at the money calls that expire in 3 months or greater on the trigger too.
+ Exit if not profitable in a few days.
+ Exit if price breaks a major support.
+ Take profit on half the position at first resistance.
+ Immediately remove 10% of windfalls from trading account.

Shorting individual stocks
Only if S&P 500 is trading below a downtrending 34 EMA. Jeff Clark’s How to Trade the “Kiss of Death”

Selling options:
To worst possible time to buy options is typically in the opening 10 minutes or so when volatility is high. So that can be the best time to sell options.

Commodities:
I sometimes subscribe to the Moore Research Center’s Seasonal Action Report. Great for commodity traders. They offer free Monthly Nearby Commodity Charts.

Knowledge of the Commitment of Traders reports is also indispensible for commodity traders. Steve Briese offers the excellent COT Bullish Review. I used to subscribe, but found I like to generate my own signals. I check Commitment of Traders graphs before considering placing a trade. Starting to use Finviz.com more.

Timing charts
Jeff Clark using the bullish percent index of the transportation sector.
Xiphos Trading taught me this: On the daily Summation ratio chart, look for divergence to to be associated with the bigger changes of direction.

Other useful charts:
– Weekly Summation ratio.
– NYSE Bullish percent.
– Gold Miners Bullish percent.
– Energy sector Bullish percent.

SPECIAL CASES
Being long calls and selling on a gap up to avoid a significant down drop and possibly buy back cheaper.
– Exiting a bullish position in a bullish stock can backfire.
– The less extended the less this will benefit because price can turn very quickly.
– When quite extended and price opens above the previous high, exit calls, or sell calls at-the-money (I have never done this). You can also short the stock and cover on significant support. Cover on a new high.
+ Buy back on price reaching significant support, or scale back in as price hits lower supports.
– After about 5 minutes, buy back if a new high is made for more than a few minutes. Only the strongest stocks will open high and extended, and just keep going.
+/- Probably the stock will go down for at least a day or 2. The distance and time price corrects is usually directly related to the stocks strength.

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