Archive


2
Aug 09

The Dow Now

Price Momentum: Positive – beginning to weaken at 9200 area. Good place to take profit if long.

Support (Daily Chart) – 8950-9000 Support Zone – If price enters this area, look for reversal signs before entering long.

Resistance (Daily Chart) – 9200-9350 Resistance - Some selling here. Good place for a reversal back to support. Look for reversal signs intraday for quick profits.

Chatroom: Real-time analysis, charts, trades. Click here.

Dow Jones Industrials Average

Dow Jones Industrials Average

Comments:
Nice move to the upside. Sentiment driven in my opinion. If long, I would take some profit as some signs of selling are beginning to show up. I would be more comfortable shorting but I would like to see price test highs and not break through. I would look to cover in the 8950-9000 support zone. I would then be looking for longs in that area, if price falls through, I would then look for 8800 to hold (200 day moving average). Remember if this market doesn’t make sense to you, that means you are applying logic to something that is irrational. My analysis is purely technical. I let price tell me what to do, rather than letting news and other conflicting information contaminate my decision making process – Steve.

Upcoming Market Highlights:

Earnings Reports This Week

ISM Manufacturing Index important this week.
Personal Income and Outlays also being watched closely.
Click here for US economic reports.

Bank of England and European Central Bank
rate announcements!
These moves markets.
Click here for WORLD economic reports.

New blog format: Posts will be simple, brief and useful to those trading Dow Jones Industrials stocks, related ETF’s or futures contracts.

 


19
Jul 09

The Dow Now

Price Momentum: Negative/Neutral – Significant bounce here. Possible sentiment shift in play. No new positions.

Support (Daily Chart) – 8350 to 8600 area. If price pulls back, look for buy signals in this area only.

Resistance (Daily Chart) – 8800 – 8900 area. 200 day expoential moving average up here. Wait for short signals. No signs of selling yet.

Chatroom: Real-time analysis, charts, trades. Click here. PW: and654

Dow Jones Industrials Average

Dow Jones Industrials Average

Comments:
In my previous post I wrote, “Wait for a bounce.” Well we got a bounce all right. Obviously it is news driven. Focus on the technicals. The price went from a support to the major resistance in 5 days.  I will be looking for signs of selling up here for a possible short. In order to go long, I need to see price retrace back to the 8350-8600 area. If it holds, I will look into buying some call options to ride the continuation upward. If I short at the resistance up here, I will buy some puts, and not expect a huge move. Momentum is now neutral which means it may be turning positive. For a daily play by play, join us in our chatroom. Click here. PW: and654. Steve.

Upcoming Market Highlights:

This Week’s Earnings

Ben Bernanke speaks!
Click here for US economic reports.

Bank of Canada rate announcement.
Click here for WORLD economic reports.

New blog format: Posts will be simple, brief and useful to those trading Dow Jones Industrials stocks, related ETF’s or futures contracts.

 


12
Jul 09

The Dow Now

Price Momentum: Negative  -  Looking for shorts.
Take some profits off table at this level.  WAIT for bounce.

Support: (Daily Chart) 8100
–  Dojis and spinning tops appearing
Minor support holding.

Resistance: (Daily Chart) 8350
– 34 Period Exp Mvg Avg at this level. Price can go here.

Chatroom
: Real-time analysis, charts, trades. Click here. PW: and654
Dow Jones Industrials Index

Dow Jones Industrials Average

Comments:
As long as the price stays below 85-8600 area, this thing is a short. I would not jump into new shorts at the current level though. WAIT for a bounce. This can take 3-5 days atleast. We break 8100, look for price to work its way to 7800 area. The bright green highlights indicate a head-and-shoulders classic chart pattern in play. Steve.

Upcoming Market Highlights:

Earnings: Watch for major banks. These move markets. 
Click here for schedule.

This week’s important economic indicators and reports.
Click here for calendar.

New blog format: Posts will be simple, brief and useful to those trading Dow Jones Industrials stocks, related ETF’s or futures contracts.


28
Jun 09

The Dow Now 6.29

indu daily chart

indu daily chart

The Dow Now
We have a confirmed momentum change in the Dow Jones Industrials Index. Now I am looking for shorts. Notice how the price action reacts when it reaches the support and resistance levels on the chart. It has touched a major support area, and bouced up to a previous support (8500) which now serves as resistance. And look, it sold off slightly. On this chart, it looks small, but when you are trading a 5 minute chart, there can be a very significant move there. So the question is, when to short? Well it is a tough area here. I want to see how price reacts in this resistance area of 8500. If weakness continues and we do not break clearly above 8500, then I will look to buy some index options (puts). We will be talking about this in the chat room. So if you want to see how I make my decision in real time, join us in the room!

Today’s Lesson
In the earlier stages of my learning curve, one serious problem that I would have to deal with was forced trading. This is when you trade because a setup ALMOST looks right, or trading a valid setup during rangebound momentumless market. As you may or may not know, forced trading does not lead to positive returns.  This takes time to overcome. One way to help is have a hand written version of your entry criteria in front of you while trading. This will help you stay focussed and not take setups that don’t meet your criteria.   Sometimes you will miss some market moves but just remember, this kind of discipline will also prevent many erroneous trades.  If you are upset about missing a move here or there, then you are being greedy. The market has a way of removing those kind of people from the game.  Another solution to this problem of forced trades is to find a mentor, or someone with alot more experience who can help you recognize the kind of market conditions where you should even be thinking about trading.  We offer this kind of coaching in the chat room. 

Upcoming Market Highlights

USA – click here for details.

Tuesday      -  Case-Shiller home price index, Chicago PMI, Consumer confidence
Wednesday  –  ADP Employment Report, ISM Manufacturing, Construction Spending, Pending Home  
                       Sales, Weekly Crude Oil Inventories
Thursday     - Non-farm Payrolls (NFP), Initial Jobless Claims, Factory Orders

WORLD – click here for details.

Tuesday   -  JPY Tankan Industry Surveys, GBP - GDP report, CAD – GDP report, CHN PMI Manufactoring
Thursday -  EUR rate decision.SNB Governing Board Member Thomas Jordan speaks

Conclusion

We have a clear momentum change in the Dow Jones Industrials Index and now looking for shorting opportunities.  One thing you want to learn to avoid are forced trades.  You must be disciplined and keep you emotions under control.  Check out our chat room because we cover these topics in much greater detail and its in real time.  Join us, it is free. See you in the room!


21
Jun 09

The Dow Now 6.22

indu daily chart

indu daily chart

The Dow Now

Looks like the Dow Jones Industrials index has fallen off the 200 day moving average.  No surprise there.  We noted the heavy resistance in previous blog posts.  It is now sitting on the 34 day moving average.  Underlying momentum is now starting to show signs of weakness.   This means I would not buy into any of these dips for longer term moves.   I am beginning to lean more toward holding on the short side.  I need the market to confirm this, so no shorts just yet.   I would take advantage of any market weakness with options.  Come to the chat room and see what we are doing in these conditions.

Today’s Lesson

You’ve heard it a million times by now: Knowledge is power.  Well in the markets it is the key to becoming a consistent trader.  If that is your goal, then one thing you need to do is always be actively pursuing knowledge about trading.   I hope you like to read.  If you don’t, you better start liking to read.   There are many books, magazines, blogs and papers written about trading in some form.   The key here is to focus only on information that is related to your goal and trading plan.  For example,  if your trading plan is built around the currency market on a swing trading basis, then you should find information just relating to that.  Google it.   Then you seek out like minded people, like us at Cashmechanics.com and compare notes.  This is how you really grow as a trader.   I know your next question: So what are some books you would suggest?   I suggest joing our site, coming to our chat room and I will point you in the right direction.  It is different for everyone.

Upcoming Market Highlights
USA – Click here for details.

Tuesday      – Existing home sales
Wednesday – FOMC meeting, Oil Inventories
Thursday    – Q1 GDP revision, Bernanke testifies

World – Click here for details.

Monday        – German IFO business sentiment indicators
Tuesday       – Eurozone PMIs, German Consumer Confidence
Wednesdsy   – Eurozone current account
Thursday      - Eurozone industrial new orders
Friday           - German consumer prices

For the other countries check out the details link above.

Conclusion
The upward momentum that has been pushing the markets higher recently is beginning to turn.  Intraday markets are choppy and indecisive.  In conditions like this, it really helps to take the time and further educate yourself.  Plan your trading education, and stay focussed.  Of course we are here to help you with just that.  Join us in the chat room and we will coach you along.  See you there!


14
Jun 09

The Dow Now 6.15

indu daily chart

indu daily chart

The Dow Now

Can you say RANGEBOUND??? From a scalper’s perspective it has been tough trading, but the support is holding. Notice how the previous minor resistance of 8600 is now acting as a support level. Also notice the spinning top and doji candles that have formed as a result. Any pullbacks into this area should be watched very carefully because there are scalping and swing trade buying opportunities here. We will be watching this in the chat room. The problem for everyone itching to go higher is the heavy duty resistance area. We have the 200 day moving average in the 8900 area and a heavy psychological number at 9000. Price has been very reluctant up here. Great place to take profits if you have any. With all this said, momentum is still up. Price can break to the upside. I am flat right now in the longer time frame strategy. I will only look to take longs if we pull into the support area and hold. If we break higher without touching support, I will only take daytrades and scalps long into that move. At levels like these, some new catalyst can easily come out and scare the market. And there is alot of news coming out this week. So stay awake and trade carefully!

Today’s Lesson

Keeping an eye on your daily chart is a good habit to get into. That is why I post it here on this blog. Even if you are a scalper. Take a look at the nicely defined trading range during the week. As a scalper, you can watch stocks or index futures on smaller time frames and just wait until the price enters one of these areas of support or resistance on the daily chart. This is a good way to manage your expectations of where price can reverse. Of course this is easier said than done, but that is why we have the chat room. We can help you notice the subtle clues that the market is offering. Many newer traders are always looking for reasons as to why the market did what it just did. Who cares why, instead focus on what the market can do next. Identify areas that are significant ahead of time. Come to our chat room and we will help you focus on the information that is meaningful so that you can learn how to anticpate the market instead of chase it. If you hold for longer time frames, or don’t have time to be in the chat room, then subscribe to our newsletter here. Either way, we are here to help you learn.

Upcoming Market Event Highlights
These are upcoming reports worth keeping an eye on.

USA             – Click here for details.
Monday       – NAHB homebuilder sentiment index.
Tuesday      – Producer prices, housing starts, industrial production.
Wednesday  – Consumer prices, current account, weekly oil inventories.
Thursday     – Weekly jobless claims, Philly Fed manufacturing index.

WORLD        - Click here for details.
Monday       - (EUR) employment, (CAD) manufacturing sales, new auto sales.
Tuesday      – (EUR) ZEW economic survey, (GBP) consumer prices, (JPY) Rate decision,
(CAD) labor productivity
Wednesday – (EUR) trade balance, (GBP) BOE meeting minutes and employment report,
(JPY) machine tool orders, (CAD) wholesale sales, leading indicators
Thursday     -(GBP) retail sales, CBI industrial trends, (CAD) consumer prices
Friday          – (EUR) German producer prices, (CAD) top tier retail sales

Conclusion

So this upcoming week, watch the Dow Jones Industrials index closely.  Even in these sluggish markets, there are opportunities.  You just need to be able to recognize them.  And don’t forget to look at the upcoming economic report schedule, because if the market is going to move, it will need a catalyst.  And there are many potential reports coming out this week.  So come into the chat room and watch what we do and how we do it.  See you there!


7
Jun 09

The Dow Now 6.8

indu daily chart

indu daily chart

The Dow Now
Looks like the long positons have done well. If you look at my previous post, you will see that I was looking to give long positions a chance and establish new ones (using options of course). So the Dow Jones Industrials Index has blown through the 8600 resistance area and has made it up to the 200 day moving average. This is big. The whole world including the media robots are watching this. And so far, buying has been getting lighter and lighter. Take a look at the doji candle that has been painted on our chart on Friday’s close. A sign of some selling. A resistance point established. Can it break through? It is possible since market momentum is still pointed up. The problem here is not only are we dealing with the 200 day moving average, but also the 9000 psychological number. Two reasons for price action to get choppy and possibly reverse. With that being said, I am out of long positions at this point. You may ask, “Why? You just said momentum is still up?” And my answer is I will not argue with a profit, especially in an area where there is significant resistance. For those people still holding long positions, this may be a good area to tighten stops and become very cautious. How about shorts? I am not going to short anything until I see some signficant confirmation.

Today’s Lesson
Today I want to mention the importance of the proper mindset when participating in any kind of speculative market. I speak to people often who are focussed on how much money they can make. This of course is important, otherwise we would all just be playing video games here. At the same time though, being focussed on the money aspect of trading is what I think causes problems in trading behavior. Especially if you are inexperienced and are not aware of your emotions.

By focussing on the money, you invite your emotions to take over your decision making. Greed and fear. These are the two that will wipe out your accounts. You have some profit, you want more. That is greed. The market is making new highs and you don’t want to miss this party any more so you jump in – at the top. That is fear. If you want to make money in the trading business, you need to be in tune with your emotions at all times.

One way to help minimize the effects of these emotions is to focus on good trades, not the money. For example, if you are trading in the forex market, and you are making 15 pips a day on average, that is pretty good. The novice will say, “15 pips, on 1 mini lot, thats only 15 dollars a day, I can barely buy lunch with that.”. The professional on the otherhand will say, “It adds up, if I can do this on the average, then I will begin to see significant results as I carefully begin to trade larger positions with confidence.” Good trades require a trading plan and alot of discipline. Both of these requirements can be developed, but it takes time and you need patience.

This game is mostly about you wrestling with your own psychology. If you have no idea or no awareness in regards to your emotional state, or can’t control it, then find a professional to do the trading for you.

Upcoming Market Event Highlights
These are upcoming reports worth keeping an eye on.

USA – Click here for details.
Tuesday – wholesale inventories
Wednesday – weekly oil reserves and Baige book
Thursday – retail sales
Friday – consumer sentiment index and Geithner speaking at G8 conference

WORLD (Important for forex traders) Click here for details.
EU – finance ministers meet on Monday, industrial data throughout week and Trichet speaks on Friday
UK – industrial data throughout week not very important but watch for political drama unfolding here
JP – mostly industrial data and revised Q1 GDP on Wednesday
CAD – Some industrial data very quiet here
Pacific Rim – New Zealand has interest rate decision on Wednesday
China – Some important industrial numbers coming from here may be worth watching

Conclusion
So keep an eye on this market because we can be at a serious point here. Sentiment is up, but things can change quickly. Be patient and flexible. Join us in the chat room and we will help you be
more patient. We will help you see through all the market noise. See you in the chat room.


31
May 09

The Dow Now 6.1

indu daily chart

indu daily chart

Well looks like the range that the Dow Jones Industrials chart told us about in the previous post stayed intact.  It was posted here and I will reiterate it: 8200 area is an area of support.  That mean when price goes there, and becomes very sluggish, it is trying to say that it wants to be bought.  Resistance looks like 8500 area but it is much more defined at 8600.  Most importantly, the underlying momentum is up and now even more so.  From what I can tell, this index wants to go higher.  If I were holding long postions, I would give them a chance, still being cautious though.  Another thing I am looking to do in this area is take some long call option positions, preferably on an intraday pullback.  We will be talking alot about this in the chat room so now is a good time to get in and learn.

Our website is now going into its beta test and you will begin to see changes as we collect feedback from members. You will notice I changed the name if this blog in order to better reflect what it covers.  Another new feature that you will soon see is an additional blog category by Pat which will specifically cover the forex market.  So check it out.

I was recently speaking to someone who asked me where to begin as a trader.  That is a question that I specifically address in an upcoming webinar (see the home page for date and time).  I just wanted to say a little about that here as well.  The first thing you want to do as a new trader is define your expectations.  This is very important.  Your expectations need to be very realisitc, otherwise when your emotions take over, you will throw money out the window very quickly.  What are realistic expectations? That you will not make money at something like this right away.  A very common mistake is new traders coming into this with high expectations of making large amounts of money in a few weeks.  They say things like, “I will just get a feel for this by playing with a practice account for a little while.  I’m good at math so this shouldn’t be that hard. I have an economics degree and I’m smart so I should be fine.”  Trading is not a game of intelligence.  It is a game of managing risk, controlling emotions, patience and learning to listen.  So as a beginner you want to start off by respecting the market and allowing yourself a realistic amount of time to learn this game.  Want to know more?  Come to my webinar and I will explain.

In terms of news, we saw some mixed reports that were more toward the bearish side, but market sentiment is still higher. Many times the market will ignore news and do what is wants to do anyway. This is why you only want to be aware of news and not trade on it. So what is coming out this week worth mentioning? Monday we have ISM manufacturing and construction spending. Tuesday is pending home sales and motor vehicle sales. Wednesday is the ADP employment and Bernanke is testifying before the House budget committee (financial drama alert!). Thursday we have jobless claims and nonfarm productivity. Friday is the employment report also known as nonfarm payrolls (NFP). Also Geithner is going to China and alot of talk may be coming out of there during the week so keep one an eye on this for any pointless talk that moves markets. See the details here.

And that is just US news. Eurzone and UK will have a lot to talk about next week. Very important to be aware of if you are trading currencies. The most important events are the policy meetings from European Central Bank (ECB), Bank of England (BOE), Royal Bank of Australia (RBA) and Bank of Canada(BoC). Policy meetings are like the FOMC in the US. If they say something unexpected, markets will move. Especially currency markets. Check the following calendar for more details here.

So remember, keep an eye on those support and resistance levels on the Dow. The market will tell you where it wants to go, you just have to have the patience to listen. Come into our chat room and we will show you how this works. See you there!


24
May 09

The Dow Now 5.25

indu daily chart

indu daily chart

The Dow Jones Industrials Index has given us a defined trading range this week. And we are presently at the lower part of the range which is the 8200 area. If you notice, we bounced in this area before and at this point we are looking for signs of another bounce.  Keep in mind, we are in a support area and the price can break through the support at 8200, going only a little lower and then reverse right back up.  That would be a false break, or a fake out.  Be ready for that scenario. If you watch the market intraday, watch for signs of sluggishness on the short side.  If price falls right through without a problem, then this is confirmed weakness which means time to look for short positions.  The positive momentum is still present, so I wouldn’t be too aggressive on the short side just yet.  At the present rate, it will take at least a week to see a change in market momentum so stay tuned.

In this type of environment, it really helps to be patient and wait for prices to reach significant levels before taking a position.  And even when prices are there, you want to wait and see what is does.  Wait for a confirmation.  Patience in trading is an acquired skill.  It is especially challenging within the context of the immensely impulsive world that we are exposed to every day.  One helpful solution is when the product you are trading is not showing any opportunities, you move on and find something that is showing signs of an opportunity.  This lesson took me a couple of years to realize thanks to my stubborn nature.  What does a sign of an opportunity look like you ask?  Well come to our trading chat room and find out.  It is much easier to show on a real time chart than it is on this blog.

One thing you may hear often when learning how to trade is learning to anticipate where price is going next. It sounds almost like a chess game, where you are always trying to anticipate your opponents moves two or three moves ahead of where you are now.  This is a very important trading concept.  It helps to protect you from being impulsive and chasing seemingly runaway prices.  We illustrate this often in our webinars and in the trading room.

As far as upcoming news to watch for this week we have: Case-Schiller home price index on Tuesday along with consumer confidence, not exactly huge market movers. Existing home sales on Wednesday while Thursday we have durable goods, new home sales, crude oil inventories and initial jobless claims.  The home sales numbers and oil inventories are possible catalysts for market momentum so be awake when these reports come out. Friday has Chicago PMI and Q1 GDP revision. Be awake for these also because the media likes to create a lot of drama around these numbers. The eurozone, Japan and pacific rim have many similar types of reports coming out and if you are active in the currency market, you should at east take a look.

Click here for market events calendar.

So enjoy your holiday and come back all ready to be patient! This is a great time to learn how to trade because  you don’t have to worry about missing alot of market moves.  Join us in the chat room we will show you how it all works. See you there!


17
May 09

Market Log May 18th 2009

indu daily chart

indu daily chart

Are you watching this Dow Jones Industrials Index?  Nice pull back that has been over due for about 2 weeks now.  Why didn’t we short this?  The answer is simple: the market momentum is still up.  I have no problem shorting something intraday, but I will not take anything overnight when overall bias is still to the upside.  The Dow Jones Industrials Index has pulled into the 8200 minor support area.  This is where bullish traders can look for reversal patterns to go long.  We will be looking at some long option plays to take advantage of this particular situation.  Come into our chat room for specifics on how we are managing our trades.

I have spoken to some newer traders who get confused as to why we would not try to take advantage of this market weakness when we know that the market is in pullback mode.  It is important to understand that we have particular strategies for a variety of scenarios.  When I write this blog,  and I mention what we are looking for, and what we plan to do, it is within the context of a swing trading strategy.  Swing Trading is when you take a trade with a 2 day to 2 week time horizon generally.  This type of strategy contains certain risk/reward parameters in addition to other characterisitcs that separate it from our day trading strategies.  Remember don’t mix strategies. 

As a newer trader, you want to choose one strategy that fits your risk tolerance, daily schedule, and amount of capital in your trading account.  One of the most common mistakes I encounter is a new trader has absolutely no structure to apply to trading decisions.  The decisions are usually impulses or reactions to market movement that is happening in the present.  By being impulsive, you are always chasing the market.  You need to learn a way to anticipate the next move.  This is what trading sytems and trading plans are all about.  And this is what we can help you develop for yourself.

Anticipating the market should not be confused with predicting the market. Anticipating the market in my opinion is when you understand what the possibilities and risks of the next move are and taking a predefined risk to try and capitalize.  When you anticipate you say, “There is a high probability of a reversal here, and if I’m wrong, I have no problem losing a hundred dollars.  But if I’m right, it is possible to make 200 dollars.”     Predicting the market comes with the added pressure of having to be right.  Your ego gets involved.  There is no room in the market for egos.  This is why doctors, lawyers and other know-it-alls who attempt to trade run into a lot of problems generally. These people say things like, “This market is definitely going up because it has to!”.  They are used to being right all the time.  Some even make money being right.  Note to people with big egos : the market is a place of uncertainty and this fact must be respected.  The market knows more than you and everyone else participating. 

For those who respect the market it will tell you what it wants to do, but you must develop the ability to listen. Part of that ability is coming into this without your ego getting in the way.  Being wrong is part of the deal so get used to it.  The trick here is to recognize quickly when you are wrong and take the appropriate action.

So what do we have to look forward to this week in terms of economic events?  It looks like a quiet week overall.  We have homebuilder sentiment on Monday and housing starts on Tuesday.  Wednesday we have Geitner testifying,  FOMC minutes and oil inventories.  So alot of potential for jumpiness that day. 
Thursday and Friday we have leading indicators and Philly Fed manufacturing index which are basically non events. Eurozone, Canada, Australia and New Zealand are generally quiet in terms of reports.  Japan has Consumer Confidence, GDP,  even a BOJ rate annoucement.  Check the forex calendar here for specifics.

So thats all for now.  If you are new in the trading world, or not so new but confused, join us because we are here to help. Just make sure to leave the ego at the door. ;)  See you in the chat room!