June, 2009


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.