Today (26th May) US market did not move much.

At around 11 AM EST I had shared my thought on the Market Internals in a quick Superior Profit Traders Community post. Mentioning that as of that time, Market - though virtually unchanged from the day before - was showing some sign of Bearishness in the Intraday charts and few other places. I had also mentioned that later I will share my reasoning behind that observation in a blog.

​Well, here is the blog.

Before I go into the the detail, I want to mention one key work. I had said there was a "hint" of Bearishness. Not a full display of it. A full display of Bearishness would mean Market falling down. It did not. It was mostly unchanged.

Market was mostly unchanged as seen from S&P500. How did I thought of Bearishness then? Would it not be appropriate to say that Market was neutral? That is how it would appear to other traders. But Superior Profit traders don't only keep an eye on S&P500. That is outward health or weakness. They also tend to look at Market Internals from time to time. To see how strong the market really is under the hood.

First, let us look at the E Mini S&P 500 through CUE At A Glance Template (Weekly Backdrop View on the left and Daily Hop On View on the right) - this is as of 27th May early morning (around 1 AM).

As explained in the chart above, Market is  going up - as seen by Hop On Daily Chart Traffic Light Candle color being green.

To a CUE Chart trader, Green is Bullish. So we are not going to say it is Bearish. And that would be correct interpretation. And it is also explained that "Bullishness" was not a roaring Bullishness owing to anemic Activity of last few days in the above chart.

Lets delve a bit deeper in market internals now to see what was really going on there.

I had posted a Broad Market Internal study in Superior Profit Blog  a few days ago. That showed overall Market Internals showing weakness. You may find that blog here.

[Note that every week we tend to share this valuable Market Internal snapshot in Superior Profit Traders Community - USA Market category. You may access the Community here.]

That blog on Market Internal was analyzing Market health usiing Weekly chart. Today, I look into finer detail of today's Market movement using Intraday chart of Market Internals.

​The chart below shows NYSE Internals of today's (26th May) - combining S&P500 E Mini with Tick Chart, Activity, NYSE Advance Decline and NYSE Up Down Volume - all key Market Internal indicators.

Here is what we can gather from this chart:

Point marked (1) : The Tick chart did not show any extreme move upward or downward for the whole day. It was moving sideways. Meaning neither Bulls were heavily buying many stocks at same time. Nor were Bears selling many stocks at same time in NYSE market.

Points marked (2): Market (here we plot @ES - which is E Mini S&P 500 Futures symbol) Opened somewhat higher with larger Activity bars.

Points marked (3): However, price soon came back to Last Day's Close (magenta Pivot line) and then below that by 10:30 AM EST. While Activity was reducing (this is the time when I posted my comment on hint of Bearishness in Traders Community).

Point marked (4): After that, whole day Activity remained muted. As if it was a holiday session and big traders were taking a break. Or, as if, traders were waiting for some key event or announcement to happen (like Fed chair person Janet Yelen's Harvard talk tomorrow 27th May at 1:15 PM EST?).

Point marked (5): Around 2 PM EST Market gave the appearance of a short rally - going back to Open (blue Pivot line). However, as we noted, Activity and Tick was not confirming Bull's strength. Tick was actually showing a Divergence. More on this later.

Point marked (6): Soon after the 3:30 PM EST, S&P 500 came back right to Last Day's Close.

Point marked (7): In terms of number of stocks in NYSE that were Advancing or Declining, we see that at Open more stocks were Advancing. A Bullish sign at Open. However, soon it turned negative around 11 AM EST (the time when I posted my comment on hint of Bearishness in Traders Community).

Point marked (8): And for remaining hours of the day, Advance Decline signal was neutral. Essentially wrapping around the zero  line.

Point marked (9): In terms of Up Volume (Volume of all stocks moving up) and Down Volume (Volume of all NYSE stocks moving down), at Open, again, it was Bullish. But reversed to below zero line around 11 AM EST  (the time when I posted my comment on hint of Bearishness in Traders Community).  For remaining hours of the day, Up Down Volume remained below zero line - Bearish. Though not by much.

Probably you can now see why at around 11 AM EST I came to announce of the "hint" of Bearishness in the Market.

​Lastly, let us look at sector/industry wise performance of market (using Dow Jones Index) for today (as of end of day of 26th May).

Clearly, by end of day on 26th May, more industries were in red than in green. A bearish sign. Though not full fledged Bearish - as several industries ended in green as well.

These are all  is interesting study from Market Internals. Now, how do we use such Market Internal study in trading? Or can we use it at all?

Remember the Weekly Market Internal Blog mentioned above? Here is the link again for ready reference.

That analysis was using longer term Weekly chart. And Superior Profit traders may use information gleaned from such Weekly studies to assess if and when Market "may be" topping. And that information may be used by  CUE Traders to look for potential Short in individual stocks - may be using trend following Go With Flow trade or trend reversing Headwind or Stretch Release trade. You may learn more about those easy tactics in Education Center and also in the many trade ideas posted in Traders Community.

What about the Intraday Real Time Market Internal chart that I shared above?

That is used by more active traders.

By E Mini Futures Day Traders for example. Indeed, the "Market" chart in this Real Time study is that of @ES - and seeing that in conjunction with the Tick Chart, Activity, Advance Decline and Up Down Volume helps an E Mini Day Trader to catch a  continuation / breakout as well as reversal trade more confidently.

It may also be used by active Stock Day Traders. If one is thinking of Shorting a Stock as Day Trade, it certainly helps to see that E Mini S&P500 is also showing a Tick Divergence at same time. Yes. The chart shared above does  show this very valuable Tick Divergence. One such area is marked by points (10). Where E Mini S&P500 was going up. Whereas Tick was going down. Such Tick Divergence may indicate a reversal point in @ES. As was in this case in the chart. Such Tick Divergence information could be used by E Mini S&P500 Day Traders. As much as it could be used by stock Day Traders. This is because often stocks tend to reverse when S&P500 E Mini reverses in Intraday chart.

Superior Profit Way: Prepared, Patient, Improvising, Flexible, Confident

From the Desk of Sagar Nandi and Superior Profit.

In Superior Profit Way we like to do our homework. It does not take long. Using Sonar (Explorer in Metastock) it takes a Swing trader ten minutes or less usually when he wants to identify a trade.

After we identify potential opportunity, if the time is right (say, following CUE Trading Signals guideline), we take the trade.

Else we wait. And wait. And wait. Until the right time comes - and when it comes, we take the trade without hesitation.

Here area  few real life examples from Superior Profit Traders Community trades of last one week on how we were prepared. And profited from that.

​It also illustrates several useful characteristics of a successful (a.k.a. profitable) trader:

1. Being Prepared
2. Patience
3. Improvising: For example, improvising  on the standard CUE Trade Set Ups  (standard CUE Trade set ups and rules are explained in detail in Superior Profit Books; specifically)
4. Remaining Flexible
5. Confidence on Own Trading System (for me, it is CUE Global)

Let us look at them in action in the real life trades that I took in last few days.

Being Prepared and Patient

Three days ago I had run CUE Explorer to scan for potential Shorts. Within few minutes, I had identified stocks in four different industries that might give a profitable trade and shared it in Superior Profit Traders Community here. In that post I had mentioned that it might be wiser to wait. To see if SPY (broad Market) holds support or breaks it - before taking any of these potential Short trade(s).

In short, I was prepared with my analysis outcome. But was not ready to take the trade. I waited patiently to see when and if a suitable entry opportunity arises.

Let us see how these four stocks played out after the original post in Traders Community.

Yahoo (YHOO.O): 

Yahoo did not yet give any signal to take a Standard Superior Profit Swing trade. This is explained in the chart below.

​ Procter & Gamble (PG):

PG went up for one day and then gave an optimal entry opportunity using Fine Tune template as explained in two charts below. This shows how the same CUE opportunity could be traded as Day Trade, Two Day Trade as well as Swing Trade.

​Some Superior Profit Traders might have traded PG in one of the CUE ways mentioned above. I had not taken PG. However, I had improvised on a QQQ.O trade and benefited from the market drop on 18th May - the same day when PG also started dropping. Here is how.

Improvising

NASDAQ ETF (QQQ.O)

CUE Charts have several easy to use tools - and once someone is used to them, new trades may be improvised; combining CUE Charts with broader Market facts (not judgement or opinion - we try to stay away from that if we can !)..

You may recall that I had already analyzed the broad market to be Bearish in my Market Internal study blog a few days ago.  Based on that and movement of QQQ.O, I could improvise a profitable quick trade using Weekly Options. 

​I had booked profit on most of the QQQ.O Put Options on entry day itself. At more than 100% profit. And I allowed some lots to carry on for next day. Letting profit run - but ensuring it was already a guaranteed Risk Free Trade. The remaining position was stopped out today at a Trailing Protect Profit Stop. Which I had put some distance away from my Entry Price. A net highly profitable trade closed within two days.

Not all the time a Stock moves in our anticipated direction. It does so many times when we follow a roust and disciplined trading way. But not always.

Sometimes market moves opposite to what we anticipated and we have to take small loss, close the trade and move ahead to next trade.

​Some other times we may be flexible enough to switch direction and come out with some profit. Here is exactly that happening with JPM.

Being Flexible

JP Morgan (JPM)

JPM did not turn out as we anticipated.  It moved sideways for two days since we analyzed it and then on 18th May it shoot up - as shown below in CUE Hop On chart below.

JPM going up in itself probably would not entice a Superior Profit trader to display flexibility and switch from intended Short direction to a Long trade on JMP. There were few more facts in play.

On 18th Fed meeting minutes were due at 2 PM. On this day, market struggled to go up. However, Financials were soaring right from beginning of day. As if someone knew what the minutes will say and what its probable impact on banking stocks might be. And were buying up many banking stocks in advance. Resulting them to soar.

Below is the sector wise performance of Dow Jones Industries index as of end of day. Financials were strong from beginning of day itself and closed the day as the strongest sector of Dow Jones.

That observation, along with relatively narrow Stop Loss from Fine Tune Template could lead Superior Profit Trader to switch from Short to Long Direction and make a profitable Day Trade - as explained below.

​This is how the Day Trade would have played out - using CUE Fine Tune Template.

It was a profitable trade. No - I did not take it; I missed this opportunity. And I am not sad about it. I don't try to take every possible Superior Profit trade that comes in the market.

However, did you see in the sector wise breakup of .DJI above that Industrials were poor performer today?

And do you remember that we had DOW in our original Community post being a Bearish Stock? I was watching DOW since I identified it to be Bearish ... and I did take the DOW Short today and profited from that.

Being Confident

​Dow Chemicals (DOW):

Dow had a Bearish Candle yesterday in Daily Hop On (not shown here ... you may look it up on your CUE Charts). However, as the Candle Flow was still Bullish (cyan), one would not enter Short. And  would watch it today.

Today DOW was Bearish (part of Industrials - which were also Bearish as a whole) from beginning of day.

And as broad Market fell, DOW fell even more.

Here I could time the trade well. And could confidently add to my position. Using Weekly Options -I  booked more than 130% profit in a day on partial position - making the entire trade a guaranteed trade a Risk Free Trade. Below snapshot explains the trade.

These trades illustrate the many opportunities that a Superior Profit Trader may encounter and exploit. I have traded these using Options. However, the same trades could be taken using Stocks or ETFs.

Before I end this blog, some further discussion of the trader's characteristics in display here is warranted.

Different Characteristics in Different Trades/at Different Times

We watched several characteristics in action. Being prepared, being patient, improvising, being flexible and being confident.

Being prepared and patient are all good. No further discussion required on that probably. They are essential and useful in trading. And that is that.

Improvising may need a few words. This characteristics come after observing the Market for a while. After trading for a while. It is like in any other skill. Photography. Playing violin. Or in golf. Trying to improvise from the early days of trading career may be frustrating.

Then comes the matter of being flexible and confident. These may be two edged sword. They are indeed useful - and allows an experienced trader to capture more from the opportunities the Market presents. However, they also incorporate the risk of going into the realm of gambling. To chase a trade. Or to break one's own trading system rules. Or doubling down too much into a losing trade. Worse than even that ... to not cut loss if Stop Level is touched.

How to avoid those pitfalls?

Like in the case of  improvising, one may wait for a while before starting to be flexible (to reverse direction in a trade) or to be confident (to add to a losing position).

One might also practice for a while on simulation money first. Before going all out with flexibility and confidence.

With a bit of practice and discipline, trading can be fun. And even profitable.  The above examples illustrate that.

​Sagar

LEIBOVIT VOLUME REVERSAL - DBA - MAY 16, 2016

From the desk of Top Market Timer Mark Leibovit.  

DBA - Powershares DB Agricultural ETF:

The ETF seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

This video demonstrates the good correlation (up and down) of my Leibovit Volume Reversal in all time frames shown - daily, weekly and monthly.  As a reminder, I used the 5/3/3 stochastic to help confirm an uptrend or downtrend.

https://youtu.be/VPG7tgQ5KMs

An Apple A Day Keeps Investors Away. Or Does It?

From the desk Of Sagar Nandi and Superior Profit

Investors should be scared of holding or buying Apple  (Thomson Reuters symbol AAPL.O) stocks at his time? So it seems the wisdom shared by many experts. Here is the headline of an article published in a news site today  "Apple's iPhone Nightmare Threatens Entire Stock Market"

Scary - isn't it? But is it true? Will Apple bring down the Market? Did it do so in the past? To be clear, I don't go around the web looking for such "news". This headline showed up in my  News Apps today morning. The news was apparently from Fiscal Times. I have no view on the news or the site. I did not actually read the article. It may be well written. May be not. I have no comment on that.

If I don't scout the web for news, where do I access my news that is needed for my investment decisions? My preferred source of news for investment is Thomson Reuters EIKON (which came with my XENITH license and I am loving it).

Now, when such an article did show up today, I looked up AAPL.O  using CUE At A Glance Template - the go to template for Superior Profit traders to look up a stock that catches their attention. Let us see what information we can gather from this CUE template. 

Messages read from CUE Weekly Backdrop Template

Apple approached its all time high around Feb 2015 - point 1 in chart.  The Bearish Headwind caught the top very well this time (no - it does not catch the top so well every time - when it does not, one may exit with Small Stop Loss; that is Superior Profit Way of trading on Headwind signal).

How do Superior Profit traders use Headwind signal in Weekly chart? It may be used to book profit on Longer Term Investment positions or tighten Stop. It might also be used to start watching out Daily Hop On chart for a Reversal Trade Entry.

After Feb, 15 Apple mostly went sideways for five months. And then started sharp decline in July 2015 at point 2. Between Feb and July of 2015, Apple reached its highest price of about 134.

In Aug '15, Apple hit the then Low of about 92. In just two months from Jul to Aug Apple had come down from about 132 to 92. About 30% drop in the stock that is the biggest constituent (11.77% as today) of NASDAQ Index. 

Did NASDAQ also drop? Yes. It did. But more on that later. Let us read the At A Glance Template first.
​
In Nov '15, point 4 in chart, Apple recovered strongly - not quiet reaching High of point 2. And then dropped sharply again. Whereto? To around 92-93 range. The exact same Low made at point 2. That made it a Double Bottom. The Headwind Bullish signal caught this bottom pretty well.

In Apr '16, point 6 in chart, Apple made another Lower High and fell down.

In the last bar in the chart on the right edge, point 7,  Apple has taken out the Lows made at points 3 and 5.

The Weekly Candle Backdrop color is Bearish (magenta).

It has fallen 30% from the top.  Better time to Short Apple (or book profit on Long position) would be at points 2, 4 or 6. It may be bit late to Short now based on Weekly chart.

Messages read from CUE Daily Hop On Template

Having gone through Weekly Backdrop, let us have a quick look at the Daily chart. This is a magnification of what was going on in Weekly chart. In Daily chart, we are looking at Apple through Hop On Template - the template where majority of Long Term or Swing Trade Entry decisions are usually made.

We can see two Headwind signals at point 8 and 9 in the Hop On Template. How does on use these signals on Daily chart? It is explained in the Superior Profit Books that you can read at Education Center.

Broadly, subject to the guidelines mentioned in Superior Profit Trade Signals book (or a systematic approach that a trader has fine tuned for himself or herself), this may be used to take a Trend Reversal Swing Trade. It might also  be used to book profit in existing Trend Following Swing Trade position or to tighten Stop. The Headwind signal does not necessarily mean that the primary trend will reverse. At point 8, the Headwind Reversal trade, if taken, could make either small profit or small loss depending on how one entered and put Stop and Target. At point 9, the Reversal Trade would make massive profit as Apple fell very sharply from that point on. This is how - sometimes - Headwind may result in windfall gain for the trader.

At the right edge of the Hop On chart, at point 10, Apple is below Lower Boundary.  In clear downtrend.

From the Movement indicator, point 11 on chart, we see that Acceleration and Speed (the top two green dots respective) have turned Bullish (green). Momentum (the lowest dot) is still Bearish.  This is little information to be audacious to enter a Swing Long Trade; at least a Standard Superior Profit Trade as mentioned in Superior Profit Trade Signals Book. Once could of course make an improvised trade if one desired. Might be a Swing Trade or a Day Trade.

That is all good reading from the At A Glance chart. In summary, Apple has fallen a lot. Now at the Low formed in earlier Double Bottom. If price holds, it might form a Triple Bottom. There is no obvious Long or Short trade signal right now in Superior Profit standard way of trading.

Did Apple really bring down the Market in the past?

Now - let us come back to the article that caught my eye. Can Apple bring down the market? We don't know what will happen in future - but we may look into what happened to NASDAQ Index (we will use QQQ.O - the NASDSQ ETF for this purpose) when Apple dropped heavily in last twelve months. We will use XENITH to look into this.

Comparing Apple and QQQ ETF's past 1 year performance

In the snapshot above, the numbered points roughly matches the number markings on the At A Glance Template above.

A side note worth mentioning. As you may observe, the "Double Bottom" formed between points 3 and 5 in Apple At A Glance seems to be missing in the comparison snapshot here. Why so? That is because this is a line chart and not a Candle chart. The bottom of point 5 was a day when price recovered sharply from the Low by end of that day. Thereby erasing the Low from line chart. Candle charts show such Lows and Highs clearly - no information is lost. That is why we use Candle charts in CUE System.

Now, back to our comparison. What may we infer from the above snapshot?

Between points 2 and 3 in comparison chart, both Apple and QQQ fell significantly. Though QQQ fell less than Apple. One might be tempted to think that Apple "brought down Market". Is that really so? What happened next?

At point 10, Apple is down significantly. But QQQ is holding pretty well.

Overall in last one year (duration of the comparison chart), Apple dropped by more than 27% whereas QQQ dropped by less than 2%. Hardly a proof that Apple "brought down the market".  And if Apple could not bring down even the tech heavy NASDAQ, how will it possible bring down overall broad market as represented by SPY or DIA?

Expert opinion in sites and media may lead us to believe that Apple can and does bring down the market. But at least from last one year's data when Apple fell significantly, we have no poof of that.
​

How may we use this insight?

Several ways. Firstly, and most importantly perhaps, we learn to trust our eyes and systematic data driven analysis more than media opinions. With today's tools, we - main street people - do have the ability to do that with few simple keystrokes. And CUE Charts helps me do that in matter of minutes usually.

Secondly, Market may fall. Indeed there is some sign of Market weakness - you may refer to the Broad Market Internals Study that shows this weakness.  And Apple may fall as well for its own reason. However, that would be more rationally interpreted as "Some reason brought down market. Some reason brought down Apple". Rather than "Apple brought down Market". That is the Superior Profit Trader's conclusion from the analysis above.

Thirdly, Superior Profit Traders keep this information / insight in mind when investing and trading. Broad market study may not help to pinpoint entry / exit of a specific stock. However, it may provide some valuable background information that helps traders choose a trade or stand aside. For example, a trader may decide to trade only when the trade set up is aligned with  Broad Market Signals. And stand aside if Broad Market and the stock of interest are showing conflicting signals. You may find other ways to use the information of course :)

Any trade-able idea on Apple? 

What if Apple holds the Low of around 90-92? If Apple comes above that level, it will form a Triple Bottom. And will also form a Fake Downside Breakout. Luring Short sellers in only to trap them. If that happens and if that is accompanied by additional signals to take a Long position, one might take it. For now, I don't see an Entry in Apple. What about your analysis? What is your system telling you? Sagar

Overall Market health check from Market Internals (Thu/12th May)

From the desk of Sagar Nandi and Superior Profit

We check our health by going to doctor. And the doctor sometimes check our internals to see what is going on. Trying to see how our health may turn out in coming days. Similarly,  some useful information may be gleaned by studying market internals in Superior Profit Way. Our traders and myself rely more on such analysis than on market chatter from social media or television or print media. Though we don't mind keeping an eye on that to see what others are saying. What others are saying is however NOT what we want to do. We rely on our own analysis in the end.

Superior Profit Study of Market Internals

Before we actually dive into the studies, it is also to be noted that broad market studies may not change every day. Trying to get insight from it on shorter time frame (Daily or Hourly) may be futile. We therefore use Weekly studies for market internals. As are in the charts above.

What can we gather from this study? That is explained below.

From point 1 (mid/end Oct 2015) to point 2 (mid/end Apr 2016), both NASDAQ (left chart) and NYSE Indices initially fell but then recovered significantly - though not fully reaching the high reached in point 1.

At same time, except one exception, both for NYSE and NASDAQ indices'  internal metrics deteriorated:

52 Week High Low :NASDAQ stayed at same level and NYSE actually improved (this is the only exception where internals stayed same or improved from point 1 to 2).

Advance / Decline: Fell sharply for both NSADAQ and NYSE.

Up-Down Volume: Fell sharply for both NSADAQ and NYSE.

Overall, the internals are showing weakness more than strength.

Though broad indices study does not mean one must only go Long or Short, Superior Profit traders tend to keep this information in his mind when taking trades in individual stocks or other instruments.

Additional food for thought (trading)? Looking at the odd one out above; that "52 Week High" actually stayed same or strengthened a bit from point 1 to 2, one might check out which stocks actually hit 52 Week High around point 2. Is there a stock in that list that you are holding? Thinking of booking profit? Or entering a new position?

Let the CUE Charts help you decide the optimal point for that action ... you may learn more about CUE charts from Education Center. And learn how other traders are using CUE charts from Traders Community.

Sagar

050616 MetaStock - Dark Pool Quiet Rotation Patterns V chart

Dark Pool Quiet Rotation™ Patterns

How Giant Buy Side Institutions Changed Market Structure

Dark Pool Quiet Rotation Patterns™ are here to stay, despite what the retail news media hype portends. The Securities and Exchange Commission SEC has investigated the practices of giant Buy Side Institutions using Dark Pools, and it has been proven that they are not getting any price advantage.

Dark Pools are used to hide giant lot orders by Buy Side Institutions, and to ensure when the giant lot orders are triggering there is no major disruption of the current trend.  If you are new to trading, this is critical information to learn. If you traded during the 1990’s and before 2005, then this is even more important. It is a major Market Structure change that has altered everything you would have learned previously about trading stocks, and continues to change price and volume patterns today.

The following are 3 major Dark Pool patterns to learn:

1. Dark Pool Quiet Accumulation Patterns
2. Dark Pool Quiet Rotation Patterns
3. Dark Pool Quiet Distribution Patterns

Most traders learn “Accumulation and Distribution” patterns, which are broad terms not clearly defined. Unfortunately QUIET is very different now with Alternative Trading Systems ATS venues. The term “quiet” means it is not visible in the chart, unless you use specific indicators and KNOW what to look for in price action.

Many Retail Traders are prone to sticking with outdated Methodologies, Strategies, and Trading Systems so it is a leap of faith for them to accept the new reality of stock trading. However until you learn the Dark Pool patterns, trading profits are likely to be a disappointment or if you are just trading as a hobby then you may be content with breaking even. Remember to truly calculate profitability, you have to include your time as an hourly wage expense for Trading as a Business.

Today we are studying Dark Pool Quiet Rotation Patterns, which differ from Quiet Distribution Patterns. The term Quiet Distribution refers to a mandatory selling of shares of stock held in trusts and charters.  Giant Funds Managers of Buy Side Institutions do not wish to sell the stock, but are forced to do so based on sudden huge redemption demands by their uninformed Mutual Fund Investors. Distribution dumps a huge amount of stock for sale suddenly, removing money from the Stock Market so there is an outflow of monies aka funds.

Rotation is always quiet these days and well hidden from view, and eventually it may cause a topping action. Quiet Rotation does not remove monies from the Stock Market. The Giant Funds Managers are merely moving money around from one stock to another.

The chart example below has been under Quiet Rotation for some time.

The TechniTrader Volume Accumulation TTVA which is a Volume Oscillator in the middle chart window clearly reveals a contrarian Volume pattern, or that Volume is heavier on the sell side than on the buy side. The TechniTrader Flow of Funds TTFF Indicator in the bottom chart window, reveals that the flow of money into this stock is not keeping up with the fast pace of the Retail Traders and the Smaller Funds. Both of these Market Participant Groups trade like they belong on the retail side of the market, rather than on the professional side.

The giant Buy Side Institutions use these two Market Participant Groups as a cloak to hide their Dark Pool Quiet Rotation Patterns. By not disturbing the trend but allowing the stock to climb higher due to retail trading and smaller fund buying patterns, the Dark Pools actually benefit as they sell hidden on their ATS venues.

Summary

TTVA the Volume Oscillator, starts heading down and diverging contrarily from the price action which is a critical point all traders need to recognize. Sure you can trade the stock as it moves up, however if you are not aware of the heavy Quiet Rotation out of this stock, a buy could end up being a serious major loss. This stock gapped down after barely rising above prior resistance.

TTFF lags behind price, which is moving with speculative emotional buying by smaller lots.

Go to TechniTrader.com Learning Center for more information about Dark Pools HERE.

Followers may request a specific article topic for this blog by emailing info@technitrader.com

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Instructor & Developer of TechniTrader Stock and Option Courses

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Proof of Pudding (Mature Trader) is in Eating (Systematic Approach)

From the Desk of Sagar Nandi and Superior Profit

Yes. I did not say that proof of mature trader is in profit. Profit tend to come as a result of discipline. And money management.  And patience. And a robust trading system - I use CUE Trading System.

In the Superior Profit webinar conducted on 27th April 2016, I had introduced the CUE Trading concepts with many real trade examples. For Long Term Investment, Swing Trade and for Day Trades.

In that webinar, based on CUE Sonar and CUE At A Glance analysis, I had identified a potentially actionable stock at that time.

That stock was Dishman Pharma (Thomson Reuters symbol DISH.NS) in National Stock Exchange of India. That was presented as a Trend Following Go With Flow Short potential Swing trade. You may like to review the CUE Intro video here. Note: Dishman Pharma was discussed right after 1 hour 02 minutes into the webinar. You may directly go there if you wish to - in the video link provided above. Note: Some stocks in India market does not allow Shorting the stock as of this posting. This post is aimed at explaining how a stock in similar CUE setup could be traded using Short stock, Short Futures or Put Options - in any market that allows Shorting or using Put Options on a stock.

Let us go through this actionable trade idea as presented in the webinar at that time. Below is the snapshot of Dishman captured right from the video recording of the webinar - let us study the signals shown by CUE System on Dishman on 27th Apr 2016.

​Reading from Weekly Chart (Backdrop Template):     1.    From June 2015, Dishman had gone up sharply – reaching the peak in Oct, 2015.     2.    Around this time Weekly chart had several Candles with long Upper Tail – indicating that Bulls are losing steam and Bears are pushing price down every time Bulls try to raise price up.     3.    Since then Dishman is moving sideways in Weekly chart till April 2016.     4.    On 27th April (the webinar day) the last bar on the chart has broken down the Triangle that was formed due to the sideways move in this chart. This is a Bearish indication.​

Weekly signals were Bearish - right? Now, for more accurate Swing Trade entry – as per Superior Profit Rule Book, we look at Daily chart using Hop On Template.

​Reading from Daily Chart (Hop On Template):     5.    In Daily chart, Flow Candle color turned Bearish (Magenta) as price came down and is resting right at the Memory line. If it falls below the Memory next day, it would give a valid Go With Flow Swing Trade Short signal.     6.    Relative Performance had tilted down indicating Dishman was not only starting to fall but it was underperforming Broad Market (the Broad Market to which a Stock is compared is adjustable in CUE System – in this case, as Dishman is traded in India, we had set Broad Market to India Bombay Stock Exchange Index which is SENSEX).     7.    Movement had turned Bearish on all the parameters (Acceleration, Speed and Movement) – as seen by the series of red dots in the Hop On Template.

That was the analysis of the stock in the webinar on 27th Apr 2016. It was bearish and a Short could be entered the next day if Dishman continued to fall. What happened next? For that let us look at DISH.NS through Hop On Template as captured on 6th May after Market Close.

Exiting the trade with profit:

​    8.    On 28th Apr Dishman continued to fall - triggering the Short Entry on Fine Tune chart or as price went below Low of 27th Apr for those not using Real Time data.
    9.    Where to put Stop Loss, that would be found using the Protection signal on Hop Off Template (see below) and would be 184.8 that was never hit.
    10.   Instead, on 6th May, in 7 trading days since entry, Dishman hit lower Boundary at 155 – which is our standard exit point for Go With Flow Trend Following Swing Trade. And the trade would be exited with profit.

Pre calculating Stop Loss:

​It was important to keep Stop Loss pre-decided. And we could calculate Stop Loss level using Hop Off Template as explained in chart below.

The result? Following disciplined way and easy to use CUE charts, a profitable trade could be identified and executed.

Any CUE trader could do it!
​I had shared this actionable trade on 27th April webinar.  However it is not only me who could identify such actionable trades.

Any of our CUE Global System traders could easily scan for this or similar stock, analyze, enter and exit the trade. In India or USA or any other market in the world.

Does your trading system allow you to do that?

Sagar

METASTOCK LEIBOVIT VOLUME REVERSAL TUTORIAL FOR THE CEMENT STOCKS - MLM, VMC, CX - M

From the desk of top market timer Mark Leibovit:  


The material/cement shares have been soaring in recent weeks tied to the growing likelihood that a wall will be built along the Mexican/US border. A project of this size and scope would indeed help 'America Become Great Again' creating untold amount of jobs and business for U.S. construction and material companies. The video displays weekly charts for MLM, VMC, and CX and demonstrates how the Leibovit Volume Reversal helped confirm the recent advance.

These products are not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. Only investors who are aware of the risks inherent in securities trading should use this information. MetaStock in no way endorses the products and services advertised and accept no liability whatsoever for any loss arising from any use of these products or their contents.

Turning a Long Term Investment Idea into a 60% Profit Day Trade

From the Office of Sagar Nandi and Superior Profit:

A Long Term Investment idea was shared in Superior Profit Traders Community few days ago on 3rd May 2016 - on Valeant (Thomson Reuters symbol VRX); a well known Pharma company listed in USA market. Detail analysis of the VRX Long Term Investment idea using CUE Charts can be found in the Community Post here. Long Term Investing and Day Trades are supposed to be at opposite extreme to each other in terms of holding period, risk reward magnitude or investor temperament; among other things. Yet, on 5th May, one of the CUE System traders made 60% net profit in a couple of hours from a Valeant Day Trade; rooting the trade on the Long Term Investment idea published  in the Superior Profit Community. Here is how.

In the Long Term Investment post, It was not explained to be not a perfect time for stock buying as earnings was about to be released (which has not been released yet as of this posting - it may be released tomorrow before market open). And instead, people could Short the Put taking advantage of high Option prices at this time and thereby potentially making profit as / if stock goes up and Put expiring worthless. Or at minimum, getting the Stock at very discounted price - if the stock falls.

In fact, on 5th May (today), one could Short VRX 15th July 2016 Put 32.5 at around 5 USD.

VRX closing price on 5th May turned out to be about 34.5.

So, if the Long Term Investor using Short the above Put Option turned out to be wrong in his directional call i.e. if VRX fell considerably after his Long trade, he would at least secure a price that is about 7 USD lower than buying the stock outright. [ 7 USD = difference between current market price and strike price which is 2 USD and the premium sold which is 5 USD].

This 7 USD lower price is actually about 20% of current market price of VRX.

That is, our Long Term Investor would end up buying VRX at 20% lower than current market price - and VRX is already at Pendum Low !

Not a bad deal after all. This advantageous trade set up was made possible by inflated premium on the Put Option just before earnings.

Some of the Superior Profit Investors might have indeed Shorted the Put based on the Community post. However, that is not the only way you could profit from that post.

One CUE System trader used the Long Term Investment idea post to make a quick Day Trade profit on VRX using CUE Fine Tune Template. He used the standard CUE Stretch Release entry mechanism for the Day Trade. Let me explain the entry and exits here using the CUE Fine Tune chart below . I have added some additional information that could be gleaned from XENITH.

Point 1 on chart below (impact of news) > 4th May 2016: At 12:30 PM Valeant took a dip (at that time reaching 3.7% down) after one big investor said he is still Short Valeant. Was the news impactful? Not really. After the initial knee jerk reaction , VRX recovered somewhat and closed above the Day's Low. From 12:45 PM onward Activity was mostly timid.

  Point 2 on chart above> Next day (today) Valeant opened almost at same level as yesterday's Close. Then moved down little bit - penetrating Early Range Low for 1 Candle (5 Minute is the default interval in CUE Fine Tune Template). And very next Candle provided confluence of multiple signals:

A) Trader was looking for only Long trade based on the post in Traders Community.
B) At this point, Bearish Stretch was Released (Oversold condition went away).
C) Stretch Released was accompanied with Heavy Activity in the bar - indicating the volume was attempting to hold price.
D) Price closed back above Early Range Low.
E) Stop Loss Point (just below day's low) was very small.
F) Potential profit - assuming it was going to hit at least Early Range High or Last Day's Close - was much bigger than the Stop Loss distance - giving an attractive Reward Risk Ratio.

That looked like a good Low Risk entry point for a bullish position on Valeant for Day Trade using CUE Fine Tune Template.

It could be traded as plain Stock Long Day Trade.

This trader, instead, played it as a Short Put Day Trade - taking a cue from the posting in Traders Community.

He used the Option VRX 6th May Put 33.5 to establish a Short Put position (which is a Bullish position on the stock).

Immediately after entering, half position profit taking order was placed at 50%. That was hit during the day (in Superior Profit Way, we always like to Take Money Off The Table when we can). Rest was held till end of day.

Valeant meandered throughout the day within Early Range. At end of day the position had 70% profit and entire remaining position was closed at that time - as this was planned to be a Day Trade.

Below is the brokerage snapshot where the trade was actually placed.

Note that during the day max profit percentage hit was actually 78%.  Overall the trader closed the trade at 60% (average of 50% and 70%) profit. A sizeable profit indeed.

The trade was concocted from the Long Term Investment idea posted in Superior Profit Traders Community and applying Real Time Fine Tune chart analysis and identifying a CUE Stretch Release Bullish Day Trade.

Once a CUE trader gets accustomed to this color coded and easy to use system, she/he tends to identify and execute such trades routinely and effortlessly.

For more information on how to trade using CUE System, you may refer to the extensive educational material at Superior Profit Education Center.

Does your system and technique allow you to cook up such trade opportunities in an equally easy, unambiguous way and,  may I say, fun way?

Sagar

These products are not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. Only investors who are aware of the risks inherent in securities trading should use this information. MetaStock in no way endorses the products and services advertised and accept no liability whatsoever for any loss arising from any use of these products or their contents.

042916 MetaStock – Doji Example for Decoding Candlestick Charts HMSY chart

Doji Example for Decoding Candlestick Charts

How to Develop Spatial Pattern Recognition Skills for Fast & Easy Reading of Stock Charts

When Candlestick Charts were first introduced to the western markets, everyone using Stock Charts and Technical Analysis relied on indicators more than Bar Charts, which were the most popular charts back then. Bar Charts are much harder to read, give less visual data, and take longer to interpret. Candlestick Charts were instantly popular because they made reading price fast and simple.

In the beginning Candlesticks were assumed to be the confirming indicator, which made pure price subordinate to indicators such as MACD and Stochastic both very popular indicators. However decoding Candlestick Charts and using Candlesticks as the entry signal rather than just confirming a continuation of the trend or a reversal of the trend, enables traders to use pure price as their entry and exit signal.

Spatial Pattern Recognition Skills™ SPRS are something most traders do not have, and need to develop. It takes a while to learn how to read Candlesticks as quickly and as easily as you are reading this text, but when you can do so it opens up a world of information about why price is moving as it is and how it will move next.

During Trading Range Market Conditions as we have now, keen SPRS are imperative. Otherwise the markets seem merely volatile, unpredictable, and confusing. By learning SPRS you can speed up the entire analysis process, and find strong picks to trade.

Everyone who uses Candlesticks knows what a Doji Candlestick is, however where it forms can reveal a great deal. As an example using the Doji for decoding Candlestick Charts, the Doji can be a resting day candle and the stock will continue moving down, OR the Doji can be an exhaustion pattern in which the stock will reverse, OR the Doji can expose Dark Pools controlling price.

The reason Dark Pool Quiet Accumulation is easy to recognize in a candlestick formation, once it is understood how giant Institutions using Dark Pools buy and sell, the patterns become obvious and are instantly easily recognized. In the chart example below the tight formation of Doji first being white, then black, and then white again is a Dark Pool Quiet Accumulation Candlestick Chart pattern.

Since this is also a compression consolidation of Doji, it is also indicating a likely Breakout pattern. The stock may either run with High Frequency Trading HFT triggers or gap. Entering early in this tight consolidation of Doji, ensures that the trade is executed before a potential run or gap. The more compression there is then the more velocity behind the Breakout, with the pattern definitely favoring an Upside Breakout. The way the Doji have formed in the Candlestick Chart tell the Technical Trader with strong SPRS, that this is an Upside Breakout about to occur soon.

Summary

The chart example also gives other information regarding decoding Candlestick Charts. The stock has bottomed decisively and recently. It has no strong resistance above price. The tight consolidation of Doji was preceded by speculative trading triggered first by Professional Traders, then HFTs, and then Smaller Funds. The stock went sideways as Professionals took profits while Smaller Funds bought. Now it is in a very tight formation. The control of price requires a very specific type of order that only Dark Pools use regularly.

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

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