Extreme Moves

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Extreme Moves

Extreme MovesWe all know that that the bulls were over exuberant and pretty much everyone and their dog expected a pullback.  However, Friday’s extreme moves appeared to be excessive, right?  Honestly, not so much.  If you put it into the context of a 16500 point rally in the first 25-days fo January, you realize it’s only a reversion to the mean.  Nevertheless, the violent nature of the move is shocking an I doubt anyone expected a 700 point move in one day!  Volatility is very likely to continue making swing trading very challenging.  Don’t make a mistake and assume that the market is suddenly oversold and predict the will rally.  It can simply consolidate before resuming a downtrend!

On the Calendar

The is only one report of consequence on the Economic Calendar today.  At 10:00 AM Eastern is the ISM Non-MFG Index which has cooled recently but remains mostly in the mid-50’s indicating growth.  Forecasters are calling for an increase to 56.2 today.  After that with have some bond announcements and auctions to round out the day.

On the Earnings Calendar, we have 70 companies reporting.  Stay on your toes this week there are a lot of reports on the calendar.  Prepare, plan and always check reporting dates of companies you own and those you are thinking of buying.

Action Plan

Without question, Friday produced shocking bearishness breaking supports as traders ran for the exits ahead of the weekend.  Swing traders are mostly positive people, and the vast majority only want trade long.  As a result, when they see a huge move lower like we did Friday they naturally want to believe the selloff is over.  They try to predict when the bounce will occur only to find out that the sellers have more to say.  Much like this morning with the Dow Futures suggesting more than a 200 point gap down!  Even when the selling does stop, keep in mind that it could just consolidate before moving lower.  Consider the fact that Dow 25,000 needs a test as support.

Remember every day does not have to be traded to be successful.  Wait for good quality signals and remember the market is now very emotional.  Big morning gaps and intra-day reversals could be the new normal in the short-term.

Trade Wisely,

Doug

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Trade Alert

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Good morning team.

With XLE showing follow-through down I have purchased the FEB 78.5 Calls creating a credit spread.  Then I closed the March 73 calls.  Overall we still have an outstanding profit on the position.

Remember all trade ideas are for your evaluation and consideration.

No Edge

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No Edge

No EdgeIncreased volatility, big overnight gaps, and violent reversals are great for very fast intra-day traders.  However, for the average retail swing trader, it means we have No Edge.  Everything that seemed to be working so well just one week ago is not working now.  That is the nature of the market.  It’s always changing and often that change is violent.  As a result, we as traders must recognize the change and quickly adapt or better yet just stand aside and protect our capital.  This week should be proof of the fact that not every day is a good day to trade and that setting in cash is a good position.  Eventually, all this wild emotional price action will come to an end, and cooler heads will prevail.  The question is will you be ready to trade or chopped to pieces trying to trade with no edge?

On the Calendar

We get things going on the Economic Calendar today with the very important Employment Situation report at 8:30 AM Eastern.  Consensus suggests nonfarm payrolls of 175,000 and an unemployment rate holding at a 17-year low of 4.1%.  Average hourly wages are expected to increase 0.3% with the average workweek unchanged at 34.5 hours.  Private payrolls are expected to increase 172,000 with manufacturing increasing by 18,000.  At 10:00 AM both Consumer Sentiment and Factory Orders numbers release.  Consensus suggests January Consumer Sentiment will come with a 95.0 reading.  The Factory Orders index is expecting an increase of 1.5% according to consensus.  We finish the week with two Fed Speakers at 1:30 PM and 3:30 PM.

We get a little break on the Earnings Calendar with only 46 companies reporting today.  Oil will take center stage with CVX, XOM, and PSX reporting before the bell.

Action Plan

Everything was looking okay until we had an unfavorable economic report yesterday morning creating a sudden gap down.  The bulls stepped filling the morning gap but failed to have enough strength to hold on to those gains by the end of the day.  As I write this, the Dow Futures are pointing to a nasty gap lower of more than 200 points.  I have been suggesting for some time now to prepare for increased volatility, but it’s still shocking to see the violence of these moves.  The big overnight gaps in both directions can chop an account to pieces.  I mentioned earlier this week to expect challenging price action and suggested new and inexperienced traders might want to watch from the sidelines.  Sadly that was a correct call.

The Employment Situation numbers this morning have the potential to improve or make worse today’s open.  Anything is possible.  I think the wild price action, quick reversals, and overnight gaps could become the new normal at least for the short-term.  Be very careful.  Have a wonderful weekend everyone.

Trade Wisely,

Doug

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Tools and Rules

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Tools and Rules

Don’t chase, don’t predict, don’t use words like “I think” when trying to enter a position. When entering a position, start with common sense and your trading tools and rules. If you don’t have trading tools and rules, ask us.

The market is seeing a little more volatility this past week. Profit trading successfully will need more trading planing. Quality will when out over quantity every time! No two people alike, always follow your rules and only trade charts you understand, always be able to explain your trade to someone.

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Each Morning before the market opens Rick and the HRC members meet up to discuss today’s trade ideas. Rick, we will demonstrate live how each trade could be traded using our Simple Proven Swing Trade Tools

Candlesticks • Price Action • T-Line • T-Line Bands • Support • Resistance • Trends • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Continuation Patterns • Trade Planning… Learn More

► Eyes On The Market

Our closing words yesterday were “Follow the Trend.” What yesterdays close to the SPY was the three close below the T-Line and the futures this morning are suggesting the same today. It looks like the SPY may test the 20-SMA today and even lower, the Vol-Stops has flipped to negative, and continued pressure on the lower T-Line Band is close to the breaking point. Longs are warned when the price action starts to bump its head on the Lower T-Line Band.

The VXX short-term futures pulled back yesterday perfectly to the Lower T-Line Band then closed above the Vol-Stop by the end of the day. The VXX chart is carving out a Bullish (RBB) Rounded Bottom Breakout Pattern.

Rick’s Swing Trade ideas

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Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.

Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.

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ERI Found a Bottom? ERI bullish above $33.95

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ERI Found a Bottom?

ERI Found a Bottom?After consolidation and pulling back to the 50-SMA ERI found a bottom. With 7% rally yesterday the buyers may be ready to push to the next level.  I yes a trending chart with several candlestick and chart pattern clues. Such as Bullish Morning Star, Bullish Engulf, T-Line Low and V-Stop support. ERI is our featured trade idea for your consideration.

To learn more about our trading tools join us in the trading room or consider Private Coaching. Rick will help coach you to trading success. Today At 9:10 AM ET. We will demonstrate live how ERI could be traded using our Simple Proven Swing Trade Tools

► Learn the Power Of Simple Trading Techniques

On November 8, Rick shared CVRR as a trade for members to consider and how to use the trading tools listed below. Currently, the profits could have been about 29.7% or $380.00 with 100 shares. Using our Simple, Proven Swing Trade Tools and techniques to achieve swing trade profits.

Candlesticks • Price Action • T-Line • T-Line Bands • Support • Resistance • Trend • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Trade Planning… Learn More

► Eyes On The Market (SPY)

We have ended January with price closing below the T-Line trend and above the T-Line Low trend. So far the sellers have just created a little profit taking. A close is low the $279.60 support area would put a very different spin on the SPY. When I look at the 3 and 5-day charts, I see that price is still holding above the T-Line High Band which suggest the bulls are still in charge just simply resting.

►The VXX short-term futures

Closed with a Doji Continuation pattern yesterday above the T-Line High Band. The VXX chart is also in an (RBB) Rounded Bottom Breakout Pattern with our strategy target still 20-40% away.

Rick’s Swing Trade ideas

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Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.

Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.

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No-Trade Zone

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No-Trade Zone

No-Trade ZoneQuarterly earnings result continue to roll in strong, but the bulls appear to be uninspired.  Perhaps they see the stocks as fully valued or just taking a rest to nurse a January party hangover.  With the Indexes having broken the up-trend its had to be bullish, but on the other hand, there is also very little reason to bearish.  Consequently, we temporarily find ourselves stuck in a no-trade zone.  At any moment either the bulls or bears could establish dominance, but as of right now they seem equally matched.  It’s times like this the trader has to take steps to protect your capital a resist over-trading.  When a market becomes choppy and volatile, it is very easy to give back some, all or even more of hard-won gains.  Slow your roll and be very picky about the trades you take.

On the Calendar

We kick off the today’s Economic calendar at 8:30 AM Eastern with the Weekly Jobless Claims.  Initial Claims continue to run at very low levels with a consensus expectation of 235K.  Productivity and Costs are also out at 8:30 and forecasters see nonfarm productivity rising 1.1% with labor costs up 0.9%.  At 9:45 AM PMI Mfg, Index is expected to post the best reading in 3-years at 55.5.  Selling prices reached 4-year highs both pointing to economic strength.  The ISM Mfg. Index comes out at 10:00 AM.  December New Order results hit a 14-year high and consensus see’s continued strength with a January reading of 58.6.  Last but not least, Construction Spending is seen rising 0.5% and home improvements up 0.7%.

On the Earnings Calendar, we have more than 160 companies reporting today.  A few of the notables before the bell today are BABA,  COP, UPS, and VLO.  After the bell, GOOG, and GOOGL will take center stage along with AMZN and AAPL.

Action Plan

To be honest, I was expecting a bit more fireworks to accompany the FOMC statement yesterday that indicated a more hawkish stance.  Instead, the price action just slowly drifted lower finding support at the lows before grinding back up.  After the close, FB, MSFT, QCOM, and all reported very strong earnings, but except for T, the market seemed unimpressed.  As I write this, Dow Futures are indicating a flat to slightly bearish open.

As earnings continue to roll in, we should expect volatile price action and opening gaps to continue.  As you plan the rest of your week keep in mind that Friday is the big Unemployment Situation number.  It would not be unusual for price action to become choppy and two-sided as we wait.  Heightened caution is warranted.

Trade Wisely,

Doug

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Trade Alert

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Good afternoon team.

During the live session today we picked up a couple trades.

1.  NKE is making a nice move off of support today.  Keep in mind the overall market is a bit funky so decide carefully if you want to enter any new positions.  Consider buying the NKE APR 65 Calls.  The initial stop is $65.95 but it could be tightened up after the close today.

2.  This trade is setup with a 3-chart because TBT tends to gap just about every day so we slowed down the price action with the 3-day.  Consider the MAR 35 Calls with the thought of a quick trade in mind.  The Initial Stop is $35.00.  Because TBT tends to gap if it gaps up either move your stop to lock in some gains or simply take the trade off and bank the profit.

Doug

Remember all trade ideas are for your evaluation and consideration.