Patience
We have all heard the phrase; Patience is a Virtue. For the swing trader patience is a difficult but very import skill that each of us must learn to master. To be successful in this business, we wait for the proper combination of patterns, price action, volume and volatility that provides us with an Edge. That sweet spot where risk is acceptable and probabilities move in our favor. Patience is also a test of endurance because the longer we wait, the harder it is to maintain the discipline of being patient.
The fact is traders just want to trade, but if we trade, without an edge, our capital is ripped from our accounts and given back to Mr. Market. I won’t speak for you, but I think I deserve my capital much more than that Mr. Market. Consequently, it’s essential that I master the skill of patience and develop endurance to wait for my Edge! Are you willing to endure the wait or will you turn your capital over to Mr. Market?
On the Calendar
It would seem this Friday on the Economic Calendar is an FOMC speaker day. At 10:15 AM Rosengren and Dudley speak with Mester at 1:30 PM and Williams ending the day at 3:40 PM. The Baker-Hughes Rig Count at 1:00 PM is the only economic report today, and it is not expected to move the market.
We also get a break on the Earnings Calendar today with only 56 companies reporting. The vast majority of the earnings reports occur before-the-bell.
Action Plan
We started the day with some bullish energy, but once again the bears mounted a counter-offensive that left all but one index seeing red. At one point during the day, the Dow was up more than 300 points but gave nearly half of it back and once again closing below that big round number 25,000. The SPY ended the day in the red, closing below the 50-day average as did the IWM. Yesterday was the 3rd attempt in as many days for the SPY and the DIA to break through the 50 but thus far been rejected. The IWM has experienced the rejection of the 50 SMA, 4-days in a row. Even the QQQ, the strongest of the four indexes could on hold on to a positive print at the close.
While all that seems pretty bearish, there is a glimmer of bullishness because all four of the indexes are at least for now holding above significant price support levels. The choppiness of the price action has made trading extremely challenging if on impossible except for the very fast intra-day traders. By in large earnings reports continue to come in positive as does most of the Economic Reports. As I write this, the Dow Futures are pointing to a gap up of more than 100 points, adding to the choppy confusion. What all this means to me as a swing trader is that I have to continue to patiently wait until the intra-day volatility subsides and a discernable edge can be defined. Long or short doesn’t matter just show me a direction. Have a great weekend.
Trade Wisely,
Doug
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Preparing To Challenge The Gatekeeper
6:50 am 2/23/18 the SPY futures look as if they are preparing to challenge the gatekeeper (50-SMA and the Bearish downtrend line) yet another time this week. I must admit this has been a challenging week for trading. One of the side effects of a nondirectional market is chop. Chop is very hard for most traders because it requires patience while the position (s) you’re in is slow, stagnant and seem to be barely hanging on. The way I see it is if the SPY can hold above $275.45 the Bulls will have a real chance of climbing back to the January high. On the other side of the coin, if the Bears can push through $268.15, they will likely test the February low. Cash is a position for a few days, just until the market finds it’s directional compass.
► Saturday, February 24, 2018
Tomorrow Saturday, February 24, Five Profesional traders come together to share with you a day of trading insight. These traders will share what works for them, and it just might be the key that unlocks the trading monster within you.
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.
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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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Volatility is High
The bulls and bears are locked in a vicious battle for control. Volatility is high, price moves are fast, and complete reversals happen in the blink of an eye. I have suggested several times that the selloff would take weeks if not months to resolve and to guard yourself against being chopped up during such times. I have continued to suggest caution and be patient. I suggested if you do trade, then trade smaller than normal positions and be prepared for fast and whippy price action. As a result, I have received some negative and very critical comments.
I am an unapologetic picky trader because I have learned the hard way that a market such as this can chop an account to pieces. I’ve been there, done that and allowed the market to take back some or all of my hard earned profits. I want to remind everyone once again that you don’t have to trade every day to be a successful trader. Protect your capital. Trust me on this that good trading will one day return. The question is will you still have the capital and the confidence to take advantage of it when it does.
On the Calendar
Thursday’s Economic Calendar gets going at 8:30 AM with the Jobless Claims report. Consensus expects claims to come in unchanged this week at 230,000. At 11:00 AM is the EIA Petroleum Status report and has no forward-looking forecast but is trending toward rising supplies. There are three Fed Speakers at 10 AM, 12:10 PM and 3:30 PM to discuss the market sensitive issue of rising interest rates. We also have several reposts that are very unlikely to move the market such as Consumer Comfort, Leading Indicators, Kansas City Fed Mfg. Index, Fed Balance Sheet and Money Supply.
On the Earnings Calendar, we have more than 250 companies reporting today.
Acton Plan
The bulls seemed to be back in charge yesterday with the Dow rising more than 300 Points after the Fed Minutes were released. However, the bears suddenly returned and in the market fell more than 450 points from its high. When the Dow has a point travel of more than 750 points over the course of the day, swing traders struggle. What seems like a good entry signal can quickly reverse and deliver a painful loss to even the best swing traders.
The SPY, DIA and the IWM are displaying the possibility of a Blue Ice Failure pattern. Adding confusion is the Futures that continue to flip back and forth delivering daily gaps and often reversing the closing direction. As I write this, the Dow Futures are pointing to small gap up, but that amounts to more than a 175 point reversal of yesterdays close. Trading during times like this will rob you of not only capital but also take your confidence. As a result, I will continue to repeat, that cash is a position and that you don’t have to trade every day to be successful.
Trade Wisely,
Doug
[button_2 color=”green” align=”center” href=”https://youtu.be/fGRvj29NTuc”]Morning Market Prep Video[/button_2]
Price Leading T-Line Band
Price in leading the T-Line Bands. On a weekly chart, BYD has had bearish follow through from a little Shooting Star. On the daily chart, you can see the sellers activity with lower highs on the T-Line. Yesterdays Doji ended up closing below the T-Line Band Low. At the morning briefing this morning I will show how price has broken through and tested the trend line. Price has also slipped under the volatility Stop. Currently, VXX is building support in a pullback, the chart has turned bullish. This chart is giving the clue of caution.
Hope to see everyone at the members morning briefing 9:10 EST today.
►Important Events
►SPY Up Date
The SPY closed below the 50-SMA keeping the Blue Ice Failure alive. The price action of yesterday favored the sellers by closing below the previous days low, and price closed back below the upper T-Line Band. I see two chart patterns forming, on the Bull and One for the Bear. If you are a bull you are seeing the Low High, Higher Low being created, if you are a bear you see a Lower low and a failed high and a Blue Ice Failure being created. On both, we need to see follow through for direction. Weakness suggest we test below the Lower T-Line Band strength suggest we test the recent high @275.32
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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
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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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We have all heard the phrase; Patience is a Virtue. For the swing trader patience is a difficult but very import skill that each of us must learn to master. To be successful in this business, we wait for the proper combination of patterns, price action, volume and volatility that provides us with an Edge. That sweet spot where risk is acceptable and probabilities move in our favor. Patience is also a test of endurance because the longer we wait, the harder it is to maintain the discipline of being patient.
