Mixed price action signals and emotion cloud the view forward.
Mixed price action signals coupled with the drama of a huge earnings day could make for a bumpy day. Over the last few days, the Bulls have made a strong statement smashing through downtrends and resistance levels. As a result, most traders have an upside bias. However, the shooting star candle pattern that appeared yesterday on the DIA and SPY raises the flag up uncertainty.
Today we have a huge number of companies reporting earnings. The question will there be enough positive reports to support current price levels. There are currently more companies with prices above $100 a share than ever before. As long as companies continue to perform that is not a problem but if too many show signs of stress at this altitude there could be trouble ahead.
The last thing I want to do is predict which side will prevail, Bulls or Bears. I want to avoid all the noise stay focused on the price action making the trades come to me. Flexibility and the willingness move with the market no matter the direction is critical. The price action of the market is always talking to us and leaving behind clues. The question is are you listening to and willing to see the clues or has your bias plugged your ears and fogged your vision.
On the Calendar
Today on the Economic Calendar we have three potential market moving reports at 8:30 AM eastern. The Durable Goods and International Trade numbers being most important with Weekly Jobless Claims to follow. Overshadowing the economic numbers today will be our first big day of earnings reports this season. With 477 companies reporting, plan for an extra dose of volatility today. Also, we must remember that Congress is moving forward on the new health care bill. Any news surrounding this controversial subject has potential market moving effects, plan accordingly.
Action Plan
My plan today calls for flexibility and a keen focus on price action. With the barrage of earnings announcements and news spun from DC anything is possible. With the DIA, SPY, and IWM tucked tightly against important resistance levels fast and extreme price moves are not out of the question. As a result, I don’t approach the market today with a bullish or bearish bias. I want to be prepared to react to price action clues without the fog of bias clouding my focus.
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Trade wisely,
Doug
A new trade idea for you to consider and evaluate on KO.
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Bulls Price Trend Working Together
We all love the market when the Bulls, price, and the trend are working together. For the swing trader, this is a dream come true.
The SPY has closed over the top t-line once again on the daily chart following the France vote and strong earnings. Yesterday’s candle pulled back slightly at the end of the day after walking into resistance. The hourly chart may be suggesting a little profit taking could be just around the corner. Below $238.40 today could be the profit taking trigger.
FREE Trade Idea – TWLO
TWLO 2-day chart – April 7 a Bullish Harami was printed creating a double bottom below the t-line bands. Follow through pushed price over the top t-line band and put the chart into a Rounded Bottom Breakout.
Note we bought TWLO yesterday.
Charts to Learn From – WYNN
WYNN – Following our post to the HRC members in the trading room WYNN has rallied on a T-Line Run with only minor passes. We sold WYNN yesterday for a 29.88%
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Members Swing Trade Ideas
We post to HRC members 10-15 swing trade ideas each day and post them in the member’s area of the website.
Subscribed members
10-15 trade ideas below – for members only
What is a Trade Idea Watch List?
A trade idea watch list is a list of stocks that we feel will move in our desired direction over a swing trader’s time frame. That time could be one to 30 days for example.
From that watchlist, we wait until price action meets our conditions for a trade.
Trading discipline. Now begins the high drama of earnings season.
Controlling emotions and maintaining a trading discipline during earnings season challenges all traders. Over the next couple weeks prepare of an earnings barrage. CNBC will be pulling out it’s most dramatic bumper music, and the talking heads will be issuing predictions left and right. How can an average retail trader cope with this tsunami of data?
Have a plan and be disciplined enough to stick to the rules. Personally, I turn off the news and avoid the talking heads like the plague. I am responsible for my trading. No one cares about my money more than me. Consequently, I must stay focused on my plan and my rules! For me, that means digging into the charts and studying price action. Chasing big wins requires the willingness to take big losses if you’re wrong. I don’t know about you, but that is not part of my plan! The truth lies in the price action; everything else is just noise that can bias your decision process.
On the Calendar
The hump day Economic Calendar is a quiet one. The Petroleum Status at 10:30 AM Eastern is the only number of consequence today. The last reading showed a decline in supplies and as a result helped the overall market by lifting some of the big oil companies. Another declining report today could give us a little hope that a trend is developing. Perhaps, we could look to energy stocks for some tasty gains in the near future! The Earnings Calendar continues to Ramp with 299 companies reporting today. Stay sharp because some the media darlings will start reporting and they will affect the overall market.
Action Plan
I have been a net seller into this sharp rally taking some very nice gains. I’m now very light on risk in my account as I’m expecting the market to pullback or at a minimum consolidate the recent move. At least that is my plan, but earnings could easily toss a big monkey wrench into that plan. Clearly, earnings are unpredictable. As traders, the best we can do is stay focused on price action clues while maintaining our discipline to avoid getting caught up in the drama. I’m confident we will be entering several new stock or options positions over the next few days. Please keep in mind that during earnings season trades can move very fast. Stick to your low-risk entry rules and avoid chasing.
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Trade Wisely,
Doug
The SPY is Painting a Bullish W Pattern on the 3-Day Chart
With the help of the French election the SPY is painting a Bullish W Pattern (clearly seen on the 3-day chart), follow through is needed. Yesterday price also closed over the 50-SMA and the upper T-Line Band. And the closing price $237.17 in also back above the cloud.
The battle is not over; A bull-Bear winner has not stepped forward.
FREE Trade Idea – SEDG
SEDG – A Rounded Bottom Breakout Strategy, broke out above the 200-SMA setting up for a Bullish J-Hook Breakout. 3-day chart pictures a beautiful Morning Star that launch price back above the upper T-Line Band.
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Charts to Learn From – IMGN
IMGN – Following my post to our subscribers that IMGN was likely to move higher in the coming weeks, it moved 97% higher and is now showing signs of even moving higher from its current breakout. Note the Doji Continuation Pattern
Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is not financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service
Members Trade Ideas Below
Members trade ideas below reserved for subscribed members
Scanned from Tc2000 | 10-15 trade ideas daily
What is a Trade Idea Watch List?
A trade idea watch list is a list of stocks that we feel will move in our desired direction over a swing trader’s time frame. That time could be one to 30 days for example.
From that watchlist, we wait until price action meets our conditions for a trade.
© 2007 – 2017 Hit & Run Candlesticks INC. – Right Way Options – Strategic Swing Trade Service – Trader Vision – All Rights Reserved. Terms of Service Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Rick Saddler, Doug
Beware the Green Eyed Monster!
The Green Eyed Monster of Envy can destroy your trading! Last night I was talking with a fellow trader that was very disappointed with their trading. As we progressed through the conversation, it became clear that his disappointment and frustration was self-inflicted. Although he had turned the corner from a consistently losing trader to a net winning trader, it was not enough. Like all of us, he wanted more.
As a very competitive person he was comparing himself to other traders and the results they were posting. Envy was destroying his success! He was ready to quit trading because of the frustration even through his account was growing. Although we all work to help each other improve as traders in the trading room, trading is a single person activity. We all start from a different place, and we all have different goals. Comparing yourself to another trader is like comparing apples and oranges.
A trader must compete with themselves not others. Your goal should be to see improvement in yourself and your trading account. A good place to start is by setting small achievable goals for each week or each month. Record your results. If you only made $10 last month that is a Huge Improvement if you have been a losing trader! If in the next month you see a gain of $15 that’s a 50% improvement over the prior month. Small incremental improvements build confidence and over time builds big accounts.
On the Calendar
Today on the Economic Calendar we have the Case-Shiller numbers at 9:00 AM Eastern followed by New Home Sales and Consumer Confidence at 10:00. Although they are all important, the big number of the day is the New Home Sales and the one most likely to move the market. Earnings are starting to ramp up with 190 companies reporting today. Keep checking!
Action Plan
Futures remained positive all night and continued to push higher in the premarket as earnings roll out. How great it will be to have a follow through day after all the choppiness of the last couple months! I will be looking for new trades today. However, I will be watchful for signs of a pullback to test support because it could happen at any time. Yesterday was saw the Dow close up more than 200 points. It would not be out of the question to see some profit taking.
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Trade Wisely,
Doug
SWKS Option Trade of the Week | Video Reply
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- Trade Alert issued on February 17, 2017.
- Trade Exit occurred on the afternoon of April 24, 2017.
- Pop-Out-Of-The-Box-Pattern with a Bull Call Debit Spread.
- 78.76% Gain = Approximately $564 per spread.
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Investing and Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks or it’s associates should be considered as financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service
Cup and Handle Formation-Bullish Continuation Pattern
The “cup and handle formation” is a bullish signal pointing to a continuation of the current trend. It may extend over several weeks or even months and contains specific attributes.
As with any continuation pattern, you rely on a confirmation in one form or another. This may occur as a second technical price signal, a candlestick continuation, volume spike, or change in momentum.
There are several parts to the cup and handle. First is the cup, which is a rounded bottom extending over time. As the shape of the cup is completed, expect the handle to emerge. This is a swing trade in the opposite direction, characterized by a specific channel between resistance and support, forming as a pennant or similar channel movement and, quite often, separated from the “cup” with an upside gap. As the handle declines and concludes, price reverses, moving again to the upside and setting up as a breakout from previous resistance.
The Cup Depth
Cup depth should represent retracement of about one-third of the prior advance at the most. In some especially volatile cases, retracement could also be much greater, so the one-third guidance is not an absolute requirement.
The Handle
Handle should be understood as a consolidating offset against the bullish movement in the greater scheme of price behavior. As a pullback, the handle is a short-term aspect of the pattern. Because it is a retracement, the caveat for all retracements applies here. Expect a relatively short-term period of time in order to predict a strong continuation of the bullish trend.
At this point – the conclusion of the three phases (cup, handle, breakout), look for confirmation in the form of a bullish continuation signal. While this may develop as an ascending triangle, it is more likely to appear as one of many bullish candlestick continuation signals. This confirms the cup and handle as the initial bullish indicator.
Some chartists like to set price targets following the cup and handle, based on duration of the pattern, degree of price movement, and strength of the subsequent continuation. However, as an initial effort, recognizing the pattern is essential for identifying and then confirming its value in predicting price direction.
The initial bullish trend moved price from $61.75 to resistance of $63.75 in approximately a two-week period. At that point, the rounded bottom of the cup began to form. It lasted approximately 1 ½ months.
The handle formed after a strong upward gap and formation of a short-term bearish island cluster of two sessions (defined as movement away from price range with gaps on both sides). The handle moved price from $64.50 down to $62.50 over less than one week.
A breakout followed, moving price above resistance of $63.75. The bullish continuation initiated by the cup and handle was confirmed at the point of breakout by a thrusting lines candlestick, a bullish continuation. The ensuing bullish trend, marked by the trendline, continued into March, when a retracement appeared. This was followed immediately by another bullish thrusting lines pattern, indicating that the bullish trend was not ending.
Every cup and handle is slightly unique, so do not expect the exact configuration to occur in every case. So much depends on volume and volatility in effect at the moment. Economic and fundamental news (or rumor) also determine how acute the rounded bottom of the cup will be, and how long the handle will ensure.
Can the cup and handle fail or turn out as a false signal? Yes. All reversal and continuation patterns are indications only, and cannot ever lead to 100% confidence. However, as with all strong signals, reliance on the initial pattern and confirmation improves your chances for a successful timing of entry and exit and overall improvement in chart reading capabilities.
To learn more about the cup and handle in its many forms, go to Bullish Cup and Handle Pattern for an e-book on the topic. This e-book provides an in-depth analysis of the pattern and how you can use it to trade with greater success.
