More timing and pullbacks

Despite its call letters NFG was anything but "No Fucking Good". It was a stellar performer.

I was late to this trade but shorted it at the top after it put in massive volume.

and covered it down here.

After playing the SVNT pop and shorting the pullback, I went long again right after and got stopped out when it fizzled. I thought to myself if I was the ones that wanted to acquire this stock I'd wait until the markets were going down in order to disguise my buying(if that was the reason for the big pop earlier). So I waited. When the markets did a feeble pop then moved down SVNT popped up. AH ha!

Soon a nice little trend developed

SVNT exit

Timing

I bankrobbed more than $1 on the rocketship up in SVNT.

Sold and shorted here

covered $1 lower, now looking for the pullback to end and the force that made it jump up before, to take over again.

Pops and pullbacks

Optimum times to enter stocks that are moving is when they pop or pullback contra or with the real trend. The risk is minimal when you can time it right. Your job is to wait for it to tell you it is time by the way they move. In each case set the stop just under the range of the previous candle.
1st chart NZ pullback after big pop

2nd chart NZ running away now, we are way ahead of the crowd

TNA popped a bit after showing much weakness

TNA resumed its downtrend

money is being made with almost no risk involved.

TZA pulled back after moving higher strongly

Stop was sniffed at but not hit, TZA lifting again. We are sitting pretty.

Game plan

Due to market conditions my game plan for the past little while has just been to scalp TNA and TZA during the day for .20 gains or whatever and then position myself for the last hour of the day low volume run up. I'm happy to do that as that is what the market is giving right now for the most part. However there are still stocks that run and present classic patterns to trade that actually follow through for multi dollar runs. Today SINA was one of those. Yesterday it was SVNT.

Watch the new highs/lows ticker and keep you eyes open for opportunities like these and set a stop so that if it doesn't follow through you can keep the loss small.

Trading is tuff these days, I wouldn't want to be a beginner trying to learn the ropes but if you can adapt and apply your system and edge successfully now then when or if the markets return to "normal" conditions it will all seem just too easy. Meanwhile bide your time and practice on the areas that need work.

1st chart SINA ascending triangle break to new highs

2nd chart SINA, sell into all the buying frenzy.

Patterns to trade by.

One of the unexpected side benefits that comes from doing this blog is when I get some thought provoking question from a reader that leads to a good blogging post.

"How to develop an edge" is always on new traders minds. Here is a way to burn high probabilities chart patterns into your mind.

I like to keep things simple and I am a visual person, not a touchy feely or over analytical type. Drawing ascending or descending triangles on charts will show you visual representation of what is happening. Ascending triangles means higher highs and higher lows, descending means the opposite. When the point of the triangle breaks through resistance or support , it means momentum and opportunity are present. Trade it. Grab it. look for more.

It's optimism and pessimism, buyers and sellers in control. Going with the flow. The patterns are not 100% guaranteed so just play the probabilities.

Print these out (black background will kill your ink though) or find the same patterns yourself and make "flash cards" out of them. Have a friend show you these one at a time in a rapid manner. Your job will be to identify what they are, what direction they are moving and decide on the probable, typical outcome within a second or less such as - ascending triangle--up--buy. Or descending triangle--down--short it. You can probably do it on computer as well but get out the scissors and make these little flash cards instead. It turns them into something tangible you can touch and makes them real.

A task like this will hurry your pattern recognition skills and decision making skills along.

An important note- I am not too picky about or debate whether a pattern is there or not or if tails are in the way. If I can see the pattern it is there. Don't debate yourself if it is not perfect.

Also if a pattern does not follow through, that gives you valuable information as well for a move opposite the probable or typical can mean an excellent and strong trade that way.

The following are some patterns from 9/9/2010 but it is not an exhaustive list:

Patterns

RIG

RIG ...wow, eh.

SNDK short fail led to great trade long

SRS break to highs

SRS ascending triangle

GG break low

GG linear drop

ABX break low

ABX continues

V descending triangles

Don't play the victim

With many sources lamenting the takeover of the markets by the robots I see too many traders crying "woe is me" and playing the victim. It doesn't have to be like that. The bots are not the big bogeyman hiding under your bed as the mainstream media would lead you to believe. In fact once you wake up to the fact that it is now easier than ever to jump on the coattails of the robots and let them make you money, you'll have a change in perceptions. The smart momentum trader doesn't care about the fundamentals or direction that any particular stock trades in. Any stock at any time in any direction is thus fair game. They become just vehicles to be used and then discarded when their usefulness expires.

When the robots take over, prices seem to move faster than ever before but that doesn't mean that the classic chart patterns don't repeat themselves. They do and thats because the programming is done by humans based on classic technical analysis and momentum. When the bots discover a stock in play, they make it really in play.

If the prices are getting jacked up or hammered down and the bids/asks are flying by, go with the flow. I like to play very liquid .01 spread stocks so I don't get screwed by the spread. I'm not in this game for fractions of pennies and will gladly give up some pennies in order to have the opportunity to get dollars.

I follow what I now call "The will of the bots". My style has been changing or evolving you could say to keep with the trend longer and not to jump on every directional change. I see evidence the bots pile on a stock that shows movement. I don't care if the initial movement was caused by the bots or by another entity wanting to accumulate or disburse shares. The important thing is to crash their party and drink some of their free booze.

Look at some plays from today. Classic technical analysis chart patterns.

1st chart NZ buying pullback

2nd chart NZ sell as it stalls

3rd chart AKAM short as it stalls

4th chart AKAM cover on huge volume candle

Identifying the trend

Sometimes the trend is not so easily spotted. Whipsaw action and fakeouts are the name of the game. You can counter those by either going for a walk or if you choose to trade by paying careful attention to the technical indicators.

This large green candle on the QQQQ looks strange coming right after a longish low volume red candle. I view obvious fakeouts like this as an ideal place to do the opposite---go short. I only use the QQQQ as a guide for the market strength and don't trade it.

A little while later you can see the QQQQ is down to lows again. Here it pops up on no volume and just hangs there. I watched for many seconds and no trades went by. HHmmm smells like manipulation to me.

3rd chart shows a little more later it has returned to lows with gusto. A trend made up of quick down candles followed by no volume pops or counter uptrends tells me the general trend is more down than up. Now find a stock that is trending like BIDU shown below and trade it.

Playing the trend

When markets are jumpy and with little follow through I prefer to find a stock that is trending and then keep on trading the trend. BIDU popped up on the making new lows ticker, that means it's in play.

Short BIDU

Cover BIDU

Could have played the bounce but didn't want to go against the trend which was down today

Waited for weakness to show itself again. Waited for it to come to me again. Short BIDU.

Cover BIDU

Momentum in action

Go with it, don't fight it.The 1:00 wave is the best.