The Trading Digest

Well that sure makes trading this week easy. Go short at Mondays open. Because “stocks are expected to extend their losses next week”. Man you can’t make this stuff up. Ok I am not saying they won’t be right but I’d put the probability at just around the levels of a coin flip. Certainly headlines such as these encourage average investors to make emotional decisions after having seen an erosion in their 401k values since mid July - but create opportunities for astute swing traders with an eye on statistical probabilities.

As always look for clues of potential intermediate turning points in emotional “guaranteed” markets that can catch the crowd leaning the other way - such as:

• those sharp up turns that leave extreme high volume footprints behind
• solid and wide reversal patterns such as inverted head and shoulders
• diamond bottoms
• double bottoms  - (support)
  
• triple bottoms  - (more support)

you get the picture.

But most likely these reversals happen after punching through an obvious area everyone is watching such as recent support or a important trendline. Be especially vigilant after gaps through these key areas. You can see a couple obvious ones as we head into this week.

So instead of fearing periods like these. Relish them because invariable one side of the boat just gets a bit too crowded. You must stay vigilant and strike when the odds (not the headlines) are in your favor and the lemmings decide they are on the wrong side of the boat.

Have a Great Night!

Dave Johnson

Let’s see IBD confirmed rally and a double/triple 9 to 1 rally.

Clearly a bullish bias going forward. Multi-Day Pullbacks should be bought in my opinion.

Have a Great Day!

Dave Johnson

Globetrader in one of his earlier posts had posted a spreadsheet for testing your risk of ruin based on some basic trading statistics. A fantastic tool from a fantastic blog.

Also Murray Ruggerio’s excellent article on cross market analysis and prediction (pdf)

From Linda Bradford Radke, lot’s of her market wisdom with these articles (a plethora)

Eventually this market will go down. Learn basic stage analysis to get an idea when that may happen. Weinstein has always been a favorite of mine in all trading timeframes.

Maybe stage analysis does not do it for you. Years ago I scanned a page from Yale Hirsh’s “Don’t Sell Stocks on Monday” in which he referenced a market timing system that had an amazing record at the time. With rising yields some of these factors could eventually come into place.

Now that you have the basic tools you need just head over to Dr. Brett’s site to get your head screwed on straight - so you can actually follow your rules.

Have a Great Night!

Dave Johnson

I did not record a live trade yesterday due to the FOMC decision. In actuality there were some decent opportunities along the way yesterday. Today I will record one for you. I want to start focusing on the setup I did from 2 videos ago. Basically the micro scalp using the tick for your entry. I will be on the look out for those today.

Some morning links:

Did you hear tha the Milwakee Brewers we offering tickets to a future home game if you receive a rectal exam at the stadium? The comment page on Digg is hilarious.

And you thought our sun was big?

Lol. Cramer the Cowboy

Have a Great Day!

Dave Johnson

Being that today is the day for a rate announcement I will most likely pass on a trade video today. We’ll see.

So does this meeting in some way change the tone of the current market? Do we get a strong pullback? or possibly a strong positive reaction? or just a ho-hum reaction with no discernible change? Curious what you the readers are thinking because I can’t even venture a logical guess.

I’ll leave you with some links:

LOL. An intersting strategy for those stubborn laggard stocks.

How to piss off a psychic

What does the World Bank do?

This honeybee thing is one strange story

and……

Best case for understanding this silly political climate we are in - and from TV

Have a Great Day!

Dave Johnson

Who doesn’t like a cheerleader?- I laughed out loud at Q’s rant. Keep up the great work Q.

I know my videos are pretty rough but man what the hell is this crap?

Do you think people know something?

I could just enjoy staring at those coffee beans all day… gawd those are sexy.

Answer the questions by clicking the photo. What personality type are you? I am a dreamer …lalalala

Okay I’ll end it there.

Have a Great Day!

Dave Johnson