ADM – Potential Hedge Position
I don’t think anyone would argue that the market is overdue for a correction. I am planning on using a couple short positions to hedge my winning long positions if the correction turns out to be more severe than expected. I thought that I would share one of the short setups that I’m considering. Archer Daniels Midland (ADM) is right up against some strong overhead resistance on the weekly chart and the daily chart. If we enter at 30.55 and use the stop loss point at 31.02, there is a nice 3:1 price target at 29.14. Such a target is very reasonable and can be reached even...
read moreSequential Breakdown Trade Plan: Echelon Corp
This is a follow-up from a previous post I made regarding ELON and the Sequential Breakdown short setup. In that blurb, I said to keep an eye on it and look for it to hit 6.12 on lighter volume, at which point it would be a great short position. I even included the detailed money management numbers. This trade setup is the opposite of the Sequential Breakout setups that I have been posting over last couple weeks. Instead of waiting for a chart to breakout and retest a failed Demark Sequential Sell pattern, the short setup uses a breakdown and retest of a Demark Sequential Buy pattern. One...
read moreShort Setup: Sirona Dental Systems SIRO
For the most part, the market seems pretty bullish still and I’m still long with a QID hedge. I did, however, notice a couple of the weaker charts on my scans tonight. SIRO is one such example and it also shows how I like to use (and misuse) Sequential signals. Remember, I’m more interested in spotting important swing points, not the actual TD Sequential signal (as defined by TD). SIRO is coming up on a resistance level right now and looking at the weekly chart, you can see that the volume is much lower. It should have trouble getting above 49.21. A stop loss could be setup at...
read moreCombining Sequential Signals and Gartley Patterns
I saw these two charts in my scan of the Russell 2000. Both are examples of how I like to combine separate signals, which in this case is a combination of a Sequential sell and a bearish Gartley pattern. So would I trade either of these? No, because the volume is not confirming the signals. Ideally, I would like to see volume shrinking at the highs and both of these charts have very strong volume near the highs. Sure, the trade might work, but I like to have volume confirming all of my bets. This link is a video of Tom O’Brien and it shows how I like to use volume with pattern...
read moreSWI chart
Thought I would try out Worden’s widget. I picked SWI because I own it and was disturbed by the action today. I hate it when long positions reverse like this. On the good side, I bought the QID yesterday as a hedge for the expected pullback. ShareEmailPrintDigg
read moreTrade to watch
Here is a trade to watch. The equity is ELON and it broke below the Sequential buy stop-loss in early November. It is moving up with very light volume and if that continues, I would short it at 6.12 with a short stop-loss at 6.50. Here is a breakdown of the money management plan. It assumes a 100K trading stake and putting 1% of that capital at risk. ShareEmailPrintDigg
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