Anyone doing big chart trades for recent up move?

I have a general doubt about trading during the recent up move during the "latter" part of May. I am a big chart trader (Daily and 233). According to the market calendar, it says to expect heavy profit taking in latter half of May. Since, stocks are generally trending up I assumed this meant "heavy profit taking" would mean down. Recently, we've had a nice up move. Was it "incorrect" for me to stay on the sidelines since I thought stocks were not following the market calendar?

Thanks in advance!

I read a great article recently on market mantra, like "sell in May and go away." It made a lot of sense because it's purpose was to reiterate that the market, most of the time, fools the masses. If you look at over all market headlines recently, everyone has been calling for a correction....since the masses are wrong a good percentage of the time.....wa la, we had a nice rally. I would say that the heavy profit taking is still going to occur but would be delayed further in to the summer time trading zone due to all of the expectations of a market wide correction. I also noted that the RUT and the NAS have seen some serious selling, into the over sold territory....therefore I expected an oversold bounce on both of those indices. Those indices being so large would naturally carry the Dow and the S&P into new high territory. All indices are pretty much in tune, in terms of overbought so maybe we will see some synchronized selling from here.

Have a good one!!

I would not suggest you were wrong to sit on the sidelines as this is a personal thing and you have to be comfortable pulling the trigger. I had to sit this move out as I have been too busy at work the past week to check my 233 at appropriate times or enter in the a.m. That said I had both up and down potential setups listed on my watch list last week. Had I been able to watch and all of my conditions were met I certainly would have traded to the up side watching my indicators and the market very closely looking for any potential reason to exit (with the caveat that my exit criteria would have to be met). In other words given the current market last week any upside trades would be exited at the first exit signal without hesitation whereas I might be willing to stay a bit longer on a downside knowing that bigger charts (weekly and up) look tired and appear to support the calendar. Does that make sense?

NCT

Yes it does. Kinda that's what I was thinking too, but was lacking confidence in my thought process. Thanks for the quick response!

Define recent regarding big charts.

Nflx daily trade on May 12
Google daily trade 5/13


Both worked very well.

BCT

BCT, I saw those signals...how did you know that those signals were going to break through the choppy trading that preceeded them? I had seen many daily signals slightly earlier in May that did not work due to choppiness.

sonicwave Wrote:
-------------------------------------------------------
> Was it "incorrect" for me to stay on the sidelines since
> I thought stocks were not following the market
> calendar?
>
> Thanks in advance!

No it wasn't incorrect. You are just waiting for "your" pitch :-)

Both 233/daily chart trades.

ICPT 5/20
PCLN 5/20

Sonicwave,
Try incorporating the E chart method for big charts. Add a 144 time frame and use the normal E parameters. It will help your entry. Don't pay attention to any of the noise and if the other MA's bother u then take them off. The E is a nice to know that should help your confidence in your entry off the 233.

BCT

Thanks for the help guys. I was pretty clueless if I was doing what I was taught or not. I will do my best to incorporate the knowledge! Hope everyone is trading well!

I concur with BCT. MAs have their purpose but if they keep you from getting into trades that work then try a test and remove. That said they have their purpose. You ask how does one know for sure the trade will work. You never will. Over time you get better at selecting trades that provide a higher probability of success. That comes with experience. I finally watched part of the video posted the other day about Karen The Super Trader. What I found interesting was how similar her perspective is to GW when entering a trade. Neither of them know for sure when they enter. They put themselves in the best possible scenario based on experience and do not panic once they are in. The focus is on managing the trade effectively and managing your emotions. Once you know your pitch all of your entries should look relatively the same - some work and some won't.

As for things you might have considered when making your decision. Most importantly your charts and indicators come first. What the market is doing right now is far more important than the calendar but you must always be aware of the calendar. If they both agree TRADE BOLD THERE (some familiar). Other things to consider.

NFLX 5/12 - Weekly - had been going sideways along 50MA for four weeks, SRSI < 20, improving MACD, bounce is possible. Daily - for those into chart patterns small reverse head and shoulders (bottoms around 4/15, 4/28, 5/7), for those that read price higher pivot low 5/12 (right shoulder of previous pattern), depending on your settings very close to FP on 5/12 as well. All of this working together to give you more confidence in your trade. Similar to what the short chart traders are doing in this forum but you do not need 6 to 9 charts giving you the same buy signal. You do, however, want as much information as possible to support your theory. As for the “E” I have not incorporated that into my thought process but several people seem to have success using it.

Googl – 5/12 Daily double bottom off 200MA around BBB, FP up, probably had auto wave if you use it. Weekly going sideways for weeks just above BBB, 50MA right below, SRSI < 20, indicators seems to be improving and possibly turning to the upside, bounce is possible.

See I told you MAs have their place. In both cases I said possible bounce on stocks that move well. Yes the monthly charts are just starting to turn but the Weekly -233 say not quite done. Finally, if you go back and review historical reversals over the years (good reversals that last for weeks) it is extremely rare to see a one or two candle reversal as on the weekly charts for these two stocks. Most of the time you will have some type of retest, double top. head and shoulders, or plain sideways consolidation that breaks to the downside. That is why I personally did not want TOS. I want the ability to study historical reversals across multiple charts. What I see when I look at the monthly and weekly for these two charts are the monthlies starting to turn (ripe) but the weekly would first bounce to retest the previous high depending on market conditions. It may or may not get there but it really doesn't matter. It is all about trading the swings that you are comfortable with. If you catch a good 3 to 5 day bounce on these type of stocks that is money in the bank.

Best of luck and Happy Trading!

NCT