Hawk’s Scan Sentry Report Feb 25th 2013
A lot has been written about the difference between being right in your technical analysis and making money with your technical analysis. Analyzing the market correctly and making money with that analysis are two different issues. How many times have you foreseen a market continuation, reversal, or correction and gotten into a trade only to find that the market had one more thrust against you, taking out your stop just before moving in your direction. Or maybe the market ran away from you before you took an opportunity to enter. Perhaps the technical analysis is correct but the execution is not clearly defined or precisely executed. Trading psychology and a good trading plan are both important to help with this issue. There are countless trading psychologists out there to help address this problem, but that is not my purview. Specific rules in a trading plan are essential, and the plan must be verified with testing and experience.
A good trading plan should not only focus on the technical analysis, but also include risk tolerance, stop loss, and trade management (including profit targets and trailing stops). However, having a viable trading plan is not enough in and of itself; you have to follow the plan as well. A trading plan is like a gym membership, it is only worth anything if you use it; otherwise it will just cost you money. A well respected trader once said, “Your trading rules are your employees; in order to make money you must let them do their jobs”. I couldn’t agree more. It is important that your trading career be based on a good foundation, so I encourage you to write out your plan, and then test it, and then test it some more. There are two ways to test it: 1.) execute it manually on a simulated account, or 2.) program an automated strategy to run and test on historical data. I recommend both approaches. If you need help programming your ideas for testing purposes, be sure to contact us at firstname.lastname@example.org and we can point you in the right direction.
And now for some technical analysis….
Our short gold trade over the last couple of weeks was ‘spot on’ netting 87 points on the move to our target at 1560. We also did well shorting the S&P last week. In my previous post I discussed watching the Russell and NASDAQ charts to anticipate action in the S&P. Well the Russell didn’t take off, and the NASDAQ didn’t breakdown yet. Let’s see what we have in store for this week. You will find charts and analysis below.
For those of you not familiar with “Hawk’s Scan Sentry Report”, on the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools are used by both institutional and private traders across the globe and are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools.
The Charts and Analysis
(We got the pullback into the Triple Trender we have been anticipating since the Trend Exhaustion 3 signal 6 bars ago and the recent Bearish Divergence in Radar1 Fear/Greed. Our trend indicators are still bullish, but I would not be surprised to see this correction move as far down as support at $1462. Note Radar1 Fear/Greed is starting to show sellers stronger than buyers.)
(Our analysis shows this correction as a pullback in a bullish market. Note that we don’t see any divergences or significant selling strength yet in Radar1 Fear/Greed. Also neither the Triple Trender nor the Radar3 Trend Strength Index have confirmed a bearish trend. )
(This market did move downward but it has not yet broken down. It is still trading within the narrow range by which it has been bound since the new year. However, Radar 1 is showing that the sellers are stronger than buyers at this point. A close below the long-term Triple Trender will cause me to be significantly more bearish on the American markets in general. )
(Sell Short) ESV– Ensco plc.
(A bearish pivot divergence with Radar1 Fear/Greed at the recent high. Radar 3 Trend Strength and Triple Trender both confirmed bearish. A trendline pullback signal to the downside, and the wave counter suggests we have completed wave-5 and are beginning reversal wave-A. )
(Buy) ZNGA- Zenga.
(A bullish Pullback 23 setting up after a pullback into the recently synchronized bullish Triple Trender. The pullback was also to the breakout price which is good support. Upside target is the gap-fill at $4.45 )
(Last week I noted the strengthening sell pressure in the Radar1 Fear/Greed and the trend strength change in Radar3 Trend Strength. This bearish orientation is now confirmed in Radar3 and the Triple Trender. Note the bearish breakdown from the up trendline this past week. Since Radar1Fear/Greed is currently making lower lows a bullish ‘Pullback Divergence’ could be developing in the next few weeks. Look for this current down move to find support around $91.25. A close below the Bull Flag low of $92.52 will negate the current Bull Flag and the green target dots will stop plotting )
( Bearish Trend Exhaustion1 at the down trendline. Radar1 Fear/Greed did not give us a bullish reversal divergence at the last low, so I expect another thrust down. Beware: Radar3 Trend Stength is bullish! )
May the trend be with you,
Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only. It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading. Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .