Good Day Traders,
I’ll be taking off for the World Money Show on Wednesday next week so perhaps it is a good time to be flat the market. We will have our weekly training session on Thursday this week and I’ll will be monitoring the market while in Orlando. But I am taking my wife so we will take at least one day to celebrate her birthday! If you are down in the Orlando area on Saturday stop in and see us as we present on the Art of Trend Trading.
General Market Observation: The Indexes did not do a lot last week to bring on a lot of confidence in either direction. As we highlighted in the “How to Make Money Trading Stocks” show Friday price is still stuck in a trading range defined by either a box or a triangle. To derive a game plan for the current market environment one must look back over the past 3-5 years and see how both current market movement and the movement from back in September of 2014 is different than the past orderly pullbacks that took place through most the bull run. The wide daily and weekly ranges is not a sign of market health, but more a sign of topping. Go back in history and study previous tops or character changes in the market and one finds that there are typically two or more violent episodes one can point to that provides clues to more challenging market times ahead to the long side.
For January 2015 all the major Markets were negative. If the January Effect does play out it could convey that the market in 2015 will be neutral at best or down significantly at worst. We must ask ourselves what motivation and catalyst are present in current market conditions that would result in a strong uptrend reversal. With that said it does not mean that there will not be excellent trading opportunities—it just means that going long will require precision and nimbleness to profit! Here’s the results for each of the Indexes through January.
SPX: The S&P fell hard this week from resistance and came to rest after selling accelerated Friday afternoon right at in the support zone where it bounced previously. If the Index maintains its negative character it would not be surprising for this level to break and price retest the next support level identified by the 200 day SMA. The last time this the 200 day SMA was attacked it failed and prices dropped to support bounded by the uptrend lower channel line. If this happens it will only be an approximate 8% fall from highs of last December. Is that enough to reset the market and send it back up to new highs. We shall see. Keep in mind that the current personality of the Index is to find a strong level of support and then bounce in a tradable rally. When that doesn’t happen or a bounce is weak it could be a clue to worse things to come.
NDX: The Nasdaq 100 has just had 8 or 9 weeks of go nowhere price action. One thing a nimble trader can do is to quickly take advantage of this bounded action but if one does try to pick long trades off support and pick short trades off resistance. Keep your stops tight! TQQQ is a good vehicle to trade to the upside because its box ranges about 16% from bottom to top.
RUT: If the market really turns ugly look for the Russell to lead the way down. Price is currently finding support in the zone at 1163 but a break here would next find a logical bounce point at the 200 day SMA which has been an area where several bounces have taken place going back to November. Again if you choose to trade off support using TNA or even IWM keep stops tight and just below the defined support zone.
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Summary of Monthly Closed Trades as of the January 30th:
The Margin Account is in Cash.
Total Booked Profits since Jan 1 when the timing service began: $1202.00
ATTS Returns for past 3 Years—Each account is now reset to $100K to begin 2015!
Since 2012 we have traded the Active Trend Trading System with the following net performance. Sharing this data is not a representation that similar results will continue in the future:
Compounded Return = 126% for the three years or an average of 31.41%/Year
Active Trend Trading’s Yearly Objectives:
– Yearly Return of 40%
– 60% Winning Trades
For a complete view of specific trades closed visit the website at: http://activetrendtrading.com/current-positions/
Updated at the beginning of each month.
Outs & Ins: ADVS, HAR & SLXP make their debut on the IBD 50 list for 2015. ADVS & SLXP have been on the list in past years. Guess what? ADVS and HAR are well extended from proper buy points but both look strong and worth waiting for a proper set up. SLXP is trying to come back after a huge sell off after last quarter’s earnings. Most of the other stocks on the list are either looking weak or extended. I’m watching NOAH to see how it builds out its current base.
28 stocks from this week’s list will report earnings over the next several weeks so there may be some volatility going forward.
Comments and opinions written below this line of text may be provocative and only obliquely related to trading. Some may find these “Off the Wall” comments challenging to their outlook on life. I will not post any comments made on subject matter below this line, so if you disagree blast away.
OFF THE WALL
Off the Wall: Well the New England Patriots won the Super Bowl. The game was actually pretty good and since I didn’t have a dog in this fight I was able to watch for just the pleasure of watching a great athletic event. During the game the announcers were talking about both coaches. Both coaches have reputations for being winning coaches who encourage their players to play on the edge of the rules. Now I’m not going to judge either one of them because I do not have a high opinion of either of their coaching styles—but they do win!
One thing the announcers said that caught my attention they said that each of the coaches had setbacks in their careers but they never let the setbacks keep them from pressing on with their vision of being a successful coach. Pete Carroll the Seattle coach was a successful coach at USC (one of the college teams I love to see get beat!). But before this success, Pete was actually fired from two head coaching jobs in the NFL. Not only fired but fired from two jobs in a row. Being fired from two jobs in a row might have caused a coach with a weaker vision to have questioned their choice of careers—but not Pete. He kept going and refining and finally learned how to coach a winning team.
Master Traders are like this. We have found a way to keep the faith while we go through the ups and downs of learning how to trade. I read a story once about an extremely successful trader who blew up several accounts but kept going. He would drive cabs to earn enough money to get a stake to start trading again. With each failure he learned not just about trading but about himself. He refined both his trading and his trading personality until he became a winning trader. The key for both Pete Carroll and this trader is that they never let failure derail their vision of success. Keep the faith and keep pushing forward!
Share Your Success: Many of you have sent me notes regarding the success you are having with the Active Trend Trading System. Please send your stories to me at email@example.com or leave a post on the website. Thanks!