Posts Tagged ‘trend’

A Look At a Few Charts: Revisited

September 3, 2019

As a follow-up to the charts I posted before my annual August hiatus, here’s what happened for each of those names. The yellow line in each of these charts is July 17, when I posted the charts before.

SPY:

The broad market ended up having a big drop as August started, but mostly recovered since then. If you tried to trade breakouts you got chopped to pieces. If you tried to fade breakouts you had to take a lot of heat during the chop for not a lot of benefit. This chart is textbook for how I used to give away a lot of my gains for the year by forcing trades during this time. I’m happy I sat this out. Things seem bleak for the markets going forward with global slowdowns and recession indicators flashing. I’m leaning toward taking more defensive long term positions here.

AAPL:

Earnings were good, AAPL spiked and then sold off all the gains. Then it dropped, and shorts got burned in that chop. In the end, it’s at the same level today as it was when I posted the chart before. Nothing but pain in August.

ROKU:

ROKU was the exception to my August rules. After some contraction before earnings, it popped and didn’t look back. If I weren’t sidelined by rule, I would have gone long on the Swing VWAP breakout at about $135. I have liked ROKU all year and in this case, breaking my rule would have paid off. Missing things like this and accepting it are important to having the right trading mindset. There have been so many good setups in ROKU this year, and I’ve been able to catch a few of them. It’s ok if I don’t get every one. Greed is a killer, as is fear of missing out, and begrudging any moves you may have missed.

TSLA:

TSLA ended up being pretty volatile with the earnings report and different news stories during August. Any of my typical setups would have lit me on fire. Lots of chop, lots of heat whether you traded breakouts or faded them. The only edge was in knowing the news and earnings beforehand, which is basically impossible unless you are cheating with inside info. Another good chart to watch rather than trade.

Going into the fall, I’ll keep an eye on any setups that may occur. I’m biased toward the bearish side, but we’ll see how things pan out.

A Look at a Few Charts Right Now

July 17, 2019

Going into August is the time I have historically lost the most in my trades. I overtrade and try to push something through when the markets are in a choppy, listless environment. So one of my rules is that I don’t trade from the end of July through Labor Day.

That said, here’s a few daily charts I’ve been watching and what I think my indicators are telling me. I’m mainly looking at the ProSwingVWAP and the Multi-Divergence Indicator v2 on the RSI(20). Also plotted in a gray line is an indicator I’m working on called AdaptiveSuperSmoother. I prefer it over moving averages. More on that later. On to the charts:

$SPY (S&P 500 ETF)

The broad market. As far as divergence, there isn’t any. No hint of weakness on a longer timeframe. The lower Swing VWAP is far below, so no definitive trend change. Since the middle of June we’ve broken the upper Swing VWAP 6 times. Today’s weakness doesn’t look good for continuing that streak, however. This looks like a textbook chart for sideways chop. This tells me take August off.

$AAPL (Apple Computer, Inc)

I am always and everywhere a big Apple fan. Slightest of slight bearish divergence. Nothing compared to what we saw at the end of April. I’d ignore that here. The upper Swing VWAP points are barely grinding higher, so no real bullish drive. Not near the recent high in May. The lower Swing VWAP is well below the current price, so no likely trend reversal indicated yet. All signs point to blowing up your account overtrading it in August.

$ROKU (Roku Inc.)

Roku has been a monster all year. Into June, a large bearish divergence showed up as it pushed above $100. We got a 10% drop after that, and the divergence ended. In the first part of July there was an upper Swing VWAP breakout at about $95. I most recently went long there at $97. Pushed back up to new highs where we are now. The drop today seems like a rejection of that newest high. The lower Swing VWAP is down at $100. Below $100 I’d look for a trend change to bearish. It would take strength above $114 to look like a continued uptrend. Another sideways chart, though I see more of a downside risk here. I’m still long here but wouldn’t add at this time, and will watch $100 closely.

$TSLA (Tesla Motors, Inc.)

Tesla is interesting here. A bullish divergence back in early June signaled a potential trend change upward. Tesla demolished upper Swing VWAP’s from that point onward. The lower Swing VWAP from that big reversal has still not been tested. Strong uptrend. The latest weakness today after another upper break doesn’t inspire confidence, and we are far from the Adaptive Super Smoother “average” price. Kind of extended. It looks like Tesla’s bull trend is still intact, but this isn’t the time to get on board, especially with the broad market likely to languish for a while. The upside target would likely be about $290 resistance from the April highs, but I wouldn’t expect that to happen until the fall. With earnings coming up between now and then, it’s a wait-and-see chart here.

So it’s a whole lot of nothing out there. Sit on your hands or play with Bitcoin pinless hand grenades. Crypto is making biotech names seem like investment grade. With the yield curve inverting and possible recession looming, the end of the year should be interesting.

ProSwingVWAP: Combining Swing Points with volume-weighted prices to define trends

November 19, 2018

Hello, it’s been a long time.  Life finds a way to get you off track.  I’m trying to get things here up and running again.

This is something I was working on a long time ago, and I just re-visited it this last week.  I think it’s interesting, so here it is: ProSwingVWAP.

2018-11-18-ProSwingVWAP

A VWAP is a volume-weighted average price.  I talked about VWAPs more here.  The idea for this indicator is to use Swing Points to define the period where we start tracking the volume-weighted value.  The chart above shows it in action.  I like using a VWAP as the price input, so you get a running volume-weighted total of each bar’s VWAP.  Kind of a VWAP squared.  You can use close, high, low, etc. as well.

Once a swing point (white dot) is charted, that swing point becomes the first value for that SwingVWAP.  From there, the price value you choose to average for the VWAP is volume-weighted on each bar and the running VWAP is adjusted.  This is done for swing highs (green dots) and swing lows (red dots) separately.  As long as a new swing high / low hasn’t been made, that long / short VWAP value will just continue to build.  A new swing high or low will reset the VWAP and start again.  I added optional paintbars to show green when a bar close is above the swing high VWAP, red if a bar closes below the swing low VWAP, and grey if it closes between them.  I also hide the VWAP value if bars close beyond them.

Because swing points need to have some future values to know if it really is a swing, there is a delay in this indicator.  The more forward bars you require to decide if a swing is in, the longer it will take for the data structure to be confirmed.  If you set the “FlagEarly” input to yes, then paintbars are yellow during this unknown stage.  The fastest reaction is if you use a value of 1 for Swing Forward, but you get more false positives this way too.  I usually use a value of 1 or 2.  The more bars back you look (Swing Back), you get fewer swings but they are bigger ones.  I mess with this value based on the timeframe and the particular name I’m working with, but I’ll usually use 8 or so.

I’m still in the research phase of this one, so I haven’t decided exactly what to do with it yet.  I like how it defines trends.  A bull trend is present when price is closing above the long SwingVWAP, and a bear trend when price is closing below the short SwingVWAP.  I also like the way it shows when a pullback is on, and when the trend resumes.  On the chart above of $SPY, the period from June to October is a prime example.  The market bottomed out at the end of July and then started an uptrend.  When a new swing high was in, the long SwingVWAP (green dots) told us when we were still in the pullback. Once price closed above the long value again, the trend was back on.  The short SwingVWAP kept trailing along below, reminding us that we were in a bull trend.  Then, as October started, we closed below the short SwingVWAP very dramatically, and the correction was on.  Now we seem to be right back in the middle of the two in a holding pattern.

For now it’s a just a context indicator rather than a trading signal, but it looks like it has some potential.  You can get ProSwingVWAP in the “Donors Only” folder in “Released Thinkscript Studies” at my Google site.  It will work on desktop or mobile, but paintbars only work on the desktop platform.

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“Trade what you see, not what you think”

June 30, 2009

Another draft post I’m going to go ahead and publish now. More to follow.

There are many ways to be wrong in trading, but here are two big ones:

1. Any time you use a trending strategy in an oscillating market you will be wrong.
2. Any time you use an oscillating strategy in a trending market, you will also be wrong.

This is where the oft-repeated platitude “Trade what you SEE, not what you THINK!” breaks down for me. A price level is “seen”; it is self-evident, and as long as the price quote is genuine, it an indisputable, objective fact. In order to act on this information, however, you have to “think” something! You must interpret the price level as either too extreme (oscillating, fade it) or not extreme enough (trending, follow it). Now we delve into the realm of opinion, the land where large number probabilities and the next trade win/loss binary play out. But the truth is this: You cannot put on a trade without making some kind of interpretation of data.. You have to see AND think. I believe the fallacy comes when you try to see AND think at the same time. Without making a well thought out plan before you go to trade, you are more likely to be influenced by emotion and other human biases and be caught on the wrong side of a trade.

I believe that the market hours are for seeing and trading, not thinking. If you want to think and plan during market hours, then don’t trade. The thinking should be done beforehand, via a consistent, disciplined, and tested trading plan with definite setup conditions. Again, you MUST think something at some point to interpret price and take a position. Instead of “Trade what you see, not what you think”, I believe the better mantra for trading is “Plan your trade and trade your plan”.

More to come…