Apple Inc. (AAPL), AK Steel (AKS), Suncor Energy (SU).

Friday I caught some quick moves on AAPL, but nothing worth posting.  Today I had one winner and two scratches.

AKS gaped down, and pulled back to the ORL on decreasing volume.  At that point it printed a NRIB that closed below the ORL and had the 5 MA right on top of it.  It looked as if it was the perfect set up.  I shorted the low of the 6th bar.  Price moved slowly at first, but then accelerated down.  It paused however just below the low of the day.  It printed an red inverse hammer, which I thought primed it for a break below the day’s low on the next bar.  Unfortunately, it worked it’s way back up to the ORL and stopped me out.  There was another opportunity to go short again below the doji of the 18th bar, but it closed just above the ORL and above the 5 MA, so I passed.  The trade ended up being a scratch.  I could have closed it out when it pulled back from the day’s low, but I didn’t have much of a profit, and decided that it was worth the chance to see if it would break back down, knowing it would not be worse than a scratch trade.

SU gaped down with a nice red bar, consolidated, and printed a nice red inverse hammer doji.  Price closed in the lower 25% of the OR, and printed two inside bars.  Once again, looked like the perfect set up.  I went short the break of the low of the 3rd bar.  Price initially moved in my direction, but then came back up into the OR.  I watched it climb right back up and take my stop out, just below the 5 MA.  This looked suspect.  I am not a “Market makers take out the stops type of guy”, but this just smacked of it.  I almost immediately went short again as it turned back around, and sure enough it fell straight down, then below the ORL, printing a red inverse hammer on the 7th bar.  I thought it was poised to break the low, it did, but went nowhere, and it ended as a scratch.

Winner, winner, chicken dinner.   AAPL gaped down, tried to rally, but was penned in by the 5 MA.  The 3rd bar was long, red, and weak, bouncing off the ORL.  The next bar broke the ORL, and two IB’s formed, the last being a marginally hammer doji.  I entered on the break of the 6th bar low.  Price fell nicely towards the Fib extension.  I thought I might have blown it when it bounced off the round number on bar eleven, but it was unable to close above the midpoint between the ORL and the Fib, as well as staying below the 5 MA.  It based for a couple of hours, and then dropped to the Fib extension.  I closed it on the way back in on the 22nd bar (87.65), instead of when it hit the Fib on the bar previous, becuase I thought there was a decent chance it could keep going, as it had been basing below the number.  Good for 4R.

Not much to report today.

Today was a very choppy, tight range session.  I only found marginal setups that I was out of almost as soon as I was in them (read: should have passed on  them).  Hopefully tomorrow will bring more opportunity.

Intel (INTC), Alcoa (AA), Broadcom (BRCM), Las Vegas Sands (LVS), Apple Inc. (AAPL)

Intel gaped down on large volume, then bounced back up on declining volume.  It tagged the ORL from yesterday and left an inverse hammer doji.  I went short on the break of that candle’s low, put a stop in above the tail, and then went to sleep.  The first target was the ORL, the second was the Fib extension.  Price slowly worked its way back down, and when it got within a few cents of the ORL I covered it.  Because it was so late in the day when it hit the ORL, there was no chance for the Fib extension target, but good for 2.5 R.

 

Alcola gapped down on large volume, and immediately ran back up.  The next bar continued up on lighter volume, tagged the 5 MA, but closed below the ORH, forming a red inverse hammer.  I went short on the break of that candle’s low, put a stop in above the tail, went to sleep.  First target was the ORL, second the Fib extension.  I covered when it hit the ORL lat ein the day.  Good for 1.5 R.

 

Las Vegas Sands gaped lower on a large red bar then consolidated with two IB’s.  I shorted the low of the third bar.  Price initially dropped, but could not break the ORL.  The entry on this  stock was bad.  The signal candle was really no signal, and I should have passed on the trade, especially given that it was above the ORL.  Worse yet, I did not close the trade when it could not break the ORL, and it later ran up and hit my stop for a full 1R loss.  Not good trade selection, but could have been saved by good trade management.

 

Broadcom gaped down on a large red bar, and printed an inside bar that was hammer “type”.  I went short on the break of the ORL.  Price dropped to the halfway point between the ORL and Fib extension, and bounced, printing a doji.  At that point I brought my stop to break even, and was stopped out on the next bar.  This was also a bad trade selection, however, good trade management turned it into a scratch.

 

Apple Inc. gaped down, bounced, then dropped back to the ORL.  It held that level, and made a low volume meander to the ORH, where it printed a red inverse hammer.  I shorted the low of that candle, but was stopped out on the next candle for a small loss.  This was not the best set up, and I am often too early on Apple to begin with.  Price eventually filled the gap into yesterday’s low, pulled back and printed a weak bar (13th) and and inside red bar (14th).  That short would have worked and been worth about 4R.  I am learning with Apple that the first entry signal on a trade is usually not the best one to take, and that a two bar signal is much more reliable.  (Read: I need more patience when trading Apple).

Morgan Stanley (MS), Amazon (AMZN), Apple Inc. (AAPL)

Boy, did I  REALLY blow this first trade.

MS gapped up, with a nice green bar that closed above the previous day’s high.  An Inside Bar then filled the upper shadow of the first candle.  I entered on the break of the ORH, and put my stop just below the IB.  The break of the ORH failed, and it triggered my stop on the next bar.   However, that bar closed on a doji type hammer, that was slightly green.  It had also bounced off of the 5 MA  nicely.  I put another order in two cents above the fourth bar, and that was filled as the fifth bar shot up like a rocket.  Here is where the problem came in. 

Keeping in mind my New Year’s trading resolutions, I quickly checked myself to see if the second entry was a “revenge trade.”  It wasn’t.  I instantly knew that the first stop was too tight, as price was too far from the 5 MA.  When it touched it and bounced leaving the doji hammer, I knew that was a valid set up in itself, albeit more risky being below the ORH.  The problem came when the fifth bar broke out, I was determined to make it to the Fib extension, and that is where the revenge for the first stop out came in.  Of course I let the price come all the way back down to the ORH, and slightly below it, where my adjusted stop sat.  To rub even more salt into the wound, MS ended up moving quite nicely off that point, and was an easily manageable trade up to the Fib extension.  (Note to self………D’oh!). 

 

AMZN help redeem me.  AMZN gapped up and rose just above the high of the previous day.  It then consolidated with two IB’s, on a volume dry up.  The eighth bar was a solid green bar, which closed at it’s high, and back above the S/R level from the previous day.  I used the previous day’s low, and the morning high to calculate the Fib point, and entered on the break of the eighth bar’s high.  An easier trade to manage you rarely find.  AMZN basically made a B-line to the Fib extension, and it was such a strong move that I only took a partial.  At this point I was kind of in no-man’s land in terms of price target’s, so I kept an eye out for a volume spike on the 5 min chart, or three WRB’s, both techniques that Jamie often talks about for an exit.  After the the third WRB, I would have had to be a glutton to try to stay in for more, and I closed it out.

AAPL was sort of an end of the day scalp.  Although the set up was pretty good, I am not too enamored of the this trade, being as late in the day as it was.  After Mac World finished on an anti-climactic note (read: no Steve Jobs appearance), it was a classic “sell the news” trade.  The real trade would have been to short the weak run from the eighth to fourteenth bar, after printing a inverse hammer that could not close above the ORH.  That would have been a sweet trade.  Instead I shorted the break of the eighteenth to the twenty second bar, after it could not close above the S/R level.  The previous day’s low was the target which it hit.  Not the best set up, but it was worth 1 pt.

Apple Inc. (AAPL), Leap Wireless Intl. (LEAP), and Freeport McMoran Copper (FCX)

Steve Jobs is going to live.  Hence AAPL gapedup with a fairly neutral green bar (almost equal shadows on top and bottom), pulled back, and then printed a textbook hammer off the 5 MA.  I entered on the break of that bar’s high.  It stalled along the ORH, and I almost bailed, but stuck with it.  Trader X talked about watching the  midway point between the ORH and the Fib extension to see if price stalls.  The 20th bar popped up towards the midpoint, but pulled back, alerting me to watch closer.  The next bar was red and weak, and although it still closed above the 5 MA, I felt AAPL had made it’s run, and I exited.

FCX has always been a tough stock for me to trade.  It had a small gap down at the open, but could not close below the consolidation range from the previous day.  The third bar was a a strong green bar that finished above the ORH and the consolidation range.  That bar went a long way very quickly, and left a small upper shadow, so I was not comfortable entering on the break of its high.  I wanted to see a consolidation bar form first.  The next bar was not quite what I wanted for an ideal entry, but it was a hammer type of bar, and I entered on the break of its high.  Price climbed and continued to close above the 5 MA.  The 19th bar could not continue the move.  It began to look a little toppy, so I closed the position.

LEAP was painful.  I entered on the break of the third bar high, in the same set up as in AAPL above.  However LEAP meandered and could not seem to break it’s ORH.  After attempting the break on the 15th bar, but failing on the 16th bar, I moved my stop up.  It got hit on the next bar.  In retrospect, this was a stupid move, as I only had a small profit, and already had my stop in at break even.  I should have given it more room, and left my stop in place.  Of course, as soon as it hit my stop, it ran up past the ORH for another 70 cents.  I think I just wanted to “beat” the stock and get out with a profit, even a tiny one, which I did.  But that is not the type of non-emotional thinking that is needed for a successful trade, and I lost out because of it.  Lesson learned (I hope).

Trading Resolutions For 2009!

1. I resolve not enter a trade unless there is a valid set up.
2. I resolve to wait for the trigger bar to completely finish before I enter.
3. I resolve to be aware of a S/R points on my trade such as OR highs and lows, previous day’s close, Fib extensions, etc.
4. I resolve to monitor my trade closely, but not to fixate on it, thus missing other trading opportunities.
5. I resolve to scale out more into strength.
6. I resolve not to “scalp” as it gets me in trouble.
7. I resolve not to let a profitable trade turn into an unprofitable trade.
8. I resolve not to “revenge” trade.
9. I resolve not to take market actions personally.
10. I resolve to turn my computer off or trade extremely small once a days profit target is met.
11. I resolve not to watch CNBC or the market averages after 6:30 am.
12. I resolve not to watch my interday P&L, and focus on stock action.
13. I resolve not to come into the market day with a rigid opinion of where the market will go.
14. I resolve to monitor myself for signs that I am losing focus or patience with the market.
15. I resolve to simplify my trading, and eliminate “outside” influences.

Happy New Year, celebrate with a cigar!

What I am about to say will probably equate me with Hitler in some of your minds.  But please try to keep an open mind as you read this and remember, although Hitler was a non-drinking, non-smoking, vegetarian, who loved dogs and children, he did have some black marks on his character, what with The Holocaust, World War II, and such.

I am suggesting that you try cigar smoking, because I think you will find it a very pleasurable, relaxing endeavor, that will provide you an occasional stress free “oasis” from this hectic world.

HEALTH CONCERNS

Yes, I hear what you are saying, “how can you recommend something so evil and dangerous.”  Well to all you “health Über Alles” types out there, let me clarify what I mean.  I have never smoked a cigarette in my life, and I only began cigar smoking in the last few years (and I am forty-one).  I will never try to argue that hot smoke can be good for your body, but I will give you some facts that differentiate cigar smoking from cigarette smoking, and which put it on the same level health wise, if not better, that other generally accepted habits.

A cigarette contains tobacco, like a cigar, but it also contains about fifteen different chemicals and additives.  It’s wrapper is made of paper, which is treated with chemicals to prolong burn time.  When lit, these chemicals produce various toxins and carcinogens which are  inhaled into the lungs.  And most cigarette smokers will chain smoke, sometimes putting away a pack or more a day. 

A cigar by contrast is 100% tobacco.  The filler, the binder, and the wrapper are all made of natural tobacco leaves, completely untreated by chemicals.  The smoke from a cigar is only inhaled into the mouth, not the lungs.  And most cigar smokers only occasionally smoke, usually for special occasions or events.

In terms of health, this puts a huge distinction between that of the average daily smoker, and the occasional cigar smoker.  In fact, you would be hard pressed to show that even smoking 2 to 4 cigars a month is as dangerous to ones health as regularly drinking alchohol, eating fast food, or having desert with your meals.  In fact, next time you barbecue, grill, or eat something that is, take a look at those grill marks on your food.  Remember that they are charred meat and fat, basically a pure carcinogen, that you are putting in your body.

PLEASURE PRINCIPAL

With the adverse health effects of occasionally smoking being minimal, the pleasure effects can be tremendous.  As a non-cigar smoker, you have to understand that smoking a cigar is a ritual.  It begins by walking into a humidor at your local cigar shop to find the right size and strength cigar to fit your tastes.  There are literally dozen of brands to choose from, from countries such as Honduras, Nicaragua, Brazil, and the Dominican Republic,  and some of which have been in business for a hundred years or more.  Once chosen, you will have to carve out 30 minutes to an hour in which to enjoy your cigar.  There is an art to cutting and lighting it, and each person will acquire their own way of holding and smoking a cigar. And when coupled with a special occasion, or a group of friends, cigar smoking becomes a social event, one which will only add to your memories.

More importantly, that time you carve out to smoke will be one of the most relaxing of your day.  When you are in the midst of the “ritual” and the smoking, the stress and worries of the world seem to melt away, even if is only for a short time.  With the biggest killer (especially of men) out there being stress, I submit that the nominally adverse health effects an occasional cigar smoke brings, are more than compensated for by the tremendous health benefits that the hour of “oasis time” brings.

GREAT CIGAR SMOKERS

If you are still concerned about trying cigar smoking, don’t be, you will be in good company.  Here are some famous people who enjoyed (or enjoy) cigar smoking

• Groucho Marx
• Mark Twain
• Winston Churchill
• Rudy Giuliani
• Bill Clinton
• Sigmund Freud
• Michael Jordan
• Jack Nicholson
• John F. Kennedy

…and the list goes on  More Famous Cigar Smokers 

….and you can see even more pictures of those whom have graced the cover of Cigar Aficionado here.

Lastly, I will leave you with this famous exchange by then President John F. Kennedy and his chief of staff Pierre Salinger (as told by Salinger), that shows how much JFK valued a good cigar.

 

Shortly after I entered the White House in 1961, a series of dramatic events occurred. In April 1961, the United States went through the disastrous error of the Bay of Pigs, in which Cuban exiles with the help of the U. S. government tried to overthrow the government of Fidel Castro. Several months later, the president called me into his office in the early evening.

“Pierre, I need some help,” he said solemnly.

“I’ll be glad to do anything I can, Mr. President,” I replied.

“I need a lot of cigars.”

“How many, Mr. President?”

“About 1,000 Petit Upmanns.”

I shuddered a bit, although I kept my reaction to myself. “And, when do you need them, Mr. President?”

“Tomorrow morning.”

I walked out of the office wondering if I would succeed. But since I was now a solid Cuban cigar smoker, I knew a lot of stores, and I worked on the problem late into the evening.

The next morning, I walked into my White House office at about 8 a.m., and the direct line from the president’s office was already ringing. He asked me to come in immediately.

“How did you do, Pierre?” he asked, as I walked through the door.

“Very well,” I answered. In fact, I’d gotten 1,200 cigars. Kennedy smiled, and opened up his desk. He took out a long paper which he immediately signed. It was the decree banning all Cuban products from the United States. Cuban cigars were now illegal in our country.

 

   Jordan-”Good” (Cigar).

   Kennedy-”Good” (Cigar)

 Clinton-”Good” (Cigar)

 Hitler-”Bad” (No Cigar)

Can Apple (AAPL) go any lower?

A lot of talking heads are on TV saying “whew”, because we finally got out of 2008.  They act as if because the calendar has changed, that the market has, and that we can’t go down anymore.  Will we?  Who knows.  Can we?  You bet we can.  And here is a ominous sign that we might.

Apple computers is a good proxy for the overall market.  If we look at its daily chart we see some troubling signs.

 Apple seems to be forming a large descending triangle, a pattern that is usually resolved with a downside breakout.

On a closer look, you can see that Apple has had 6 inside bars, with volume drying up.  One inside bar can often be a precursor to a range expansion move.  Looking back on the last five years of Apple, there have never been six inside bars.  The closest was at the end of August of this year, just before Apple began its fall from about $170.00 to $85.00.  These inside bars are formed basically at the very bottom of its recent range (plus or minus $85.00).

If you look at a weekly chart, you see the descending triangle, along with a NR inside bar (I realize that we technically have one day left in this week).  If Apple breaks below $85.00, on good volume, there is only a minor speed bump in the way at between $80.00-$82.00 that keeps it from a measured move down to $50.00, which also happens to be a support level.

Apple at $50.00?  I know it sounds crazy, but $120.00 was once thought of as the absolute floor.  I am not say it will go there, but it can.  And one thing is pretty certain, it is going to break here one way or the other pretty soon.

Iron Mountian (IRM) 12-30-08

IRM gaped up on addition to the SP 500.  It printed a large green bar, with good volume, that finished at it’s high.  It then printed two progressive inside bars, each on declining volume, and consolidating in the top third of the opening bar.  These are the set ups Trader X dreams of. 

I took a more aggressive entry (read: below the ORH), on the break of the third bar high.  Price got within 10 cents of the Fib extension, and then printed a spinning top.  After that I figured I should not press my luck as the stock was up 16% at that point, and I closed my position out.

 

For some interesting  reading, and perhaps some insight into how the financial meltdown happened (and why the “experts” could not predict it), check out these two books by Nassim Nicholas Taleb,   Fooled by Randomness  and  The Black Swan.

Apple Inc. (AAPL) 12-29-2008

Slow day, what with everyone gone for the holidays.  Here is a rule, when Trader Mike shuts it down for a while, then it must be SLOW.    It is almost not worth trading.  However, some of us still have to pay the bills.  I was able to get AAPL both short and long, which was nice.

 

Good year end/new year reading here at Trader X’s blog.

By the way.  Although I always assumed John Mayer was talented, I didn’t listen to his music and assumed he was a run of the mill pop star.  Boy was I wrong.  Check out his newest DVD entitled “Where the Light Is“.  Watch the middle set, with his power trio, The John Mayer Trio, and tell me if this guy isn’t as good a guitarist as Stevie Ray Vaughn.