Outlook for Next Week (November 19-23, 2007)
One of my original intentions in creating DummySpots some hundreds of thousands (millions?) of words ago was to share a bit of what I’m thinking as trades unfold. I’m getting back to some of that. If you trade regularly, I doubt my pointing out where (anything) stands in relation to its 200-day moving average will be of much use to you. You’ll already know that, or have decided it’s not pertinent to your trading style.
Instead, I’m offering what I see based on the methods I use, mostly short-period RSI readings, especially the RSI(4).
As always, if it looks at all like I’m telling you to take any particular trade, please see my disclaimer in the sidebar.
Here’s what’s currently pinging off the cold metallic walls of the cavern where my brain should be:
(Click for the readable version)
Please feel free to share your own expectations (or your opinions on mine). Dialog is always welcome, and it’s a great way for us to learn from each other.
LP said,
November 20, 2007 @ 11:34 pm
BIIB printed a doji and not a hammer. But the move came on heavy volume but at the end of the day when the market rallied. So I don’t know what to think of it.
Will said,
November 21, 2007 @ 10:02 am
LP- Very narrow trading range for some time now. I wouldn’t want to guess whether this consolidation is bottoming action or just a pause. Maybe a break out of the recent range would make for a trade? Let us know how it goes.
LP said,
November 21, 2007 @ 1:42 pm
Yeah I will keep a track of it…haven’t done anything with it yet…no trades without confirmation unless it’s experimental and happy meal money…my happy meal not warren buffet happy meal
LP said,
November 21, 2007 @ 1:43 pm
besides, I’m not throwing away the beer money for the yacht
Will said,
November 21, 2007 @ 11:53 pm
Never, but NEVER, throw away the beer money
Brett said,
November 26, 2007 @ 1:43 pm
I like the bottom call, and it looks like we hit a lower low and held a higher RSI(4), looking at building a couple long positions here. Would you put a stop in at the new low of 141.67?
Will said,
November 26, 2007 @ 7:43 pm
Hi Brett- thanks. Of course by the time I got home this evening and get to respond (7:26 EST), this is all with the benefit of hindsight, so caveat emptiness and all that.
I would not have chosen that new low as a stop. With swing trades like this one, my stops are often looser, leaving more room for waffling before a run. Some intensive backtesting showed me that, by sitting out the vacillations, I’d take some losses, but would make significantly more money in the long run. These things seem to have a habit of giving a signal, then wandering around a bit.
I’ve written about OGRes (Opening Gap Reversals) quite a few times, and in my experience they’re one of the strongest signals out there. You see from the post after this one that I would have graded an OGRe after that run an “A+” long entry- I actually double my position size on the rare occasion when we get an OGRe at the bottom or top of a run, if I’m fortunate enough to catch it.
Had I been off work today, I would have exited my position on this morning’s reversal between 10:00 and 10:30 EST, at around 144.00-144.40, and would be sniffing a re-entry now.
An aggressive re-entry would have been on the close today (I show a couple of weaker “buy” signals below 141), a better one, in my opinion, would be to wait for a break back above 141.50. (Levels from the current RSI system).
However, as I said, I did not get the chance to exit. Therefore I’ll be watching the original “danger zone” below 140 tomorrow and the intraday action. I will very likely either 1) exit entirely and wait for a re-entry or 2) double my position if the action is positive (i.e. maybe a good spooky gap down and OGRe in the other direction).
If we don’t dive down there at all, I’ll just sit tight.