May 5, 2008
Well, GS didn’t show up to the party today. This has been the pattern on the last two big green candles however, consolidation.
We’ll just have to wait and see if the pattern continues. Certainly, GS found some support near the lows, which tallies with my longer timeframes.
May 4, 2008
Here we have the daily view that looks pretty bullish. Potentially, the bulls will cite the 200MA as a potential level of support, and, that with the trading above the 200MA that the stock is no longer in bear market territory. Normally a successful retest and bounce off of support points would be the safer bet.
Contrasted with the weekly view, which confirms that the common is most definitely out of bear market territory, and currently in bull market mode. Certainly the overhead resistance of the 50MA might be cause for a little patience.
However, based on the previous, the stock is definitely bullish as far as daytrades go for Mondays OPEN. We may [most likely] see an initial pullback to say $199.50′ish, but then I would be looking for a trade to run to $204.70
May 2, 2008
How did the reality play out against the model? Not too badly.
Goldman traded in a pretty tight range, chopping pretty much all day, which is not an ideal place to be for anyone daytrading the stock.
POT never pulled back for an entry anywhere near $180…but it traded higher in it’s usual volatile manner.
And finally, the S&P500, traded down.
May 1, 2008
Two for one.
Well GS was strong all day, and again has run a little ahead of itself. Therefore, we may again see some narrow ranges intra-day as it consolidates, correcting through time. This can be difficult to trade intra-day, as it churns, so, a substitute for tomorrow.
According to the model, POT was due a run today, which it is in the process of taking. However, unlike GS, POT still has pretty substantial upside over the next couple of days. I’m looking for $195-$200 before things get a bit dicey again.
Now the difficult part is, where to try and jump on board. This is [currently] a volatile stock, and moves pretty fast. I’m personally going to be looking at circa $180 for an entry LONG
April 30, 2008
I haven’t had a technical Goldman update for a little while, so here we are;
GS has been in a pretty sharp uptrend, and I believe this uptrend is safe for the near future. Corrections have been just recently through time, rather than price. Therefore we may well see further upside over the next couple of days.
Should GS rollover, plenty of warning should be given, with the opportunity to position short. This possibility, driven by the 200MA, is of course on a technical basis valid. What then remains to be seen is how price interacts with the 50MA
April 30, 2008
From Brett Steenbarger;
A deadly pattern among some of the best traders is to channel achievement motivation into trading *more*.
The best traders do have a strong achievement motivation and work quite hard at their craft. That achievement drive makes them hate losing. Their impulse is to go for the jugular; they want to not only achieve, but achieve *more*.
This drive can be a trader’s greatest weakness, however. It can lead to stubborness in taking losses, leading to outsized losses. It can also lead to overtrading, as the driven trader attempts to *make* things happen. That is a particular recipe for disaster on slow, narrow days such as yesterday, when it’s easy to get chopped up jumping aboard seeming trending moves.
The net result is that *pressing* to achieve can take the trader out of his or her game. It subverts risk management by leading the trader to trade too large, without careful attention to stop loss points. It also interferes with decision-making by leading the trader to take trades without an objective edge.
A good analogy is the fighter who goes for the knockout on every punch, leaving himself wide open to jabs and punches from the opponent. When the boxer is *too* aggressive, defensive skills go out the window. So it is with the trader.
Another analogy is the soldier in the battlefield. Too hyped up and too aggressive, he may charge out of his foxhole and make himself an easy target for the enemy. Sometimes the best strategy is to maintain control and pick off the enemy sniper-style.
How can you know if this is a problem for you? If you keep metrics of your trading results, you’ll see that the average size of your losing trades exceeds the average size of the winners. You’ll see that your biggest losing days are ones in which you trade most often and with largest size, particularly when the market was showing no special opportunity. You’ll also know by your state of mind: traders who *press* to win typically experience high degrees of frustration when the profits don’t come quickly.
If these are concerns for you, self-control strategies such as meditation and biofeedback can be tremendously helpful. How to use such strategies will be the focus of my next post.
April 25, 2008
I like trading high priced stocks. Has anyone traded this stock before, or even better trading it currently? Check it out.
April 18, 2008
From Brett Steenbarger;
A little while back I posted about the increasing number of one-sided days in the stock market and how those are affecting traders. Yesterday I noticed another kind of one-sidedness: seven of the last nine trading sessions in the S&P 500 Index ($SPX) have closed either in the top or bottom quarter of their day’s range.
This led me to examine more broadly the issue of how often stock indexes close near their day’s highs or lows. If we divide each day’s range into quartiles, then we would assume, over time, that a chance distribution would put 50% of market closes in the top or bottom quarter of the day’s range and 50% in the middle two quarters.
That is not what we see in the data, however. Since July, 2007, two-thirds of all trading days closed either in the day’s top or bottom quarter: 132 out of 200 days, to be precise. From January, 2000 through June, 2007, that ratio was 61% (385 out of 627 days).
If we tighten the criteria and divide each day’s range into deciles, we can observe how often the market closes in the top or bottom 10% of its daily range. One would expect, by chance, that this would occur 20% of the time. Since July, 2007, however, it has occurred 77 out of 200 days: 38% of all occasions. From 2000 through June, 2006, we closed in either the top or bottom 10% of the daily range in $SPX 209 out of 627 days, or 33% of the time.
What we are seeing is that markets are closing near their day’s highs or lows more frequently than we would expect by chance. This may reflect a bandwagon effect, in which traders and investors observe market movements during the day and don’t want to miss out on them. This would lead them to buy rising markets and sell falling ones, creating late day strength or weakness. Regret and the fear of missing out on a market move would lead to increased trending behavior as the day progresses, creating a kind of one-sidedness to the trade.
This bandwagon effect, exaggerating market movements late in the day, tends to be unwound the next day. Going back to 2000 (N = 2082 trading days), we find the following average next day changes in $SPX as a function of the location of the prior day’s close:
Prior Day Closes in Top Quarter of Range (N = 727): -.06% (343 up, 384 down)
Prior Day Closes in Middle Two Quarters of Range (N = 743): -.02% (381 up, 362 down)
Prior Day Closes in Bottom Quarter of Range (N = 612): .11% (357 up, 255 down)
What this suggests is that, once a bandwagon starts during the day, it tends to persist into the close. Fading one-sided days, particularly of late, has not been a fruitful endeavor for traders. Expecting bandwagons to persist into the next day’s trade, however, has also not been profitable. It appears that traders segment their performance day by day, perhaps jumping aboard trends in an effort to finish their days on winning notes. By the close of the next day, however, any such bandwagon effect has been erased.
April 15, 2008
Goldman Sachs today found a trading bottom, thus, tomorrow we should be trading higher.
April 11, 2008
The price action today created a divergence, and confirmed that the short-term selling is once again ready to reverse itself come Monday.
Certainly there may well be some weakness at the OPEN, but the bias is shifting back to LONG positions.
