Trade, Live and Thrive: 04/28/12

Saturday, April 28, 2012

The BSE 30 - Ichimoku Study - Week: 23 April to 27 April 2012 - In and out of the Kumo..

......Regulars can skip below and go straight to the chart......

Introduction:

We do a weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets we track to learn Technical Analysis.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider...

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.

When Ichimoku was created back in the 1930s, a trading week was 6 days long. So we have one and a half week(9), one month(26) and two months(52).

Now that the trading week is 5 days, we should actually use 7, 22 and 44 instead.

However, the majority of systems, worldwide, still use the old settings 9, 26, 52.

We need to study markets, on a weekly basis on this Blog.

How do we fit 52, 26 and 9 into that need? With one candle being one week?

There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months. Fits the old logic - albeit differently.

Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change...read on...

Quick Reference :

Chikou Span - purple line,

Kijun Sen - blue line,

Senkou Span A - black line,

Senkou Span B - grey line,

Kumo - grey shaded area,

Tenkan Sen - red line.

Useful resources (free) from the Web:

http://www.freestockcharts.com/

http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page

BSE 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:

The BSE Sensex 30 - End of Week Chart - 27 April 2012

Last 7 Signals seen on BSE 30 - Week Chart (EOW) marked on chart above:

1. Senkou Span Cross: Strong Bearish Signal (S)
2. Chikou Span Cross: Weak Bullish Signal (C)
3. The Kijun sen cross: Weak Bullish Signal (K)
4. The Flat Kumo: Bullish Signal (Ko)

5. The Tenkan Sen/Kijun Sen Cross: Weak Bullish Signal (T)
6. The Kumo Breakout: Bearish Signal (B)

7. Chikou Span Cross: Strong Bearish Signal (C)

Also marked on the chart, in Blue ... to discuss this week's action ...

2: The Chikou Span (purple line) has finally crossed the price line bearishly (C). As this action happened when the Price was below the Kumo, the Bearish Signal is deemed 'Strong'.

3: The last candle has moved back out of the Kumo - Bearish Kumo breakout (B)

Just as in last week, the Price is above the Kijun Sen and M VWAP 34 - This is Bullish .

See circle - the Bullish Senkou Span cross, which seemed imminent - may be delayed.

The Price has moved in and out of the Kumo for quite a few weeks, its still near this wall.

Conclusion: Bulls have lost ground again last week, however staying above the Kijun Sen, Bulls still have a chance to move up.

The Dow 30 - Ichimoku Study - Week: 23 April to 27 April, 2012 - Bulls Move..

.....Regulars can skip below and go straight to the chart......

Introduction:

We do a weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets we track to learn Technical Analysis.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider...

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.

When Ichimoku was created back in the 1930s, a trading week was 6 days long. So we have one and a half week(9), one month(26) and two months(52).

Now that the trading week is 5 days, we should actually use 7, 22 and 44 instead.

However, the majority of systems, worldwide, still use the old settings 9, 26, 52.

We need to study markets, on a weekly basis on this Blog.

How do we fit 52, 26 and 9 into that need? With one candle being one week?

There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months. Fits the old logic - albeit differently.

Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change...read on...

Quick Reference :

Chikou Span - purple line,

Kijun Sen - blue line,

Senkou Span A - black line,

Senkou Span B - grey line,

Kumo - grey shaded area,

Tenkan Sen - red line.

Useful resources (free) from the Web:

http://www.freestockcharts.com/

http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page

DJI 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:

DJI 30 - End of Week Chart - 27 April 2012

Last 6 Signals seen on DJI 30 - Week Chart (EOW) marked on chart above:

1. Senkou Span Cross: Neutral Bullish Signal (S)

2. Chikou Span Cross: Strong Bullish Signal (C)

3. Tenkan Sen/Kijun Sen Cross: Neutral Bullish Signal (T)

4. Kumo Breakout: Bullish Signal (B)

5. The Flat Kumo: Bearish Signal (Ko)

6. Tenkan Sen Cross: Strong Bullish Signal (minor signal - see arrow)

1. Price crossing the Tenkan Sen (red line) is considered as an early warning sign of sentiment reversal. The reversal was studied last weekend (click) and the consequent candle (last one above) is a Bull's reward.

Conclusion is same as pointed out last week, 'Bulls are still all over this screen. Bears need to get Index below the Tenkan Sen, to have a chance of taking this one over.'

S&P 500 - Triple Screen 'Technical Analysis' - Week: 23 April to 27 April, 2012 - Bulls find Channel Support.

Recap:

Last week (click) our view Looking Forward was, quote ..

"MVWAP 34 (EOD) to our White Channel bottom (EOW), is the range to break, going into next week... and Longs would pin their hopes on the Bullish Harami (EOW), even if its reliability is low..." unquote..

Our Call was correct, as we studied in our Intra Week, EOD Analysis: click and click.

The MVWAP34 was broken & we have the "Three Inside up" that the Bulls hoped for.

Let us check out the action of last week, and find the way forward..

S&P 500: Long Term View (or) Month Chart with closing prices in a line graph (or) EOM Chart:

S&P 500 - End of Month Chart (EOM) - 27 April, 2012.

Bulls continue to rule this screen.

The last candle of the screen (not shown) looks like a Doji - shall study once month ends.

Currently the close of last month, and open of current month, are exactly equal.

Month end view is awaited.

S&P 500: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart:

S&P 500 - End of Week Chart (EOW) - 27 April, 2012.

As the Bulls hoped (see last week's EOW), the Bullish Harami mutated into a "Three Inside up".

The 10 EMA is set for a touch and go (studied earlier, a.k.a: deflection) with the 13 SMA, can produce an explosive up move, if it materializes.

Weekly close is above all Short term MAs that we study.

Channel lines are realigned to the last Price action.

The RSI has closed above the MA3 - see Indicator below chart.

Bulls are back, on this medium term chart..

Another study of the "Three Inside up" for your reading..

http://www.thepatternsite.com/ThreeInsideUp.html

S&P 500: Short Term View (or) Day Chart where each candle is 1 day's price action (or) EOD Chart:

S&P 500 - End of Day Chart (EOD) - 27 April, 2012.

Break of the previous range at the MVWAP34 gives us this realigned channel (yellow).

Price has closed above all short term MAs that we study, they are bullishly crossed over, and we are above the MVWAP 34.

Bulls are on top, in the Short Term too..

Looking Forward:

Staying above the MVWAP34 (EOD), the Bulls have a clear run to the channel top.

The "Three Inside up" and "Deflection" from the EOW study add hope for the Bulls.

The Candle pattern, that this month is forming, is a vote for the Bears. Shall be studied on month close.

Welcome Read

The Trading methods used here are suitable for those who (like me) are always Learners in the World Market (never presuming Mastery).

One learns with 'Technical Analysis' using Moving Averages, Channels, Time frames, Pattern & Candlestick Analysis, Fibonacci, Ichimoku Cloud, Oscillators & other Technical Indicators.

To comprehend the Dynamics of any Market, Peer Wisdom suggests, that we show plenty of Patience, keep it real Simple and adopt tons of Discipline.

We therefore use the same framework 'Patiently' every week - 'Simple' Technical Analysis Tools are repeated - The 'Discipline' of keeping a Neutral view is maintained.

So welcome to my notes - posted here for my Friends and Family.

Some Quotes..

There are times when playing the stock market that your money should be inactive - waiting on the sidelines in cash - waiting to come into play. In the stockmarket - time is not money - time is time and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience. Patience is the key to success not speed.

Jesse Livermore.

That's been one of my mantras - focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.

Steve Jobs.

Discipline is the bridge between goals and accomplishment.

Jim Rohn.

Favorite Quote

"Why do we trade?

To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.

So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?

The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment.

The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.

Maybe it is our different images of the godlike that animate our career choices.In work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade"

.... Brett N. Steenbarger

Inspiration

The Parable of Talents...

14 For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. 15 And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 16 Then he that had received the five talents went and traded with the same, and made them other five talents. 17 And likewise he that had received two, he also gained other two. 18 But he that had received one went and digged in the earth, and hid his lord's money. 19 After a long time the lord of those servants cometh, and reckoneth with them. 20 And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. 21 His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 22 He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them. 23 His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 24 Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed: 25 And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. 26 His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. 28 Take therefore the talent from him, and give it unto him which hath ten talents. 29 For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. 30 And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

The Holy Bible: Matthew - Chapter 25.