Trade, Live and Thrive: 05/05/12

Saturday, May 5, 2012

The Dow 30 - Ichimoku Study - Week: 30 April to 04 May, 2012 -

.....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 that we track, in our quest to master Technical Analysis.

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

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... do 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 - 04 May 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 Arrow points to last week's candle which has stayed above the Tenkan Sen. So our signal marked '6' above remains valid for this week too.

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: 30 April to 04 May, 2012 - 'Three Inside Down' effect.

Learnings from the Past Week:

Our Analysis last weekend (click) ended with the note "The Candle pattern, that this month is forming, is a vote for the Bears. Shall be studied on month close."

We studied this pattern at month close (click) and concluded that below 1398, the Bears get a shot at the, Bearish "Three Inside Down" candle Pattern, on the Monthly Screen.

Finally on Thursday, we saw the Index slip below the 1398 (click).

Currently the SP500 has closed the week at 1369, after a 2.5% odd Fall from the top..

Our study was just in time to catch the big move, where to next ?

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) - 04 May, 2012.

Support, after last week's fall, was on the 5 EMA.

Our Three Inside Down is active so long as the month is below 1398.

On the Stochastic, the %K has moved below the %D.

Bulls are still on top, at the Long Term Screen.

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) - 04 May, 2012.

We saw the Bullish 'Three Inside up' and a potential Deflection (10 EMA) on this Screen last weekend.

The Bearish Signals from the 'higher' Time Frame, Monthly Screen - dominated the above signals.

The 10 EMA has therefore crossed bearishly below the 13 SMA.

Support is on the White - Weekly Channel bottom.

The Medium Term View is Neutral.

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) - 04 May, 2012.

Price has dived below the MVWAP 34, and is below all short MAs that we watch.

Bearish crosses of above MAs in progress.

Support on Week Channel's bottom line, with Histogram ticking into minus.

This Screen is in Bear hands.

Looking Forward into the Next Week:

Bulls get strength above the MVWAP 34 and Bears momentum, below the White Channel line.

The Yellow 'Day' channel should hold the Action.

Intra-week Updates, shall be up.

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.