Trade, Live and Thrive: 05/12/12

Saturday, May 12, 2012

The BSE 30 - Ichimoku Study - Week: 07 May to 11 May 2012 - Kijun Sen Folds..

.....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

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

The BSE Sensex 30 - End of Week Chart - 11 May, 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)

From the Chart as marked...

3. After Supporting the Price for 7 odd weeks the Kijun Sen gives way - setting up last week's fall.

4. Tenkan Sen is fast approacing the Kijun Sen, for a cross that could be a Strong Bearish Signal.

5. The MVWAP 34 which was broken last week, acted as the resistance this week.

6. The Chikou Span is close enough to the price to cross it anytime, to give a Weak Bullish Signal.

Incidentally the Flat Kumo (Ko) effect is absent from last week on..

Conclusion:

Bears have taken over this screen totally.

The Dow 30 - Ichimoku Study - Week: 07 May to 11 May, 2012 - Yo Yo at the Tenkan Sen.

.....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/

https://www.ichimokutrade.com/articles/Ichimoku_Ebook.pdf

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

DJI 30 - End of Week Chart - 11 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: Weak Bearish Signal (minor signal - see arrow)

From the Chart as marked...

1. We notice that for the last half dozen odd weeks, the Weeks candle has played yo yo with the Tenkan Sen. The gravitational pull of the Flat Kumo, is therefore evident.

2. EW Oscillator is ticking towards minus regardless of the Yo Yo played above.

Conclusion:
Bulls continue to dominate this screen.
Bears need to Keep Index below the Tenkan Sen, to have a chance of taking this one over.

Playing Yo Yo perpetually, will not help the Bull Cause.

S&P 500 - Triple Screen 'Technical Analysis' - Week: 07 May to 11 May, 2012 - One for the Bull & One for the Bear !

Learnings from the Past Week:

Our view 'Looking Forward' into the past week, was that the EOD channel (yellow), should hold the price action (click).

We had an Intra week EOD analysis (click) which confirmed this.

The EOD channel (yellow) held the price line...that was One for the Bulls.
The Bears however did break the White Week Channel -so One for the Bears.

Is it 'come back' time for Bulls? or would the Bears press the Down Button next week ?

Lets weigh the options...

S&P 500: Long Term View (or) Month Chart each candle is 1 month's price action (or) EOM Chart:

S&P 500 - End of Month Chart (EOM) - 11 May, 2012.

We start with the EOM - Almost 4 years Data is held in the channel shown above.

We have moved to candle chart - to see this month's evolving pattern better.

The highlighted candles show the 'Three Inside Down" in progress - first discussed, end April 2012 (click).

Price has slipped below the 5 EMA.

Bulls are on top on this long term chart - but its a shaky existence below the 5 EMA.

We zoom in for a closer look, with the EOW charts as below.....

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) - 11 May, 2012.

We look at the EOW - which houses 3 Quarter's data in the white channel, shown cutting across the RBG Month Channel.

The medium term screen, screams Bear - for now.

The White Week Channel gets broken, most short term MAs are crossed bearishly.

The last three candles almost make a 'Three Outside Down'

To close back inside this channel, would be what the Bulls would want here.

To see if that would happen - lets zoom in closer with the EOD charts below...

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) - 11 May, 2012.

Data from Mid March 2012, is captured for analysis, in the yellow EOD channel above.

As anticipated last weekend - this channel held the price action.

Price is still below all short term MAs we watch, and they are all bearishly crossed.

The histogram has started ticking towards the plus.

This screen just about makes it into the Neutral zone.

Looking Forward into next Week:

Holding the yellow channel on the EOD, the Bulls should attempt the MVWAP 34.

Keeping the Bulls away from a retake of the Week Channel, would keep the Bears in Business.

The positive divergence on the EOD - MACD histogram (yellow arrow)- gives the Bull some hope.

Intra Week Updates as warranted - 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.