Jack Steiman...A person that I read every day

Eveything I know about trading started with Jack Steiman. He uses moving averages in a lot of his analysis...but his charting is better then everybody's (and he doesn't pay me to say that!) Anyway, here's a little piece of a piece that he wrote about equities that you can take a look at:

There are many who are already declaring the bull market off the March lows dead. That may very well be true, but don't fool yourselves in to thinking it's a done deal either. It is normal and expected for markets to test down to those 50-day exponential moving averages from time to time. That allows for the oscillators to unwind and for any negative divergences that formed to be wiped out. The higher you go in a bull, meaning the higher those MCAD's go, the odds increase that, at some point, they won't be able to keep up with price thus creating the negative divergences. You can't have those hold on forever thus the selling that takes place.

It does not mean that all is lost despite the increasing bad news on the economic front. The battle will now rage between the 20-day and 50-day exponential moving averages for a while and how that is resolved will tell us if the bull is truly dead or if its just taking some well deserved time off to continue and unwind things to the oversold level on the daily's.

If we get oversold on the daily charts and we hold on to the 50's then you have to think things aren't nearly as bad as they looked this week, especially the past few days. On the other hand, if the move up is weak and labored, we have to consider the fact that the bull is about to end. It is totally unclear which way it'll break because if you study the daily charts, they are almost oversold now.

We are truly at a crossroads here. It'll be no fun for folks if we lose those 50's because that opens the door for another leg down in the bear market and this would have been nothing more than a rally in that bear market. It won't take long to get our answer folks. The battle between the 20's and 50's is not a wide and lose one. It's tight. The S&P 500 20 is at 1043 with the S&P 500 50 at 1017. There is also gap at 1017. This is an additional buffer for the bulls, but a death knell for this market should it get taken out with force. Patience as we learn the truth.

Is a divergence building in Apple?

The other day we discussed how to trade divergences in the S&P 500.

Today, our Trade Triangle gurus did a video about a divergence they see developing in one of the biggest tech stocks in the world, Apple (NASDAQ_AAPL).

Divergences that are building for this market. Divergences do not mean that Apple is going to collapse, as the major trend in the stock remains firmly in the positive camp. However, it could indicate that Apple is at a highpoint for the time being.

Do You Understand How Divergences Work in the Market?

I am always writing about negative divergences...Gold, Oil, equities, whatever. I also write a lot about Market Club and their Trade Triangles being one of the people responsible for the 150% return this blog's accounts have had (obviously, Bob Iaccino and others have also been crucial too.)

So, for those of you who want to understand why MACD's and negative divergences work so well, take a look at this new short video they did on the subject.

Demo Vs. Real Trading

Terrific piece done by Brad Gareiss of FX360 on the difference between real vs. demo trading (pdf).

I get a lot of emails from the readers of the blog wondering why I'm so calm about taking losses. Because I am so matter of fact about my losses, half of the comments are asking me if I'm on quaaludes or something!

But, you see, that's the point, isn't it? If you use stop losses, and know ahead of time what your exit points will be, YOU CAN BE CALM. You've accepted the risk BEFORE you make the trade. So when you are trading real money...there is no reason to worry because losses are normal. Remember...it's cumulative pips that are the goal here, not individual trades. You are trying to win the war, not always the battle.

Out of trade

Stopped out with $100 loss...and then the pair went in my direction for what would have been a $300 gain! That's trading!

New Trade

I am short the Kiwi/USD...a half lot. I only did a half position because the markets are acting very irrational. Bob Iaccino only made the trade because we hadn't had any trades in a few days. We didn't have any trades for a few days because the markets are acting irrational!

Short at 0.7177 with a stop of 0.7199.

Don't be Shy!

The Bank of England is being absolutely blunt about what's going on out there...they are the first "big" or "official" entity that is admitting that there are still big problems. Just look at the pounding (no pun intended) the Sterling has taken the past week. The Larry Levin post I did the other day was about how the Fed continues to act as if everything is roses. Meanwhile, our wonderfully talented and knowledgeable legislative is behind the scenes acting anything but!

Straight Lines Lead Straight to Profits in Crude Oil

In this new short video that Market Club did...they describe why the Trade Triangles work so amazingly well. It's simple, powerful, and a neat technical tool. You don’t have to be a rocket scientist to do this and you don’t have to have a PhD in mathematics either.

If you’re not already using this tool, I highly recommend that you watch this video, because they are one of the factors that is responsible for these account's successes.