Stuck in the middle of the S&P and the NASDAQ futures.
In developing my crosshairs software for public use I decided to design the loss line in such a way that it could appeal to both conservative and aggressive traders alike (because we are all different).
I view moving averages as possible areas of strong resistance and support (which was my focus on the previous post on this subject) but I also view these same moving averages as directional indicators. The direction can be up, down, or sideways depending upon the way each moving average is “stacked” on my charts. The move can last from days to weeks, and even months, depending upon the chart used (DAILY or WEEKLY). I can actually remove the candlestick chart from my platform software and be able to have a relatively good idea as to the price movement of the stock based solely on these moving averages. This is really nothing new but the way I color code the averages and use them in conjunction with the CROSSHAIRS is what makes them unique.
A stock moves in the direction of the major indices (e.g. DOW, S&P, NASDAQ, etc) or, at the very least, is supported by their momentum unless there is some corresponding news event that causes the stock to move in the opposite direction.
I do this for good reason. It is to remind me, and anyone who cares to read what I have to say, that trading is a daily battle in the war for financial survival; therefore, we all best be prepared. If you are thinking about trading you are about to enter a battlefield that few survive, especially if you enter with no clue as to how to defeat the enemy. Part of knowing how to defeat the enemy is knowing what weapons to use, how best to use them, and when it is best not to battle. This last point is what I wish to focus on today.
Trading, I have heard it said, is nothing more than gambling. Obviously, there is an element of risk and speculation involved but is there not a risk involved when we sit behind the wheel of our car, go boating, or climb a mountain? There is. But do we not do these things because of the risk? We prepare to meet the risk and we accept it. As a trader we meet the risk by preparing for it. If we do not prepare for it, then we are gambling. We are the mountain climber without a rope; on a boat ride without a life preserver: behind the wheel without a seatbelt.
These posts will not be a “brag” time nor will they portray my style of trading as a fail safe, get rich quick system (because it is not). There will no discussion on my percentage gains or losses, on how much money was made or lost, how many winners in a row I have had, etc. etc. because none of these things matter to you and have nothing to do with your success or failure. My trading record is worthless to another trader. What does matter is the concepts behind the CROSSHAIR and how they can be used in any style of trading, whether mine or yours or another. Get the concepts and you get the CROSSHAIR.
For anyone who has been trading for a fair amount of time you know that the market rarely provides trend trading opportunities like these but when they end the corrections can be steep and volatile. My indicators alert me to a possible trend reversal-or at least an extended consolidation- when there has been no crossing of enemy lines after 18 consecutive trading days. Combine this with a need to test a support level on the WEEKLY chart and you have a pullback level of between 945 and 880, with the strongest support around the 50 TANKS area on the WEEKLY chart at the 905 level (the CROSSHAIRS PULLBACK LINE-also known as the Battle Exit Line-ON THE DAILY).
The battle exit line will not deceive you into thinking that you are always going to be right but instead allows you to trust yourself to do what is right!
I recently wrote about the dire predictions for the market as the focus of the financial stations and trading websites turned toward the “bearish head and shoulders” pattern forming on the S&P. This pattern turned out to be a deception and the market took off like a rocket off the 200 TANKS and up past the channel we discussed when we were looking at either a missile launch or bunker building from a recent range. We knew one or the other would take place with great force and energy.
