STOCK PATTERNS WORK…UNTIL THEY DON’T. IT IS ALL A MATTER OF PROBABILITIES
Just when you think you have the market figured out it changes course leaving you scratching your head in frustration.
The main barometer I use to measure to strength/weakness of the market and, therefore, the barometer I use to help me make individual stock trading decisions is the futures, particularly the S&P futures.
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.
I have four time frames that I use when making a decision to trade: the WEEKLY “War Zone”, the DAILY “Terrain”, and two INTRADAY “Deployment” charts (89 and 144 minute). The war zone chart gives me a broad picture of what a stock is likely to do for the next several weeks to months; the terrain chart for the next several days to weeks, and the 89/144 deployment charts the next several hours to days. By “deployment” I mean the chart wherein a crosshair has formed. Obviously, the 89 and 144 minute charts are used much more frequently than the others to enter a trade due to the shorter time period but the DAILY and even the WEEKLY (though very rare) can also be used as deployment charts.
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.
Email me with any questions you would like me to ask Mr. Nenner the next time I conduct an interview.
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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).
