Someone in our latest webinar had the audacity to claim that the simple stock system probably couldn’t be used on a stock like Financial Bear 3x (NYSE: FAZ). I guess he didn’t realize that I had already featured FAZ in December, and its 2x leverage cousin SKF has been featured several times. Anyway, I told him I’d post some FAZ for him today.

So, here’s the last two days of FAZ. First, the 12th:

So, we have a long right at the open. Note end-of-trend comes up right away to tell you to at least lighten your exposure. Then, depending on your sensibilities, you’d either hang on long through the next two long signals, or get out b/e the rest. If you got out, then you’d get back in a couple more times for one scratch and one loss. The loss, to me, is taken at the red bar.

Next up, at around 12:57, we get long again for a fantastic run. End-of-trend tells you where to take partial profits along the way… and if you still have any shares left at the red bar, you’d exit the rest of the way.

Then, at the end of the day, you have a short signal that is a clear winner. End of trend tells you where to take profits.

Beautiful!

Now for today, February 13th:

Today was pretty flat ahead of the 3-day weekend. There’s a short trade that you’d reverse into a long trade around 10:52. As always, on the long trade I’d recommend taking most or all of your profit at Alla’s Average. See how well that thing acts as resistance? Incredible! But, at this point you’d still be slightly down for the day.

The short trade at 13:40ish is right on top of Alla’s average, and Alla’s Average is kinda flat. I wouldn’t recommend taking this trade. But if you did, then you’d have a nice winner. Note that end-of-trend tells you when to take profits.

Finally, there’s a long trade at the end of the day that you’d close out at EOD for a nice profit.

Summary

The Simple Stock System kicks ass. End of story! Both days we had 1 loss and several wins. See the other posts with the simple-stock-system tag for example after example.

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FAZ	| |

My Facebook Friend Evan C. wrote:

“Its too bad amazon doesn’t sell wine, I owe you a bottle for the wealth of info I’ve gleaned from your posts! Would it be possible to get a screenshot of DXO for 2.6.09 with the elite indicators? I am curious how they would have rea/played it.”

So, here is every day from 2009/02/05 to today, in Powershares DB Crude (NYSE: DXO):

The 5th and 6th (click the image to enlarge):

The 5th

Here we have a short trade right into Alla’s Average. I always tell people not to trade right on top of Alla’s average, because it is such a powerful turnaround/chop zone. If you took this one, despite all of my advice, you’d take a loss. But, don’t worry, because the second trade is a really nice win (note how end-of-trend in the bottom panel tells you where to trail your stop and take profits). The third trade doesn’t really go anywhere, and you’d scratch it at the end of the day.

The 6th

Beautiful! One big win in the middle of the day long. And, one scratch trade that doesn’t go anywhere at the end of the day short. This is the day Evan was asking about, and I can’t help but think he’ll be pleased with this.

Next, the 9th and 10th (click the image to enlarge):

The 9th

A nice, quick winner long in the morning (notice volume pressure and end-of-trend tell you when to take profits). Then a sweet short trade down to Alla’s Average (compare this with the trade from the 5th that didn’t work as well… it pays to have some air between you and Alla’s Average when you trade counter-trend to it, and then you can take profits at Alla’s Average). Then a scratch short trade at the end of the day (end-of-trend tells you when the move is over, once again).

I’m getting the feeling it doesn’t pay to trade oil at the end of the day…

The 10th

It keeps telling you to get short all day, and price never really runs against you… so you’d either hold on short until the payoff, or keep scratching the trades until the payoff. Either way, you finish the day smiling. Note that, once again, end-of-trend catches the end of the move.

Next, the 11th and 12th, uglier days (click the image to enlarge)…

The 11th

Here, much like on the 5th, is a trade right into Alla’s Average. See why I don’t ever take those trades?? :-) At least this time, end-of-trend came up and told you to take profits while the trade was still flat. Anyway, my suggestion is that if you trade on top of Alla’s Average, at least reduce your size.

Then, you have a nice short trade, and once again end-of-trend catches the bottom of the move. Nice.

The 12th

Let me repeat again, be very cautious when trading right on top of Alla’s Average. This time, the long trade does pop up, and end-of-trend does come up to tell you to take profits. So, it works out ok this time.

Then, you have a short trade with the trend again, which is a small winner if you choose and exit while end-of-trend is high.

Summary

I don’t cherry-pick this stuff. Some dude on facebook asked for the stock, and I showed several consecutive full days. All the indicators are set exactly the same as they are on all of my simple-stock-system posts. I’m way too lazy to optimize inputs to take some freaking screenshots. I chose the volume chart setting mechanically based on the 30-day average daily volume on DXO, just like I do on all of my stock posts. The arrows you see are not hand-drawn, but are an indicator that tells you where your entries should be, automatically.

Bottom line: this stuff works. And, I offer it to people through eotpro for Tradestation, Ninjatrader, Multicharts, and eSignal (and maybe more by the time you read this… check the site). If you are tired of losing all the time and want to step up and make some money, maybe you should investigate… :-)

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We are giving a webinar for ninjatrader users today after the close, and I’m going to talk a little about trading stocks with eotpro indicators. About an hour after the open (when I woke up!), I put up four charts… XOM, SKF, DRYS, and MSFT. I just did this off the top of my head, and also by glancing at stocktwits.

All of them looked pretty good, but today I’m going to feature DryShips Inc. (Nasdaq: DRYS).

Basically, there were two short entries. If you look at the bottom pane, you can see the end-of-trend indicator coming up to the top and hooking back down several times, indicating that you should give up on the first trade. Scratch the trade, or slightly better. The second trade is a home-run, though… when end-of-trend lines are up, you want to be careful not to give up too much profit, but that’s not a problem here… and if you held on until the red line hooked down, you took the whole move. Congrats!

I think the audience will be impressed…

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DRYS	| |

On Friday a reader asked for PowerShares QQQ (Nasdaq: QQQQ) in the blog comments. I told him I was travelling, but would show Friday’s Q’s today. So, today, you get the last two days of QQQQ. Let’s see:

Well, Friday it was buy, buy, buy… and how you did would depend on your money management. If you trail the plot cycles, then you held long all day. If you are more of an in-and-out quick kinda trader, then you scored on the first trade, lost on the second trade, and scratched the third trade. A pretty so-so day. The last buy signal of the day was on a candle marked 15:59.46… and if you went long in the last 16 market seconds, you closed at EOD for break/even. But please don’t take a trade that close to the end of day!

In today’s action, the simple stock system basically said to get short near the open for a nice ride down. Then it stepped aside for the rest of the day. Since it was much more choppy after that, I think that was a good choice!

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Those stocktwits seem to have a one-track mind. I was excited to see a new ticker at the top of their discussion list, because that’s how I pick the stock I feature in a totally unbiased way. For a long time they’ve been sticking with SKF, so I thought FAZ would be a nice change… but it’s just another freaking inverse finance ETF… only with more leverage. Oh well…

The simple stock system, made up of just a few eotpro indicators, picked a single entry on Financial Bear 3X (NYSE: FAZ), and not a bad one at all:

It did pull back on you before running, but even with the tightest of stops you’d still be fine, as it didn’t even penetrate the low of the entry candle. A pretty smooth ride up after that. Sweet!

Incidentally, there is a table of volume bar settings that I use for these. I take the 30-day avg volume, and use the overview settings for all these stock charts. If you don’t want to bother looking it up, all you have to do is take the 30-day avg volume, divide it by 100, and pick the next highest fib number. Let’s take today’s stock as an example. FAZ is so new it hasn’t even been trading 30 days, so I just looked at the last couple days of volume… about 3 million shares or so. 3,000,000 / 100 = 30,000. So, I went with the next highest fib number of 46,368 share bars. Couldn’t be easier!

The indicator picks the entries mechanically, and I use the same settings on all stocks, and I always show you the whole day on the featured stock. So, no funny-business or cherry-picking. Just sweet, sweet profits.

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FAZ	| |

Today I’m featuring Potash Corp. of Saskatchewan, Inc. (NYSE: POT), which was the #2 most-discussed stock on stocktwits. As you might guess, #1 was SKF, and I just refuse to feature SKF again so soon. They’re just going to have to make more varied selections.

Three long entries, all of which look pretty good. The second one pulled back on you, and I wouldn’t be ashamed to cut that trade off after a while. No matter what, it was a decent set of picks.

On Daily Charts, Too!

By the way… the every push entry signal has been adjusted so that it works on daily charts now, too. Here are the last few months of POT:

Some nice short entries, no? This is my first try at adapting it. As I look at more daily charts, I may make some adjustments. I firmly believe that in the markets, a chart is a chart, though, so I don’t see why everypush entries can’t work well for swing trading, too.

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POT	| |

Finally, the stocktwits discussed a stock more than SKF. Sadly, they chose General Motors Corporation (NYSE: GM), which spent most of its day in a tight range. If I ever finish my article on daytrading stocks, one part of it will describe the fact that you want to trade a market thats moving. Oh well, the simple stock system still handled it well, which is nice:

I want to point out the end-of-trend indicator in the second-to-last subgraph. In particular, look at when the thick blue line comes up toward the top and turns magenta. This marks the area where you want to be careful, and potentially take your profits. Look at how it pegs all three big moves of the day!

Here are the trades:

1. We have a long trade which reverses up at 4.50ish rather quick, but you’d know better than to let this winner turn into a loss, because end-of-trend is warning you. Fantastic!
2. Then, we have a nice short trade. Again, end-of-trend helps you pick a great place to scale out.
3. Then, we get stuck in a sideways range… and the system repeatedly tells you you want to be long. See the volume pressure staying to the upside, which also helps you to hold on. If you eventually sold this for break-even, or even a small loss, I wouldn’t blame you. But, if you held on, eventually you got the predicted pop up, and end-of-trend tells you when to aggressively protect your profits.
4. Finally, we get short toward the end of the day, but the stock just sits there. You’d close at end of day for b/e, give-or-take.

So I guess I got my wish, and got to profile a stock. Too bad it was today, since it looks like freaking SKF trended down smoothly all day! Still, I am pleased with what the system did with this mess. When I first pulled up the chart, I admit I wondered if I would get chopped up. Turns out, the system was ok!

Please note that if you only traded on the right side of Alla’s Average (the dashed yellow average on price action), you’d just have the big short trade, and the flat short trade. In my own personal trading, I rarely fight Alla’s Average, but I wanted the demo system to have as many trades as possible (readers like action!) and it seems to still do ok.

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GM	| |

Once again the stocktwits discussion board can’t get enough of UltraShort Financials ProShares (NYSE: SKF). Well, fine… here we go again…

Read it and weep, my friends…. the simple stock system handles itself very well with 4 wins and 1 loss. The loss is easy to spot, being the first long trade of the day. Note that if you used Alla’s Average (the dashed yellow line in the price chart) as a trade filter, you’d have 3 trades for 3 wins. We have all kinds of tools to fine-tune trading systems with eotpro…. for the posts tagged “simple stock system” I just try to keep it very simple.

Doesn’t anyone trade companies anymore? All I ever get to feature are ETFs! I must admit, they are nice, smooth trading devices in these crazy times. I guess that’s the reason.

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SKF	| |

Well, sadly, the fine traders at stocktwits discussed the UltraShort Financials ProShares (NYSE: SKF) more than any other stock, again. I’d just choose a stock that I like, but then retards would come out of the woodwork claiming I’m trying to hide something. So, here we go a third time in a row, with SKF.

So, clearly the first long trade is a stop-out. Then we get a nice winning long trade, and two winning short trades. 3 out of 4 ain’t bad! Definitely profitable.

Check out past posts tagged simple-stock-system if you haven’t… for such a simple combination of eotpro.com indicators, it performs pretty well I think.

As you can see, I always use the same indicator settings, always show you the whole day, always choose the volume chart settings based on the 30-day volume, and I just go with whatever stock the stocktwits discuss (unless a reader requests a stock). And the entries are chosen mechanically (see the dots in the first subgraph?)!

Anyway, I think a human trader could have easily gotten short in the morning, after that first stop-out under alla’s average. It wasn’t mechanically selected because the first red candle body was cut by the moving average. A human trader could assess the situation a little better. But, that’s why I call it the simple stock system… because it’s so simple!

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SKF	| |

Darn, those stocktwits people sure do love UltraShort Financials ProShares (NYSE: SKF). It came out on top of their list today, so of course I had no choice but to select it again. Sigh….

But, as you can see, performance is quite good. Check the end-of-trend indicator at the bottom, which gave many good clues about when to exit the positions.

So, by my scorebook, I count the first two short trades as one win, as you’d be sitting in the first when the second arrives. Then the long trade is a nice win. Then we have a short trade that is iffy… depending on where you put your stop you might have bailed for break-even or a small loss. If you did, then the last short of the day got you right back in to close out the day with a winner.

It’s been a while since I’ve posted the rules, so…

• Volume chart chosen based on 30-day average volume (I generally use the overview settings from this reference post on these stock charts).
• New push on the everypush paintbar (first red or green bar)
• Volume pressure on b/a-histogram is up for long, down for short.
• End of Trend is below 90
• Closes above the fast MA for long, and below for short. Candle body must not be touching the MA… candle wick can be touching the MA… that’s still ok.

Those rules are how the mechanical entry dots are generated. Not very complicated… With good tools it’s not too terribly difficult to trade profitably. Most of it is the mental game, and following through on your plan.

Hopefully those stocktwits people will pick more variety soon… I’ll get bored featuring SKF all the time.

Believe it or not I have a really long post on stock trading in the works… it’s been halfway done for months now. I just need time to finish it up. I’m extremely busy lately!

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SKF	| |

I’m in a hurry today, so this post will be short. As usual, I picked the top stock mentioned on stocktwits.com so that you know I’m not cherrypicking.

Today, it was UltraShort Financials ProShares (NYSE: SKF), and it basically told you to get long in the morning and stepped aside. Not a bad thing…. but I wish it offered a third entry in the afternoon. If you line up the first green bar in the afternoon with the volume pressure you can see why it didn’t flag that entry. However, the price went sideways for three bars until volume pressure popped up. So, here again we have a case where the human would reasonably know to enter, and the simple stock system was…. well… too simple ;-)

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I personally love to daytrade the e-minis, and we show off e-mini daytrading in the eotpro.com live room every day. That’s why I have been trying to focus on stocks here at the blog lately: to make sure people understand that our indicators work great on them, too!

As most of you know, I try not to cherry-pick anything. Not the stock (when a reader doesn’t request anything, I simply pick the top-discussed stock on stocktwits). Not the timeframe (I use a volume chart chosen mechanically based on the 30-day average volume). Not the time of day (I show the whole day). Not the indicators (I use the same ones every time, with the same settings). Not the entries (they are chosen mechanically by an entry indicator). And every stock I’ve featured so far has looked decent.

Damn, I’m awesome!

Anyway… the top stocktwits stock today was Google Inc. (Nasdaq: GOOG). We have a short entry and a long entry. You’d probably scratch the short unless you were itching to take profits. But the long was very-well timed! Check it out:

Note that if you were bullish on the open, you could have traded the second bar… the only reason the mechanical entry indicator passed on it was because the end-of-trend indicator was up. That will happen most times when there is a decent-sized gap.

Check out past posts tagged simple-stock-system to see other stocks I’ve featured. It just goes to show that with the right tools, daytrading doesn’t have to be all that complicated….

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In the comments, Todd requested that I feature Energy Conversion Devices, Inc. (Nasdaq: ENER). So, here we go….

Two trades, for two wins. The move at the open was rejected due to volume pressure to the upside… looks like there was some buying pressure on the way down, either bottom pickers or short covering. The second move down was much cleaner from a volume perspective, and was picked off nicely. The long trade took its time, but did drift up without retracing much.

I’d say this was quite a nice performance from the simple stock system. I mean, it’s mechanical entries, after all, and it’s done quite well. I don’t cherry-pick the stock (Todd chose it), or the time frame (it’s chosen based on the 30-day avg volume), or the time of day (I always show the whole day), or the indicator settings (they are always the same). Just a couple of my eotpro indicators and a little common sense go a long way…

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ENER	| |

Cool… I didn’t realize so many ETFs had moved from AMEX to NYSE. Anyway…. reader Todd requested QLD in the comments. Honestly, I prefer stocks to ETFs because the volume flow is less confusing to track, but here we go:

The simple stock system selects 6 entries, of which 4 were clear winners. The first and fourth trades didn’t just run the other way… but the pullbacks were severe enough that you might have wanted to take a small loss. In any case, the winners here should definitely edge out the losers for any daytrading style I can imagine. So, not as strong a showing here as the Goldman Sachs example I just posted, but pretty good nonetheless.

I have yet to see the simple stock system have a bad day on any stock I’ve thrown it at. If you are curious, look over the posts tagged simple-stock-system, and see for yourself!

Today’s top-discussed stock on stocktwits was Goldman Sachs Corp. (NYSE: GS), so I pulled up my simple stock system on the chart. You can see from the dots in the first subgraph that there were four trades selected mechanically. All four were winners, with maybe the third one so scary that you’d want to bail break-even. Not bad, at all!

I added arrows on top of price action where the dots fired, so you can see how it lines up easier. Sweet!

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GS	| |