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Trade for LifeTM Daily LetterEvery morning before the market opens you can receive the Trade for LifeTM Daily Trading Letter published by the VCM Research Department. It is designed for the intraday, swing and core trader to discuss the market and to give plays on stocks, Electronically Traded Funds (ETFs) and the market itself. It will begin each day with a valuable trading lesson. Lessons - There are many lessons that are only learned by experience. The good thing is that it does not have to be at your cost. Learn from others’ experiences by collecting a series of lessons brought to you every day in the opening paragraph of the Trade for LifeTM letter. The Market - Every day the market will be evaluated to arrive at a likely trend on the daily charts and develop a likely intraday bias for day traders. The market will be looked at through various symbols that represent the market as a whole. Stocks - Play ideas on individual stocks will be provided as they occur in the market. The VCM Research department scans hundreds of stocks, virtually all of the ‘playable’ stocks in the market to bring you the best swing and core setups every day. The plays selections could range from zero to four selections based on market conditions. You will be supplied with the rationale for the play, as well as the proposed entry price, stop-loss price, targeted exit areas, and the proper management philosophy. ETFs - ETF is the acronym for "Electronically Traded Fund" which represents a new and very popular style of market play for the core and swing trader. ETFs give traders the ability to play a whole basket of stocks in a single sector by purchasing one single tracking stock. Professional money often goes after all the stocks in a sector and when the setups happen, ETFs let you play along without the fear of being in the 'wrong stock' and with less risk because large overnight moves are not as likely as they are with individual stocks. ------------------------------------------------------------------------------------------------------------------------------------------------------- Trade for LifeTM Daily Trading Letter (Sample) From the VCM Research Department For June 25th, 2007 Daily Trading Lesson Today's Quote: "A proper entry is 85% of a winning trade." – Oliver L. Velez, Tools and Tactics for the Master Trader Next up on the series, "Professional Traders" Professional traders... know that the entry is everything. Today we have another simple statement. And unlike yesterday's comment, this one really is simple. No psychological talk needed. This is one you need to take to heart if you don't know its importance. It may be one of the most overlooked concepts in trading. The entry IS everything. Think about the following if you have any doubt. 1. If you enter a trade too early, before the stock has proven its direction, you will stop out of many trades. Entering the stock early changes the odds of the play working at all. 2. If you enter late, you start to affect the risk-to-reward relationship. As a matter of fact, every penny you are late has a double affect. Think about it. Every penny you enter late subtracts one penny from the reward (target) and adds it to the risk (stop). A late entry can take a good trade and reduce it to a mediocre one. 3. Beyond altering the risk-to-reward, the late entry can start to have psychological affects. There is not much more devastating then to chase a play beyond its proper entry, get in late, find you have gotten in at the high, and sit for a long time under water. Sometimes you eventually exit because you are underwater for so long, where the proper entry would have had you in the money that whole time. Some people feel that you must see volume come into a stock before entering. This is not a proper way to trade. You must learn to recognize the patterns that will attract traders and get there first. That big volume surge should be taking you to your first target' not making up your mind about entering. The Market Today The NASDAQ market has remained considerably stronger than the S&P 500 over recent trading sessions. They both are beginning the "Christmas tree pattern" where we go back and forth on the daily chart from red bars to green bars to red bars (see daily inset).
This shows a total lack of direction when every other day the Bulls and Bears exchange the leadership role. Once this pattern forms it usually provides an above average support or resistance area once prices get over or below this congestion. The daily chart of the S&P 500 is almost in a downtrend at this point and we will take a closer look at that situation tomorrow. The daily chart above shows us that we are likely to see a sideways congested area for a period of time. The hourly chart above currently shows bottoming tails at 3 very near the prior lows at 1. This indicates a bounce is likely. Note that on the top, 2 has formed a lower high than the prior base (red solid line). It is quite likely we start to form a pattern of higher lows and lower highs until a breakout occurs in one direction or the other. If the bottoming tails at 3 give way it is likely we'll see a break below the hourly support area provided by 1 and 3 and a test of the daily lows down in the $46 area on the QQQQ. Trading idea: Traders of the E-minis or the QQQQ/SPY should maintain a bullish bias going into the open and maintain it as long as the intraday uptrends are maintained. The key is for the hourly bottoming tails to hold at the open or on a retest. The bounce may very likely only go to the QQQQ 47.60 to 47.80 area. Stock Plays: Today's play is a possible long swing trade from the daily charts on VARIAN SEMICONDUCTOR EQUIPMENT (VSEA). Sector: Semiconductor Equipment. Next Earnings Date: July xx
The Technical Setup: VCM red bar ignored (RBI). VSEA has been in a daily downtrend over the last month and a half. A bearish wide range bar (- WRB) at the end of the move down set the low and while the next rally stopped at the downtrend line (DTL); after one red bar we saw a reversal and a trade over the high of the last red bar and a break of the down trend line. All this is happening in precisely the area of a likely weekly buy setup (see weekly inset). The Play: Traders can buy VSEA as a swing trade over 41.80 with a protective stop loss under 39.25. The target areas are 45.89 and 46.44. Part of this position may also be considered as a core hold to 48.50 and higher. VCM Tip: A RBI on the daily chart that occurs in the area of a weekly buy setup makes for a powerful pattern. Management Guidelines: For swing and core trades (ETF plays follow core guidelines) can be found at http://www.vcmtrading.com/resources.php Yesterday's Plays: NOVA did not meet entry requirements. The idea still looks good for today however (unofficial). Some Stocks to Watch Daily Charts
Weekly Charts
*** Always understand that these are only watchlists. It may be a long time before some of these set up properly, or they may never set up. Do not assume that any bullish or bearish stock is ready to play today. The ETF Trader ETF stands for Electronically Traded Fund which is an open ended mutual fund that can be traded at any time throughout the course of the day. We also use them as a way to look at various sectors, which gives us a different perspective of the market is doing. For more information and to see the complete list of ETFs we monitor on a daily basis, see http://www.vcmtrading.com/resources/ETFs.jpg Today's ETF discussion will be on the REGIONAL BANKS HOLDR (RKH). This sector is just a discussion today but maybe next on our hit list for possible short patterns.
The Technical Setup: The RKH is showing all the signs of an uptrend ending on the weekly chart. We came off the last high with a bearish wide range bar (- WRB) and dropped immediately below the last pivot support area around 155.00. The next rally made a lower high (LH). We now have another bearish wide range bar that has dropped the price to the prior support level. The next rally in the stock that produces the shortable sell setup will get our attention for a core short ETF position on the RKH. The Play: There is not play on this sector; this is just an analysis and a watch for the near future. Yesterday's Plays: None. Open Sector Portfolio: We are currently long the DXD as of Wednesday when it met entry requirements.
Please feel free to send any comments to services@vcmtrading.com Remember as always that you should not risk your own money unless you understand and are comfortable with the position and you have a full understanding of the risks of trading securities. Good trading everyone, and watch for the VCM Email Alert later today... |
Please keep in mind that all comments made by Velez Capital Management, LLC ("VCM") instructors and representatives are for educational purposes only and should not be construed as investment advice regarding the purchase or sale of securities, options, futures or any other financial instrument of any kind. Consult with your investment advisor before making an investment decision regarding any securities mentioned herein. VCM instructors and representatives assume no responsibility for your trading and investment results. Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. The author as well as other VCM employees, representatives and "affiliated" individuals may have a position or effect transactions in the securities herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. There is a very high degree of risk involved in any type of trading. Option and Futures trading is not suitable for all investors. Past results are not indicative of future returns. VCM, its subsidiaries and all "affiliated" individuals assume no responsibilities for your trading and investment results. Velez Capital Management, LLC Copyright ©2008. All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF VCM.COM IS A VIOLATION OF THE COPYRIGHT LAW. |
Bullish: IDSY DYN TTWO VSEA BSG CV IRIS LACO HNR SPR ASTI EPEX SRM RURL CADX HMSY IDEV HCBK
Bearish: MTRX IMCL MEND CF
