‘The Professors’ weekend update 1/27/2013

Jan 28, 2013 | Uncategorized

by Hank Swiencinski, AIQ TradingExpert Pro client for over 20 years, founder of ‘The Professor’s One Minute Guide to Stock Management’. AIQ will be hosting a full day seminar with ‘The Professor’,  March 9, 2013 in Orlando, FL. More info CLICK HERE
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The Dow rose another 70 points on Friday, closing at 13,896. The Dow was up 246 points for the week. The Nasdaq was up 19 points on Friday, and the rise kept the index in the Green for the week, closing up 15 points at 3,150. Volume was right at its 10 day average. There were 347 new highs and only 12 new lows.
Big Picture Strategy: So where are we now? Hmmm? Back in the beginning of January, when all the worrywarts on CNBC were talking about falling off the ‘fiscal cliff’, we talked about how ridiculous this was. I said that it was not gonna happen. On the last trading day of the year, we saw the Dow dip down to the 12,884 level and I mentioned that the Dean’s List was still positive. I said not to worry. That was over 1,000 Dow points ago.
Back then I was talking about a rally that would take the Dow back up to the 14,000 level. And now we’re just about 100 points from that target. How did I get so close to the target? By watching a Hockey Stick develop. By NOT listening to the talking heads.
We saw the rise from the November lows, and then the pullback towards the end of December, when everybody in Washington was ‘cliffing’it. We didn’t care about the ‘cliff’. What we were interested in was the Hockey Stick Pattern that was developing and the Dean’s List. That’s all that mattered to us.
We saw that the November to early December rise was just shy of 900 points, and that if we added it to the low on 31 December, it projected a target just under the 13, 800 level. And that’s where we were on last Thursday. Friday’s 70 point pop was a bonus.
Anyhow, that’s how we got to where we are now. But that’s ancient history. You guys are always interested in what’s next. You always want to know we do we go form here?
But before we talk about this, we need to understand a few things. Remember, this is a teaching web site. I’m not like Lou. I don’t just give you a bunck of stocks on a list, and tell you to buy them. That’s NOT what I do. I try to help you understand why they might go up (or down). I give you my reasons. I try to walk you through a few scenarios, and help you understand why your stocks are performing like they are. And IF you make mistakes along the way, or didn’t sell something when the indicators turned against you, perhaps you’ll learn the next time. Trading is a learning process. It takes time and requires discipline.
You just can’t go to the Lists and buy things. Not from my Lists, not from Lou’s, not from any one’s list. If you just use Lists, you’re gonna lose! You need to pay attention to the SIGN: .The SIGN consists of three things; Lists, Patterns and Indicators. So if I’m going to buy something, it needs to either be on the Dean’s List or the Member’s Watch List. Then I need to see a pattern. No pattern, no trade. We need to see a pattern so it can propel the stock higher. And then finally, we need to see the indicators turn positive. We need all three conditions. You all know the drill.
And IF we’re buying something from the Lists that is pulling back with an overslod 2-period RSI Wilder, we need to know where it is in the original Pattern. That way we’re NOT buying something at the top of the pattern. Like with CNI that I’ll talk more about below. The reason I’m buying CNI on pullbacks now is because I have higher targets. Many of the stocks on the Lists now are getting very close to their projected targets. We’re NOT interested in stocks that are near their projected targets now. If a stock is near its target and completing its HS Pattern, It could be ready to start a decline.
OK, now let’s get back to what we could see happen in the markets next week.
Firstly, there was a small change in the A-D oscillator on Friday. The small change was less than 7 points, so we should see a Big Move within the next 1-2 days.
Also, the rise of the last few weeks has driven all of my oscillators into EXTREME overbought conditions. Can they remain this way? Sure. But odds are high that they will not. The odds favor a pullback now. At least on the Dow. At 13,900, we’re about 100 points above the projected target from the HS pattern. And we know that stocks do not go straight up. They go up in waves. So now that we have reached our target, it would be perfectly normal to see a pullback.
If the Dow does start to pullback next week, it would tell me that current wave is likely the first wave up of the 5 wave sequence for Major Wave ‘E’ up. Next would be a wave 2 down. On the other hand, iF we continue to push higher, then we’re likely in the impulse wave or wave 3 up in the sequence. A Big Move to the upside early next week would confirm the wave 3 scenario.
While the Dow has been steadily making new highs, the forgotten Nasdaq has not. Held down by the ’crash’ in Apple, the Nasdaq100 has basically traded sideways for the past month. BTW, did any of you see that Apple traded down to EXACTLY 435 on Friday? EXACTLY!!! I hear that some old geezer with a Hockey Stick pattern was saying 435 several weeks ago. Hmmm?
Anyhow, with Apple likely to bounce from its lows, and the Nasdaq having traded sideways for the past month, it sets up a rather favorable condition for that market. I don’t see money leaving the market now, but with the end of January approaching, the institutions might be looking to shift out of some of the overbought big cap stocks into the smaller sisters. The NDX closed the week at 2737. If the NDX starts to move higher early next week and breaks 2760+, it could lead to a nice rally.in the small caps. The rally could see the index approach the 2850+ level. So watch the small caps and technology next week.
As long as the Dean’ List remains positive, I will remain positive. If we start to pullback, I will view the pullback as a buying opportunity.
The kinds of stocks that I want to be trading now are stocks in well defined Up trends, where the 50 is above the 200, and forming railroad tracks. Stocks that are in the Free Willy Mode. Not the ones ‘In Jail’ being held captive by their moving averages. If the market pulls back, I will be looking to buy these stocks when their 2 period RSI Wilder becomes oversold on the Daily Charts. Once I see this condition, I’ll look to buy them using the shorter term bars. Jut like we did two days ago with CNI. Two days ago, CNI was sitting there at 93.40 with it’s two period RSI Wilder buried in oversold territory. One day later it was trading over 2 points higher. CNI is a Free Willy stock. Just about everybody in the stock has a profit!
BTW, during CNI’s recent pullback, it formed a small ‘Blade’. The low of that Blade was 93.3, so if the 6 point ‘Stick’is added to that low, the stock now projects a target near the 99 level. About a month ago, I mentioned that the transports appeared ready for a breakout, and that the way I planned to play the move was with CNI. So far the move is right on track. So now, the HS patterns on CNI have three targets: 97, 99 and 105. The stock closed at 95.41 on Friday..
Now I’m just using CNI as an example here. There are many stocks in the Free Willy Mode now that should be looked at on pullbacks. Just take a look at the Member’s Watch List.
American Express, AXP, is another example of a Free Willy Stock. Two weeks ago, the stock hit an new high of 61.97. The previous high of 61.42 was made in May of last year. So now almost everyone who owns AXP is a happy camper. In the past week, the stock pulled back to the 59 level, where its 2 period RSI Wilder became oversold. The stock is currently trading less than a point from that oversold condition..
Also at some point last week, I think I mentioned how Green Mountain Coffee Roasters, GMCR, had a nice HS pattern, with narrow Bands. The stock was trading close to 40. Now its 46 and moving higher. Take a look a the ‘stick’ on GMCR and make your own projections.
So basically I’m doing two things now. As I mentioned above, I’m looking to buy stocks in up trends when they pullback, stocks like CNI and AXP. And I’m looking for stocks or ETFs from the Lists that have nice HS Patterns. Stocks like GMCR.
I am NOT looking to buy stocks that are ‘In Jail’. This is NOT the time for ‘Hope’ stocks, project stocks, turn around candidates, or junk. Junk like Apple. No matter how you slice AAPL, right now it’s still JUNK! The 50 is below the 200, and the PT indicators are negative. That’s how I define JUNK!
Have a wonderful weekend.
That’s what I’m doing,
h
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.

The Webinar Room opens in 60 minutes for Hank Swiencinski and AIQ session

Jan 24, 2013 | Uncategorized

DON’T MISS OUT

The Webinar Room opens in 60 minutes for Hank Swiencinski and AIQ
to bring you

“The Professor’s One Minute Guide to Stock Management: The Basics”

We will be starting in less than 90 minutes, at 4:30pm ET

So make sure to reserve your seat now.

Click here to register for the webinar

Today at 4:30pm ET:

The Professor will reveal some of his hallmark strategies that have helped create many successful traders and investors.

“Hank has been an AIQ client for over 25 years. We met over lunch late last year, and I was immediately struck by his erudite approach to trading and investing.

His knowledge of technical analysis and the practical application of wave theory, moving averages, and DMI is impressive.”

Stephen Hill,
President
AIQ Systems



Weekend Strategy Review 01-20-13

Jan 23, 2013 | Uncategorized

by Hank Swiencinski, AIQ TradingExpert Pro client fro over 20 years, founder of ‘The Professor’s One Minute Guide to Stock Management’. Later this month Hank will be presenting an AIQ webinar covering some of the techniques he teaches, like cycles and stick patterns.
Hank will be presenting this free AIQ webinar entitled The Professor’s One Minute Guide: The Basics, January 24th, 2013, 4:30 – 5:15pm eastern,
Click on this link to register. Here’s a sample of his Weekend Strategy Review 01-20-13
The Dow rose 53 points on Friday, closing at 13,650. It was up 161 points for the week. The Nasdaq was down 1 point on Friday, but was up 9 points for the week. The Nasdaq is having a tough go of it lately, mostly because of Apple. The characteristics of the company have changed radically in the past month. Apple went into a sustained up trend almost four years ago, on 11 May 2009, at a price of 129.49. During that time, the 50 NEVER once fell below the 200. Pretty amazing! But that is no longer the case. On 2 October of last year, the PT indicators turned negative and then on 19 December, the 50 dropped below the 200. So now, any rally in Apple must be viewed with suspicion. That’s because any rally could be the development of the Blade of a negative Hockey Stick pattern, which could lead to significantly lower prices. And it’s not often that you see a stock that has a potential ‘Stick” of over 200 points, so we need to be careful. Remember, Apple represents a significant portion of the Nasdaq100. And IF Apple continues its downtrend; the Nasdaq will likely continue to experience problems. But let’s not focus on Apple for now. Let’s look at the Big Picture instead.
Big Picture Strategy: The Dean’s List remains strong and the cockpit indicators are positive. I will remain Bullish as long as my Lists and indicators stay positive. The strategy is very simple now. Once we get closer to the 14,000 level, I will re-evaluate the strategy. Not now.
OK, we’re at 13,650, just 450 points from our target of 14,000+. What now? Just a few weeks ago, we were trading under 12,900 and some of the folks on CNBC thought the world was coming to an end. We didn’t. We saw that the Dean’s List was much too strong for Armageddon. We also saw that the decline that occurred since the middle of December looked more like the Blade of a Hockey Stick Pattern than the beginning of any end of the world scenario. Pullbacks after rallies are normal. They are positive, not negative, no matter how the world looks to the folks on CNBC. We also saw that the 50 was still comfortably above the 200, and that the pullback only caused the price to drop back to the 200. The Dow was taking a break. It was resting.
So why am I writing about this today? Well, I want you to take a quick look at the Dow. I want you to once become familiar with the pattern. Get it burned into memory. Specifically, I want you to look at the stick that started on 15 November and completed on 18 December. Note that the November low was 12,472, and the high was 13,366. or a rally of 894 points. So if we add 894 to low of the Blade that completed on 31 December, 12,884, when Congress was trying to keep us from falling off the ‘fiscal cliff’, we get 13,778. Only 222 points from 14,000.
In the Classroom, we talk about how the market moves in waves. We also talk about Ending Diagonals and termination patterns. And the one thing we know about them is that the final waves of these larger patterns should consist of 5 waves. And because the most recent ‘Rope Jump’ that occurred in early December told us that the move was likely a wave 1, which was followed by a retracement, it’s even more likely that what we are seeing now is the impulse wave, or wave 3 of the 5 wave sequence that will eventually complete the Ending Diagonal Pattern.
So assuming that we are in the impulse wave, then we also know that it too should consist of 5 waves, So odds are that the move that started on 31 December still has a lot more to go. We know that the move probably won’t be straight up. That there will be pullbacks along the way, and each of these pullbacks should be viewed as a buying opportunity.
Buying opportunity as in Buy the Cake, Eat the Cake (BTC-ETC). That’s what we’re looking for now.
One of the stocks that I’m currently watching is Green Mountain Coffee Roasters, GMCR. Before you look at Green Mountain on a Daily Chart, I suggest that you take a look at it on a Weekly Chart. That way you’ll have a better feeling for the kind of stock we’re dealing with.
Green Mountain had an incredible ride once the market turned positive in March 09. It rose from relative obscurity to being a 115 stock in 2 ½ years. Then the coffee tree came crashing down and GMCR fell back to earth, once again trading in the teens. Hey…GMCR is a coffee grower not a purveyor of magic potions. Anyhow, for the past few months, GMCR has been appearing on the Member’s Watch List. We saw it jump the ropes in late November, an indication of a possible wave 1. Since then, it has spent the last 6 weeks forming what appears to be a wave 2. The stock is currently in a well defined up trend, and is on MWL with positive PT indicators. More importantly, the Bands are narrowing, which could be telling us that its K-cups could be ready for some serious brewing. If the stock starts to move above 43.79 and push its Bands, it could be headed significantly higher.
On the other hand, on Friday, Bank of America reported fourth-quarter earnings that were 63 percent lower than last year but slightly above expectations. A decrease in revenue and a few costly blunders from their 2008 acquisition of Countrywide and Merrill Lynch were the reasons cited for the decline.
Now, most of you know that I’m not a big fan of bank stocks. I’m not. But I also know that many of you are. But when it comes to stock ownership, the only thing I really care about is patterns, indicators, and Lists. Being a fan of something is for sports, not stocks. And right now, the events leading to BAC’s earnings announcement have created a very interesting situation on its Daily chart.
BAC is currently in a well defined up trend, and when the stock pulled back on Friday, it caused the 2-period RSI Wilder to become oversold. Now I know that a few of you might be looking at BAC and thinking about using the BTC-ETC strategy. But as we know, to use this strategy, the stock must be in an up trend, and have positive indicators. During Friday’s pullback, the DMI and P-vol on BAC turned negative. So right now, BAC is NOT a candidate for my BTC-ETC strategy. The stock was on the MWL recently, but dropped off during the pullback. That’s OK. But to use BTC-ETC Strategy, we still need to see an Up trend, an oversold 2-period RSI Wilder and POSITIVE indicators. So I still say…. NO Banks! Besides, take a look at BAC’s weekly Chart since 2009. It’s been almost 4 years since the stock bottomed, and the chart still looks horrible! Give me Free Willy stocks anytime! I can’t get interested in BAC until I see it ‘Jump the Ropes’ on the Weekly.
Another stock I’m watching is American Express. AXP. It’s on the MWL and has pulled back on the Daily’s. The stock is in a well-defined up trend with positive PT indicators and is a candidate for my BTC-ETC strategy
Also, on Friday, we saw Schlumberger, SLB, pop 3.13 points to 76.50, after being highlighted by Emeritus and placed on the Honor Roll at 73.22 two days before.
After jumping the ropes in mid-September for its wave 1, SLB formed a 2 wave pullback into mid-November. Since that time, it jumped the ropes again for wave 3.1, that was followed by another 2-wave pullback or wave 3.2. The PT indicators turned positive on 4 January at 72, and Friday’s jump appears to confirm that the impulse wave is underway. Take a look at the HS/w Blade Pattern on the Weekly’s.
While you’re at it, you might want to compare SLB to our energy rabbit, GPOR, which continues on its tear. Do you see the massive HSw/Blade pattern that formed on the Weekly chart of GPOR since 2009? That’s what is propelling the stock higher now. Now go back to SLB. See the similarities? For comparison purposes, you might want to look at the chart of Petrobras, PBR. GPOR is Green, having fun in an Up trend, and is now in the Free Willy Mode. PBR is in Jail, constrained by its moving averages, RED indicators, and fighting a downtrend. What’s more fun? Free Willy or Jail?
Remember, it’s mid-January, and March is right around the corner. I always want to look at energy going into March.
So reviewing my Big Picture Strategy, I’m positive and looking to buy stocks from my Lists that have patterns and are either starting an Up trend or are pulling back and resting from a recent move up. For stocks that appear to be completing a wave 2, I’m looking to buy them when the indicators turn positive, especially if they have tight Bands. On those stocks that are already in up trends, I’m looking to buy them if the 2-period RSI Wilder becomes oversold. We’re going higher.
Also, continue to pay attention to Emeritus and the Honor Roll. Remember how he signaled ‘RALLY’ on 2 January by placing a world record 38 new stocks on the Honor Roll? Then added RCL, GILD and CNI. He highlighted SLB on 8 January, then again on 16 January. And PEP on 10 January, just to name a few. Pay attention :>)
Continue to be patient with gold and silver. On Friday, the PT indicators turned positive on SLV after a nice 2-wave pullback since mid-September. The ETF is starting to ‘Jump the Ropes’again. Hmmm? Could Major Wave 3 Up be starting? We’ll see.
I’m also watching the Major Hockey Stick Pattern on physical gold shares, GLD. Gold is also playing with a ‘Rope Jump’on the Daily’s. The DMI and P-vol turned positive on Friday. Now all I need to see is a positive MACD and I’ll go looking for my pick and wheelbarrow.
That’s what I’m doing,
h
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.

The Volatility (Regime) Switch Indicator

Jan 19, 2013 | Uncategorized

The AIQ code based on Ron McEwan’s article in February issue of Stocks & Commodities, “The Volatility (Regime) Switch Indicator,” is provided at the website www.TradersEdgeSystems.com/traderstips.htm.

To test the author’s volatility switch indicator, I used the NASDAQ 100 list of stocks and AIQ’s Portfolio Manager. A long-only trading simulation was run with the following capitalization, cost, and exit settings:

  • Maximum of 10 open positions
  • Size each position at 10% of mark-to-market total capital
  • Take no more than three new positions per day
  • Compute the mark-to-market capital each day
  • Three cents per share was deducted for each round-turn trade
  • Select trades based on the lowest three-bar RSI reading
  • Exit trades only with a system exit; no stop-loss or profit target stop used.

I coded four similar test systems. All systems enter & exit on the next bar at open after the respective entry or exit rule becomes true at the close of the bar:

System 1: A basic trend-following system that buys when the close of a stock is above its moving average and the moving average is higher than it was 10 bars ago. Exit when the close is below the moving average.

System 2: The same as System 1 with the volatility switch filter added to the entry and exit rules for the stock.

System 3: The same as System 2 with System 2 rules also added to the market using the NASDAQ 100 index (NDX) to represent the market conditions.

System 4: The same as System 1 but with the volatility switch filter and the trend-following rules added to the market index (NDX).

I used the author’s parameters of 21 days for the volatility length and 50 for the volatility switch level. Note that my coding of the indicator is multiplied by 100. To determine the trend, I used a 50-bar moving average. For the period 12/30/1994 to 12/12/2012, the systems returned the results shown in the table in Figure 7.

 Figure 7: AIQ, SYSTEM BACKTEST RESULTS. For the period 12/30/1994 to 12/12/2012, the four system variations returned these results.
In Figure 8, I show the equity curves for all four systems, with the largest graph showing the equity curve for System 4, which is the one I prefer due to the relatively low drawdown and the highest Sharpe ratio. Adding the volatility switch filter only to the stocks (System 2) did not reduce the drawdown but the return increased very slightly and the Sharpe ratio was one of the highest. Adding the filter to both the stock and the market (System 3) dramatically reduced the drawdown, but the return and Sharpe ratio also were significantly reduced. Adding the filter only to the market index thus seems the best compromise. The tests tend to show that the filter can be used to reduce drawdown and increase reward-to-risk ratios.
FIGURE 8: AIQ. Long-only equity curves (blue) compared to the S&P 500 (red) for the test period 12/30/1994 to 12/12/2012 trading the NASDAQ 100 list of stocks.

The code and EDS file can be downloaded from www.TradersEdgeSystems.com/traderstips.htm. The code is also shown below.

!THE VOLATILITY (REGIME) SWITCH INDICATOR
!Author: Ron McEwan
!Coded by: Richard Denning 12/7/12
!www.TradersEdgeSystems.com
!INPUTS:
volaLen is 21.
maLen  is 50.
volaLvl is 50.
rsiExitLvl is 90.
!ABREVIATIONS:
C is [close].
C1 is valresult(C,1).
!INDICATOR FUNCTIONS:
MA  is simpleavg(C,maLen).
RC1  is (C-C1)/((C+C1)/2).
SD  is sqrt(variance(RC1,volaLen)).
Count  is countof(SD <= ∧SD,volaLen).
VolaSwitch is Count / volaLen * 100.
!TRADING SYSTEM RULES:
!SYSTEM 1: TREND FOLLOWING WITHOUT VOLASWITCH FILTER:
Buy if C > MA and MA > valresult(MA,10).
ExitBuy if C < MA.
!SYSTEM 2: TREND FOLLOWING WITH VOLASWITCH FILTER:
BuyVS if VolaSwitch < volaLvl and C > MA and MA > valresult(MA,10).
ExitBuyVS if (VolaSwitch > volaLvl and C < MA)
or (VolaSwitch > volaLvl and rsi3 > rsiExitLvl).
!SYSTEM 3: TREND FOLLOWING WITH VOLASWITCH & MARKET TIMING:
BuyVSM if BuyVS and TickerRule("NDX",BuyVS).
ExitBuyVSM if ExitBuyVS or TickerRule("NDX",ExitBuyVS).
!SYSTEM 4: TREND FOLLOWING WITH VOLASWITCH MARKET TIMING APPLIED ONLY TO NDX:
BuyMvs if Buy and TickerRule("NDX",BuyVS).
ExitBuyMvs if ExitBuy or TickerRule("NDX",ExitBuyVS).
!RSI WILDER (FOR SYSTEM 2 EXIT):
U  is [close]-val([close],1).
D  is val([close],1)-[close].
W1 is 3.
rsiLen1 is 2 * W1 - 1.
AvgU  is ExpAvg(iff(U>0,U,0),rsiLen1).
AvgD  is ExpAvg(iff(D>=0,D,0),rsiLen1).
rsi3  is 100-(100/(1+(AvgU/AvgD))).
—Richard Denning
info@TradersEdgeSystems.com
for AIQ Systems
 

Weekend Strategy Review – Sat, Jan 12th, 2013

Jan 15, 2013 | Uncategorized

by Hank Swiencinski, AIQ TradingExpert Pro client fro over 20 years, founder of ‘The Professor’s One Minute Guide to Stock Management’. Later this month Hank will be presenting an AIQ webinar covering some of the techniques he teaches, like cycles and stick patterns. Hank will be presenting this free AIQ webinar entitled The Professor’s One Minute Guide: The Basics, January 24th, 2013, 4:30 – 5:15pm eastern,
Click on this link to register. Here’s a sample of his analysis

 
The Dow rose 17 points on Friday, closing at 13,488. It was up 53 points on the week. The Nasdaq was up 3 points on Friday and up 23 points on the week. The rally continues. 
 
The Dean’s List remains strong, and all of the cockpit indicators remain positive.
 
Big Picture Strategy: I’m Bullish and will remain so until the Dean’s List starts to weaken. I’m expecting the ride to end near the 14,000 level, possibly higher. When the ride ends this time, it will be time to change the strategy. Not now.
 
CNI was up 0.75 points on Friday, closing at 94.25. It reached a high of 94.65 during the day. Earlier in the week, I mentioned that the first target for CNI was ‘just under 95’, so we got very close. My next target is 97, then 105. The reason I’m focusing on CNI today is because I want you to have an idea about what to expect next. CNI is currently in a trend mode. It has moved higher as a result of the Band squeeze….just like we expected. Money Flow remains strong, pushing prices higher.
 
If you bought CNI after it was highlighted by Emeritus and placed on the Honor Roll, you’re probably up close to 3 points now. And 3 points times 300 shares is $900, a nice profit. I bet that many of you are starting to get antsy, thinking it might be time to take some money off the table. Hmmm? So what are you going to do with your CNI?
 
Are you going to hang on for the higher prices projected by the smaller Hockey Stick pattern? Or are you going to wait to see if CNI reaches the projected target of 105 suggested by the larger Hockey Stick pattern? What to do, what to do???
 
I mention this today because this question comes up all the time. And it’s important that you think about what to do in situations like this.
 
Here’s the deal: Remember last summer, when we were having fun with Royal Gold? Remember how we saw a Hockey Stick pattern form between May and August, and how we saw the Bands start to narrow? If you don’t remember, I suggest that you take a quick look at Royal’s chart. Remember too how we measured the stick, and made projections to the 94-96 level? We did this when the stock was trading in the mid-70s.
OK, now I want you to think back and remember how you felt when the stock started to advance. It was pretty cool, wasn’t it? I remember all the emails I received when the stock hit 85. Many of you were starting to get nervous. You had 10 points of profit.
 
But the pattern said Royal still had another 10 points to go…at least. A lot of you sold at 85. But then a few days later, many of you were wondering why you sold. The indicators were still positive. Remember my story about checking the roots? You planted the seeds, you gave the plant plenty of fertilizer and water, but as soon as the plant started to shows signs of blooming, you sold. You had to check the roots even though the flower was telling you that it was OK. Hmmm?
 
No. In the Professor’s Methodology, we don’t check the roots! We let the plants grow to become flowers. We only sell IF there is something obviously wrong with the plant. Then we might do a little pruning. There needs to be a reason.
 
So now after reading this, and looking at how Royal Gold went on to move 5 points ABOVE its target, reaching the 100 level….now I want you to take a closer look at CNI.
 
Is the stock doing what you expected? Is it healthy? Do we need to check the roots?
 
Now I want you to go back and look at Royal again. But now I want you to take a close look at the stock on 10 October. That’s when both the DMI and P-vol turned negative. Hmmm? That was the time to check the roots. The stock closed at 95.26 that day. Two months later, on 20 December, the stock hit a low of 76.17.
So let me see if any of this hits home? You spend all sorts of time doing research on a stock, and then finally get the nerve to pull the trigger. But then as soon as it starts to move up, doing exactly what you expected it to do, you sell. Hmmm? Or if you did have the discipline to hang on until the stock reached its projected target, you failed to sell when the indicators told you the move was over. And for the past 3 months you’ve either given back all your profit or worse…are now experiencing a loss. 
 
So now go take another look at the chart of CNI. Then think about Royal Gold. Knowing what to do and having the discipline to do it is what trading is all about.
 
Have a great weekend.
That’s what I’m doing.
h
 
BTW, several gold and silver stocks have re-appeared on the Dean’s List. Royal Gold was among them. So once again, we have DL and Pattern. And 2 of the 3 PT indicators are now positive, at a time when the Bands have really tightened. What to do, what to do?
All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.

FREE webinar – The Professor’s One Minute Guide: The Basics

Jan 11, 2013 | Uncategorized

Thursday January 24, 2013 4:30 – 5:15pm eastern

Hank Swiencinski has 30+ years trading experience, 6 years as a professional. He was also Director Marine Corps Research & Development and Technical Director Navy International Policy.

The Professor, as he is known to his clients, has educated hundreds of individual traders and investors in his hallmark strategies; strategies that encompass using moving averages, Wells Wilder’s DMI and what The Professor calls his ‘Hockey Stick’ patterns together with wave and trend analysis.

We encourage you to join us in welcoming Hank for a 45 minute FREE webinar on January 24th from 4:30 – 5:15pm eastern. During this session, The Professor will reveal some of his hallmark strategies that have helped create many successful traders and investors.

“Hank has been an AIQ client for over 25 years. We met over lunch late last year, and I was immediately struck by his erudite approach to trading and investing.

His knowledge of technical analysis and the practical application of wave theory, moving averages, and DMI is impressive.”      Stephen Hill, President ,AIQ Systems

 

 
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Market review and AIQ Expert Rating analysis + IBD meetup

Jan 9, 2013 | Uncategorized

For those of you that are interested to hear my market update, I will be presenting the Iinvestors Business Daily monthly online meetup this coming Thursday January 10th at 7pm London time, 2pm eastern.

To attend use the link below

http://connectpro39608568.adobeconnect.com/ibdlondon/

I will also use the AIQ Expert Ratings analysis on the overall market to see which buy or sell signals are active, and where to next the market might be going.

Regards

Richard Muller
AIQ TradingExpert Pro user and Senior Instructor, The Trading Prism

The Professor’s take on GOLD (GLD)

Jan 8, 2013 | Uncategorized

by Hank Swiencinski, AIQ TradingExpert Pro client fro over 20 years, founder of ‘The Professor’s One Minute Guide to Stock Management’. Later this month Hank will be presenting an AIQ webinar covering some of the techniques he teaches, like cycles and stick patterns. Here’s a taster of his depth of analysis on GLD


During the week, we saw gold (GLD) fall in response to the release of the Fed minutes. I know that many of you are following gold, so I thought it would be a good idea to check the charts to see if it everything was still on track with my gold scenario.

I know that a lot of my subscribers were involved in gold last summer when GLD moved from the 150 level to near 175. That’s when stocks like Royal Gold (RGLD) were leading the Dean’s List and making nice moves almost every day as it rose from the low 60s to over 100.

Then in early October, things started to change and gold stocks started to decline. And as I write this, gold stocks are still pulling back. So I thought it would be a good idea to do an update on gold, mostly because I don’t talk about it a lot now in my Daily Updates. That’s because I’m usually NOT interested in things that have negative DMIs.

But let’s take a closer look at gold. The thing we need to determine is “Is gold behaving normally, or is it doing something strange? Something we don’t expect.

If it’s behaving normally, then we shouldn’t be concerned about the pullback. On the other hand, if its doing something that we don’t expect, then we need to change our outlook on gold, and any scenarios associated with it.

OK, now I want you to look the attached chart for GLD, which is the ETF for physical gold. What do you see? Hmmm? I want you to think about all the things you learned in Class, because almost EVERYTHING we talk about in class is on the chart.

Now I don’t want you to read any further until you actually look at the chart. Remember, this is a learning process, and not a Lou letter where he just tells you to buy something.
I want you to understand what’s happening with gold, so stop reading and go look at the chart.

OK, here’s what I see. First of all I see a stock that is in an Uptrend with its 50 > 200. However, the DMI is negative now and has been negative for the past 3 months. This is why I’m on the sidelines. 

As for the pattern, I see a stock that has just finished a Major Wave 4 triangle after a Major impulse wave 3 UP. Is this normal? Do we expect a triangle to form AFTER a Major Wave 3 up? Yes.
During the formation of the triangle, did it have 5 waves? Yes.
Did the 5 waves form a Three Lows to a Bottom Pattern? Yes.
Is this what we expect for wave 4s? Yes.

 OK, so now after answering Yes to all of the questions, there appears to be a high probability that the triangle that took a full year to form was a correction of the Major Wave 3 up. So once it completes, the Major Wave 5 up should start.

 
Before we get into wave 5, let’s ask ourselves…How do we expect wave 5 up will develop? What should it look like? How many waves will it have? How far up should it go. All of these questions should be thoroughly understood in your mind BEFORE you make a commitment to trade gold in the future. Otherwise, minor setbacks, like the release of the Fed minutes will get you confused as to what is really going on.

So let’s move on.

OK, I would expect wave 5 up to develop in 5 waves. After a TLB Pattern, I look for two things in a wave 1. The first is a‘Rope Jump”, or to see the price cross back above the 50 and the 200. Remember, IF we’re going to move back into a long term Uptrend for Major Wave 5 Up, we need to have the 50 move above the 200. And the only way this can happen is IF the price gets back above the ‘ropes’. Did this happen with GLD? Yes.

The second thing I want to see is the power of the move. In other words, IF GLD is going to enter a Major Wave 5 up, then it should start to hit specific targets as it moves up. Well, what was my first target for wave 1 up? Where did the target come from? Hmmm?

That’s right…from the Three Lows to a Bottom Pattern that formed as the Wave 4 triangle developed. The target is the interim high between the first two lows. Remember? So, did GLD hit it first target? Yes. (See the magenta line on the chart.) 

OK, so now after hitting that first target, what would we expect? Hmmm? Here’s the part that most of you don’t like to hear. Right. We expect to see a wave 2 pullback. It’s perfectly normal to see a pullback. As a matter of fact, the pullback MUST happen for GLD to go higher. 

How do we expect the pullback to form? Will it be 5 waves or three? Correct, it should be three-wave a-b-c pullback. Wave 2s are almost always a-b-c- pullbacks. Is GLD forming an a-b-c pullback? Yes. So the probability is high that the current pullback is a normal wave 2 that is correcting the gains of wave 1.

Ok, so now let’s look at a few projections. When I make projections using the Professor’s Methodology, I use Hockey Sticks. So let’s take a look at a few. 

The first HS is the big one formed using the stick of Major Wave 3 and the Blade of the triangle, or Major Wave 4. How big is this? Go measure. It’s BIG. This is why I’m interested in gold stocks in the first place. But for now, let’s just concentrate on the smaller Hockey Stick; the one that developed for waves 1 and 2 of Major Wave 5. 

The‘Stick’ of wave 1 up of Major Wave 5 up was about 28 points. So if wave 2 down stops near where we are now, the minimum for wave 3 UP of 5 should be close to the 188 area. GLD closed at 160 on Friday. The old Wave 3 high for GLD made on 26 August 2011 was 184.82. So If GLD moves above the old high on the next move up, it will enter the ‘Free Willy Mode’ and once this happens, there is no telling how high it can go after that. Once a stock enters the ‘Free Willy Mode’ everyone who owns gold will have a profit. That’s when you will hear the folks on CNBC talking about gold stocks every day.

ER 2-98 on DJIA on 12-26-12

Dec 28, 2012 | Uncategorized

The Weighted Action List (WAL) a measure of tickers in the SP500 receiving confirmed Expert Ratings, is to the downside at 4-96. The Access Plot, a measure of the bullish/bearish for the sum of all SP500 stocks has only Moneyflow indicator in bullish territory.

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