ANOTHER trend day with Elliott Wave

After a decent sell off last week, most traders were expecting an up day. I don't think many were expecting to see an up day with this kind of strength. I know I wasn't.

Today we got another trend day. I've learned from Corey at Afraid to Trade that trend days should be a day trader's bread and butter. Just one or two of these kinds of days can make enough to cover you for a week or even a month. I'm learning to be much more aggressive on trend days and much less aggressive on days that aren't trending. My trading has improved dramatically since I've done that.

Trend days are so easy--buy any pullback to the 20 period moving average especially if there is a "doji" style candle. Today provided more than six of those opportunities which I've pointed out with the green arrows. I'm still a weenie, so I only took two of those trades. I made enough for the week, but I should have been able to make my monthly goal today. Sometimes I wait for too many confirmations before going full-bore.

Today provided another excellent Elliott Wave pattern (according to my novice interpretation). Corey has an ongoing educational series on his blog about using Elliott Waves in trading. I used to think the hole thing was bogus, but I've found his explanations to be very clear and free of jargon.

Kicked out of my office

My wife is painting our bedroom so I've been kicked out of my corner office. I am currently trading from the dining room table with a laptop and a 22 inch monitor (just to look cool). I'm planning on moving my trading station down to the basement to take advantage of cooler temperatures during the summer months.
By the way, if you're a trader, you need one of those giant calculators. I remember when my dad got his first calculator. It was the size of a small phone book and had a red LED display where then numbers appeared at the end of small tubes that had an incredibly narrow viewing area. It cost him $100 in 1975 which is about $400 in today's dollars. Mine cost a buck.

My Trades on a Trend Day

A couple of the three StockPunk readers have expressed an interest in seeing actual examples of trades that I've taken during the day. Although the day isn't over yet, I thought I'd post some trades that I took today. I've erased the number of shares I purchased so you wouldn't be overwhelmed by my massive account size (it's in the hundreds of dollars--I kid you not--OK, I kid you, but I'm still keeping my financial information private).

Today looked like a "trend day" from the very beginning. We had a large (over 1%) gap down from the day before. Price continued to push downward for 10 minutes until we got a retracement that never really got close to 50%. We had a -1,000 reading on the TICK right out of the gate (green circle) that was additional confirmation that price would probably trend down today. The TICK continued regestering -1,000 values throughout the day futher confirming that this could be a powerful move down.

I placed 4 short (betting on the market going down) trades (yellow circles) as price moved up toward the 20 period moving average (yellow line). My fourth trade was very large because I felt that the trend day gave very good odds of things heading south quickly. They did, and I exited my 4 positions at the white arrow.

I waited for another retracement to the 20 period moving average and place two more trades as price rode along the average for a few minutes. Another quick downward push and I exited out at the 2nd white arrow. You'll notice that the price continued down past where I exited and I could have made twice what I did. However, I've been learning lately that I do better if I set a conservative target and take quick profits. Otherwise, I hold on too long and often end up giving all my gains back.

I wimped out on taking a trade after what I perceived as Elliott Wave 4. Things seemed a bit wacky and overly volatile. I was wrong to hold off, and I missed another nice downward push.

Trend Day with Elliot Wave

Things are finally starting to click for me again. I've made my target for May this week. It helped that there were 3 trend days this week! Usually you can expect 3 or less trend days in a month, so it is best to take advantage of them when they show up.

I took advantage of the trend day Monday. We got another one on Wednesday, but I was so biased toward the bearish side that I refused to acknowledge the day until it was over. Today (so far) we've got another bullish trend day going.

I was bearish after the gap began to fill extremely aggressively after the morning "pop" I even went short on what I thought was a bearish flag pattern developing. A few minutes later and I was stopped out.

I've had a lot of trouble with my biases messing up my trading. I've got to learn that the market could care less about what I think it should do. it does whatever it wants to regardless of what everybody thinks it will do. I've stopped listening to news radio while trading because I've noticed that news reports influence my ability to stay focused on what the market is doing as opposed to what I think it will do.

I used to start preparing for the market an hour before the open hoping to glean some sort of nugget of information that I could use to make better decisions. I've noticed that my trading has improved dramatically since I've started turning on my computer and trading software just 10 minutes before the market opens.

I've also been trying to recognize trend days earlier, and that stop out was a wake up call that today was favoring one. I took a trade after the 2nd wave of an Elliot Wave pattern completed (right at the number 2). I had no clue that an Elliot Wave was forming, I was just anticipating a trend day trade.

I sold when price made a new high, and watched as the price continued on about 2 times higher after I sold. That should have clued me in that wave 3 was in progress. I missed two trades (from a to b in wave 4) and wave 5. I tried to get in as price touched the 20 period moving average, but I was too slow calculating everything and price rocketed to new highs and left me behind. Dang it.

I made another "trend day" trade as price consolidated around the 20. It was a hard trade to take because the stock chat rooms that I read were all saying that the rally was done and that we were headed lower and hard. I'm learning that the only thing that matters is what the market is telling us in real time.

A couple of 30 minute narrow candle trades

Today's prevailing trend helped push a lot of stocks upward. I took a couple of narrow candle trades that were trading with the trend using breakouts from narrow 30 minute candles as my entries. Here are a couple charts:

D.R. Barton Reviews Google's Stock Screener

Stock Screening - Google Finance Falters

by
D.R. Barton, Jr.

Last week we ended by talking about Google Finance's use of Web 2.0 tools to make an addictive little screener. And it is truly fun to play with. But alas, when the playing is done and it's time to get down to some real work, Google Finance's stock screener really has little to offer.

First the good stuff about the Google screener. Compared to almost every other screener, it's easy to find. A little thing, I know, but it's frustrating trying to go through the multiple layers of web pages to get to some of the better no-cost screeners. At the top of the Google Finance homepage, right next to the ubiquitous Google search box, is a single hyperlink, the stock screener (in typical Google minimalist style).

Once you get to the screener you'll find four default screening criteria with boxes for minimum and maximum values. The truly unique part is the slider that's between the min/max boxes. Between the min and max sliders is a little histogram that represents how many stocks are at each increment of the slider. Cool. For most criteria, this looks like a normal distribution, with some skew to one side or the other. What makes this really fun is that if you move one of the min or max sliders to reduce the universe of stocks, you get instantaneous feedback on how many stocks satisfy the scan, plus a sortable list of stocks that meet all of the criteria. And when I say instantaneous, I mean less than a second.

As Google has set this up, it's a very visual process, but I'll try to describe one example for you. With all of the criteria set as wide as possible, Google shows 2,950 stocks. Move the 'dividend yield' minimum value slider to the right from 0% to 5% and the universe is reduced to 512 instantly sortable stocks. You can do this with 61 different criteria that Google provides, if you so choose.

But the good news pretty much ends there. The minus side of the ledger is unfortunately well populated for the Google Finance screener. And there are some deal killers.

First and foremost, there's no way to export the results of your scans to a spreadsheet or trading platform watch list. And if you devise a scan that you really like or need and want to run it later, there's no way to save a set of screening criteria. In addition, the universe of screening criteria is fairly limited.

Here's the bottom line. If you're just wondering how many stocks have a Market Cap over $1 billion and a dividend yield between 2% and 6%, and you want a lightening quick answer, Google can get you there with a sortable list. But you won't be able to save or export the scan, making the utility of this Google app marginal at best.

In the end, the Google Finance stock screener is a bit like a Slinky. It's fun to play with and can occupy you for minutes on end, but when all is said and done, you can't turn your time and effort spent into anything really useful.

Next week, we'll start to look at some screeners that scan for technical criteria. So please send any suggestions/thoughts/reviews of your own to drbarton "at" iitm.com. Until then...

Great Trading,

D. R.

About D.R. Barton, Jr.: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at "iitm.com".