Hey guys -- Sorry the posts have been a little sparse recently. Jeremy and I have been really consumed with officially launching The Financial Puzzle - but that's actually great news for you. We have developed an amazing amount of resources in a relatively short time (literally hundreds of pages of material.) Much of this is going to be offered for free! We are also developing strategic relationships with other key companies to help us facilitate our teaching -- and your success as traders. I thought it would be appropriate however, to pause for a moment and reflect on how we've arrived here.
The Financial Puzzle really began over 12 years ago when Jeremy and I first met in college. In our friendship, Jeremy has always been known to have ideas that were "bigger than life," and I've always acted as the "facilitator." This has worked out well and together we've accomplished amazing things in life. Typically this is how one of our ideas is conceived.
"Hey Josh, I had this crazy idea..."
Ilisten carefully while immediately figuring out the viability of the crazy concept. Typically this occurs while drinking Dr. Pepper (I don't think it's scientifically proven, but we think it makes us smarter.) After careful consideration and a couple hours of dreaming we usually conclude as I say:
"Honestly Jeremy,I think we can do this... and if it doesn't work I'll always think it should have!"
That is exactly how The Financial Puzzle started too! Like everything else we've done, Jeremy and I decided to work together as traders. What was unique about this endeavor is that we seemed to struggle at every turn. I can remember a couple very specific times that we wanted to quit. Our frustration was consistent -- finding a comprehensive educational program that would give us all the information and tools necessary to be successful traders in an easy to understand, down-to-earth format. We knew it could be done -- obviously since people were doing it all over, and we were determined to figure out how. We endured as we gained our education from the school of Hard Knocks - which can have a very expensive tuition for traders! However, we officially graduated and the investment in our education has proven to be priceless.
The Financial Puzzle was then the outgrowth of our interactions with other traders that had a similar frustration toward education. There just isn't a product out there that is comprehensive enough to make you a successful trader in and of itself. As we've met these frustrated traders we've always been glad to share the lessons we've learned along the way. Ultimately, our contacts spread across the country (literally from California to NY), and we found the webinar format to be the most convenient tool to facilitate our teaching. We have since gone through and systematically developed our comprehensive trading educational series: Foundations of Stocks and Options. We are very pleased to have received wonderful reviews from our beta students!
We will keep you updated with our progress. In the mean time, please come check out our Free Report: How to Retire in One Year with Only $10,000 and our E-Course: Basics of Stock Options. Both of these are free and we would really enjoy your feedback. Also, we welcome your ideas for subjects you'd like to see covered in subsequent materials. Please feel free to email us or comment right here on the blog.
Looking forward to seeing you in class!
Monday, January 19, 2009
Wednesday, January 14, 2009
What Does Apple Mean Without Steve Jobs?
If you haven't heard the news yet Steve Jobs has taken a temporary leave of absence from Apple until the end of June. For several months health has been a concern. After taming concerns last week today Jobs made the announcement. So what does this mean for apple?
As always the price of a stock is going to reflect the news. At one point today AAPL haulted trading. Once they started again the stock dropped about 10% pretty quickly. It finally settled the day closing after hours at $79.25. Tomorrow will be interesting to see reaction as the news spreads. In the morning I can almost guarantee a bearish trade will be present. Today obviously would have been a good day to place a strangle had we known the announcement was coming - but we can't trade the past.
For tomorrow I'd suggest sitting at the computer if you want to make some money. The trades could swing pretty wide depending on how news flows in and out. Eventually by the end of the day the price should settle after traders, institutions, and all those floating stocks around get their minds wrapped around the new face of Apple. The bigger question is where will the stock land? This news may break our AAPL, RIMM similarities that we had going as Apple is likely to fall a bit more. We'll see.
The next level on the chart would be around $73.00. If that holds then the fallout will not be so bad. If the $73 mark does not hold we're probably looking at a new support level down around $60, the top of the window gap from back in July 2006. Of course the ultimate fall on this stock would be down to the $50 support from July 2006. I can't imagine AAPL falling below that.
Anyway you twist it there appears to be some good trades left on AAPL before next week's earning's announcement. Watch volatility pricing in the options. It can really stick you at times like this.
As always the price of a stock is going to reflect the news. At one point today AAPL haulted trading. Once they started again the stock dropped about 10% pretty quickly. It finally settled the day closing after hours at $79.25. Tomorrow will be interesting to see reaction as the news spreads. In the morning I can almost guarantee a bearish trade will be present. Today obviously would have been a good day to place a strangle had we known the announcement was coming - but we can't trade the past.
For tomorrow I'd suggest sitting at the computer if you want to make some money. The trades could swing pretty wide depending on how news flows in and out. Eventually by the end of the day the price should settle after traders, institutions, and all those floating stocks around get their minds wrapped around the new face of Apple. The bigger question is where will the stock land? This news may break our AAPL, RIMM similarities that we had going as Apple is likely to fall a bit more. We'll see.
The next level on the chart would be around $73.00. If that holds then the fallout will not be so bad. If the $73 mark does not hold we're probably looking at a new support level down around $60, the top of the window gap from back in July 2006. Of course the ultimate fall on this stock would be down to the $50 support from July 2006. I can't imagine AAPL falling below that.
Anyway you twist it there appears to be some good trades left on AAPL before next week's earning's announcement. Watch volatility pricing in the options. It can really stick you at times like this.
Congratulations to our EXPERT!
At Financial Puzzle we are proud to celebrate with Jeremy (many of you know him as J-dub) on his recent award from EzineArticles.com. Jeremy has been recognized as one of their premier contributors and have awarded him the title "Expert!" He has also been featured regularly on their homepage and had several articles recently distributed for publication. We are proud of Jeremy and look forward to more great material!
Tuesday, January 13, 2009
A Couple Bearish Days Leading to Support
If you read my post on Friday you know I'm mostly bullish for the short term on the DOW, however it looks like we'll have a couple more bearish days before we make it back down to support. With so many stocks settling into some consolidation channels it makes a lot of sense the DOW would as well.
While we do have the major support dip down to around 7500 back in Nov, I would expect this support to hold just north of 8000. Of course we'll see. A dip down to the 8k range and then a turn upward should provide some good momentum to make some bullish trades in the market. In the meantime be extra careful with bull trades and try to grab a few bearish profits while you can.
While we do have the major support dip down to around 7500 back in Nov, I would expect this support to hold just north of 8000. Of course we'll see. A dip down to the 8k range and then a turn upward should provide some good momentum to make some bullish trades in the market. In the meantime be extra careful with bull trades and try to grab a few bearish profits while you can. Saturday, January 10, 2009
Market Analysis
Oh where is the bottom and how do I trade? This is the question on almost everyone's mind. Hopefully I can offer some insight here.
I'll start off with the bad news. The bad news is there's not too many people crying bull. From CNBC To Fox Business, to Money Magazine, to just about every other news outlet you can find - The market looks doomed. The current issue of Traders World magazine doesn't help much. Eric Hadik of INSIIDE track is calling for 1-3 years of bearish behavior. And in the same issue Robert Giordano is calling for DOW support at 7150. Could they be right? Yep - they could be. They could also be wrong.
Take a look at this chart:
Okay, I know at first glance it looks like Chinese... or something. But there really is logic here. From a pure theoretical standpoint the bears could be right. There's the whole 17 year theory, the 34 year theory (which go together by the way) the presidential year theory, the "I made up a theory" theory - and not to mention the extreme negative bias by the media which tends to manifest in bearish behavior and sentiment.
However, from a pure charting standpoint there's hardly any reason to be bearish - in fact there's almost completely nothing but bullish signals. Let's look at a few of them.
First of all let's talk about the support line: My personal lines for support sit between 7500 and 7750. Giordano could be right with his 7100 range but I think that's pretty forgiving, certainly when paired with what I'm about to show you.
1) line construction - Giordano must be drawing his lines off of candle wicks. It's fine, but sometimes not consistent. I'm drawing mine off of a line chart.
2) Iterations - There's really only once way back in 2002 where support was found in the 7100 range, however there are 3 times on the line chart where my support held. And when we add candles for confirmation there's a total of 7 iterations dating back to '97! (This is using a weekly chart)
3) With a daily chart we see massive support in Oct. '97, Oct. '98, Jul & sept 2002, March 2003, and assuming it holds now oct/nov '08.
4) Patterns: There are currently no trends in place. We see a sideways channel. A channel can last for 3-4 months, or I've seen them last a year or more. A few years ago SHLD channeled sideways for right around a year. All it means in the broad picture is things are going nowhere. Already this channel has lasted 3 1/2 months. Who knows when it will break.
5) Candle Pattern: On Friday Oct. 10 we saw a massive dark candle at lunch time. At one point the market was trading around a 2400 point loss for the week. But by the end of the day we regained some value and closed the day with a high wave spinning top candle (or close enough). THAT is how bottoms are formed. I told my wife on that day "this is a good sign". Then just a few days later on the 27th & 28th we saw a massive bullish engulfing signal. Good sign #2. As is common during a basing period we saw one more major test of the bottom on Nov 20 & 21 (highlighted in yellow on my chart). The 20th threw a long dark candle, and the 21st completed the tweezer reversal pattern by showing the exact opposite on the next day. When this candle pattern occurs at the bottom of a trend it is most often a bullish reversal signal.
I will make note back in Sept I pointed out the falling 3 wedge pattern and said in the next few days expect the market to break to the downside. I was right then, and once again this candle pattern will likely provide at least some bullish move.
The sideways move we've seen in the past 3 months is completely normal and symptomatic of a market forming a bottom. Take heart if you're worried. It's very true that the other bearish indicators may prove to push the market lower, but I personally find the chart patterns to be quite accurate.
The trick about technical analysis is to balance all the different indicators. The bear guys were right - but now I think the chart is taking over and the bulls are about to run. Of course, it can all change tomorrow!
During these sideways markets my personal favorite strategies for trading are to sell options and trade as neutral as possible. Every day can be a new adventure. A lot of stocks are set up perfectly for complex option strategies. You should be able to find plenty of stocks to write Iron Condors on. And of course if you're down a bit and want to just make some income start writing some covered calls. You can recoup a good portion of your losses a lot quicker than you think!
I'll start off with the bad news. The bad news is there's not too many people crying bull. From CNBC To Fox Business, to Money Magazine, to just about every other news outlet you can find - The market looks doomed. The current issue of Traders World magazine doesn't help much. Eric Hadik of INSIIDE track is calling for 1-3 years of bearish behavior. And in the same issue Robert Giordano is calling for DOW support at 7150. Could they be right? Yep - they could be. They could also be wrong.
Take a look at this chart:
Okay, I know at first glance it looks like Chinese... or something. But there really is logic here. From a pure theoretical standpoint the bears could be right. There's the whole 17 year theory, the 34 year theory (which go together by the way) the presidential year theory, the "I made up a theory" theory - and not to mention the extreme negative bias by the media which tends to manifest in bearish behavior and sentiment.
However, from a pure charting standpoint there's hardly any reason to be bearish - in fact there's almost completely nothing but bullish signals. Let's look at a few of them.
First of all let's talk about the support line: My personal lines for support sit between 7500 and 7750. Giordano could be right with his 7100 range but I think that's pretty forgiving, certainly when paired with what I'm about to show you.
1) line construction - Giordano must be drawing his lines off of candle wicks. It's fine, but sometimes not consistent. I'm drawing mine off of a line chart.
2) Iterations - There's really only once way back in 2002 where support was found in the 7100 range, however there are 3 times on the line chart where my support held. And when we add candles for confirmation there's a total of 7 iterations dating back to '97! (This is using a weekly chart)
3) With a daily chart we see massive support in Oct. '97, Oct. '98, Jul & sept 2002, March 2003, and assuming it holds now oct/nov '08.
4) Patterns: There are currently no trends in place. We see a sideways channel. A channel can last for 3-4 months, or I've seen them last a year or more. A few years ago SHLD channeled sideways for right around a year. All it means in the broad picture is things are going nowhere. Already this channel has lasted 3 1/2 months. Who knows when it will break.
5) Candle Pattern: On Friday Oct. 10 we saw a massive dark candle at lunch time. At one point the market was trading around a 2400 point loss for the week. But by the end of the day we regained some value and closed the day with a high wave spinning top candle (or close enough). THAT is how bottoms are formed. I told my wife on that day "this is a good sign". Then just a few days later on the 27th & 28th we saw a massive bullish engulfing signal. Good sign #2. As is common during a basing period we saw one more major test of the bottom on Nov 20 & 21 (highlighted in yellow on my chart). The 20th threw a long dark candle, and the 21st completed the tweezer reversal pattern by showing the exact opposite on the next day. When this candle pattern occurs at the bottom of a trend it is most often a bullish reversal signal.
I will make note back in Sept I pointed out the falling 3 wedge pattern and said in the next few days expect the market to break to the downside. I was right then, and once again this candle pattern will likely provide at least some bullish move.
The sideways move we've seen in the past 3 months is completely normal and symptomatic of a market forming a bottom. Take heart if you're worried. It's very true that the other bearish indicators may prove to push the market lower, but I personally find the chart patterns to be quite accurate.
The trick about technical analysis is to balance all the different indicators. The bear guys were right - but now I think the chart is taking over and the bulls are about to run. Of course, it can all change tomorrow!
During these sideways markets my personal favorite strategies for trading are to sell options and trade as neutral as possible. Every day can be a new adventure. A lot of stocks are set up perfectly for complex option strategies. You should be able to find plenty of stocks to write Iron Condors on. And of course if you're down a bit and want to just make some income start writing some covered calls. You can recoup a good portion of your losses a lot quicker than you think!
Will RIMM follow Apple?
Hey, it's J-Dub here (that's my nick name for those of you who don't know). So we finally got everything up and running and now I can get back to blogging and throwing out some good analysis.
It's no secret I'm an apple fan. Love their computers, love their music players, love their phones - oh yea, love their stock. It's always fun to trade. However a lot of people seem to miss the fact that their evil phone counterpart Research in Motion (RIMM) is just as much fun to trade. In fact based on volume about half as many people trade RIMM as AAPL. But the funny thing we have noticed over the last year is how close the two run together.
This started appearing about a year ago, and while it's taken that long for the patterns to adjust and fully look like a mirror, over the last 6 months it's been easy to confuse the two charts. In fact one time in an online class back in October we were talking about AAPL but somehow the RIMM chart showed up. I got so confused and I remember saying "When did apple drop to $50/share?"
None the less - over the next little bit I'm going to continue this comparison as often a trade on one is actually setting up a trade on the other. If you need an easier trade then that then I think we need to talk!
Currently both stocks are forming what appears to be a pretty strong base/foundation. I'm mostly bullish on both. But I'll give better analysis in a post to come.
It's no secret I'm an apple fan. Love their computers, love their music players, love their phones - oh yea, love their stock. It's always fun to trade. However a lot of people seem to miss the fact that their evil phone counterpart Research in Motion (RIMM) is just as much fun to trade. In fact based on volume about half as many people trade RIMM as AAPL. But the funny thing we have noticed over the last year is how close the two run together.
This started appearing about a year ago, and while it's taken that long for the patterns to adjust and fully look like a mirror, over the last 6 months it's been easy to confuse the two charts. In fact one time in an online class back in October we were talking about AAPL but somehow the RIMM chart showed up. I got so confused and I remember saying "When did apple drop to $50/share?"
None the less - over the next little bit I'm going to continue this comparison as often a trade on one is actually setting up a trade on the other. If you need an easier trade then that then I think we need to talk!
Currently both stocks are forming what appears to be a pretty strong base/foundation. I'm mostly bullish on both. But I'll give better analysis in a post to come.
Friday, January 9, 2009
AAPL: Wedge vs. Divergence
AAPL is trading right into a falling wedge with the 50 EMA acting as strong resistance while simultaneously showing bullish divergence against MACD. Typically, each of these individual signals indicate different moves: the falling wedge is bearish and the bullish divergence is... well, bullish. However the failed break back in late November is certainly giving this a more bullish feel. Additionally, we are at a very strong, 2 year support level around that $84-$85 range.
This is a great time to set up a bracketed entrance as our anticipated downside target is $71 (with a pause at $80) and conversely the upside potential is roughly $110. This is also a great example of the moving averages forming the wedge for us as we see the price caught between the 20 EMA and the 50 EMA. Look for AAPL to trade sideways for a few more days with an entrance into a trade as the price breaks through either one of these averages. Remember to confirm the break based on volume and a tested pull back and I'd have obvious caution in the event of a downside move at the $85.27 support.
Below is a chart of the analysis. I've also posted a larger version here:
As always, Happy Trading!
This is a great time to set up a bracketed entrance as our anticipated downside target is $71 (with a pause at $80) and conversely the upside potential is roughly $110. This is also a great example of the moving averages forming the wedge for us as we see the price caught between the 20 EMA and the 50 EMA. Look for AAPL to trade sideways for a few more days with an entrance into a trade as the price breaks through either one of these averages. Remember to confirm the break based on volume and a tested pull back and I'd have obvious caution in the event of a downside move at the $85.27 support.
Below is a chart of the analysis. I've also posted a larger version here:
As always, Happy Trading!
Subscribe to:
Posts (Atom)
Posts
