Here we are at Monday once more. Except this one has the Fourth with it!
To review the most recent charts, please scroll down. There will be none today, nothing exciting happened.
In fact we won’t comment on anything other than to say something about Apple. We have an open long trade in Apple that is still in place at writing.
Even though I am not going through all the symbols tonight (not much difference from the weekend round up) there is something exciting to discuss. We are refining our process just a little. Recently we added Resistance and Support considerations to our decision making. Today we are going a step further.
Normally our rule for entering a trade is the trend must be with us (yeah, yeah, like the force, if you must). So the price or 8 EMA (red) must close above the 21 EMA (blue) while the 21 is above the 55 (brown or green). This is because moving averages do have a bit of a lag to them. We have offset some of this by using exponential moving averages.
What the heck, let’s look at a chart.
We are looking at the chart of GLL. This is an ETF that we use if ever Gold gives us a shorting signal. Since shorting something is not always convenient, we use GLL. This is also a double up symbol: whatever the underlying (in this case gold) does, GLL does twice as much.
You will note, around position 1, that the candle has closed above the blue EMA while the green EMA is still above it. Normally this would give us pause. Actually, more than pause it would stop us in our tracks. With our new refinement, we will enter the trade once the ROC (rate of change) is above 0.
You can see that there is one candle already closed above the 21 EMA (blue), but the blue is below the green and the ROC has not crossed above the 0 line. The next day, the ROC obliges, all of our conditions are in place. The trade is placed and a trailing stop is placed at position 2. The high of the chart anchors the trailing stop and as the price falls back, we are stopped out at a loss at position 3.
A couple of things. I don’t wait more than three days for all the closings, etc that I am looking for to happen. It is a sign of the strength of the move if everything doesn’t come together in a reasonable amount of time.
The other thing is the ROC doesn’t have to stay above the 0 line. As long as the blue has been closed above and the ROC has closed above the 0 line.
Sadly, this trade was stopped out at a loss. The take away here is that we take every trade no matter what is on the TV, in the newspaper or yapped at us by our friend, Murray. If you do not take every trade and follow the process, you have taken control of the vehicle and that is not good for anyone.
Any questions or comments, please direct them to: firstname.lastname@example.org.