Tuesday, May 31, 2011


With the futures pointing to a gap up tomorrow, here are some of the stocks that I will be keeping an eye on.
LAVA - Nice results and volume on Friday. Wait for a break of 7.15.

KKD - Lovely volume pattern. Going to wait for a pullback though.

CY - Nice volume on Friday. Wait for a break of 24.

MO - Wait for a close over 28.


Take care and good luck!

Monday, May 30, 2011

Trading from India

As the regular readers of the blog know, I haven't posted much during the last couple of weeks. In spite of this, the blog has seen regular traffic and increase in number of subscribers through the blog feed and followers on twitter during this time period. Thanks to all you readers for your support! 

The number of posts, though still pretty high compared to most blogs, have generally reduced in the last few months. I try to keep my personal life as well as my opinions on anything else but the markets away from this blog but I feel I owe you regular readers an explanation for this decrease in output. I started trading while still a grad student in States, and having got my PhD, decided the time was right to move back to India and did so last August. The time difference makes it hard to be as prolific with the blog as I once was but I shall continue trying my best to blog my thoughts as frequently as possible. This blog is something that I literally built from scratch, and though the income from it is pretty much insignificant, the feeling of pride that comes from having built something that now enjoys such wide readership from over 100 countries in the world makes the effort more than worth it. Also, the fact that I can help new or struggling traders out there and give something back to the community, no matter how small my contribution might be, is more than enough reward in itself.

As a side note, I trade the Indian markets now as well (I still trade the US markets) and it has proved to be quite an interesting experience. The Indian markets are in a stage where you have a lot of people promising 90% winning trades and unbelievable returns. We all know how that works out. Another thing that has struck me is the lack of any good technical analysis material on the Indian markets. There is a lot of good fundamental analysis out there but nothing much at all as far as technical analysis is concerned. I know this blog enjoys a large Indian readership. Feel free to email me at positiontrader @ ymail.com (no gaps) if you have any questions on Indian stocks, portfolio analysis or technical analysis in general. I might start a blog on the Indian stock market in the near future, time permitting.

BTW, my being in India also explains tweets regarding Crown Royal and Jack Daniels when its morning your time. As it turns out, it actually IS 5 o' clock somewhere!

Take care and good luck! 

Sunday, May 29, 2011

The week ahead

The bulls made a comeback in the latter half of the week, but the future don't appear too bright for the bulls here. Following is the daily S&P chart. Here are a few points to consider before you overcommit yourself to the long side:

1. The market seems to be channel bound since last April and got rejected right on top of the channel last Friday.

2. The volume has progressively decreased during the last three up days.

3. Resistance looming right ahead in the form of MA(20).

4. 1338-1340 have act as tough resistance levels in the past and the same can be expected this time too.

5. Most of the sector charts got rejected at major moving averages on Friday. The move up has been on relatively lower volume. Here are a few of these sector charts.

All the above doesn't mean that I will not be playing the market to the long side in the coming week. Just that I will be making sure not to overcommit myself to the long side. For that, I would wait for a break of 1345, for that would imply higher highs being finally formed on the S&P.

Take care and good luck!

P.S.: Did you know this blog is being written from India since last August?

Monday, May 23, 2011

Are the markets oversold?

And the answer to that question is not quite yet, but certainly very close to reaching oversold levels. Following are the charts of NYSE and NASDAQ McClellan Oscillators with the oversold levels marked on the charts.

Of course, oversold can easily become "more oversold" just as overbought can become "more overbought". What the above charts are telling us is that the odds favor a bounce soon. That does not mean one should go heavily long here as the momentum still lies firmly with the bears. But if you are already short, think about taking some profits here and if you are not, be wary of starting new short positions here.

Take care and good luck!

Monday, May 16, 2011

Out for a week

Due to some pressing matters, I won't get time to follow the markets this week and hence, won't blog this week. I take this as a forced but well deserved break from trading as well as blogging. Let me leave you readers with the following dollar weekly chart. Keep an eye on the ascending trendline marked below which I expect to act as heavy resistance for the dollar around the 78 area.

Take care and good luck!

Wednesday, May 11, 2011

Dollar analysis

With there being a high degree of inverse correlation between the markets and the dollar in the last few days, I thought it would be interesting to have a look at the dollar. Let's start with the daily chart first. The dollar has been in a sustained downtrend since January this year and it finally broke off it on last Friday as can be seen by the break of the descending trendline marked below. Two days of consolidation followed by the upmove today. Today was crucial as this was the first time the dollar has managed to close above MA(50) since January. Looks good for further upmove but further resistance at 75.65 and 76.40s.

The weekly chart makes for even more interesting reading. The chart below makes it easier to realize the extent of the weakness in dollar in recent times. The marked trendline was support for a number of years and should now act as resistance and I expect it to be, very tough resistance. That is THE level to watch out for on the dollar. If the dollar gets rejected by it, expect further upside in the equities. At the same time, don't underestimate the weekly MA(20) level which has always acted as strong support/resistance. 

To sum it up, as impressive as the recent up move in dollar might be, I am still not be willing to bet on it until it breaks the ascending trendline marked on the above chart. Watch out for this level for a clue to where the markets are headed in general.

Take care and good luck!

Silver ETF analysis

I thought it would be interesting to analyze the action in silver recently not only from the point of view of where it is headed but also from learning point of view. Let's start with the daily chart first. The gap down below MA(50) on Friday was telling as gap downs/ups below/above important levels usually are. The pullback to MA(50) was on relatively low volume with the volume decreasing progressively as it went higher. The rejection at MA(50) today was bad news for the bulls. Look at the volume of today's down move. The next level of support is the low from Monday, 33.60. The next support is at 30.04. Don't be eager to call a bottom on silver just yet!

Let's have a look at the weekly chart now. The price finds itself right at the weekly MA(20). As can be seen from the chart below, this is a very important level of support and this is right where the price found support earlier this year. Let' see if silver finds support here tomorrow. A break of this level and further downside is on the cards.

Take care and good luck!

Here is my take on the dollar.

Tuesday, May 10, 2011

Chart of the Day

Today's Chart of the Day is from the extensive watchlist posted this weekend. While most of those stocks have already moved up in the right direction, some are still setting up. Like PEP for example. Finally managed to close over 70 today. Its in a nice slow uptrend and looks good for more.

Another chart which looks good for tomorrow is SONC, also from the weekend's watchlist. Watch out for volume to come in tomorrow.

Take care and good luck!

This time it will be different......

That's what the bears think each time the market pulls back. Surely there are more fundamental reasons for the market to fall rather than rise. This time it will be different......except that it hasn't been different for over a year now. Each pullback has been followed by newer highs, in most cases V-shaped rallies. Make no mistake, there will come a time when it really will be different, when the market will undergo a long period of correction. It will happen. But if you go on shorting each pullback in anticipation of this correction you are just going to seriously damage your account. You have got to respect what the bulls have done for over the past year. Odd favor going long in case of a pullback. And if at that pullback, it does turn out to be different, then the worst that happens is that you get stopped out for a small loss. If it is really THE correction, you will get ample time to go to the short side. Just stop trying to catch the entire move and calling the "top" every time.

Take care and good luck!

Monday, May 9, 2011

Intraday alerts

These are some stocks from the watchlist posted during the weekend that got triggered today.

Also keep and eye on BEE and MO from the watchlist.

Sunday, May 8, 2011

Watchlist for next week - Part 3

I decided to relax my screening criteria of charts this weekend in order to go through a larger number of charts, and the result was 548 charts to go through. Following is part 3 of the best setups from my search. As always, it being earnings season, be sure to check when these companies are reporting before taking any position in them. The important levels are marked on the charts itself.

That's finally it! Here are the links to Parts 1 and 2 of the watchlist. Hope you readers had a great weekend!

Take care and good luck!

Watchlist for next week - Part 2

I decided to relax my screening criteria of charts this weekend in order to go through a larger number of charts, and the result was 548 charts to go through. Following is part 2 of the best setups from my search. As always, it being earnings season, be sure to check when these companies are reporting before taking any position in them. The important levels are marked on the charts itself.

Here is the link to part 1 of the watchlist. Still got some more charts to go through. Hope you readers are finding this extensive watchlist somewhat useful!

Take care and good luck!

Saturday, May 7, 2011

Watchlist for next week - Part 1

I decided to relax my screening criteria of charts this weekend in order to go through a larger number of charts, and the result was 548 charts to go through. Following is part 1 of the best setups from my search. As always, it being earnings season, be sure to check when these companies are reporting before taking any position in them. The important levels are marked on the charts itself.

Take care and good luck! Have got lots of more charts to go through!

Thursday, May 5, 2011

This is what happens when........

I have nothing to comment on the chart below. No technical analysis in this post. I just had to post this chart. This goes beyond technical analysis. This chart should serve as a reminder to what happens when....This is what happens when people who might have never even traded jump in a stock/commodity expecting to double their money shortly. This is what happens when you finally get on board of a sure thing. This is what happens when you start seeing ads on television regarding the commodity. This is what happens when you start getting mails in your inbox regarding the next big penny stock in the hot sector. This is what happens when your colleagues in office who have no idea that you trade and even run a trading blog, advise you to put all your money in gold/silver and sit tight for the next six months. This is what happens when your relatives come and complain how close they were to pulling the trigger couple of months ago but are sure to get in now, so as to not miss the next big run. This is what happens when a bubble gets formed.

Just a reminder......

Take care and good luck!

Wednesday, May 4, 2011


Here are a few stocks I will be watching tomorrow. As usual, it being earnings season, be sure to check when these stocks are reporting before taking any position in them.
REDF - Seems to be done with the relatively low volume correction. Like this for a day trade tomorrow. Wouldn't hold a large position of this overnight due to its volatile nature.

NUVA - Like it over 31.15.

G - At important levels. But nice volume today and also like the orderly move up with MA(20) acting as support. Wait for the break of 16.30.

CBD - Had pointed this one earlier today when it showed up in my intraday scans. Still like it with a stop below yesterday's lows.

Take care and good luck!

Intraday alert

Here is a stock that I like from my intraday scans - CBD. Nice volume today. Watch out for a close over 46.11 today.

Take care and good luck!

Tuesday, May 3, 2011

Chart of the Day

Still like the consolidation on this one. Still waiting for a break of 50. Volume showed signs of picking up today. Maybe tomorrow??

Take care and good luck!

Monday, May 2, 2011

Chart of the Day

Today's Chart of the Day is FMCN. Been in a steady uptrend this entire year. Broke out of the consolidation range today on good volume. MA(20) providing constant support. Support also at previous highs at 36.40.

Take care and good luck!

Sunday, May 1, 2011

Best of Trade to Learn

I did finally get round to updating the Best of Trade to Learn post. Its been quite a journey for the blog which will be one and a half year old next month. I hope the blog has been beneficial to at least some of you readers out there. Feel free to write to me at positiontrader @ ymail.com (no gaps) in case you have suggestions for the blog or any questions. Without further ado, I present to you readers The Best of Trade to Learn.

Updates till May 1 below

Dear readers, I realized this morning that the next post was going to be the 100th post of this blog. (May 1 update : now over 650 posts!) I must admit that I never expected that I would write 100 posts in less than two months. In fact, my only aim, and it did seem challenging at that time, was to document my daily trades and whatever I had learned  from them. As you regular readers know, the blog has turned out to be much more than that. And you readers are a big reason for that. I never expected the blog to have such a large readership so soon, and there certainly are days when I am too tired or not in the mood to post, but its the thought that there might be people counting on me for a daily review or stock picks that makes me post everyday. So, thanks for your support and I hope together, we will continue to grow to be the best traders we can be!


It certainly has been one wild ride since I started this blog. When I started it in early January, I was coming from over 170% gains in 2009. So, my confidence levels were indeed high up. This continued for the first two weeks but the market has a way of showing you your place as soon as you start getting complacent. That's what happened to me. One small mistake and I was in a downward spiral.

I was in a slow, painful recover phase after that where I was very quick to collect both my profits and losses. I admit, my confidence was shattered. But out of nowhere, all that changed one day. And surprisingly, what got me my confidence back  was not making a few good trades or having one great  trade, but not trading at all!

I feel it imperative to state, please don't make life all about money and don't let your market results affect the rest of your day. Sometimes, we as traders, looking at our screens hours a day and keeping track of the P/L bottomline all the time, can lose sight of this simple fact.

Here are some other posts that I particularly like and hopefully you will like them too.

The blog has certainly helped me improve as a trader so far, and I hope you readers are benefiting a little too. Trading is unique in the sense that it offers new challenges everyday. Each and every tick is different. Each day is a whole new challenge. Each day presents us with endless opportunities. That's why it is imperative that we keep on learning.....always. Trade to learn, and maybe you can even learn to trade.

March Updates

The first link here is the most viewed post of this blog. The second deals with the importance of position sizing in trading. If you don't master the art of position sizing, sooner or later you will end up blowing up your trading account. And lastly, we have a post based on my personal experiences on the problems faced with and how you can succeed with small trading accounts.

Trading with small accounts

May Updates

One of the most important things I have learned in trading. You can't be a successful short term trader without following this.

Trade what you see, not what you think

June Updates

July Updates

A post on how I called the bottom in the market when most traders were predicting gloom and doom. Though the post goes into calling this particular bottom, the general guidelines for picking any bottom remain pretty much the same.

Calling the bottom

August Updates

With the consensus being that Netflix was grossly overvalued, I wrote a post on why I refuse to short a stock like Netflix.

September Updates 
One of the common questions new, and even experienced traders, struggle with is where exactly to place their stop loss. This question becomes even more critical in these times of automated trading where we find that it is common for our stops to be hit, only for the stock to turn and run without us. Here is a post on the art of setting stop loss points.

November Updates 
This was a post on a slow, choppy trading day when I had nothing better to do. The post was written partly in jest and I was quite surprised by the response it got. I guess a lot of traders, new and experienced, could relate to this post. It ended up being one of the top five read posts of the blog.

December Updates 
A post on how to make the best use of StockTwits.

A post on the importance of using multiple time frames in trading. Using multiple time frames for my trades has been one of the biggest improvements I have made in my trading in 2010. This post shows the importance of using multiple time frames for charting even for short term traders.

I ended the year with a post on advice for new traders. I had received many mails from new traders asking for advice, so I decided to do a full post about it.

January 2011 Updates 
Being fed up of all the yearly predictions being thrown out out there, I decided to write down a few predictions of my own. The beauty of these predictions is that they are valid for every year!

My predictions for 2011

February 2011 Updates

In response to a question by a reader, I wrote this post on why I personally prefer technical analysis over fundamental analysis. I had consciously avoided writing about this topic because I am well aware of the passionate defense it generates from both sides, but after a year of writing the blog, I thought it was high time I put in my two cents about it.

My wife will never forgive me if I don't mention that I got married sometime this month (just kiddin! I DO remember the exact date!). All the best wishes here on the blog and twitter, made me realize that thanks to this blog, I have made friends and have well wishers throughout the world! That feels awesome!

 March 2011 Updaes

Sometime in January, I decided and actually did start to write the story of my initial adventures (failures would be a more apt description!) in trading. The whole aim of this series was that perhaps the story of my initial hardships and finally, success, might inspire some new or struggling traders out there. I have made pretty much every mistake in the book and the road was anything was easy. But still I was surprised, when what started as a small post, turned into a five part series which finally ended in March. BTW, thanks to all you readers out there for the awesome response to all these posts!

April Updates

Take care and good luck!