Trade in the Happy Zone

Many traders make the mistake of trading in too many different styles, only a few of which have been sustainably successful for that particular trader. It’s much better to apply the majority of your capital to strategies that have been sustainably successful for you. In this video we draw an analogy to hitting in baseball and how swinging at the right pitches most of the time is the best formula for success.

SMB Training Blog

Spain’s Ibex 35 Index Mired in Long-Term Congestion Zone

In the midst of political and social uncertainty surrounding the recent referendum in Catalonia to separate from the rest of Spain and Prime Minister Rajoy’s aim to stop it, Spain’s Ibex 35 Index has been faltering, as shown on both the longer-term Monthly chart and the short-term Daily chart below. Longer term, price ran into major resistance in the form of […]
Slope of Hope

USD/JPY Mired in a 31-Year Congestion Zone

The USD/JPY Forex pair is mired in a 31-year sideways congestion zone, as shown on the following Monthly chart. Major resistance and support are formed by a long-term 40% Fib retracement level at 124.34 and 23.6%  level at 105.69, respectively. The momentum and rate of change technical indicators have been in downtrend since mid-2013. Until we see a clear breakout above or […]
Slope of Hope

SPX:VIX Ratio: “Major Conflict Zone” Awaits

After today’s dramatic 36-point drop in the SPX, price on the SPX:VIX ratio plunged to the upper edge of a “Major Conflict Zone” and the “Bull/Bear Line-in-the-Sand” level, as shown on the Monthly ratio chart below. A drop and hold below this critical 150 major support level will seal the fate of increased volatility and lower prices for the SPX. The Momentum indicator has also fallen below the […]
Slope of Hope

Recreation for soldiers in a war zone

Here’s part of an interview with an Air National Guard Pave Hawk helicopter search-and-rescue pilot:

What was your favorite video game while deployed in Afghanistan?

That’s easy. We were addicted to Halo. It was amazing: We had a bunch of computers linked together, and we could play capture the flag with 16 or so people. You could hear people yelling out tactical info like “Help! Johnson is sniping us from the waterfall!” and such. So much fun.

I didn’t see that one coming!

(Separately, who has read the interviewee’s book, Shoot Like a Girl? Does the pilot of a Pave Hawk actually do any shooting? I would have thought that was the door gunner’s job.)

Philip Greenspun’s Weblog

Volatility Back Into “Major Conflict Zone”

After today’s (Friday’s) 53.5 point drop on the SPX, volatility has now fallen back into the “Major Conflict Zone,” as depicted on the following 20-Year Monthly ratio chart of SPX:VIX. As I mentioned here and here, a drop and hold below the 150 Bull/Bear line-in-the-sand level would see a retest of the June 27th lows. […]
Slope of Hope

Gold Miners Enter Fertile Corrective Buy Zone

During the past two weeks, or so, Market Vectors Gold Miners ETF (GDX) has declined about 16%. That said, however, the weakness represents a relatively shallow 27% correction of the entire Jan-Aug bull leg from 12.40 to 31.79. The weakness has pressed GDX into a significant support plateau between 27.80 down to 24.00, with my optimal, […]
Slope of Hope

GoPro GPRO Boldly Breaks Resistance into Bullish Zone

We’re seeing GoPro Inc (GPRO) flash on our stock scan this morning as it’s breaking above key price resistance and the 200 day SMA.

What’s going on and what’s the possible play from here?  Let’s see!

At Afraid to Trade we look for “strong stocks getting stronger” and absolutely avoid trying to find alluring reversal points in “weak stocks in a downtrend.”

At this point, GoPro (GPRO) has proven itself with multiple bullish factors that culminated in a big breakout this morning.

Note the positive divergences, build-up in volume, and reversal into an uptrend from May to August.

We’re focusing on today’s bullish breakout above the 200 day SMA (red) and two prior price highs at the $ 14.00 per share level.

For swing and longer-term traders, GoPro is a buy/bullish candidate as long as it remains above the key $ 14.00 level.

We’ll keep watching and potentially trading this candidate into the “Open Air” beyond $ 14.00.

A simple upside target – into the future – would be the $ 20.00 level (a Round Number and prior high from January).

Either way, continue watching this stock and what happens immediately here at the $ 14.00 critical price point.

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Corey Rosenbloom, CMT

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SP500 Bullishly Breaking through Resistance Zone

Might the S&P 500 break powerfully through resistance from the current “Neutral Zone?”

If so, what are the upside targets?

Let’s highlight our current “Neutral Range Zone” levels and plan for a possible breakout:

I’ve been charting for members the “Repeat Pattern” of October 2015 which you can see highlighted above.

Let’s start there.

In October, we had a similar strong sell-swing into a Double Bottom price pattern (1,880) with a Positive Momentum Divergence.

Price rallied strongly toward the underside of the (blue) 50 day EMA and paused into this level.

Keep that spot in mind – it’s the beginning of October.

In terms of planning the next swing, price could either:

Trade “Down Away From” the 50 day EMA just under 2,000 or…

Break powerfully above it and move “up away from” the resistance pivot toward the 200 day SMA (red).

Ultimately, price broke powerfully above it, triggering a short-squeeze bullish impulse straight to the 200 day SMA.

We’re using the same logic right now at the end of February 2016.

Once again either price stalls into resistance or – perhaps more likely – breaks powerfully through it.

Either way, our “Neutral Range Zone” extends from 1,900 to 1,940 as highlighted.

A continuation higher opens the market for aggressive bullish trades toward 2,000 and 2,020 (200d SMA).

Whatever other strategies you’re using, focus on the current levels, possible breakout, and similarities to October 2015.

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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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Strategy Planning at Key Inflection Zone for Amazon AMZN

As a trader, I’m drawn to key price or trendline inflection points that generate simple “IF/THEN” strategy planning events depending on how price interacts at a critical reference level.

At the moment, Amazon (AMZN) shares are trading down from a critical inflection point that will set the stage for short-term trading strategies for the stock.

Let’s take a quick look at the current inflection zone and note what the expectations will be for channel or pattern continuation or else a breakout above the known resistance/inflection level.

Keep in mind our goal here is not to predict the future, but to note price behavior (supply/demand) at a key inflection point.  Trades develop naturally from the higher timeframe structure as we watch the lower frame evolve in real-time.

For now, the simple key inflection point for Amazon is the $ 270 per share level as it reflects the upper bound (target) of a falling range (declining parallel trendline) pattern.

A breakthrough ABOVE this inflection point that carries above the prior “spike” or Bull Trap high into $ 275 would be expected to continue through “Open Air” back to the prior established high into $ 285 per share.

That’s the Bullish “IF/THEN” Scenario Plan.  The Bearish plan calls for a simple continuation of the short-term pattern which would suggest a bearish outcome all the way back to the $ 245 per share level (the lower boundary target).

We’ll be following along in real-time comparing evidence as to whether the bearish $ 245 target or $ 285 upside breakout target is favored.

For now, odds seem to argue in favor of the downside target given the negative divergences and the two doji reversal candles into the critical $ 270 target.

When in doubt, or to get additional information from a Higher Timeframe Inflection level, drop to intraday charts:

The Hourly/intraday chart shows the recent rally up to the $ 270 target in May which has been ‘undercut’ by negative volume and momentum divergences along the way (ever since the volume and momentum peak on May 3).

Again, the chart evidence points for simple odds – at least from an intersection of divergences into resistance – as favoring a bearish outcome.

However, as traders, we are always aware to alternate possibilities if only for risk-management strategies (placing stops above an expected resistance zone).  It would be far too easy if everything worked exactly as expected!

Savvy or aggressive traders can also set up a game plan to buy shares on a breakthrough above a resistance level that odds (charts) suggested would hold firm.

The strategy is to trade an unexpected breakout and the expected “Short-Squeeze” or popped stops impulse that would likely occur on a surprise breakout.

Thus, we’ll plan for a bullish breakout on a firm breakthrough above $ 270, allowing the one-day possibility of a vicious Bull Trap (a bull trap occurred on the April 25th high which preceded a ‘collapse’ in price the next session).

Otherwise, we’ll continue monitoring price should it continue trading lower as the divergences and resistance (Daily Chart Declining Trendline) pattern suggests.

If a full downside target is achieved, it will likely do so with a few chances for intraday traders to sell-short intraday bear flag or breakdown trades that occur in real-time as price moves toward the target.

This is an example of scenario planning on the higher timeframe which guides trading decisions on the lower frame.

Corey Rosenbloom, CMT
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