www.channellines.net

Good morning everyone. I'll be spending a good portion of today working on www.channellines.net . I am going to keep updated current short/long/watchlists at this site. This way scrolling through past blog entries will not be the tedious process it currently is. No peeking! I'll be around here and monitoring the markets as the day unfolds.

4/29 Update

AEM broke support

BHI is starting to break down

BIIB finally gave a little

The BMC long term play I recommended is doing well so far.

Will CALM hold support again? I think it will.

Fade the inverse H&S play on CCJ, working nicely

CBG, another long entry?

Still waiting on juicy CELG!

I got Punked by CTB!

ERTS, it's coming...

GM, just can't pull it off, resistance is too strong...

The FXI, just wating to die...

UPDATE: Forgot to mention EP, Did anyone catch it when I mentioned it?

Use of Stops.

The implementation of stop losses are placed for good reason. When stops are placed at initial trade onset, they are placed with a plan in mind. You are, at THAT time, under a calm, controlled, and rational state of mind. Once you lift that stop, or place it for "just a little more room", you have succumbed to fear and hope. Fear you will take a loss, and hope it will turn around. This is not rational though within the environment for which we dwell. Let me further my point. Within the "art" or "science", whichever you prefer, when a point of support or resistance is violated, this point then become the flip side of its initial counterpart. When resistance breaks, it BECOMES SUPPORT. So, under this RATIONAL thought, you can identify that when the price comes back down to when you bought the puts, you are relieved and think that you may at least "break even". This is a retrace, the stock then explodes higher and you are hit twice as hard. To top that off, how much time was wasted tying up capitol in a trade you were HOPING would go your way? Not to detract from the site which bears the name, but a "slope of hope" (note non-capitalization) is a slope for suckers. If you are hoping, and the ORIGINAL basis for the trade does NO LONGER EXIST, please exit the trade. If you see a small move in the stock is affecting your cost basis too much, adjust the delta. If you think you need more room for your stops, adjust the delta of the option. If you have a small amount of capitol and that is all you have to keep you in the game, save more, or at least play a spread with an acceptable break even point. You are here to limit loss, not to become rich. First limit loss, preservation of capitol is key to survival. Control loss and gains will follow. You can control delta in a variety of ways, if you are not aware of what delta is, do not play options until you have a clear, concise handle on this principle. Charts will be soon to follow!

Another thing I want to mention. Now this is NOT speculatory, and I know a few other very good chartists which this happens to. Yesterday, as so common in the past (dated, noted, archived, and confirmed), I had 20 stocks on one watchlist. 19 of these I was bearish on, one I was bullish on. 19 where green (as UP in price), one was red. Guess which one that was. SBUX. Not by much, but red. These are what I call "counter" days. My percieved strong stock lose value, and weak ones gain value. Usually my watchlist, on these days, is 90% or greater correct, when reciprocated! OK, these moves are not large, but following, when the market moves as I expected, the correction is much larger. We shall see. Good trading to all! Oh, by the way, SBUX is the only green on my screen at the moment.

The last addition to this post. Now pay attention closely, for what I am about to say goes against EVERYTHING you may have previously been taught. For those who are plagued by stops, whether incorrect, impropperly placed, or whatever reason you may have. Can you play options without stops? Yes you can. I suggest you try this method by paper trading it EXTENSIVELY before coming to any conclusion whether it works for you. First off, focus on buying options that are a good purchase. Attempt to buy options that have high intrinsic value and low extrinsic value. Try to get the time without paying excessively for it. You want as much time for your trades to work out as possible, if you take the other side of the trade and are a net seller, you want as little time as possible for the other person to be correct. With this said, trade in pairs. Keep your portfolio delta neutral. If you go long a strong technology stock, go short a different one. Lift all stops and let the pair ride. When using this technique, it is vital you do not pay excessively for extrinsic value and you are attempting to capture the diveregence from the pair. The market breathes in unison, when the market is up, stronger stocks run stronger, when the markets are down, weaker stocks run weaker. Paper trade it, try it out, if it works for you, you may never need to adjust, set, or get ulcers over stops again.

New Charts

A few new securities, and some old, worth mentioning.

First off, thought I'd see bullishness on this chart. Everyone is gonna need a new pair shortly.

HBI, Hanesbrands (click for chart)

Feeling bearish on ERTS, Electronic Arts

EDS also leans me to the bearish side

ELX, the chart here don't tell you much, but I believe it is getting ready to tank. Really tank.

Also looking bearishly on EREN, Energy Conversion Device

I do believe ETR, Entergy Corp. has also just topped.

Suntech Power Holdings

The chart of STP (click for chart) is at a consolidation point. A bull-flag within a bull-flag possibly. A long entry here at 45.12 would be low risk. I did see an entry at 43.50 on Thursday/Friday of last week. The break of the red descending channel line would confirm the bullishness of this stock, a fall and daily close below the 42.50 area would trigger a well placed stop loss order.

EAT! NOW!

Here is a BIG potential!
Short EAT, hey everyone's got to!

10 Year EAT Chart

1 Year EAT Chart

Short on EP..

Chart review and more intra-day posts

Good morning everyone. Looking at the site statistics, it appears about 1/100th of this sites viewers actually enter the comments section. Recently I have been posting many additional charts in the comments section. I am going to start listing more posts and less comments within that section for a greater viewing audience. Many opportunities I am sure are overlooked by only frequenting the posts themselves. I do believe SBUX was one of these items, along with many others. So please refresh your window before commenting, there very well may be a new post up. With this being said, I have viewed a few charts of the indices so far this AM. I do have an over-all bearish outlook for todays trading action. To view the chart of the listed ETF/Security, just click on the hyperlinked name.

QQQQ, appears to be at an intersection of a downward sloping channel and an internal rising channel, a low risk short area.

I am sure these are re-inforced by Fibonacci retracements, EMA's, SMA's, and so forth, I just do not feel the need to cross reference all these items. On occasion, I will throw the Wilder RSI, slow stochastics, and MACD on the chart.

IWM, is a good educational chart where it currently resides. The green channel is the minimal upward movement I would expect, the red channel the max. This is relevant to the open, high, and close of the daily candle. Hence, in this scenerio, an open at the red line, reversal at the blue, and close below the green would be the most bearish confirmation signal. An intraday spike above the blue line is totally feesible, the close at that point is more vital, it should reside below the red channel. These minimal and maximal areas set-up trading entry "zones". Zone entry is all dependent on your personal patience level, if you do not wait, you may get stopped out before the turn, waiting too long may make you miss the entry all together. It all comes down to your risk tolerance. How many ulcers are too many??? Patience and experience allows less emotion when trading, this aspect, unfortunately, takes its own learning curve.

Here is DIA's minimum and maximum channel advancement areas. DIA actually has 3 potential areas. Recall that trend/channellines can be made from high to open/high/close, or close to open/high/close. There are so many transients in drawing trendlines that I discovered the use of a confirming parallel the best bet. Hence, trading using channels. All trendlines have parallel channel lines, but as a whole, which set of channellines fit more accurately?

SPY also has 3 channel pairs which could be adhered to. If the green channel is upheld, the point at the highlighted area was an "over-extension". These areas are of vital significance. They depict precise points which will become of importance. In this instance, note the black channel, all drawn using this one point of reference and the green channel intersction of current price activity.

Correlation of ALL this information on all 4 ETF charts is key, they give you the bigger picture. Instead of hitting yourself on the forhead AFTER the fact, I am trying to help you pat yourself on the back WHILE it happens.

Good trading, and watch for further posts on some selected securities.

UPDATE: It appears as if Disqus is having some issues. Hopefully they will get them straightened out quickly.

Reader Input and Comments

I am putting together some information and opportunities which should benefit all involved. Please email me at channellines@gmail.com to receive a rough draft of this idea. Any, and all, comments and ideas are greatly appreciated.

Quick Post

Just a quick post to get us rolling, I have a lot on my plate this AM. Here are the "coincidences" I look for on a daily basis: Four stocks (ETFS) hitting resistance simultaneously, pretty indictive of a market turn. Top to bottom, DIA, IWM, QQQQ, SPY. I'll get some more charts up later.

Sniping a target from 20 years out.

Is technical analysis accurate enough to pinpoint reversals from 20 years out? My answer is yes. Do I know why? Hell no. It is just one of those unfathomable events that may never have a concrete answer. The answer to that question is the search for the holy grail. But..... why ask why? If it works, use it. I am one of those people who need an explanation to EVERYTHING! I usually figure it all out, but this one is definately perplexing. Is is right ALL the time? Yes, just our interpretation may be wrong at the time. Here is AAPL, 20 years out. Lets focus on the green parallel (note the slope of all parallels are at 20.9 degrees (and yes, ALL stocks have their favorite slope to operate off of!)).

AAPL (20 yr daily)

Now, looking in closer (1 yr daily) we get this.

AAPL (1 yr daily)

I did draw a parallel to the original green channel line. Shooting out a 20 year trendline allows the charting software (ANY charting software, not just the one in use) to distort the angle, or move in a non linear mannor. So, in summary, my perception is AAPL is in for a big move. This big move I believe to be to the downside.

Apples to Amazons

AMZN looks poised for a psyche move. The break of the red channel will have the world declaring yet another savior. Watch the 92.00 area as outlined in the chart.

AMZN

IF Apple breaks higher, watch the 189.00 area. Of course, with all the catchy MAC commercials, we can not rule this out!

AAPL

Charts at random...

RIMM looks ready for a quick pullback.

DTE Looks as if it may be doing the death march.

DRI still looks real ugly

DVA Looks like a pretty optimistic short

I know I have mentioned DF is not not so distant past. I still remain very bearish on this one. Armageddon type bearish.

Anyone catch the DAL drop when I mentioned that one?

DDR is another I stand pretty bearish on

DVN looks ripe for a big short pay-off

Anyone to short DV? I have some experience with some of these graduates, pretty safe bet in my opinion...

I never looked at DRH before, but the gap today combined with the channel slope looks pretty significant to me. This one may be in trouble.

As far as TXN is concerned, I would not be too short for too long.

Need more charts? Let me know, I'm here all day!

Google chart

Good morning everyone, I'll be adding to this post shortly. I just wanted to get something new up for comment. Take a look at the GOOG chart below, note the harmonic. I'm going to start listing charts this way for those who want to save them to .pdf or print them. Let me know if you have a different preference.

GOOG

The bigger picture

I hope everyone enjoyed theri weekend. I wanted to take this morning as an opportunity to step back and take a look at the larger picture. As most of you are aware, I do not put an abnormal amount of emphasis on horizontal support/resistance or Fibonacci retracements. Do I believe they are important? Sure I do, I just believe diagonal channels and trendlines hold more weight. We have approached the first possible reversal point in the big picture of things. There are always alternate area of support/resistance, which GOOG has shown us by inflating the market last week. Looking back through my watchlist (one of them anyway), not only do I see areas of resistance hit, but I see alternate areas of ones that broke through that first level along with resistance being hit on stocks I had a bullish outlook on. There are a select few I still hold a bullish bias on, but by far and wide they are the minority. Here are the indices, which I religiously follow, in the daily candle format. There are slightly higher levels of alternate resistance, but as a collective whole, the market looks poised for a turn to the downside.

DIA

IWM

QQQQ

SPY

Insane!

So, there comes a point, no matter how rational you think or irrational the markets are you just gotta say "What the ____???". I have stated in the not so distant past, that I did not believe we were YET in a full blown bear market, and the direction is not obviously DOWN. Sorry, but major support was yet untouched. Did the markets give technical eveidence that the bear was here? Most certainly, for those who are looking for it and anticipating it. Charts are funny in that aspect, like a magic mirror, sometimes you see what you want to see. I do think we will be in a devastating bear market before too long, just not yet. Just getting a feel around the general area in which I live, people don't have any clue about the general economic weakness. How are they affected? Gas went up .20 yesterday. They just now seen something out of the ordinary. Are they eating crackers and peanut butter to save money for their kids clothing? Not hardly, at least I can not tell by the line at Starbucks. We, as technicians, analysts, advisors, and traders, are the most informed and up to date people out there regarding the economy and health of the financial markets. Scary thought.... When many of us are asked the question "Are we in a bear market?" and we answer with hesitation. This brings us to present day. Can Google hold off the inevitable and devastating bear? No, but the perception of GOOG just may. Do you recall the larger overhead technical objective that I said we would have to meet before falling into the abyss? Could we cover that ground in one swoop? You betcha. Options expiration with one helluva gap, regardless of anything else, today should prove exciting. Expect the unexpected, and don't put your butt on the line for anything!



A technical area of interest on the IWM, for those who follow it. Take a look at the chart below. Throw that channel up on your chart and see what type of significance it plays within the next day or two. It just may prove to be of some value to you.

Chart Update, Blog still up.

I did state in yesterday's email that the blog is POSSIBLY not going to be up. But, hey, I love charting and commenting here. So I will do what I can. Over the last week or so (since the newsletter format has changed) we have added many securities to a watchlist, I also stated about fading yesterdays gap, which I did (IWM @ 70.72). We'll see how that works out. Many of the charts on the watchlist rose yesterday to exact resistance. Others had significant breakouts which nullified the charting trade criteria. Here is the list of "all is well".

AG
AEM
AAPL
CAR
BMC
CALM
CCJ
CBG
CELG
CNP
CEPH
CERN
CIEN
CNX
CBE
CTB
CMI
CY
DRI
DECK
DE
DAL
DSX
DDS
DISCA
DISH
DUK
EGLE
EFII
GM
FXI

Here is a list of charts that have been slightly modified
CPB
CBST
DF

And at last here is the list of "Oh crap, that did NOT work as expected!".
BIDU
BHI
BYI
COG (Which I DID mention in the comments to bail on!)
ELN
VMI
PNC

After reviewing these charts, many of them are offering second chance entry. Today has very good probabilities of being a down day.

Bounce off these levels

Good morning, today I'm looking at the indices to take a slight upward bounce. The levels on the Q's and DIA are outlined below.

Previously mentioned charts of interest.

AG
Looking at AG's hourly chart shows the breakout of the triangle is not mute

ABX
ABX appears to have tested support

BMC
BMC, pushing the stop limit. A close below the blue trendline (just prior to close) would have me exiting the position. It may just be an opportune time to enter on the long side.

CNP
CNP still appears to be feeling out that top.

DECK
appears to be getting it's game together, currently on its highs for the day.

DE
looks to be allowing entry.

There is currently 1 or 2 positions out of 30 I have recently mentioned that are not working as planned and been identified. Not too shabby from my perspective...

CAR, COG, CALM, CCJ, CPB, CERN, CBG, CELG, CNP, and CEPH opportunities.

Good morning everyone. I hope everyone has a prosperous week. I have a meeting or two this AM and will be around toward the middle of the day. Please feel free to join in the comments section for discussion. I will see you later!

AAPL Swing trade

Congratulations to ElChupacabra on an AAPL swing trade, executed like a professional, in real time, right here! Everyone give him some Disqus points up!

Giving BLUD?

Does BLUD have anything to offer? BLUD's put/call premium pricing is definately askew. Calls are much more costly as far as ITM up front month options. This is usually for a reason, because they're worth it. But, on the other hand, the pricing can be temporarily inflated to dump the calls. I'm looking at the 30 puts, may have potential.

Updates

DE

AG

DECK

DISCA

DISH

And two not so appropriate behaving ones, although I did get out of FXI
profitably, PNC, not so much. There is a secondary

support area on FXI which was charted, but not the one I played off of. So,
the original technical basis for the trade no longer existed,

hence my exit.

PNC

FXI

Watching for short entries.

Just looking through the indices and getting a general feel and scope of the market today leaves me with the impression of some slightly upward movement in the morning. This then leads me to believe we will have a reversal to the downside, possibly a sizeable reversal. So, I am now weeding out trade opportunities and looking for short entries that can be established at that point.

Another bear call spread I will be watching is listed below, on GM. This was a chart posted yesterday. This mornings gap up should allow this spread to get executed, possibly at a much better price even. Remember, this is a credit spread, you want to execute it at as high of a price as possible. Note your breakeven point should also be above the current price allowing cushion for the play. The market can trade down, or sideways, you would just not want GM to trade up significantly.



These spreads are listed in the quantity of 1 contract, you can adjust this to what ever position size you are comfortable with. Personally I like to deal in lot sizes of 10. This maximizes usage of commissions (one set price for contracts 1-10). Selling debit and credit spreads typically need your trading level to be bumped up one notch by your broker. You can call and request this, also while you are there you may be able to negotiate lower transaction costs. Most brokers will offer reduced commissions if you trade X amount of options per quarter.

Yesterdays newsletter can be accessed here, you should have todays, if not, send an email to channellines@gmail.com requesting to be added to the subscription list.

Bear Call Credit Spread

A bear call credit spread to look at. Try shaving your entry to 2.25 (limit credit order). VMI was listed in the newsletter. This looks like a good short term income trade with close expiration and an excellent percentage chance your trade ends in profit. Take a look at the stats with a shaved 2.25 credit entry. If you miss the entry, what are you out? Nothing. A gap up this morning could get the entry bought.



Credit spreads are great for commissions if the trade moves in your favor. You have entry commissions only, at expiration they all expire wothless and you keep the initial credit.

Charts

BRCM Short, stop = close > 22.00


CSCO, A potential long


GLW, a potential bullish breakout?


How bout that CROX call a few days ago?


Shorting EBAY

And some more

If I remember correctly, I also mentioned AMGN. You may not be too late!


Here's one I got my eye on, BUD. You may want to keep a little looser stop on this one, maybe 50.00ish.



One that got away, watch for a pullback, BJS.


Congratulations to Blackstone! It has established enough history for it's first technical entry! Short the channel!



And one more till later.... BSX, playing head games?

Swing trade ideas

Here are a few ideas to take a look at.

ACN puts with a stop of 38.00


Calls on AES if breakout occurs (see notes on chart)


Puts on AA if it pulls back up to 38.50ish


I think I mentioned this one the other day, Puts on ALTR, stop at 19.75


Have a little patience on this one, with puts ready... AXP

Good Evening!

My apologies, but I did find my cycle count was off slightly. I left out three data references from the chart at the end of the day, the incorrect time skew made it look very abnormal, hence I ommited, my mistake! Count the marks on the chart and correlate with the graph. I will attempt to get this taken care of tonight. Oscillators are cyclic, I ran 90degrees out of phase when the 2pm area hit, hence the time frames are not quite linear. If this sounds greek, that's ok. I'm on top of it and will have it taken care of.

Good Morning

You can receive todays newsletter here: 04-07-08 Newsletter.
To be added to the mailing list, click here and press send.

New Data

I've been hard working all weekend coming up with algorythms and such to plug into my market data, also a lot of common sense explaining the "not so common" market action. My charts have varied in many different ways. First off, I have identified 15 potential market turning areas in any given day, these are my major data entry areas on the charts listed in the newsletter. To allow for early morning and late afternoon trading volatility, a skew had to be placed within these time frames, hence the turning points start narrow, widen during mid-day, and then narrow once again. The charts were divided into a few hundred data-points inserted for gaping time spaces. The number, ironically, came up divisible exactly into 6.5 hours (a typical trading day). Many calculations came up a little more than strangly coincidentally accurate. I went through and calculated Thursdays information regarding Fridays market action. I could not find any truly representative indice that matched the chart enough to prove "more than coincidental". It happened upon me, after staring at my graph named "major market curve" that there IS a major market indice ($XMI). This graph did match up rather nicely. Bear in mind, the actual data points are based on personal calculation of an oscillator looking bullish or bearish, so there is some room for improvment. Also, some weighted delta's may need to be added to different time frames. You may note, the primary peek was not caught, but the close proximatey secondary upward peek was. The remainder of tonight will be spent plotting the markets for tomorrow, and of course, my normal charting analysis. Last week was one of my "not so stellar weeks", I am hoping it is just because I have been overloaded lately. Here are the charts noted above.



Note that the ETF swing indicator is designed to identify the laregest % swing and weakest/strongest indices. The data from Thursday called each one correct. This kind of accuracy deserves more of my attention, and much more accuracy, I believe, is obtainable. And yes..... the graphs are fancier, but that took up about 1/20th of the time I spent on them this weekend!

Channel Lines News Letter is now FREE!

Click to view the Channel Lines Newsletter for 04/04/08
Please read the "Why is the Newsletter FREE section."
If you want put on the automated distribution list please email your email address to channellines@gmail.com
Thank You.

Trial Issues

I will post more charts and ideas when the opportunity arises, promise. Here is a chart of AMR. I do not recommend going short, because you would be going DIRECTLY against the oscillators in this same time frame (dailies). The chart is more to show how bear flags can be formed through the intersection of channels.

If you are interested in a trial subscription of the newsletter, you can visit www.channellines.net. Note this is .net, not .com. See you tomorrow.



I'll be on pretty much all night and available by email or the blog.

Below is an illustration on how the ETF swing indicator works and how it can be of assistance to you during your trades. The commentary explains what the indicator predicted for yesterdays market, and how it actually played out. Looks pretty damn good to me!



Also note the largest percentage decline (middle of the day) was 100% correct on the Q's also, the swing indicator had the Q's as the largest potential downswing on a percentage basis. The Q's to be the most rapid decliner at any time is rare, let alone the odds of an indicator correctly predicting it. Keep in mind, it is just a tool to be used in conjunction with other methodologies and techniques.

An open for RIMM above 120.40 would not bode well for the bears, this level is of extreme importance for RIMM. If RIMM's treacherous ascending wedge breaks to the upside, there could be bulls a rampant for a bit. Ascending wedges are one of the most failed patterns and extremely difficult to play accurately. Open at 120.40 or slightly below, and all down from there.

Early release, FREE once again!

Call it atonement for yesterday, man did that not bode well. Fortunately, I did not enter any positions yesterday. Days that gap and run in the direction of the gap are often not gainful days for my short term plays. Following my bullish medium time periods, I know some of my readers and subscribers fared well yesterday. Here is yet one more free Channel Lines Newsletter, the descriptions of the tools used are a little more in depth. I don't know if I did something right, or someone else did something wrong, but I have had a large influx of followers today! Thank you all, and may your stay be prosperous and profitable. I'll be out until early afternoon tomorrow. Have a great trading day, bag one for me!

Click here to view today's Channel Lines Newsletter!

Changes on the newsletter

Upon looking at the size of the potential gap, new targets have been identified. Please refresh your newsletter for updates listed.

Free Online Newsletter Today.

I am working on a new format to the newsletter. You can take a look at what I have compiled so far here: Channel Lines Newsletter 04-01-08 , any feedback is appreciated, just email channellines@gmail.com.