20. June 2012 00:57
Quick announcement - some of you may have noticed new improvements to the OVI Traders Club website, which has been keeping me busy. There are more to come and I'll be reviewing them with you in the next few days.
Now onto the markets ...
The market has enjoyed a recovery of sorts over the last couple of weeks, so the question is, should you be in or out?
Well, for me it's purely a matter of quality and having the odds massively in my favour.
For that to happen I want the OVI to be in the direction I'm trading for several days, AND I want to see a flag forming or an approach of resistance or support.
- So, for a rising market, I want a positive OVI for several days, plus a bull flag or approach of resistance. My trade only activates upon a break past resistance.
- And for a falling market, I want a negative OVI for several days, plus a bear flag or approach of support. My trade only activates upon a break past support.
Right now I'm not seeing massive quality, but that's not an excuse to not paying attention to what's going on. It only takes a few days for things to change and for patterns to set up nicely. All you need is a couple of great quality trades under your belt and you'll appreciate the beauty of "Quality" trades.
Let's look at a few charts anyway because it's always good to keep on top of the markets. That way you'll be ready to pounce when the setups present themselves.
There is a break of resistance of sorts in this chart (see the purple dotted line), but I'm not seeing "Quality" because the OVI isnt' there yet. I ONLY need to get into high quality opportunities, and this doesn't qualify yet. The S&P was up today (Tuesday) but that's ok, we do not need to chase opportunities.
The same goes for the QQQ. Again, there's a break of resistance but the OVI actually fell on Monday. No need to chase.
I mentioned a few weeks ago that AAPL looks like it's going to go sideways for a while, adn this is exactly what's happened. From Monday's chart you can see it's approaching a resistance and the OVI has been positive (albeit not spectacular) for about three weeks. Today AAPL hovered at the resistance line and is poised. As an opportunity I class it as a 6/10. Just look back at the chart to see far better ones.
Some of the banking stocks have been setting up at minor resistance levels.
BAC has broken through its resistance and actually had a decent OVI surge. Still not the greatest opportunity, but at least it was spottable before it happened.
Not as obvious as BAC, and its resistance level not so clearly defined. Just poked out today, but not with massive conviction.
A similar pattern with Morgan Stanley, but without any OVI backing.
Now for some oil stocks:
Not a bad chart pattern, which did break marginally today. But no backing from the OVI.
Chevron has set up almost as a bull flag today, though it's done so with a Doji bar and having just broken resistance and failed to sustain the breakout. On the positive side though, its OVI has suddenly burst into life. I want to see this being sustained, plus the bull flag to form neatly, and only then maybe ...
RIG didn't bother forming a bull flag - it just flew up straight through its resistance today (not on this chart). Its OVI has been positive for some time so this can be viewed as a decent opportunity albeit in the context of a pretty barren landscape of opportunities at this current time.
SLB broke through its minor resistance today, but did so by forming a Doji bar. Also note, no conviction with its OVI.
Exxon powered through its resistance today but wasn't a Grade A opportunity because its OVI wasn't playing along. Don't see this chart as a missed opportunity - it never really presented itself as a worthy pattern. Stocks will fluctuate up and down as a natural course of events. We're only interested in the really obvious ones ... and this ain't it!
Now for a few more ...
Reasonably decent and broke out today minorly. OVI positive for several days and the stock is forming a cup and handle of sorts. HD has been a great performer until its recent blip, but now it looks like it's back on track. This is a pretty obvious pattern in our book but the flag could have consolidated rather more tightly for my liking.
One of our best performers over the last year, RIMM telegraphed its weakness since March 2011 with bear flags and persistently negative OVI readings. It still looks rather sick, so wait for support to start being threatened. One to watch.
Forming a bull flag with a persistently positive OVI. This is pretty obvious - I've been bullish on VZ since early May. I don't think it's a fortune maker, but it's solid, pretty obvious, and very low risk.
Another pretty obvious one. Bear flag and a persistently negative OVI. See how "well" X has performed as it steps down with a negative OVI since the beginning of May.