technical analysis | SMB Capital

The Bear Trap Followup: NFLX 110

Yesterday's SMB U Trading Lesson was on how not to get ripped to shreads in a Bear Trap. Today, Gman tweeted in Pre-market that NFLX was setting up as a Bear Trap and that he would look to trade it long against 110 to take advantage of those who might be trapped trying to short. Let's take a look at the chart to see what he was thinking. The idea is that many traders are looking at this chart and they are counting on the fact that those who got long on the break bove 110 several weeks ago have stops below 110. They will short the break of 110 hoping to add more fuel to the fire and catching a move down to the next support area. Here is how the trade played out from an intraday view today. Read more [...]

Tags: day trading, stock trading, technical analysis Posted in General Comments, Steven Spencer (Steve's) Blogs | No Comments »

Trading Lesson: The Bear Trap–Ouch!

Apr 2nd, 2012 | By sspencer | Category: Steven Spencer (Steve's) Blogs, Trading Lesson

A large part of successful trading is understanding how others are positioned in a stock and using that information to your advantage. One of the most common triggers for opening a short position in day trading is a drop of multi-day support. The idea being that many longs will have stop orders below this level, which will lead to a large decline in the stock price as selling ensues. But what happens when a large number of traders get short on the drop of a support level but there are no real sellers to push the stock lower? What if longs use this as an opportunity to buy more stock? There is usually a powerful reversal and if you aren't prepared you may end up being the deer in the headlights Read more [...]

Tags: day trading, technical analysis, trader training, Trading Lesson Posted in Steven Spencer (Steve's) Blogs, Trading Lesson | 1 Comment »

I Love Being Wrong–SODA

Mar 12th, 2012 | By sspencer | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Theory

One of three In Play names discussed in today's AM Meeting was SODA. It was gapping up to 36 which is a longer term resistance level. My initial thought was the news didn't seem like a big deal and it would be a nice short on the Open against this level. As the market opened it traded a few cents above 36 and then began to quickly drop out. But by 9:45 it was clearly holding above this key level. When a stock gaps up significantly there is often some quick profit taking right after the opening bell. If by 9:45 the stock is still trading near its high and above a longer term resistance level you should be thinking about how to get long. Shorting is the low percentage play. In the case Read more [...]

Tags: day trading, technical analysis, trader training Posted in General Comments, Steven Spencer (Steve's) Blogs, Trading Theory | 6 comments

Was It Worth Trading?

Mar 7th, 2012 | By sspencer | Category: Steven Spencer (Steve's) Blogs, Technical Plays

After the market closed yesterday P released their earnings. It was immediately sold aggressively down to 12.50. A controlled bear flag developed with the next major support about 2.5 points lower. I noticed on the StockTwits stream @ldrogen say the conference call was not going well at all. From the back of my mind emerged my negative bias having watched its bearish price action in the days following its IPO last June. My "trading brain" was quickly calculating how many traders might now be trapped long from much higher prices after its recent runup. By reviewing the long term chart you can see that almost every trader who bought $P in the past two months was in from a price above 12. How Read more [...]

Tags: day trading, technical analysis, trader training Posted in Steven Spencer (Steve's) Blogs, Technical Plays | No Comments »

Technicals Trump The Tape in Financials

Jan 18th, 2012 | By sspencer | Category: General Comments

We consider three things when making an intra-day trade: The Tape, The Technicals, and the News. How each of these factors is weighed depends on the particular setup, the type of stock and current market conditions. JPM was the first large financial to report numbers on Friday. The numbers were not particularly good and it was showing weak price action in the pre-market. So we had two checks on the short side for JPM from news and price action. What about the Tape? The big financials all trade tens of millions of shares each day. You cannot read the tape in these names. Occasionally you may identify a level that will not drop or lift but when HFTs are banging around 1mln+ shares at a time Read more [...]

Tags: day trading, technical analysis Posted in General Comments | No Comments »

Questioning the 50-day & 200-day MA’s

Oct 26th, 2011 | By jeff.white | Category: Trader Development

My recent post on Indicatoritis discussed how some traders rely on indicators incorrectly. I believe that still holds true, but I was questioned about some common moving averages on the heels of that post. So in this video, I want to discuss moving averages, and more specifically, two moving averages which are commonly accepted by traders as important: the 50-day and the 200-day moving averages. We'll look at some big-name stocks and let the charts speak for themselves on whether it's appropriate or not to leave these MA's on the chart all the time. Be sure to view in HD (720P) and full-screen mode for best quality in the video. Jeff White Producer of The Bandit Broadcast Follow Read more [...]

Tags: technical analysis Posted in Trader Development | 1 Comment »

Bears Don’t Exist, Think Like a Bull

Sep 21st, 2011 | By smbcapital | Category: General Comments

This is a guest post from Fred Barnes aka @DCDaytrader: I recently had a conversation with a few somewhat novice traders. For us traders who don’t have the 2007-2008 market experience on our resumes, we’re looking at the recent market activity in awe. Watching the quote screen (of the $ES_F) in August (2011) required the skills of a speed reader. The volatility was nothing short of amazing, but one learns quickly that fire burns. The commentary being discussed by these somewhat novice traders is trying to determine which side of the market to be on at any given moment throughout the trading day. Obviously that is understandable due to some of the wide price swings we’ve had the past Read more [...]

Tags: bear market, bull market, day trading, l, market psychology, market structure, prop trading, smbU, stock trading, technical analysis, trader education, trading psychology Posted in General Comments | 5 comments