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Price Headley, CFA
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Price Headley was inducted into the Traders' Hall of Fame in 2007 and is the founder of, which provides investors with specific real-time stock and options strategies and investment education to profit from significant market trends. Price appears regularly on CNBC, Fox News, and... More
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BigTrends Blog
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Big Trends in Trading: Strategies to Master Major Market Moves
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  • Trading To Win

    One of the easiest mistakes any trader can make is not a 'trading' mistake at all. Rather, the mistake is complacency with his or her trading skills and knowledge. Unfortunately, trading is not like riding a bike - you can (and will) forget how. Obviously you'll always know how to enter orders, but the efficiency and accuracy of your trading will diminish without constant renewal of your trading mindset.

    The reason that most traders don't undergo psychological self-development is a lack of time, and that's understandable. However, a good book, DVD or Coaching Class is actually an investment in yourself, and ultimately an investment in your bottom line. Today as a primer, and a challenge, I'd like to review some self-development concepts that Ari Kiev explores in his book 'Trading To Win, The Psychology Of Managing The Markets'. This in no way is a substitute for his excellent book, but they are still useful ideas even in this abbreviated form. None of them are going to be new to you, but all of them will be valuable to you.

    1. Plan the entire trade before you enter the trade. Have an entry strategy, and an exit point (both a winning exit point and a non-winning exit point). This will inherently force you to look at your risk/reward ratio. Write these entries and exits down in a journal.

    2. Eliminate distractions.
    It's difficult enough to find trading time at all if it's not your regular job. If you're a part-time trader who trades at work between meetings and phone calls, think about this: there are full-time professional traders who are concentrating on nothing other than taking your money. It's not that they're better or smarter than you - they just have the time to focus. If you must trade, set aside blocks of time to study or trade without distraction. Or it may be more feasible to do your trading on an end-of day basis, meaning you
    place your orders and do your 'homework' the night before when you can
    focus on it.

    3. Choose a method or a small group of methods, and stick to them.
    Far too often we see a trader adopt a new indicator or signal only to see it backfire. Become a master of your favorite signals, rather than a slave to any and every signal. Understand that an indicator will fail sometimes. That's ok. The sizable winning trades should more than offset the small losing trades initiated by an errant signal. This trading method is designed to eliminate the emotional bias of trading.

    4. Choosing not to trade can also be a prudent choice. You'll frequently hear 'don't fight the tape'. The same idea also applies to a flat market - you can't make stocks do something they're just not going to do. Wait for good entries into a developing trend rather than force a bad entry into an unclear trend.

    5. Take responsibility for your trades - all of them.
    Examine why the losing trades failed, and why the winners were successful. The reality is that you chose to enter each and every trade. This can be painful, at least initially, since the ego is built to deflect blame yet accept praise. That's a trap. If you find yourself saying "that was a good trade entry but....." then stop yourself immediately. Either everything before 'but' or after 'but' is inaccurate. If you rationalize or justify poor trades, then you'll never learn from them. This may be the most important idea of the five - the ego can prevent real learning. If you can learn to accept some failure without being emotionally devastated, then you'll be a good trader.

    The only advice I would add to this list is simply to keep a daily trading journal. This can be a journal of trades, signals, ideas, and emotions about your trading. The more you put in the journal, the more you'll get out of it. It will also help you in applying and tracking these five concepts above.

    Trade Smarter!
    Price Headley, CFA, CMT - Founder & President
    Disclosure - none

    Jun 25 3:26 PM | Link | Comment!
  • Short-Term Market Concerns, Volatility Rising

    June 22, 2009

    June Expiration ended last Friday with the major indices down sharply for the week.  We are also down thus far on Monday, with the S&P 500 Index (SPX) right around the round 900 level currently.  Earnings Reporting includes some big names in a variety of sectors this week such as (WAG), (NYSE:ORCL), (KR), (NASDAQ:BBBY), (NYSE:DRI), (NYSE:MON), (NYSE:NKE), (NASDAQ:PAYX), (NYSE:RHT), (NYSE:ACN), (NYSE:CAG), (PALM), & (NYSE:KBH). The major economic event this week is the FOMC Rate Decision due Wednesday afternoon, June 24th.  Also due this week on the economic report calendar are Durable Goods Orders, New Home Sales, Crude Inventories, Initial Jobless Claims, Final 1st Quarter GDP, Personal Income and Consumption.

    As you can see on the following chart, the S&P 500 has moved into the bottom half of its Acceleration Bands (light blue lines) for several days now.  Our BigTrends Market Timing turned short-term Bearish on the S&P 500 last week on June 18th  -- our Market Timing is a nightly commentary on the markets based on trend and sentiment indicators, call 1-800-244-8736 for more information.  The Daily Percent R reading on the SPX has moved to the lowest levels since the March 2009 market bottom.  Should the 900 strike be violated, potential downside support for the SPX kicks in around the 880 level, which is the site of the recent trading range bottom and also just below the location of the Bottom Bollinger and Acceleration Bands. 

    SPX Daily Chart

    The growth-oriented Nasdaq 100 (NDX) has been an outperformer versus the SPX and Dow Jones Industrial Average (NYSEARCA:DIA) in 2009.  However, looking at the longer-term Weekly NDX chart below,  you can see the underlying downtrend in place since 2007.  In addition, we face potential overhead resistance, both from the Top Acceleration and Bollinger Bands, as well as the round 1,500 level.  

    NDX Weekly Chart

    The CBOE Volatility Index (VIX) is spiking up this morning to back above 31.  The VIX has largely been oscillating around the key 30 level recently, with 27 to 33 being the basic range.  However, volatility on the VIX itself looks to be picking up, as you can see from the Percent R spikes in the chart below.  In addition, the implied volatility on VIX options has increased recently, indicating that some traders are likely buying VIX options banking on increased movement.

    VIX Daily Chart

    Bottom Line: We remain in a bigger picture trading range, but we see a short-term bearish bias as we head into the heart of the summer months.  The market had a very strong 3 month move from the bottom in early/mid March to early/mid June, so some sort of consolidation/pullback is a logical possibility to follow.

    Trade Well,
    Price Headley

    disclosure - none

    Jun 22 12:24 PM | Link | Comment!
  • Weekly Market Outlook - Support Below Current Levels

    The major indices were up slightly last week, and are currrently down fairly heavily on Monday.  It may be notable that despite the recent rally, the Nasdaq 100 (NDX) was unable to take out the key 1,500 level on a closing basis last week, and the S&P 500 (SPX) has not yet taken out 950 on a Weekly close.  Some big stock names are up on the Earnings Calendar this week, including ADBE, BBY, FDX, CCL, DFS, SJM, RIMM & KMX.  Due this week on the economic report calendar are PPI, Housing Starts, CPI, Industrial Production and Leading Indicators.

    The Nasdaq 100 has been a 2009 outperformer versus the other major indices.  The fact that a growth-oriented index (heavily weighted in Technology and Biotechnology) has led the way could be considered a positive for anticipated future economic activity, as growth stocks are most likely to accelerate earnings quickly should the world economy recover.  The NDX is pulling back thus far this Monday, but as you can see on the folllowing chart, pullbacks since the March market bottom have been contained by the 40 day Exponential Moving Average (yellow trendline).  So should we continue to sell off, watch 1,400 on the NDX as a possible support level.  Also keep an eye on the mid-level 50 on Percent R, as it has also held previous pullbacks in the NDX.

    NDX Daily Chart

    Stepping back to look at a longer-term S&P 500 chart below, you can see that Weekly Percent R readings on the SPX have reached their highest levels since 2007, which is a sign of strength.  However, we do face potential upside resistance from the 950 and 1000 levels that many traders are watching.  The 40 week Exponential Moving Average (yellow trendline), which encompasses 200 days, is right around current levels.  Looking back, you can see that the SPX has been unable to sustain any sort of move above this trendline since late 2007.  There also is potential overhead resistance from the Upper Bollinger Band and Acceleration Band, but if we can move above these key areas and break above 1,000, we could have some serious upside potential.

    SPX Weekly Chart

    Bottom Line: Trading range remains intact for the time being, although if the market correction today continues, we will basically have a downside break of the recent tight range.  If one is looking for support below current levels, target 1,400 on the NDX and 900 on the SPX.  We continue to watch the key 30 level on the CBOE Volatility Index (VIX) ... remaining below the 30 level is important for the market strength to continue.

    Trade Well,
    Price Headley

    Disclosure - none

    Jun 15 12:21 PM | Link | Comment!
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