Howdy all.  Im writing in as a guest writer just to post a couple ideas that I see for some bullish trades.  Before I get into my post let me shamelessly promote my own blog  http://bulldodger.blogspot.com .  The two trades I will highlight are Peabody Energy Corp., BTU, and National Information Consortium, EGOV.  Both of these are examples of a pattern called an ascending triangle.  Just what are ascending triangles and how are they evaluated?

Ascending triangles typically occur in up trending stocks.  The price rises to a level of resistance (point A the chart).  At this point, sellers begin to take control.  These sellers may consist of bulls taking profits off the table as well as bears selling shares short.  Both combine to produce an excess of supply, causing the stock to turn down. The stock falls until buyers begin to step in, either bulls taking on a position or bears covering their shorts.  Either way, the new low is higher than the previous low (point B).  The change in excess supply to excess demand causes the stock to rotate back up.  As the stock nears the level of the previous high (point C), sell orders again cause the stock to turn.  The key is that the previous high is met but not exceeded.  This indicates an large sell order may have been placed at this level, as some strong force is obviously acting to repress price movement above this point.  This sell order may be a limit order placed sometime in the past.  And each time the level gets hit, some, but not all, of the sell order is gets exercised.  As the stock falls towards point D, rising momentum in the bulls causes a new lower low to occur and turns the stock’s movement from down to up.  This time, however, the sell order that was present at the previous high (points A and C) may be deminished to the point where it no longer has the size to deminish the upward momentum.  As a result, prices often explode through this level (point E).  The price target in such a formation is calculated by subtracting the value at point B from the value at point A, and then adding that difference to the price level that reacted as resistance for points A and C, or the breakout point at E.  Also, the amount of time that it will take for this target to be reached is roughly equivalent to the horizontal length of the ascending triangle.  Like all triangle and wedge formations, I think of Ascending triangles as being a build up of tension in the market that is reflected by the rising lows.  The conclusion of which can be a dramatic change in price.  
 

As an example of a successfully broken Ascending triangle, here is the stock EGOV.  This stock had been forming an ascending triangle over the past month, and today broke out, rising 10% from yesterday’s close, and about 8% from the resistance line.  Though I missed the train on this one, I may buy back in if it pulls back to the prior resistance level, which would now be acting as support.

An example of an Ascending triangle still in the process of forming is BTU.  The resistance level is somewhere in the $28 to $28.50 area.  The rising lower trendline illustrates the rising lower lows.  At some point this formation will break.  While it is not guaranteed that the bulls will win out, they are often favored in such a formation.  The conservative trader will take a position upon a breakout above resistance (say at 28.75).  With a price target of about $36, this still leaves plenty of room for profit.  More aggressive traders (like myself) will take the trade in anticipation of the breakout.  The trade off is that the aggressive trader accepts a lower probability of success for an increase in profit potential.  As long as I place my stops well, it’s a risk I am willing to take.

Be sure to check me out at http://bulldodger.blogspot.com .
Happy Trading- Dylan

Alright, so it’s the end of January already…not exactly the bullish start some of you were hoping for but patterns are developing and in my eyes, that’s good! On the daily time-frame we are again below the 50-day moving average, and clearly the big winner this past month was gold. I’ve been holding ABX for the past little while but I should disclose that I’ve taken a profit and am no longer holding any more shares. However, I am still keeping a watchful eye on gold as I still see it as a long opportunity.

On to the S&P 500…if you haven’t read my last two posts, you should. None of my trend-lines have changed…I’ve omitted a few lines in my next chart to make things clearer, but my previous lines are just as important…so please refer back to them.

Can anyone tell me what pattern is developing? Refer to the descending red and ascending blue line…if you’re thinking a symmetrical triangle then you’re spot on! Symmetrical triangles can be characterized as areas of indecision. A break below the lower trend-line signals a move lower, while a break above the upper trend-line signals a move upward:

Now with that said, we are sitting right above 825…as I said in my last post, 825 is acting as support so any close above 825 is still bullish. After this week’s past activity, I would be cautiously bullish. However, a break…or more importantly a CLOSE below 825 is a bearish signal. It is very important that we close below 825 before going bearish, don’t be greedy and short before confirmation, if you do you could easily get stuck on the wrong side of the fence.

As mentioned above, I would only be cautiously bullish this coming week. This symmetrical triangle formation is favoring the bears. Further, we are clearly still in a bear market…markets like these have unlimited downside, anything can happen in regards to downside projection.

Remember this chart? I posted this Dow chart in my last article. The S&P is clearly much more bullish than the Dow…Friday’s close confirms this. We closed below the ascending blue line and this my friends is dangerous! Again, if we close below 825…preferably 820 on the S&P I will go bearish. Shorting the vulnerable Russel 2000 may be one of my moves. ETFs like TWM or TZA are possibilities.

Happy trading!…and please tell your friends and family about H.A.S., help us spread the word!!

Richard
richard[at]hedgeagainstspeculation.com

Firstly, let me apologize for the down time Hedge Against Speculation has been getting. This is the cause of switching domains, I obviously did not do it correctly thus causing H.A.S. to be down for the past couple days. Nevertheless, it is up now so let me introduce you to our shortened domain…wait for it…wait for it……WWW.HEDGEAS.COM! Hope you peeps like it!!

But before I continue on with a market update I should thank all those who have continued to support H.A.S., so thanks once again for all your kind comments and emails.

Now on to the markets…let me refresh your memory and re-post Jan 22’s chart:

On Jan 22nd we were clearly under the second blue line. Today the S&P 500 (sitting at 845) clearly closed above this blue line. This my friends is very bullish, if we continue to stay above this blue line we should be testing resistance at 925 fairly soon. But wait…let us take a look at the Dow:

Here we are still within the two down blue lines. The shorter term time frame shows that we are still improving but a break above the upper blue line needs to happen. What’s positive though is that we have a higher swing low…this is indicated by my blue line trending up.

Here’s a little reminder though…the Federal reserve meeting is tomorrow, so be very careful with your trades. I have a feeling that this meeting may act as our catalyst for the Dow to break resistance. Further rumor has it that there is a lot of insider trading going on right now…CEO’s and Directors are buying into their companies again, let that be a sign that tomorrow may potentially be a good up day. And I just got word from my friend Marco at Option Maestro that the financials are up big in after hours trading. There’s some news flowing around about what’s going to happen to banks etc…BAC, UYG, and FAS are all up around 10%. Keep all that in mind while you trade tomorrow!

Richard
richard[at]hedgeagainstspeculation.com

After contemplating whether or not I should continue blogging I’ve decided to renew Hedge Against Speculation’s domain for another year. So what does this all mean? Well you’ll be seeing plenty more posts from me throughout 2009, I’ll provide you with ample market analysis to hedge yourself against any risk in this poor economic environment. Further, H.A.S. may have a brand new look as well, so stay tuned!

On to the markets…the markets have been pretty uneventful since I last posted. Clearly, the larger picture is still very bearish. Until we find a bottom, all trades to the long side should be kept to daily time-frames. Like usual, let’s take a look at the S&P 500:

All the trend-lines I drew are significant ones…let’s start with the support lines. Our nearest support is a falling line, if we break below 800 we should fall fast and hard towards 775. A fearful fall to 750 could easily happen at that time…I use the term “fearful” because any break below 750 would be a lethal one, 750 is our last defense! Take a trip back to late November…we could’ve easily fell to 500 two months ago.

On the bright side, if we break above 840 we should see a bull run hitting our heads at the MA(50) or my green resistance line. This would be a nice run up, and something I foresee happening. However, it is more likely that we stay within the two falling blue lines and move sideways for the next week or so.

Now you’re probably wondering…when are we ever going to see a bottom? Well we’ve been close to one, but not until we get a double bottom will any chance of a bottom arise. I’ve said that many times, but a true bottom is never “V” shaped, bloggers have been calling bottoms all year round…remember back in November 20th or so when peeps were calling that a  bottom?…well thumbs up to them for finally picking a short-term bottom but a true bottom is never shaped like a “V”.

So let’s take another look at my chart and play out a few scenarios:

1. We will not break through 840 and simply head towards 750. A sign that this may happen would be if we close below today’s low TOMORROW! We may be heading for another leg down if this happens. This may look bearish but it would act as the quickest reversal scenario for the S&P. Long term bulls should be loving scenario #1.

2. We break through 840 and head towards 925…from here we will get some sort of panic selling causing us to retest our 750 lows. From here we will start to recover, this recovering will take longer…it may take us till September before anything reverses.

Those are the two scenarios I foresee…I will let the markets play out and keep you all posted if anything changes. I do apologize for the lack of posts in the past month, and I do appreciate those who still come to my website even with the lack of posts…I was plesently surprised to see 250+ clicks/day without any new articles. Oh, and if anyone is interested in doing some guest posts for me, please let me know…HAPPY TRADING!

Richard
richard[at]hedgeagainstspeculation.com

It has been a while but H.A.S. is back! Work has kept me busy on the weekdays and as for the weekends..well you have to have fun on the weekends, right? Now that training and my test is done I will be posting more regularly…but seriously?…53, 803 comments in moderation since I was gone?! LOL, anyways, I haven’t been following the markets as much as I should be but I see that things are becoming more bullish as the days pass.

Here’s a chart of the S&P 500 after Friday’s action:

As you can tell, the S&P is in a consolidation pattern. It’s taking a breather before another move to the up or downside. An upward move is more likely though…take a look at these two candlesticks…which candlestick pattern did we get on Friday?

If your answer is “hammer” than you are absolutely correct! This is a reversal pattern that is often seen in a downtrend - it indicates that a bullish move is in the making. On Friday, we headed towards support at 850 and shot right back up!! I can’t say we’re out of a bear market just yet (it would be wrong to say so seeing as the path of least resistance is still down) but there is a lot of indecision in the markets, this indecision and further consolidation could result in a true reversal.

Note: I’m out of all my shorts, I am long ABX, su.to, V, & SBUX. 

That’s all I have for today, but I’d like to make a special thanks for all those who are still following H.A.S.  A stumbled upon this blog review that was done many months back, thought I’d share it with you all…

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Hedge Against Speculation is a market advice blog written by Richard.

What is this blog about?

I couldn’t sum up the theme of this blog better than the blog itself so:

The goal of this blog is to help traders become responsible traders. Hence the title “Hedge Against Speculation”. Don`t take unnecessary risks in the market, use the information we provide you to hedge yourself against any risk in the markets. If you`re unsure as to where the markets are heading, don`t guess. Engaging in a course of reasoning based on inconclusive evidence are for amateurs, be a responsible trader and wait for opportunities. I don`t want to see any of my readers lose money in the markets

-Hedge Against Speculation

Content:

I read the first few posts of this blog and to be honest, to me they don’t make sense to someone like me who has no interest in markets or investing. Nonetheless, I can see that the posts are useful and full of meaningful content. The inclusion of graphs show that time is being spent in preparing the content of this blog for this full credit must go to the writers. The Offers and Contest sections of the blog are definately worth checking out.

Layout:

This blog has a personalized theme which fits in well. The header is excellent in my opinion and the advertisements fit in well and are un-obtrusive. However the best feature for me are the images after every post:

These provide a nice touch to the blog.

Overall, an excellent blog. The fact that it gets 6000 page views per month is no joke and is testiment to the quality of the posting on this site. So, all that’s left for me to say is, check it out!!!!

This entry was posted on April 29, 2008 at 6:15 pm and is filed under Blogging, Reviews: Websites/Blogs. Tagged: blog, marketing, review. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.