Monday, March 09, 2009

Reversal in the R-Zone - Apple Inc. (Public, NASDAQ:AAPL)

The first chart is the trend channel of the QQQQ on the 15 minute timeframe. So far, each attempt to rally has failed. Friday's late day bounce was likely to be met with selling as well. How do we know where supply will overwhelm demand? Probably in the R-zone.

Place fibs. from the most recent reaction high (RH) to the most recent reaction low (RL) and wait to see what will happen. If the bounce is real, price will move into the R-Zone, consolidate then move higher. Candlestick patterns in the R-zone are our guide. If the R-zone acts as resistance we'll see red reversal sticks followed by a move lower. If prices consolidate in the R-zone, we want to see more sideways action.

This strategy worked fairly well with stocks trading with the market. I reviewed my WL last night, drew in the Fibs. and set alerts within the R-zone. AAPL set up perfectly.

CELG opened lower but thrust to the top of the R-zone and reversed.


WMT is not trading with the market, but I placed the FIBs from the RL to RH and finally it set up with NRIB at the base of the R-zone.

Same principles apply to stocks in an uptrend. As we noted over the weekend, oil was well positioned to BO. This a chart of SU, which held the R-zone as support on the open. A possible trade opp. is identified by the black arrow.


Tomorrow, I'd like to see a run lower for the markets, followed by a reversal. I anticipate the third rally attempt will have legs. However, I'm not saying that it will happen tomorrow. I'm saying that as we descend the wall of worry, we have to be nimble, and catch the opportunity, if and when, it presents itself.

13 comments:

john said...

Forgive an OT question ...I'd like to know any recommendations that you/your readers have for a streaming charting service.

I use Quotetracker, but the data feed is unreliable. Also, I'd like to be able to display multiple time frames for each stock in a single screenshot.

Thanks

Jamie said...

John,

I use Esignal. Not comparable to QT as far as pricing is concerned, but it does have multiple timeframes per screen shot. However, flipping screens would be hazardous to your mental health. I use quote windows (QW) with my WL stocks and sort the windows by % change to focus on the outliers. I also have QW for each sector of interest, as well as a separate sector QW. So, every time I click on a symbol, I get four timeframes for that symbol.

However, Esignal charges extra for CME futures. I think they offer a free 1 month trial.

Jamie said...

Data is reliable but once in a while there can be small glitches. For example, this morning futures time template wasn't working so I traded QQQQs as opposed to NQ futures. Not a big deal and I could have still traded the futures without the last 15 min. EOD data on the chart, just a nuisance really.

Susan said...

Jamie,

At what price did you set alerts within the R-Zone for AAPL and CELG?

Thanks,
Susan

Jamie said...

Susan,

Use closest whole or half dollar levels to the 50% retracement level. In Esignal alerts are set at high/low levels so for AAPL high 88 low 87. Assume that full retracement will not be reached and select a level inside.

Jim said...

Jamie,

In Esignal, when you place trendlines/studies on the charts for a given symbol, do the studies remain attached to that symbol? In other words, when you cycle back to a symbol, are previous studies retained on the charts for that symbol?

yr said...

Hi Jamie,
Do u have any rules abt how to place fibs? I'm quite confused abt the placement. Sometimes I see from PDH to PDL, sometimes, from PDH/L to ORL/H, sometimes, its from ORL to ORH, and then we have the RH to RL.

greytrader said...

John,

I am confused about your statement about QuoteTracker. QuoteTracker does not have a data feed, it supports just about any data feed that is out there. I use TD with IB and Etrade as backups. I use TD for backfill with IB for backup. So if anything, data feed is more reliable as you can switch to a backup when there is a glitch with the one you are using.

Also, not sure by what you mean about QT not being able to display multiple time frames in a screen shot. I use QT and monitor 3 time frames for one stock, all linked together and 2 future chart at a time on one screen.

Jamie said...

Jim,

Yes, they remain attached to the symbol until I remove them. You have the option of removing one or all from current symbol or all symbols. Too many trendlines and fibs on too many symbols would eventually slow down the platform, so I clean up once in while.

Jamie said...

YR,

I understand the confusion. I'm still experimenting with different ways to place fibs. When I'm finished experimenting, I'll write a post on my new Fib. strategy.

Jamie said...

Jim,

Sorry , my comment above applies to trendlines, channels, fibs and other drawing tools. Studies like MACD, MAs and Pivots are tied to charts. For example, on my daily timeframe I have a 200 SMA which I don't use on my intraday timeframes. That study, once applied stays for all symbols on the daily. Studies such as MACD, volume, etc. also apply to charts as opposed to symbols. They stay until removed and can be stacked or tabbed.

john said...

Jamie, greytrader, thanks for the feedback.

Grey, yesterday morning, QT's charts were up and down (mostly down) between about 9:30est and 11:00, neither the TD backfill nor the IB feed was working (although the IB backfill is always so slow as to be useless). QT said that their were "issues with their servers."

Separately, I often find that charts are painfully slow to backfill using TD (even worse if using IB) for the first 45 minutes or so of trading each day - - have you experience this? Anyway, they recommended that I use IQFeed.

Jim said...

Yes, I understood your comments apply to drawing tools. Thanks Jamie.