Trading Psychology Edge

Tomor­row, I’ll be doing an intro­duc­tory webi­nar with David Weis and Gavin Holmes on the Wyck­off & VSA Meth­ods.  This is a pre­lude to a week­end work­shop we are doing in Chicago in June.  Come join us tomor­row at 4:30 EDT (New York Time) — 3:30 CDT (Chicago Time).  It’s free.  

CLICK HERE & REGISTER FOR FREE

Antic­i­pat­ing Today’s Sell-Off

Each week in Deep Prac­tice we spend time review­ing the US Stock mar­ket and what to expect — both near term and inter­me­di­ate term.  Last night, we dis­cussed in detail how weak­ness had come into the mar­ket over the past few days and what that means.  We also talked about today and the strong like­li­hood of down­side follow-through from yesterday’s sell-off — both why it was likely to occur and what that would look like.  Traders in Deep Prac­tice were well-prepared for today’s down trend action.

A Seri­ous Group of Traders

What is Deep Prac­tice?  Deep Prac­tice is a group of traders who meet on my desk­top (i.e., I share my screen with every­one) to seri­ously study and prac­tice the Wyck­off Method of read­ing the mar­ket by its own action through price bars and vol­ume.  We usu­ally look at the cur­rent mar­ket and then walk-forward a pre­vi­ous mar­ket, assess­ing the mar­ket action, iden­ti­fy­ing Wyck­off prin­ci­ples as they are unfold­ing on the chart, and ini­ti­at­ing and man­ag­ing trades.

It’s a seri­ous group and every­one has a chance to par­tic­i­pate, offer com­ments, and ask ques­tions.  We also usu­ally address a chal­lenge one of the mem­bers is hav­ing (e.g., a sit­u­a­tion that is fre­quently chal­leng­ing for the trader or even just a trade that didn’t work out).  It’s done anony­mously and in the spirit of: ‘How can we best learn from this?’ Its a prac­tice that all mem­bers find of high value.  There is no other group like it. 

Details

Inter­ested?  We meet once a week for 60–90-minutes.  All ses­sions are recorded, and many mem­bers view the record­ings later because of time zone dif­fer­ences and find it of high value (and, many send in ques­tions and com­ments that are addressed the fol­low­ing week).  We cover swing trad­ing stocks, day trad­ing ES and cur­ren­cies, and other mar­kets by request (not all mar­kets every week, of course — this is very focused).  We keep the costs low, so that isn’t a bar­rier to entry. 

You are invited to learn more here: Deep Prac­tice.  Oh, almost for­got!  You will get access to the last four weeks’ worth of Deep Prac­tice record­ings imme­di­ately, so you can start right in.

S&Ps Reach Antic­i­pated Level!

On Mon­day, we had a free review of the US Stock Mar­ket.  We looked at a series of charts and also how I expected the mar­ket to trade this week, based on over­all mar­ket struc­ture.  On Mon­day, I said that the 1385 level was a key level that the mar­ket would likely revisit.  Today, we sold off and came into that level.

We will be doing free webi­nars every other week, as time per­mits.  We will talk about how the mar­ket traded and what we can expect next — all from the Wyck­off per­spec­tive.  Watch this site for the next one. 

If you missed Monday’s webi­nar, we have it avail­able as a record­ing on the site.  Click on the Free Resources but­ton near the top of the page (under the Wall Street pho­tos — see image below) for access.  If you haven’t already reg­is­tered for the site, it will ask you to do so — it’s quick, easy, and pain­less.  Then you will have access to this webi­nar and the other free resources we have.  Enjoy!

We’ll be doing a free webi­nar after the close today.  Start­ing at 4:30 East­ern Time (New York Time), we will dis­cuss the US Stock mar­ket.  We will take a look at a few trades that set up well from last week, and what we can expect in the week ahead.  If time per­mits, we will take a look at a few other mar­kets, as well.

The webi­nar will run for 45 min­utes, or so.  It’s free.  All you need to do is reg­is­ter at the link below:

Free Webi­nar Reg­is­tra­tion Link

Many traders in our com­mu­nity know that we have a dog called Asta. Asta is a super smart dog. He does every­thing with us, hik­ing, rid­ing in the car, Lowes shop­ping trips, and above all, super­vis­ing Gary’s teaching.

I don’t know how many dogs out there who know how to eat peanuts, but Asta does as the video shows (go to youtube and search for Asta Dog Crack­ing Peanuts). The photo is Asta hik­ing in the White Mountains.

So now when you hear Asta in Gary’s classes, you know who is mak­ing the noises:)

Traders are always con­cerned about their con­fi­dence.  When asked how they think they can build more con­fi­dence, the typ­i­cal answer is: “Well, that’s easy — more win­ning trades!”

Well, that’s not quite right.  Here is a brief inter­view I did with Tim Bourquin of the Money Show Video net­work on the topic, shot at the New York Traders’ Expo in Feb­ru­ary.  Click on the image below to access the video.  Enjoy!

Dr. Gary at Traders’ Expo Interview

Title: Free Mar­ket Review
Loca­tion: Webi­nar
Link out: Click here
Descrip­tion: Join Dr. Gary as he looks at the week just past and the week ahead. We will review trades that occurred as well as what to look for in the com­ing week. You will see how the mar­ket really works. This is a free event open to any traders who want to learn to read the mar­ket by its own actions.
Start Time: 16:30
Date: 2012-04-30
End Time: 17:30

In my posts this week, we have been antic­i­pat­ing each of the market’s next moves in advance.  On Sun­day night, I noted that the mar­ket was about to fall with a tar­get zone around the 1350 level.  I noted that we were about to dip down to test last year’s high (May 2011 high).  You can see that post by click­ing here.   The mar­ket reached that zone.  On Tues­day night, I said that the mar­ket was due for a rally and also said, “The upside appears lim­ited to around the 1386 level, unless we see see evi­dence of buy­ers step­ping in aggres­sively.”  We started the rally the next day, as antic­i­pated, and then reached the antic­i­pated level, too, today.  And, buy­ers did indeed step in aggres­sively.  (You can see Tuesday’s post by click­ing here).

What’s Next?

Buy­ing was def­i­nitely aggres­sive.  The rally today ran far­ther than expected and vol­ume was good, indi­cat­ing strong buy­ing.  Will we see fol­low through?  I think we will.

Watch tomorrow’s close

Look at the weekly chart.  Tomor­row (Fri­day) com­pletes the last weekly bar.  You can already see that it dipped down into sup­port and ral­lied aggres­sively.  If we close near today’s close or higher, we will have recorded a very bull­ish week — one that reacted and strongly rebounded off last year’s high.  It will rep­re­sent a suc­cess­ful test of last year’s high.  So watch tomorrow’s close.  If it is firm and com­pletes a bull­ish week, we can expect follow-though next week and at least a test of our highs so far this year, and likely new highs in the near future.

As I said in my last post (click here to see it), the mar­ket had good odds of react­ing and com­ing back to retest last year’s (May 2011) high.  All the signs we look for were there.  These are taught in detail in Chart Read­ing Mas­tery, and past stu­dents were not­ing these signs and antic­i­pat­ing the reac­tion.  As you can see on tonight’s chart of the weekly and daily S&P 500 Cash Index, the mar­ket fell as antic­i­pated and the tar­get zone I noted has been entered.

What’s Next?

Ini­tial reac­tion tar­get reached

We have had five down days in a row.  That’s a fair run, and the mar­ket is look­ing a bit over sold.  I am expect­ing some con­sol­i­da­tion to come in.  Any fur­ther push down tomor­row in the morn­ing ses­sion will unlikely get very far beyond the 1350 level (maybe 1345 in the futures).  The upside at this moment appears lim­ited to around the 1386 level in the cash mar­ket, unless we see evi­dence of buy­ers step­ping in aggressively.

We do see a pickup in down­side vol­ume today.  Sup­ply is active.  If we do con­sol­i­date next, we can antic­i­pate fur­ther down­side, depend­ing on the char­ac­ter­is­tics of the consolidation.