Posted on April 16th, 2008 at 8:11 AM

 The first attempt to capitalize on a new trend is the counter-trend trade.  After the counter-trend, there is the XTL breakout.  After the XTL breakout, you wait for stochastic pullback trades within the established trend.  This cycle is playing out in SPWR.  I took the XTL breakout trade and it is working well.  You can see on the chart that a false bar appears above the stochastic.  If you are not long this stock, the best thing to do now is to wait for a false bar stochastic trade.

Posted on April 17th, 2008 at 12:08 PM

     AAPL has had about a 50% recovery of its recent down trend. It was setting up as a Type One Sell at the end of a Wave 4, and was looking forward to continued woes into a Wave 5 down. However, it recently broke the Red Wave 4 Channel, as well as violated the 140% retracement of the Oscillator. Both of these suggest that we are not looking at a TRUE Wave 4. (See pic below). If it is not a trued Wave 4, what is it?

Posted on April 17th, 2008 at 12:13 PM

I am a technical trader first. I also think it is prudent to understand the nature of what is happening these days as we sit on unprecedented times.

The Fed is bailing out entities such as Bear Stearns with tax payers money (one might think that they are the lender of first resort instead of last resort these days) and the Fed is taking mortgage securities as collateral at the lending window.

I don't about you but this really concerns me that the Fed is holding Mortgage Securities that have fallen from 92% to 65% of supposed value and still continue to fall, as collateral. There is a reason that no one wants to mark to market! Bear Stearns was essentially going to be forced to mark to market because Goldman Sach would not take their swaps any longer. You must understand that no one else is willing to take these same mortgage securities being held and bought by the Fed as collateral.

Posted on April 17th, 2008 at 12:20 PM

     We have a possible Type Two Sell setting up in Crude Oil today on the Daily chart. We hit the MOB from the previous 3 yesterday, which happened to be where the time hash mark was showing in the MOB. Today's bar made a higher high, as well as a higher low. That qualifies it to be a Buyers Bar. However, if we observe the internals of the bar, we notice that the Close is below the Open, and the Close (ever so slightly) is below the Midpoint of the bar's range. Thus, the bar exhibits two forms of buying, but also two forms of selling. We often see these types of bars at reversal points on the chart. While it's not time to short it yet, it is time to start PREPARING to short it!

Years ago, when I began trading, I was told the smart thing to do was to buy low and sell high.

Well, that is easier said than done, as I found out, because it is not that often that markets make extreme lows or highs that are clear-cut events.

Then, I heard that good traders do not care about picking tops or bottoms, so I adopted a philosophy of buying into weakness or selling into strength.

By Kathy Lien, Chief Strategist of DailyFX.com*
Posted: April 18, 2008

Trends in the currency market can last for a very long time because currencies as an asset class represent the health of a country and its economy. The outlook for a currency pair will not change on a dime, which means that trends will last for weeks, months and, in many cases, even years. The reason this happens is simple.

Barring any unforeseen disaster, countries where unemployment is high and companies are suffering will not go from performing terribly to performing strongly in a matter of days or even weeks. Usually, the economy of a country gets progressively better or progressively worse over the course of a few months, and this progression is reflected in the price action of the currency.