timwest
Short

DJ Transports iShares - IYT - 1 YR Broken trendline - H&S Top

AMEX:IYT   ISHARES TRANSPORTATION AVERAGE ETF
355 38 11
Chart says a lot of damage has been done.

150 massive resistance... Sell here & sell at 149

Downside open-ended here.

Tim

12:41PM EST
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timwest PRO
2 years ago
Projection:
snapshot
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justindanethan timwest
2 years ago
I really love your work and your style ! Great post :)
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2use timwest
2 years ago
Now that is a nasty drop.... and it won't go alone. I guess you are in risk-less mode this year huh?
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timwest PRO 2use
2 years ago
Have you see the overall 2014 stock market forecast I put out back in January? I'll see if I can find the link. This chart goes along with that forecast. Just profit taking into year end. Russell2000 is down about 7% ytd.
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2use timwest
2 years ago
I would definitely like to see that - i started with TV only in 2nd quarter. So much i missed.
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timwest PRO 2use
2 years ago
Search for DIA - long term charts - or search under my name - for DIA charts
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timwest PRO 2use
2 years ago
FORECAST FOR 2014 FOR DJIA (DIA)
is the first chart from the beginning of the year (end of January I think)
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elcololp
2 years ago
Tim, what do you think BBRY to take position today?
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timwest PRO elcololp
2 years ago
I'm considering the same idea... and T-Mobile too. I think they are very different from "the market". The gap open higher today (before the employment numbers at 8:30am) could provide an EXCELLENT entry into the IYT short position and a long position in BBRY and TMUS.
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elcololp timwest
2 years ago
Did you take position in BBRY, TMUS?
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elcololp timwest
2 years ago
I think take position in BBRY right now is a little early... dont you? See this http://screencast.com/t/sowpXlNDG
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timwest PRO
2 years ago
There is a nearly identical H&S pattern back in January in IYT. Just pointing that out. Keep risk limited to a fraction of 1% of your portfolio. Don't bet the farm on this one.
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timwest PRO
2 years ago
There are a lot of potential top-formations in IYT - it might be more dramatic than the forecast - so many fake-downs....
snapshot
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2use timwest
2 years ago
But a breach of that support line will be a game changer - im pretty sure a lot of people see it and once breached, its a new game.
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timwest PRO
2 years ago
Crazy transports:
snapshot
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timwest PRO
2 years ago
I'm going to use a stop above 152.5 - and I'll re-enter short if it goes back under 150 and I'll use the same 152.50 stop.
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Futuraman PRO timwest
2 years ago
Broke the trend but then recovered it. As a market leader IYT showed its strength today. Still think it is a short Tim?
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2use Futuraman
2 years ago
The same observation. But i am not convinced in any side - i can still imagine a slide. Headfakes happen as well
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timwest PRO Futuraman
2 years ago
I shorted right up near the close. The resistance is the number of days at the same price, just over the last sale. I think the risk is small here on shorts for a move lower. It's been a leader for sure, but the range expansion decline last week is a real sign of trouble longer term. I'm not a huge "trend line" trader, but an observer that trend lines change people's opinions in the short term. The break of the trend was a sign to that the trend is weakening and to sell rallies into resistance. I can be wrong more than a few times in a row before I get a good trade on. Delta worked out great as a short from the 39+ area and it fell to 34-35 target to cover this week. The sector has given me some trades already.
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2use timwest
2 years ago
Wasn't that transportation is the first sign to a change of trends in the whole markets?
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timwest PRO 2use
2 years ago
There is no maxim that always works - It used to be the financials were the best indicator, but it just depends on the times. When the indexes were first created, there were spreads between the two, the Industrials and the Rails, that were followed. From my nearly 30 years of charting the markets, the song is always changing. Charles Dow found patterns and there are always new patterns being formed. I'd say just look for areas of extreme sentiment or extreme optimism. The best indicators of all time have yet to be invented, in my opinion. I'd like to make an indicator that is based on my "Key Hidden Levels" that would count the # of securities above or below those key levels and plot it daily. I bet it would be extremely useful. It's a complex indicator to calculate, but it is extremely useful and relevant. Care to take a shot at programming it?
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2use timwest
2 years ago
I still need to devote time to learning the programming language. I am contemplating on a similar idea - an automated divergence indicator. Meanwhile i am indeed monitoring your charts for time at mode and hidden levels. I should say it does work on some stocks
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KevinWeatherly
2 years ago
Tim, I enjoy reading your posts, thanks for publishing them. With respect, does your trendline need to be revisited? I was taught trendlines do not pass through ANY points when it's being drawn (as per, Trader Vic, Methods of a Wall Street Master). If one accepts that, the trend line on the daily chart could be drawn to connect the Feb low with the price low made in mid-April of this year. If one accepts that line, the IYT actually boounced off the trend line that would correspond with that. Does this make sense?

If your trendline is drawn from some previous point, as it looks like yours might be, it appears its angle would have to be changed to incorporate but not pass through lows made in mid-April in any case, which would again have IYT bouncing off of such a line. I'm not trying to bash your work, as I've really enjoyed reading it, and I'm new to this community as well I was more trying to start a dialogue. And I'm not saying I disagree with your conclusion, particularly if IYT rallies up to 150 and is rejected over the next week.
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timwest PRO KevinWeatherly
2 years ago
I am not a believer that trend lines can not pass through other prices. In fact, everything I have seen in my 28 years of charting tells me to only look at trend lines that don't connect through price extremes. There are a few reasons why. Before I answer though, there are a lot of charts that I have posted here and it would be great if I could send you to look through them and see which ones worked and which ones didn't and the reasoning for them, etc. I'm happy to point out how I do things differently and I think it is also useful to see how "everyone else" is looking at something to look for differences and at how other people will be reacting to a technical event. That said, I'm a big believer in "price levels", not trend lines. I believe in fundamental events and knowing when certain things happen in a chart so you have those as reference points. I believe that people don't think in trend lines. People think in levels. Absolute levels. Levels that don't change. They memorize levels. So, when you look through some of my work you can see that I try to explain things as best as I can to help you understand why I do it differently. Would you mind taking a look at 20-30 more charts of mine and see what you can see? I think you will see that I explain myself here and there. Look in the chart and also look in the text underneath. If you can, look at my youtube videos too that go over some of the key levels and methods. All the best to you. Keep the questions coming! Tim
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2use timwest
2 years ago
I second that . I went through probably 100+ Tim's charts, some indeed did not work, some did - my own personal opinion even is that his longs are slightly better than his shorts :) - but in any case they were highly educational and interesting. I would also add that price extremes are probably better used within day trading, but on larger charts its the range, the levels - just because people are given time to study and make decisions (day trading is more like a gunslinger "fastest hand in the west" game)
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timwest PRO 2use
2 years ago
To comment on the longs vs the shorts: It's been a bull market :-)
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timwest PRO 2use
2 years ago
Thanks 2use - I appreciate you taking the time to do that. If you equal risk-weight all of the ideas, and do a daily P&L, I'm sure the volatility of the returns would be very, very low, with a beta of 0.20-0.40 and a return of 15% a year with pretty low standard deviation.
Just my sense. Extremely low volatility of returns, daily, weekly, monthly.
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2use timwest
2 years ago
I made a portfolio of stocks, that i agreed on with you . all longs as i cannot short unfortunately. Still, even without selling them on the stops that you may have claimed in the comments - before the current selloff - the portfolio was in plus. I am pretty positive that it is indeed around 10%+, but again, i exclude the shorts and no fees (ive learnt the hard way how much can you loose with fees when i ended at the same sum after i sold all the stocks i had, and portfolio performance was 5% up)
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timwest PRO 2use
2 years ago
Very good! If you are allowed to open an account with Interactive Brokers, you can see just how unbelievably low their fees are (low margin rates, and low commission rates, and global markets with stocks, options and futures all in one account).
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IvanLabrie PRO timwest
2 years ago
A stocks broker that accepts Bitcoin would make my day...
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KevinWeatherly timwest
2 years ago
This is great, thanks Tim! I appreciate the dialogue. I will absolutely peruse some of your other charts and the videos. I must say I have found trading solely based on a trend line (or a break of one) doesn't work, but a lot of times trading based on a trend line combined with using price levels does, so I definitely hear you regarding that. Again, thanks for your thoughts/reply. Kevin
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timwest PRO KevinWeatherly
2 years ago
My pleasure. Thanks for your reply too Kevin. Constructive conversation with you.
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timwest PRO
2 years ago
Working exceptionally well here at 144... I might double-up and put a breakeven stop - this one looks like it could be a big winner. My risk? Giving away a nice profit in exchange for a monster profit.
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timwest PRO timwest
2 years ago
It's hard to follow, because I didn't post here that I covered right after I posted this - I didn't feel like doubling up, so I covered. Sorry if that is confusing to anyone.
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timwest PRO timwest
2 years ago
DJ Transportation Average Ishares - IYT - Daily - Cloned Decline

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timwest PRO timwest
2 years ago
Thank link shows that I posted a chart and covered my short.
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timwest PRO
2 years ago
This has been a nice, wild ride. Selling rallies, buying dips, selling rallies = probably overtrading this, but "don't count your money while you're sitting at the table" applies nicely...
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chartmojo PRO
2 years ago
Yup..good one Tim
+1 Reply
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