The current price action is frustrating many stock traders.
If this is you, then this trading lesson is for you.
The Lost Art of Tape Reading:
Tape reading is mysterious. It sounds “old-school.” Watching the stock ticker-tape print as one long thin strand of paper forms a continuous stream of quotes in fractions. You can almost smell the chalk as new prices are updated by the quote boy.
You may believe these days are over but they are still alive and well. If you have placed a trade you understand how to read the tape. You see tape reading is monitoring if price is moving closer to, or further away from a significant reference point.
Great traders can do this before a trade. This secretive band of stock traders can lock onto a stock and “know” if there is an edge and money to be had.
Almost magically they earn money trading month-after-month. What do they know that you don’t? The truth is nothing. They just apply the knowledge with absolute rules and a clear mental picture of price action.
Using our definition of tape reading above, you always read the tape, when you are in a position. Nobody in the world knows the strength or weakness of a stock better than you. Nobody knows the current odds of a stock trading down to your stop loss or trading higher to your profit target better than you.
You know the order flow, you know the momentum and you know the volume. You know it so well that you can feel it in your bones with every up-tick and down-tick.
The magical shift that triggers this ability, is you have a price- your entry price. This one reference point gives you clarity like no other. The great traders can do this before a new buy or short-sale. The great traders have a mental checklist for all of these scenarios that struggling traders only awaken after the trade.
The more you awaken this power prior to the trade the, the closer you get to walking that big fat check to the bank each month.
If you are struggling in the current tape you aren’t paying attention. The reference points and order flow are fuzzy flip-flopping, bunched-up trading ranges. Few stocks and especially the SPY are obvious. Pull the moving averages off the SPY chart and you have another trading range.
This is why so many traders are struggling right now. if this is you, take a step back and assess the picture.
Ask yourself: If the bulls or bears… are clearly in charge… before your next trade.
*Plenty of free trader training here if you are looking for a new edge.
Stock Market Today: Map of the S&P 500
(click the map for a full view)
A new trading range in the SPY is in play. The previous two bullish days give us a reason to believe $200 will be tested this week. A down trending 50sma is hovering at the level as well. If the SPY can trade above $200 with volume this week $208 is the next target.
(click the chart for a full view)
- Lower open this morning (7am) would be a good thing if you your bias is to buy stocks today.
- Oil looks more and more like a bottom.
Charts in Focus
COST finally breaks out ahead of the holiday season. The stock price has roughly $6 to the first profit target. It will be a nice trade to stalk if the stock consolidates at the $154 level.
(click the chart for a full view)
SPY Trading Range Causing Headaches | Stocks to Trade 9-6-15
Earnings in play today > 1M avg shares: NG, PEP, YUM
Relative weakness to yesterday’s bullish price action: vrx, endp, hznp, agn, holx, avgo, mnk, mdvn
> 20sma, positive week and closed 2% higher from the open: DOW, TWTR, KMI, LVS, COP, DD, EOG, CVN, CVS, NOV, AXP, ETP, FTI, DE, CLR, EDP, DHI, MUR, EMR, BX, APC, IBM, DFS, HES, CTRP, NUE, LLTC, GRUB, AMT, MJN, MCHP, HP, WDC, TSO, LNC
<20sma, negative last 5 days and closed 2% lower from the open: vrx, dxcm, lci
Bullish Ideas ATR/Volume/Price: NKE, TSO, CRM, NFLX, NFX, ADBE, LYB, HFC, VLO, AMZN, FB, UA, ACN, GOOGL, MCD, LB, RCL,
Bearish Ideas ATR/Volume/Price: hznp, vrx, mnk, gpro, lulu, qrvo, xpo, amba, cf, wpz, lng, wmb, rrc, wndp, mon, teva, lrcx, abbv, myl, cat, agn, swks, amgn, cah
Weak Stock Weak Close: mdvn, mnk, swks, agn, teva, hznp, endp, vrx
Strong Stock Weak Close: EW, INCY, HRB
Weak Stock Strong Close: rax, cf, wpz, gps, rrc, stx, kss, cat, pcar, trn, mat, axta, cbs, bbby, etn, cog, ir
Strong Stock Strong Close: JBL, TSO, JNPR, NFLX, RCL
20 day Breakdown: dnkn, feye
20 Day Breakout: CNQ, CVE, DOW, GE, PTEN, RDC, COST
2x Normal Volume: DOW, VRX, WYNN, LVS, ENDP, JOY, CAG, ETP, SCTY
Watch List Longs: GE, VLO, SBUX>59, COST, MCD,MO, HD, JNPR, ADBE,
Watch List Short: kss, abt, slb, ms, amgn, swn, m, vz, amat
Inside days: jd