Where is the market now?

It looks like the DOW is going to continue down and could hit the 12,200 by the end of July. Or it could trade sideways and not reach that low. The DOW continues in a down trend until it breaks through the trend line shown as the yellow line in figure 1. Right now I can't tell if the DOW is going down further toward the 12,200 level. We need to watch and see if the price goes through the upper median line on the red pitchfork or heads down to the intersection of the red and blue pitchforks. I have circled the area in yellow.

Figure 1.

Now let's look at the Qs. Figure 2 shows that the Qs may test the$50 -$51 highs later this week in to next week. Or this may be the start of a downward move toward the bottom ML of the pitchfork. Again, we will have to wait and see.

Fig. 2

Lastly, my updated watch list. Baxter(BAX), Intel(INTC), Colke(KO),Companhia Vale Do Rio(RIO), McDonalds(MCD), Illinois Tool(ITW). I dropped Johnson and Johnson(JNJ) it made its move too quickly for me to catch it.

Winners and Stocks to Watch

So, I was wrong about the DOW. It hit 13,135 on May 19th. Now, it is heading down. How far? I can't tell yet. It is at the 50% retracement level from the high on May 19th. You can see the from The chart in Figure 1 that DOW is still in a down trend and could from the pitchfork in blue that it could go back down to the 12,000.

Figure 1.

Did better with the Qs. I was right on target. It hit $50.47 on on May 19th. So, I'm 50% right so far.

Second, let's look at some recent winning trades.

International Game Tech (IGT) - bought 1/10 30.00 on 5/8 and sold it on 5/13 for a 8.79% profit in 5 days.

Western Digital (WDC) - bought 1/10 30.00 on 4/21 and sold it on 5/14 for a 20.93% profit in 24 days.

Coke (KO) - bought on 5/21 the 1/10 55.00 and sold it on 5/23 for a12.16% profit in 2 days.

Next, here are 2 new trades that I have not exited yet. First, Colgate Palmolive (CL) bought the 1/10 70.00 on 5/21.

The other trade is Saint Jude Medical(STJ). Bought the 1/10 40.00 on 5/23. The chart in figure 2 shows that I believe it headed to 45 by the middle of June. Of course, remember using the system I use I don't have to wait until it reaches 45.00 to make my 5% profit so, if I am off on my prediction I can still have a profitable trade.

Figure 2.

Lastly, some stocks I that am watching Johnson & Johnson(JNJ), Baxter International(BAX) and Intel(INTC).

Weekly Pitchfork update on the Market. Happy days Again?

I thought I would change my focus a bit on this blog. I will look to see where the DOW and Qs are headed on a weekly basis using Andrews Pitchfork and Action/Reaction lines. In addition to looking at the the market I will look at stocks that I am looking to buy.

Are happy days here again? First, let's look at the DOW. As I write this entry the DOW is up 170 on the day at 12,532. But is it going to go up or down from here. Well, I can't tell yet from the daily chart. Looking at the chart in Fig 1. we see that the Dow is at a reaction line.

Fig. 1.

It is marked on the chart as R2. The DOW touched the ML of the pitchfork on the 7th of April and has followed the reaction line down since. The high on April 7th was a test of the 12,700 level that seems to be a main level of resistance for the DOW at this time. It has reached this area 3 times since Feb of this year. If we can break though this area I feel it will signal that we are back in an up trend in the DOW. Until then it looks like we will continue to stay in this sideways channel.

We may be able to predict the Dow by looking at the weekly Dow chart. We see in Fig. 2 that if the Pitchfork holds, we will break out of the resistance level I mentioned earlier on the daily chart by the end of April/begining of May.

Fig. 2.

Now for the Qs. Looking at the chart in Fig 3. we can see that the Qs are headed up and if the Pitchfork is right the we should be at $50.50 by late May when the 2 pitchforks intersect.

Fig 3.

Longer term predictions for the DOW's and the Qs'

Fig 1.

Not too long along ago I gave a my short term prediction for the DOW. Now, I thought I would take a look at the DOW to see if I could tell if where the DOW was going in the next 6 months. So, looking at a weekly chart and applying the tools I use, I have come to the conclusion the DOW has hit a bottom, the bias is up and is now trading in a sideways channel You can see this in Fig. 1
Looking at the action/reaction lines the DOW ends Feb. begins March at the 13,400 level. Then it should retrace that upward move. How far down the retracement goes, I can't tell yet. But, then it will reverse and climb to the previous levels of Oct. ,14,200 by the end July of this year.

The scary thing about this prediction I was watching TV and some of the talking heads were making the same prediction. They must have been reading my blog.

Fig 2.

Now for the QQQQ. It looks like the same story as the DOW. We have hit bottom and the Qs will climb to the $50 level by April and then will test the highs of Oct 07 of $55 by Sept.

Well, I hope I am right and my bank account hopes I'm right and the mortgage company hopes I'm right and the credit card companies hope I'm right but, we will see.

Where is the DOW going now? The Qs?

Fig.1. Charts generated by Track 'n Trade

In a post last week, I said I would make a prediction of where the Dow is going next. Well, my crystal ball is still a bit fuzzy, but here I go. According to Dr. Andrews the price will touch the median line of the pitchfork 80% of the time. The other 20% of the time there is price failure and the price will reverse and go in the opposite direction. I hope this is one of these times. (Fig. 1) shows the newest Pitchfork(in red) based on the pivot point high that formed 2 days ago. Using the action/reaction lines I get a target price testing the lows of late Jan. of 08 near 11,600. That's why I hope I am wrong. So, since it is such a steeply drawn pitchfork I am going to call the reversal point using the upper line of the pitchfork and not the median line which would be approx the 12,050 level on or before the 18th of Feb. That area noted by the square on the chart also, is the 60% fibonacci retracement area from the pivot point. So, let see where the DOW goes now and this is one time I hope the Pitchfork is wrong.

Fig.2. Charts generated by Track 'n Trade

Now, I want to look at the QQQQ. Looking at the chart(Fig. 2), using the the red pitchfork, I think the Qs are going to stay around where it is and end up at the $45 level. This should happen around the 20th of Feb. You can see it hit the target price at the beginning of Feb and has gone done since I believe it will reverse back up and end up at the $45 level. Again we will see.

What Tools I Use to Trade.

In my first entry I said I would tell you what tools I use to trade and to predict where the markets are going. I am not going to go in to details here on the tools but, as I show my trades I will expand on the indicators I am using.

As I said earlier, I look at a stock because of it fundamentals and then trade the stock based on its technicals. So, from a fundamental standpoint I pay for a stock/leaps screener from compoundstock earnings using the default values given.

Now, what do I use from a technical standpoint. I primarily use Andrews Pitchfork, action/reaction lines and MACD.

If you are not familiar with Andrews Pitchfork go here to learn how to draw the Pitchfork. If you really want understand how Dr. Andrews traded and what he taught people I suggest you take the pitchfork primer course.

Dr. Andrews said that prices will hit the median line 80% of the time before reversing. So, I learned from Dr. Andrews where the price was going but, my problem was until recently was knowing when the price is going to hit the Median Line. Well, I found my answer in a Book By John Crane, Advanced Swing Trading. It falls right in with trading the Pitchfork by using Action/Reaction lines he talks about to predict time. Now I have a target price and a time frame of when I am going to reach that target price.

Now for the MACD. I use the MACD to help confirm what the pitchfork and the action/reaction lines are telling me.

So, where do I go from here. Next, I will make a prediction of the DOW this Friday.