Tuesday, December 23, 2014

Active-Trader - Welcome Fib Lines

Welcome back Active Traders.

Since my previous post, I have made some excellent progress on my indicator which I will call Fib Lines.

This screen show shows how the indicator is working on GPRO as of 12/22/2014.  I have been bearish on GPRO for some time, but note how it bounced right off the top of the 100% level on the daily chart and put in a "Close above the Low of the High Bar" formation.  I still remain bearish on GPRO shares which are now down almost 50% from their highs set just shy of the $100 level back on 10/7/2014.

On a side note, check out how the indicator does a very clear job at showing you where wave 1 begins and ends

Another interesting thing about Fib Lines is that its not just purely a mathematical calculation, there is human input required to find the beginning and end of Wave 1.  To see what that can mean over time, consider prior interpretation of Facebook found here,  In that, we show the 423% level (which is the last level in the sequence) at $80.88.  What happens when the price breaks beyond those levels?

The answer if course it is that it depends on the interpretation of the human analyst.  In this case, I expect that Facebook is in the early stages of a long uptrend, so I re-calibrated the beginning and end of Wave 1 and came up with the interpretation shown on the right.  You can clearly see likely support and resistance levels from this chart, so it will be interesting to see how price action plays out against these levels.

As for enhancements to my Fib Lines indicator, here's what it needs before I release it for testing in 2015:
  • Add the White lines level - as of now I have the Red and Green lines only
  • Rename the Fib levels to relationships from 100%. Once you see that, you realize some other cool symmetries such as the tree lines between 1.618 and 2.618 are actually 2.0 and 2.236 when started from 100.
  • Move the labels over to the right side of the chart since they are often out of view when left justified as they are now
  • Figure out how to distribute the fib level data over the Internet. As of now, the data is hard coded into DLL component of the indicator.
  • Add support for Thinkorswim
Some time in early 2015, I plan to make the indicator free to members of my Yahoo Group.  If you would like to join my Yahoo group, just send an e-mail to fx-mon@yahoogroups.com.

Have a Merry Christmas and a Happy New Year!

Sunday, December 7, 2014

Active-Trader - CME

Welcome back, traders and wealth builders.

This past week, I caught a nice breakout in CME group.  The shares recently cleared 2+ year old resistance in the $85 area, stepping out into areas not seen the financial crisis in 2008.

Taking a longer term look at the stock, it had an IPO in early 2005 at about $45 per share.  The stock went on to have a stellar ascent from there, trading as high as $142 at the high set in January of 2007, almost 2 years to the day from the IPO in 2005.

Then along came the financial crisis which hit the stock and hit it hard. The stock traded from the $142 area all the way down to a low of $31 set in January of 2009 almost 2 years to the day from the top set in 2007.  Funny the way this stock tends to move in locks steps of 2 years, and always setting the high and low in January.

From the low set in 2009, the stock has been on a slow and steady ascent. A quick look at the fundamentals in TC2000 show the move in the stock is well supported by expanding fundamentals. While earnings growth has flagged in the past few years, the multiple being paid for the shares seems to be expanding.

As for price levels, the chart above shows the $161% voodoo line at $90.79.  We also have the 1.272% (purple) and 1.1618% (blue) extensions of the recent high to low swing.  All 3 of these levels serve as short-term points of resistance if you are looking to flip out these positions for a short-term gain.

Long term I'm bullish on the shares as well as sister exchange CBOE which has better earnings growth due to explosive growth in trading of listed options.

Have a great week and ahead and as we enter the holiday season let me take this opportunity to thank my loyal blog readers and here's wishing you all new equity highs.

And of course don't forget to put aside some time to enjoy the fruits of your labors.