Here's the previous article showing the trade open for IBB: 

I got in at 101, and it's at 122. 

I'll update why I pulled it, but here's a quick summary

1. stock is well outside donchian channel.
2. surpassed my highest target
3. volume seems to be drying up a bit.
4. Pigs get slaughtered.
5. 20% in 2 months is pretty good.

I'm going to watch any dips in IBB to see if they're a nice correction. I would expect a pullback between 116 and 112.

How Not To Use Simple Moving Averages (as a trend trader)

The statement I'm about is going to conflict with the technical analysis 101 lessons you learned about moving averages as a novice technical trader. If you are attempting to trade with the trend, you do not want to using moving average cross overs as timing signals.

Let's examine a stock chart to see what is happening when moving averages cross over each other. In the chart below (click on it to see full size), notice what is going on with price at the points I've circled in red. These points are where a short term simple moving average (9 period) crosses over a longer term 33 period simple moving average.

As you can see from the chart, the stock isn't really trending nicely at the time these simple moving average crosses occur. In fact, it's just the opposite. Why is this?

According to Chuck LeBeau:

What we are really observing at the crossover point is that the average of the last 30 prices is exactly the same as the average of the last 10 prices. If we are looking for trends to trade, this equal relationship of the two moving averages is not a reliable or logical indication of a trend. In an upward trending market the average prices over the last 10 days should be much higher than the average of the last 30 days. By implementing new trades at crossover points we are limiting our trading to points that may not clearly reflect what we should be doing. For best results in a trend-following system we want to be trading when the trend is clear and reliable; not when the trend is confused and questionable.

Reading that paragraph was an ah ha moment for me; although the concept is obvious and simple, it's still easy to over look. The fact is, trading moving average cross overs is a trend reversal strategy, not a trend following strategy.

Trend Trading Simple Moving Averages The Right Way

Taking the information I learned from the article, I've been thinking about several ways of screening moving average data in order to time entries and exits. There are many variables at play, but all of them involve either the distance between short and medium term simple moving averages, or the slope of those averages. I am using stockfetcher to design the screen, and will be using it to do back testing as well. Let's look at an example of AAPL using the same moving averages but in a different time frame.

I have highlighted the areas in the chart below where the short term and medium term simple moving averages are increasing, and either getting farther apart, or are parallel. As you can see these are the places where the stock is trending nicely, and obviously these are the places where we would want to be long the stock. The trick then is to create a screen which can find these conditions near enough to when they start to be true.

Trend Trading Using Simple Moving Average Slopes

I have developed a screen for this system for both long and short trades. I am currently moderately bearish on the markets, so I decided to run the short simple moving average slopes screen to see what I could find.

A few potential shorts I see with this system are:

Walgreen: Symbol WAG. I will be looking to short WAG at the end of trading below the $31.92 level. The initial price target will be $29.46 or 8.7%, but it could easily go to $26.

Republic Services: Symbol RSG. I will be looking to short RSG below today's of $26.47 with an intial target of the August lows at around $24.75 or 6.5%.

THERE IS A NEW REVOLUTION

There's a big new revolution going on right now on the internet. Do you

know what it is? If you're not part of this revolution, you are going to
miss out big time.

BEFORE THE INTERNET

When TV was first invented by John Logie Baird (1888-1946) back in 1925,
it revolutionized communication. Shortly afterward it became a mainstay
of popular culture. TV changed the world and how we view information,
not unlike what is happening on the internet today.

But do you know what TV was supposed to do?

It was going to educate the world; that was the whole purpose of TV back
then. Somehow the message got twisted and the educational aspect of TV
was quickly forgotten and lost forever.

NOW FOR THE GOOD NEWS

Educational TV and has been reborn on the web and presents some
marvelous opportunities to get back to TV's original roots. Now you can
educate yourself and learn valuable insights on subjects that you would
have missed out on had it not been for TV on the web.

HERE IS A QUESTION FOR YOU:

Have you ever been to one of those expensive trading seminars? You know
the ones I mean. They normally cost several thousand dollars, plus the
cost of a hotel room and airfare. Thousands and thousands of folks
attended them because they wanted to expand their knowledge of the
markets and learn new trading techniques.

I HAVE SOME GREAT NEWS FOR YOU

Even if you've never attended a trading seminar before, you know the
value of knowledge and education, that is why this offer will appeal to
your interest.

ANNOUNCING TREND TV

This is like the perfect marriage of TV and the web. Now you can attend
online trading seminars that you have an interest in. It is so easy. If
you are reading this email, you are online and therefore have everything
you need to get started. You can attend all 4 trading seminars, or just
the ones that interest you. There are four world class trading
instructors that will help improve your trading. Best of all, it's all
online and it's on TREND TV now.

http://www.ino.com/info/488/CD3173/&dp=0&l=0&campaignid=16

NOW FOR THE GOOD NEWS

You're not going to have to spend thousands of dollars like before to
attend all four of these seminars. You're not even going to spend $100
to attend one of these online trading seminars. In fact, you can put
your credit card and wallet away because these online seminars are
offered at no cost from a well known, world class company.

In fact, if you jump over to this web address right now, you will have
instant access to these four online trading seminars with our
compliments. But hurry, I'm not sure how long this is offer is going to
last.

WORLD CLASS COMPANY

Before you click to go, let me tell you about the company that's making
these online seminars available to you at no charge. The company has
been on the web since 1995 providing financial information to individual
and corporate investors and it's not a brokerage company. I'm sure that
when you surf over there you will recognize their name immediately, and
that's what makes this offer so special.

Seldom, if ever, have I seen an offer quite like this one and I don't
want you to miss it.

http://www.ino.com/info/488/CD3173/&dp=0&l=0&campaignid=16

There's not much more to say except that the revolution has begun. Get
on-board today if you want to improve your trading and your ability to
make all the right moves in 2010.

Best of luck,

The Trade Detective

If you haven’t been to the Record Price Breakout.com blog since Friday, then you probably haven’t noticed the dust. I’ve been busily working on a major redesign, making Record Price Breakout.com a fully functional website, in addition to the blog. I’d love to get your feedback on the new design, as well as a couple of new features that I’m introducing below!

Today I’m really excited to announce two new features on the blog. The first new feature is the Record Price Breakout Trader Talk Live Chat Room. The chat room allows you to share your computer screen with others in the room, making it an ideal way to discuss different charts and trade setups. It is fully audio and video enabled, so if you have a microphone and / or a webcam, you can easily communicate and get to know your fellow traders.

The second new feature is the Record Price Breakout Live Portfolio. I have put together a new video explaining this awesome new feature here: Trade Talk Live Intro Video

In response to all of the great feedback that I get from blog readers such as yourself, I will continue to add amazing new features, and create software, such as my Profitable Exit Strategy tool, which are designed to help you become a more profitable traders.

Both of these new features are going to be part of my new premium membership service. As RPBO has become more and more popular, the time, energy, and resources necessary to keep up with the expansion have increased dramatically. At this time, I do all of the web design and programming, and am going to utilize the premium membership fees to hire a web designer, which will allow me to focus completely on creating new trading content and software tools.

Again, I would really love your feedback on the redesign and new features. Take a moment to test drive the Trader Talk Live chat room, and Live Trading Portfolio today.

To Profitable Trades,

This veterans day, Ford produced a fantastic video saluting the troops. If you haven’t seen it yet, I’d highly recommend taking a moment:

Amazingly enough, Ford appeared on one of my stock screens, and I was absolutely blown away at the chart I saw. Ford has rallied a whopping 900% from it’s lows in late ’07. I can’t imagine anybody not wanting to be aboard that train.

That said, it is clear to me based on the chart that Ford still has plenty of upside potential. Given that Ford is now the only true American car company, I’m very happy to see the chart working out in their favor. Ford is in a very distinct cup with handle pattern, and is mere cents away from breaking out of the handle.

Take a look at my new video: Ford – Cup With Handle

Normally I would spend some time writing an article to support my forecasts, but for today, I have created a very detailed forecast for the S&P 500 and taken a look at some critical indicators and trend lines. All indications are that if the 1100 level holds as resistance, that this market is going to roll over. Check out the video:Has The S&P 500 Topped Out?

That said, the most frequently asked questions I get about the strategy are about not the strategy itself. In fact, the two most frequent questions I get about Record Price Breakout stocks are:

1. How Do I Know When To sell
2. How Do I know When to Buy

How and When to Sell

To answer the question of when to sell, I put together a simple yet insanely popular software tool which I shows you the exact price levels at which you would want to set trailing stops to let profits run, as well as when to exit if a trade doesn’t go your way.

Record Price Breakout Entry Strategies

In case you’re unfamiliar, here’s a link to my Record Price Breakout trading strategy.

Entry Strategy – Use My New Profitable Entry Tool

I designed this new tool to help you find chart patterns. If a stock is a record price breakout candidate, and breaks out of a well known chart pattern such as a bullish flag or continuation triangle, all the better. It will also show you at a glance if the volume and P/E ratio components of the stock meet the criteria for a record price breakout stock.

Entry Strategy – Marketclub Weekly Trade Triangles

It’s no secret that I am a huge fan and supporter of Marketclub, the Ino Traders blog, and Trade Triangle Technology. If you are unfamiliar with trade triangles, just check out this quick video:

To combine Trade Triangle Technology with the Record Price Breakout trading strategy is quite simple:

1. If all three triangles are green, open the trade.
2. If daily triangle is red, wait for it to turn green to open the trade
3. In the very unusual situation where the weekly triangle is red, wait for it to turn green.

In cases 2 and 3, the monthly triangle must always be green, and in all probability you’ll never see an RPBO with a red monthly triangle.

Entry Strategy – Just Do It

The beauty of this strategy is that the stock is at a high. This means there is little to no resistance over head, and Because you waited for a spike in volume, it is likely the stock has upward momentum and hence plenty of room to run.

Entry Strategy – Wait For a Retest
Many traders like to establish key trading levels as support before entering a trade. Waiting for price to come back to a key level before going back higher is known as a retest.

Entry Strategy – Use Technical Indicators and Indicator Patterns

Using technical indicators is a key aspect of technical trading. While I won’t describe how to use them here, I will show a setup I like to use.

In the chart below I have the Marketclub trade triangles on as well as 3 technical indicators: ADX, MACD, OBV.

These indicators follow trend strength / quality, momentum, and buy / sell pressure respectively. If there is no divergence in the ADX, the DMI+ is above 25, no divergence in the MACD, MACD histogram is positive, and OBV is rising, then entering an record price breakout is a great option.

At that time, I mentioned that crude oil has broken out of a triangle pattern at around $75, and look to be heading much higher, with price targets around $96 for a 50% fibonacci retracement.

Since that time, crude oil has shot up past $80 per barrel, and has formed my favorite chart pattern of all. A bullish flag. Bullish flags are highly reliable patterns with good price predictability.

Take a look at the picture to the left which describes the Falling Three Methods candlestick chart pattern.

The requirement of bearish falling three methods candlestick formation include,

* The pattern should be formed in a downtrend.
* On first day there should be a long bearish candlestick.
* First day candlestick should be followed by small-bodied candlesticks of following day whose real-body and/or shadow do not cross the range of first day candlestick.
* On last day there should be a long bearish candlestick which should be closed well below the first candlestick’s range.

Now take a look at the s&p 500 over the past 4 trading days:

The s&p 500 is definitely at a cross roads. First, all of the Trade Triangles have gone negative, and second, price has crashed through a major support. Take a look at this chart:

First lets take a look at the indicators. You can clearly see divergence in the MACD, as well as a negative reading on the MACD histogram. You can see negative divergence in the On Balance True Range, showing negative pressure on price. There is also negative divergence in money flow, ADX trend indicator, and a negative DM- DM+ cross over. In fact, just about every indicator I have looked at is bearish.

However, the biggest technical indicator is the breaking of the long red trend line. As you can see I have drawn in support at around $95 on the SPY, which is exactly how I’d be trading this market right now. Short the SPY, or buy some deep in the money put options.