SPY Trend Analysis, PRKR Breaking Out

One lesson I have learned, and it took me a while to catch on to this lesson, is that one should only go long stocks if the general market is in a bull market.  Sure, there will always be some stocks soaring while the market sinks, but I have found that the odds of a profitable trade increase dramatically if the stock you are buying is in a bull market and the market itself is also in a bull market.

I define the general market by using the exchange traded fund, SPY, which follows the S&P 500.  Below is a daily chart of SPY:

The S&P 500, unlike most other stock indexes around the world, is in a long term up trend.  For me, this means, mentally, I should only focus my mind on potentially going long stocks.   However, the short term trend is currently down, so while I am scanning for long candidates, I cannot actually pull the trigger quite yet on any of them.

With this week's strength, the short term momentum is beginning to change, and SPY will likely enter a new short term up trend soon, which means I'll be able to buy stocks again.

Below is a stock that my scans pulled up that I am eyeing:

I have no idea what product or service the stock above provides, but it is the sort of chart I am going for  - strong up trend, with a nice consolidation to digest the recent gains.

Gold Trend Analysis

Below is a daily chart of the exchange traded fund, GLD, which follows the price of gold.  According to my rules, this ETF is in a bear market, since the long term and the short term trends are both down. What this means is that I cannot consider buying gold until both trends reverse themselves, regardless of how great the fundamentals appear to be. 

As a trend following speculator, I have no idea where gold will go next.  My job is to simply analyze the present and react to what is currently going on.

Blog Re-continued, TLT Chart

I have decided to re-continue this blog.  For the last 2 years, I was teaching English as a Second Language in China, where all Google related services are blocked.  

However, during this time, I have allowed my trend following system to compost in my mind and I hope that what I have now is a significant improvement in my trading. 

Every week, I will be posting a high potential position that is in accordance with my pre-defined rules and money management protocol. Let's start with the only position I am holding at the moment:

Visually, there are some changes I have made to my charting style.  Most noticeable are the solid, long term moving averages.  Because I believe that aligning yourself with the long term trend of a position is so essential, I decided to make this change in order to make the long term trend more pronounced.

What I consider the short term is trend is represented by the blue and red lines, and if either the short or long term trend changes, I will sell.