Projecting Tomorrow's High and Low Using DeMark's Method

Nope, no trades today. Preserve capital and wait until the perfect moment, and then exploit it!

Anyway, a couple things that you may find useful.

There are two useful day trading tools called the "Pivot Technique", and "DeMark's Projected Ranges." They can give us clues to what tomorrow's potential support and resistance levels are, and what the high and low of the day may be.

Both of these methods are based on the trading range of the day before, but they are often right. Sometimes, they seem like self-fulfilling prophesies, since many floor traders are aware of these techniques. Regardless, it would not hurt for us to know.

Tonight, I am just going to do the projected high and low from the DeMark method for the S & P 500 ($SPX). Tomorrow night, we'll explore the pivot technique. Please note that this specific equation is only for when the yesterday's close was lower than yesterday's open.

Equations taken from New Trading Systems & Methods by Perry J. Kaufman
Yesterday's high=H= 1338.80
Yesterday's low=L= 1326.56
Yesterday's close=C= 1334.82

Tomorrow's Projected High= (H+C+(2*L))/2-L= 1336.81
Tomorrow's Projected Low= (H+C+(2*L))/2-H= 1324.57

Potential Buy- BVN- Compania De Minas Buenaventura S.A.

I was going through my daily pattern sleuthing, and I found something that made my heart race.  An Elliot Wave channel!


We're taking a look at BVN, which I have confirmed, is a Peruvian precious metals mining company.  My analysis and trading strategy is detailed in the video below.

I'll start off with a picture, as always, click to enlarge

Elliot Wave theory dictates that every broad market move can be divided in to five waves up, and three waves back.  Often, the waves form a channel, which is very useful in forecasting long term movements.  This sometimes works for individual stocks, and I have conviction that BVN is "one of those stocks."




BVN is at the bottom of the channel, and the upward Wave V is about to start, which means that a major upswing is on its way.

As icing on the cake, a small triangle formation is forming with short-term price targets at $40 and $50 and is about to break out.

And finally, to make things even better,  silver and gold are spewing out buy signals with reckless abandon.

So what is the strategy.  Depending on your appetite for risk, you can do one of two things. 
1. Buy tomorrow
2. Wait until a definitive buy signal, and place a buy stop order around 45.30
3.  Our price targets are at least $55 within the next year, and I expect a move to $65.  This is a long term strategy.
4.  My only place that I promise to sell as now is when the price hits the top of its Elliot Wave channel.
5. Our stop loss is a break beneath $42, which breaks the channel.

I will be buying BVN stock tomorrow morning, and a leveraged option upon breakout above $45

Happy trading, post any questions in the comment box.
~Christopher Diodato

BUY DGP- Ascending Triangle Breakout

First trade!  Buy a gold ETF tomorrow.  I chose this one because I liked the leverage, so less capital gives you the same profit as if you invested more money.

We have several things that will work in our favor with this trade

• Breakout above very stubborn resistance
• Breakout on high volume from ascending triangle
• Two stochastic buy signals
• Favorable risk/reward ratio
• High probability of success with this type of breakout (~75%)

Click on the picture to enlarge.

Strategy:  Buy stop @ 44.55 and a Buy limit order @ 44.05.  Filling one order must cancel the other, as we do not want to overleverage ourselves.

The probability of a bullish ascending triangle breakout hitting its price target, according to the Thomas Bulkowski studies, is 75%, which means that there is a 25% chance of failure.

Our stop is a close below 43.75, and our target price is 47.50, resulting in a probability adjusted risk-reward ratio of 11.

This is a very favorable trade, and I had a video, but it is still opening.  Hope you can jump in!

~Christopher Diodato

EDIT:  1:26 PM  

Renowned technical analyst, Sam Collins, has just recommended a strong buy for all gold ETFs.  Beat you too it! =)

First Post

Yes, yes.  Upon request, I have created a blog; a blog dedicated to sharing my trades and my money making tips.

Before I start, here is an introduction of myself, since I suppose I should establish some credibility.

My name is Christopher Diodato.  I am nineteen years old (almost twenty), and have been studying technical analysis and markets since my eighteenth birthday.  I taught myself how to trade, with the help of about twenty books and several very intelligent people working in the field.

My main areas of study are in the field of technical analysis, including:
Price Patterns
Point & Figure
Oscillators
Elliot Wave
Cyclical & Regression Analysis
Capital Conservation

It is the last point, capital conservation, that I believe makes any trader successful.  As most technical analysts, my win rate is not impressive.  In all honestly, about 40% of my trades result in losses.  However, the losses are usually only about 1-2%, while my winning trades average about a 12% gain each.

I am currently a sophomore at Penn State University, majoring in finance, economics and employee relations.  My goal is to create a business immediately out of college with funds amassed by trading.

I am also currently studying to become a Chartered Market Technician, and should have completed all three exams by Spring of 2012.

My goal of this blog is to post my trades and my logic of each trade BEFORE I actually make the trade.  This will ensure that readers of this blog have ample opportunity to take my recommendation.  I generally post my trades in video format so everyone can see each step of my analysis.  Even though these are my recommendations, I take no responsibility for losses, as I know that I am sometimes wrong.

For those interested, here are my statistics for my trading in the year 2011:
Total Percentage Return: 62.6%
Win Rate: 45.4%
S & P Return: 9.29%

Time to time, I will also post my current thoughts on the market.  These include pivot points, technical phenomenon, and support and resistance levels.

So what are we waiting for?  No amount of happiness can buy you money, so let's make some!

~Christopher Diodato