High Probability Trading Strategies

I generally don’t trade individual stocks. I usually trade the bull/bear ETFs for S&P, interest rates, precious metals and Euro, plus futures. But, with all the news recently about Netflix I thought I would check it out.

Netflix has crashed the past few months from a high in July at 304.79 to a low (so far) in late Oct. at 74.25. Ouch! On the weekly chart, in late Oct. Netflix overshot the 78.6% retracement by a bit. What ever momentum indicator you may use has been OS for several weeks. Also looks like a text book five wave decline. For the past couple of years, Netflix has had a fairly consistent 8-11 week low-low cycle. The Oct. low was week 9 from the last weekly low in Aug.

There was a huge gap down Oct. 25, must have been some news how another 100,000 or so subscribers canceled. Netflix isn’t going to go out of business. They’ve been pretty smart for many years, but seem to have made some blunders the past few months.

The technicals are warning to take a look for a bottom. “When there is blood in the streets, look to buy.” Even if Netflix only made a 38.2% retracement, the price would have doubled. This isn’t a specific trade recommendations, only an alert that the technicals as I teach in High Probability Trading Strategies all seem to say at least a weekly low may be near. Check it out for yourself.

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One of the best lessons to be learned from High Probability Trade Strategies is how to identify if a market is at a high probability juncture. The S&P has reached such a juncture.

The Feb. 18 high to March 16 low can clearly be counted as either an ABC or 1-2-3. The three day rally to the March 21 high reached the 61.8% retracement and which is very near the low of the potential Wave 2 or B which is typically the maximum a Wave-4 should reach. Daily DTosc (8,5,3,3,) momentum is OB.

What is an important pattern signal taught in the book that would signal the March 17 low is a W.C and the S&P should eventually continue the bull trend to above the Feb. 18 high?

The daily closing low of the potential W.1 or A low is March 1 at 1296. A daily close above 1296 is an “overlap” as described in the book and signals March 17 should be a corrective low. With the S&P near critical price resistance and daily momentum OB, any daily reversal signal or decline below a minor swing low is a sell-setup with minimum capital exposure.

Which ever direction the S&P takes from here, the strategies taught in High Probability Trading Strategies will allow the trader to take advantage.

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