Monthly Archives: May 2012

A Bull Trap Ripped Directly From Your Nightmares

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The stock market has no shortage of terrifying chart patterns that are so evil, they change the psychology of market participants.

Today, the ultimate F.U.B.A.R move by Bears to sell a Bull trap worked with deadly success.

Bears have sown a seed of evil in the hearts of Bulls, especially in the more thoughtful longs, which makes them dissatisfied with their own lot and envious of short sellers.

Bears set a Bull trap that sprung today and destroyed the confidence of many Bulls.

The Bearish Island Reversal or Bull Trap is when a stock or market gaps up, then soon after gaps down, trapping Bulls that bought on the gap up, on what looks like an island.

The Bull Trap was so perfect, it destroyed Bulls confidence for the rest of the day and even broke the 5 day streak of having a rally in the last 30 minutes of trading before market close.


My TVIX stock pick may finally start to move. I bought TVIX in my personal trading account a couple of weeks ago.

We made over 7% in FCEL today as we sold into strength. I got FCEL from JB’s chat forum at market open a couple of weeks ago. A JB chat moderator by the name of Username said he liked the chart of FCEL. I charted it and agreed and bought it on May 16th. You see, JB has 3 moderators, Matt, Luke, and Username that are awesome traders that you also get access to through JB’s live chat service every morning.

JB’s stock trading service is really nothing less than life changing if you want to quit your day job and learn to trade at home for a living.

Click here for an exclusive offer by JB for members of Guerilla Stock Trading to sign up for his service for just $99 per month! Normally, JB’s service is $300 for 3 months. This is a brand new pricing model that JB will be rolling out over the coming weeks and months. I’m proud to be the only website on the Internet offering JB’s service for $99 a month

Click here for an exclusive offer by JB for members of Guerilla Stock Trading to sign up for his service for just $99 per month! Normally, JB’s service is $300 for 3 months. This is a brand new pricing model that JB will be rolling out over the coming weeks and months. I’m proud to be the only website on the Internet offering JB’s service for $99 a month

How to Pick Stocks in 6 Easy Steps

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Picking stocks can be very intimidating, especially if you are a first time trader with fear on making a loss on your investment. There are, however, certain factors to consider when venturing into the stock market. Below are 6 easy steps on how to pick stocks which will increase your chances on making incredible profit on your investment.

1. Your Reasons for Picking Stocks – It is of utmost importance that you assess your reasons for investing in stocks. Decide on whether you are investing for the short or long term. This will be your starting point.

2. Pick Companies That Are Leaders In Their Field – If a company is a leader in their field they must be doing something right and there is a good chance you will be making a sound investment.

3. Familiarise yourself with the Company – Once you have decided on a company, it is time for you to evaluate the company’s financial position. It is important that you are comfortable with your selection. This can be done by studying their annual/quarterly reports. These reports are available to the public.


4. Diversify Your Portfolio – There is more risk attached to investing in a single stock than by investing in a group of stocks. But there is also a lot more profits that can be made. For this reason, first time traders trying to build their trading account should choose to trade only one market, instead of a group of markets.

5. Be Patient – Follow the stock for a few weeks before deciding to include it in your portfolio.

6. Don’t Believe Everything You Hear – Don’t just take it for granted when someone recommends you to pick a certain stock. The person might be punting the stock because he has a personal interest in its success.

It is safe to say that your decision to invest in stocks would be with the intention of getting the best possible return on your investment. With this in mind it is important to make the right choices to achieve this goal, and starting with the knowledge on how to pick stocks, you are already on your way to make money on markets.

The Basics on How to Range Trade

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The ability to make a good profit with very little risk, in addition to easily identifying the normal high and low movement has made range trading become known as the best strategy for new traders to approach the market. However, to enhance your trading success, it is of utmost importance that you are versed with the basics on how to range trade, especially if you are just getting started.

Explaining Range Trade

Range trading is a simple, non-directional trending strategy which traders use in order to profit from the market. This market is easily identified by the levels of high buying pressure, known as support, and high selling pressure, known as resistance. Here, the trader will buy as the price moves to a lower support level, and sell as the price moves to a higher resistance level.


How to Range Trade

The trading opportunity, as you can see, rests between the support and resistance levels in the range. This doesn’t necessarily mean that it has to be high in order for you to profit, or even enter into trade. In fact, this strategy allows you to take advantage of the lower volatility horizontal movement in the market. Once you have established the high and the low in a range, you trade reversals at these points. When the price moves to resistance, you wait for opportunities to go short, and when the price moves to support, you wait for opportunities to go long. Now that you know how to range trade, let’s have a look at setting up your first range trade.

Setting Up Your First Range Trade

1. Choosing a Great Range Trading Stock

Before entering your first trade, make sure you look for stocks whose price action is sideways and that the percentage between the swing move high and the swing move low is high enough for you to profit off of with how ever much money you are putting at risk in this trade.


2. Support and Resistance
Determine the support and resistance barrier levels by taking a look into the recent trading history, the highs and lows, Fibonacci levels, pivot points, and Bollinger Bands.

3. Setting Limits

In extended positions, set your limits near the top of resistance and your stops below the swing low, and in short positions, set your limits near the bottom of resistance and your stops above the swing high.

Now that you know how to range trade, you will find it much easier to identify and profit upon the turns within a sideways trading range.

Institutional Trader Spying Week Of May 21 – 25th 2012

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We track institutional trader activity because it is institutional traders that cause the formation of all money making trends in the stock market.

It doesn’t matter if you are a day trader, swing trader, or long term investor: we all need a trend to form after we buy a stock in order to make money.

I invented a unique method for tracking institutional trader activity as you will see in the animation below.

The TICK measures the ability of market makers to match up a buy order (+1 on the TICK) with a sell order (-1 on the TICK). The theory is that when institutional traders step in and buy across entire sectors, it is more difficult for market makers to match up every buy order with a sell order. As a result, a temporary anomaly forms in the TICK.


I then look at which sectors went up or down the most during the anomaly that forms on the TICK.

I also look at the news stories released during the anomaly and make an educated guess on what news caused the institutional buying or selling.

Last week, institutional trader activity was detected on Thursday, May 24th 2012 during the last hour of trading. The sector that experienced the most buying during this time frame was the Utility sector which is a traditionally defensive sector. The news that had the greatest probability of causing this institutional activity was when the Italian Prime Minister Mario Monti said he expected Greece to remain in the Euro-zone and that he thought Italy could persuade Germany to issue Euro bonds to help struggling countries.

Song: Fortune On Wall Street
Album: Wall Street: Working On The Edge
Artist: Lance Jepsen
Available on iTunes Now At http://itunes.apple.com/us/album/wall-street-working-on-edge/id529290850

Weekend Stock Screener Scan 5/26/12

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The Saturday weekend stock screener scans all markets including ETFs for the best looking setups the market has to offer using the Alligator method.

The Alligator method is when a stock moves, shorter time frame moving averages will cross above longer term ones. These crossovers are watched by momentum traders, swing traders, and even longer term investors. When the crossover happens, it looks like an Alligator opening its jaws hence the name the Alligator method.

This week you’ll notice many of the same stocks that were listed last weekend, will appear again. These are stocks you want to pay extra attention to. It means that the stock pulled back, then bounced up again to confirm the Alligator pattern from last weekend’s stock screener scan.


Notice LUV is hot this week with the price of oil dropping. Airlines stand to make more money, a lot more money, when the price of oil drops.

The top performing stocks from this weekend scan that were listed within the last 6 weeks that warrant your attention and further research are:

IBCP = +47%

RUSS = +44%
ESIC = +38%
INDZ = +35%
ITPOF = +32%
PGTI = +31%
WSBF = +25%
LEDR = +23%
NEPT = +23%
PENX = +18%
RDI = +18%
BZQ = +17%


Becareful taking any long positions in any stocks while we are in a strong downtrend.

I do not accept payment to list any stocks on GuerillaStockTrading.com and I do not hold any of the stocks listed in my personal trading account.

Make sure to bookmark http://www.guerillastocktrading.com and return each Saturday for new hot stock screener picks.

Song: Could Have, Should Have, Would Have
Artist: Lance Jepsen
Available on iTunes now at http://itunes.apple.com/us/album/wall-street-working-on-edge/id529290850

Entering the Stock Market Game Successfully

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If you are considering entering the stock market game, all of the various and sundry advice out there regarding how best to turn a profit and maintain a healthy portfolio can be terribly overwhelming.  Learning how to make money in the stock market requires a willingness to fail.  Unfortunately, this failure can often result in losing hard earned cash.  If you are extremely unlucky, it can mean losing a great deal of it.  For most new investors, the


consideration that causes the most concern, is figuring out the best entry stocks.  Just as with a new job or new business relationship, getting off on the right foot can have make a very appreciable difference to the success and longevity of the venture.

If you are just entering the trading realm, there are a few easy things to keep an eye out for when selecting entry stocks.   Buy stocks that are currently priced below their perceived value.  In general, their value with increase, positively affecting your portfolio.  Additionally, invest in companies in which you believe.  Look for companies that have great customer service and employee records.  There is a good chance that these companies will remain stable, as they are clearly organized and well run, from the top, down. 

In order to help you buy stocks that are currently priced below their perceived value, you have the P/E ratio. P/E or price to earnings is a way to measure a company’s value relative to its current stock price. Yahoo Finance provides an awesome tool that uses the P/E ratio called the Industry Browser. The way to use this tool is to look at the P/E for the industry as a whole, then find the company with the lowest P/E ratio when compared to the P/E average for the entire industry.

You can use this awesome free tool provided by Yahoo Finance by going to: http://biz.yahoo.com/p/753conameu.html

If you decide to use this tool just remember, it’s a good starting point for research but not an end in itself. There are reasons that companies are valued less relative to their peers. There are usually problems with the company or lowering forecasted earnings that have caused


investors to undervalue these stocks. Use this tool in combination with other tools in your arsenal.

Another tool you can use in searching for undervalued stocks is the stochastic. When the stochastic is below 20, its being undervalued and is often a good entry. When the stochastic is above 80, its being over valued and is not a good price level to enter at.

Institutional Traders Report and TICK Animation

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A +1 on the TICK is a buy order, and a -1 on the TICK is a sell order. In the perfect world, market makers are able to match up every buy order with a sell order and by the end of the day, the TICK has a reading of 0.

This simple concept and TICK chart allow us to peek into the market at a depth that’s normally closed off to amateur traders. It allows us to form a thesis on what institutional traders are doing. The theory is that market makers have no problems matching up buy and sell orders coming from amateurs and most institutional traders as well. However, on days institutional traders are very active, their buying and selling across entire sectors make it too difficult for market makers to match up every buy order with every sell order. As a result, temporary extremes form on the TICK. Anything above 600 or below -600 on the TICK suggests institutional trader activity. Remember, it’s institutional traders that create trend waves in the market that us amateur traders can surf for profits. Amateur traders don’t have the buying power to move markets like institutional traders. For this reason, it’s important to watch what institutional traders are doing in the market.


I have created an animation of last week’s market action in the TICK. This animation shows that institutional selling most likely took place last Monday, May 14 2012, and Thursday, May 17 2012.

In this research report, I then examine the news stories on these two days and make an educated guess at the news stories I think caused institutional traders to sell. I do this to further get inside the minds of institutional traders to learn what they are focusing on.

Here are the cheat notes from my research on the most likely reasons institutional traders sold on Monday and Thursday of last week:

* Monday news that most likely led to sell off
- Greek politics no coalition government likely refusal of further austerity cuts for next EU bailout payment
- Raised probability Greece to leave the Euro
- Moody’s put JP Morgan on review for possible downgrade


* Thursday news that most likely led to sell off
- Jobless claims unexpectedly increase
- JP Morgan losses increase, can’t unwind trade as short sellers move-in
- El Mundo reports run on Spain banks, $1 billion pulled in single day after Moody’s downgrades 16 Spain banks

We can also use the days of institutional selling on the TICK to look at sector performances for those days to see WHAT institutional traders are selling. On Monday, institutional traders primarily sold out of Financials, Energy, and Consumer Discretionary. On Thursday, they mainly sold out of Consumer Discretionary, Materials, Industrials, and Financials.

Song: Could Have, Should Have, Would Have
Artist: Lance Jepsen
Available on iTunes at http://itunes.apple.com/us/album/could-have-should-have-would/id527223212

Recession Spreads Across Europe Animation

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Major GDP numbers were released over the last week that shows 13 countries in Europe are officially within a Recession.

The classic definition of a Recession is used which is 2 or more consecutive quarters of negative GDP growth.

I have done my best to use the European GDP numbers to create an animation that shows the spread of the “contagion” across Europe. This animation will show all European countries in a recession as of May 20th 2012.

The idea that the contagion was somehow contained to Greece because of the heroic Greece Bailout was totally bogus.


The two countries we need to watch that rumor has it are very close to going into a Recession are France and Germany.

The G8 Summit at Camp David this weekend has produced statements from leaders that are beginning to show Euro-zone leaders are realizing that just cutting government spending and cutting government jobs is not helping to stop the spread of the Recession across Europe. In fact, it’s creating a lot of social unrest and problems for elected officials in numerous countries. Rumor out of Camp David is that European leaders are looking to scale back so called “austerity” measures and focus more on creating jobs.