Time Frame Trend Configurations

 

Here are five frequently encountered configurations and the recommended actions based on the WMA trend.

1) Daily is positive but both the weekly and monthly are negative. 

Enter the new daily trend with caution. The lifespan of the new daily is clearly limited because the stronger trend forces are pressing down on the daily and limiting its progress. If a positive weekly trend is achieved during the trade, overall trend power is enhanced and the trade can be extended. 

2) Daily and weekly are positive but monthly is negative. 

Enter only on a new daily trend that is within the context of a continuing positive weekly trend. If a positive monthly trend is achieved during the trade, overall trend power is enhanced and the trade can be extended. 

3) Daily is negative but weekly and monthly are positive. 

Enter only on a new daily trend that is within the context of a continuing positive weekly/monthly trend. 

 
4) Daily is positive but weekly is negative and monthly is positive. 

Enter only if the weekly again becomes positive. A word of caution here. A negative weekly can cause the positive daily to turn negative. 

5) Daily and weekly are negative but monthly is positive. 

Enter only on a new positive daily trend, but with caution. If a positive weekly trend is achieved during the trade, overall trend power is enhanced and the trade can be extended.

Notes on Above

The daily is key and the start of any new trend. 

Any isolated positive trend without companions to support and extend it, is not a favorable configuration.

Timing Method & Entry

My preferred timing method (see #3) is when a new positive daily trend has just emerged back into an existing positive weekly/monthly trend. This configuration has very high probabilities of success, and in fact, is #1 in profitability and reliability, particularly after a prior 7-21 day decline in the daily.

At those points, we also require GPS confirmation guidance on trend direction and duration in any time frame. At least one other confirmation indicator should also be present.

For maximum effectiveness, enter as near as possible to the beginning of a new trend, not after surges and certainly not in the middle of a trend. 

In Conclusion

Markets are all about trend power. Stronger trends, such as weekly or monthly, have greater weight and power in the equation than the daily.

The key question to ask that leads to investing success is simply this; “What is the trend?" Then watch for the daily trend to emerge or reemerge back into any positive weekly or monthly time frame trend.

On the time frame clock, these configurations are footprints to the future.

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Trading Checklist

Purpose:

This purpose of this presentation is simply to bring several technical elements and techniques from different articles into a single checklist and trading plan.

Modify it as necessary to account for your comfort level, preferences and trading style. You may also want to print out the body of this guide and make your own notes.

Goal: 

The primary object for serious traders or investors is to improve one’s trading performance and prospects by having a system discipline in place that will deliver reasonable results over time for the benefit of your family and future.

12 Point Plan:

This 12 point plan for uptrends includes techniques, technical details as well as questions to ask yourself before trading. Trades in downtrends would take the opposite position. 

1) Check Finviz for the general market background including charts, economic calendar and news of the day. 

2) Your screening program for stocks in up trends must first include a WMA (18/9, 25/8 or equivalent) in a positive daily posture. All new trends begin first in the daily time frame before any possible migration higher. 

3) At least two other positive indicators must also be present such as the vital SAR or GPS, +DI/-DI, MACD, Coppock Curve, Trix or other indicator of your choice measuring different aspects. Last indicator to turn = entry point. 

4) Does the price picture have a positive slope? 

5) Is the SAR or  GPS below the price in the daily time frame and preferably in the weekly also?

6) Is your selection at or near the beginning of a new trend and as close to trend lines as possible?

7) Is a positive weekly trend also evident? If so, the prospects are more favorable and the trade duration may be extended.

8) Have I checked time frame trend setups against the current configuration?

9) Have I checked Finviz for possible high short interest fuel?

10) Is the stock in a favorably trending sector or industry? Check Finviz.

11) What are my objectives, time horizon and reasonable return expectations?

12) Does the total weight of the evidence suggest I place my order now, research further or do I need to paper trade first to build confidence?

 Preferred Timing Method & Entry:

My preferred timing method is when a new positive daily trend has just emerged back into an existing positive weekly and monthly trend. By history, this configuration has the highest probability of success. 

For maximum effectiveness, enter as near as possible to the beginning of a new trend, not in the middle of a trend.

Conclusion:

In summary, it’s all about having a disciplined plan, telling time and indicators to support that effort. 

Here's to successful trading!