Short term trader or long term investor? Here’s your entry on CME. (March 27, 2015)
Our “Free Chart” video for this weekend is CME ( NASDAQ:CME ). Here’s the deal, look at the 50-day moving average, that’s the red line, this is like super easy, forget about this stuff here that was just a little “whoop-de-doo”, it just generally marks the trend line, where the stock pulls back to. So this was a bigger decline right here, but ultimately what was it? It was still a higher low than the last one; we’re still seeing a series of higher highs.
What that leads me to is this right here, the 50-day moving average can used as a stop for this buy on the bounce right here. What you’re really looking for is confirmation on Monday before you do this, let’s look real close here; $95.00 is really what I would call the line of demarcation and what you want to do is wait for the stock to start trading, I’m actually doing this about ten minutes before the close on Friday, wait for the stock to start trading above 95.00, that’s when you go ahead and make your buy.
If it’s a short-term trade you’re really looking for $5.00, it’s kind of a quick trade, you’re hoping for $100.00. You’ve got a stop just a little bit below here, 93.68; we’ll keep it though below the 50-day moving average. You put a stop here and then this is what you’re looking for; Boom! You’re looking for that kind of bounce. Now, that’s for you short-term traders. If you look at a weekly chart here you can see this is in a nice uptrend, long red box, the ones before have actually turned out to be pretty good buy points.
This is an ADX indicator and the black line indicates strength, strength of the trend, the higher the level the stronger the trend. For example the black line was really, really strong. What was that reflecting? That reflects a really, really strong uptrend. You want to look at that and then you want to look at the green and the red line, green is good, red not so good. You want green over red for uptrends. When the green is over the red, and again this is a weekly chart, when the green line is over the red line that indicates that the trend is upwards, it’s a bullish trend.
So you say, “Okay, green over red, that’s a good thing, uptrend.” Now let’s go back to the black line, the signal line, how high is that? It’s pretty high too. So we’ve actually got a pretty strong trend here. By the way, note here, black line is low; it’s really low, the green and red line can’t figure out what the heck’s going on. By the way it’s a lagging indicator, they all are, even those that are touted to be leading indicators, that’s a bunch of “BS”. The only leading indicator is fortune telling. Everything is based on prior history, which can change at any time, as far as going forward.
So we look back here and theses are all clustered together. Well we’ve also got a sideways 50-day moving average, stock right back to where it was before, nobody knows what the heck is going on. So when you’re looking at this here, I’m giving you pearls here, when you’re looking at this back here it’s really not to say that this is going to move up as opposed to succumb to this resistance here and move lower, so there should be a lot of uncertainty.
You’re waiting for some certainty to the uncertainty and that’s what we’re getting here. So we’ve got a strong uptrend, green over red, black line high, then we just look at the daily chart and here’s our entry. So if you’re a trader, there’s basically two ways to look at this. If you’re a trader buy now and sell here; if you’re an investor buy now and then zoom out and let the trade work out.
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