Needle in a haystack

Faceless Bureaucrat:  Having spent an hour or so putting my checklists together I have today spent a few hours wading my way through sectors and stocks to see if anything fits the bill - or ticks the boxes (something we faceless bureaucrats just love).  It has to meet the exacting requirements I have been taught.  Now maybe I'm too fussy.  Or perhaps unable to see what's right in front of my nose, but it's like searching for a needle in a haystack this search for the elusive trade.

I found quite a few sectors that are trending quite well - I saw evidence of recent "golden crosses" where the 50 day moving average crosses up through the 200 day moving average (showing an increasingly strong uptrend) such as on Household Goods.  I saw evidence of a sector stumbling as it approached a Big Number - in this case 4000 (Media Sector).  Apparently Big Numbers have this affect quite often - it's all to do with trader psychology.

I saw that the Banking Sector trend looked pretty indifferent and really quite shady and that Construction is flat. I'm learning something about what's going on in the real world from seeing these charts it seems, which is quite interesting but not making me any money.

Having found some good sectors like Travel & Leisure, Pharmaceuticals, Mining and Automobiles, I've drilled down into the stocks themselves.  As I'm looking to go long (buy) in line with the FTSE going up I'm looking for evidence that price action has retraced (moved down) to a moving average line and is about to bounce back up.  It's important I don't get carried away, as amateurs like me do, by seeing sharp moves upwards.  The traders say "If you've seen the move, you've seen the move" - which means you've missed it.  Move on.  Don't try to chase a trade, you lose money. You have to be able to recognise the signs that the price is about to move in your direction and put the trade on before the price moves substantially - catch the move.

I'm looking to find the price hitting the 50 moving average (MA).  This is apparently the best one as price action always keeps returning to it eventually - it's like it's on a piece of elastic and can only stretch so far away from this line before springing back to it.

But each time I find price has returned to the 50 MA I find some other problem with the set up.  Maybe the trend looks like it's starting to turn with the higher highs (peaks) levelling off and even a lower low (trough) appearing.  I'm looking to go long (buy) and so I must have continually higher peaks and higher troughs as evidence of a good strong trend.

Or I find that there are what's called "roadbumps" in the way of my expected increase in price.  This might be a big number in the way and evidence that the price has reached this before only to be pinged back down - and if this has happened more than a couple of times this is called "resistance" - it's like an invisible ceiling holding the price down.  I don't want a ceiling blocking my trade from moving up in the right direction.

And finally, I've been checking an important indicator called "MACD" which shows whether the moving averages are converging or diverging and if it doesn't look similar to the pattern on the chart then that's a danger signal and I should avoid the trade. That managed to wipe out the last few promising looking trades - MACD was showing lower highs or lower lows and indicating that the trend may be tailing off.

But at least I've noted down a few stocks to watch over the next few days in the hope they will start to set up in the way I need to place a trade. 

So I'm calling it a day for now without putting on any trades.  But I've been a good girl and done my work as planned so I'm allowed that glass of Chablis as a reward.  Apparently it's important we reward ourselves not for winning trades but for following our plan.  Faceless bureaucrat likes that concept.

Looks like bad assed trader will have to wait a bit longer to come into being....