Thursday, April 16, 2009

Keep on pushing !!!!

Yesterday
Another day of crazy market moves. We stayed in a fairly narrow range off the open and kept on testing both lower and upper boundaries until we broke out of the range late afternoon. So what caused this rally? Yet another improved economic indicator (no comment yet again).

So what happened? It seems AMEX came out saying we have less credit card delinquencies then the month before. Yay !!! the recession is over, the bottom is in, a hand full of people started to actually pay for their bills, instead of spending it on a new toy, big screen TV or anything related to consumer spending (hint hint) - this is the sign we have all been waiting for. Forget about the quadrillion that is somewhere there on the side in some uncontrolled market, forget about cooked up books and unethical accounting reports, forget about housing, debt, leverage or the fact that no one can get any money from banks to innovate or grow. People are paying their bills a bit more now, thats worth at least 2% more on the market. Big price move, NO volume. Does not get more bearish then this.

We did top out at 852 and yet again I did not short even with such a bearish move.

Today
JPM earnings today at 8:00. I may make a move pre-market here around 8:00 when the fireworks will start. What do I expect for JPM earnings wise? Have to admit I am not so confident on a call here. I could go either way and we will know at 8:00 what direction we will take.

In terms of direction for the day, I will post more information once we see the earnigns report. My perfect trade plan of course would be to re-attempt yesterdays top and hit the 856. Here is where it will get interesting, it is very possible that we keep on pushing further up the range to get back to the 864 and possibly hit the first 871. If we are to see a trend up here I will scale in with hedge at the 852 as I expect it to top out here for the short term at least.

The other interesting observation is the lack of volatility we are seeing this week, usually during option expiration week we have much stronger moves and we have not yet seen those. This could lead to quite a bit of volatility today and tomorrow so be careful and keep your stops tight on day trades.

Keep in mind, the top yesterday may have been the top of the new channel I had described in yesterdays review. Today we will know for sure what pattern we will have to trade with, either uptrend channel (very weak at this point), the new downtrend channel (medium probability), or still within the wedge formation (highest probability).

Trade Review
(new section that reviews twitter trades in more detail, may actually add graphs going forward so we can analyse what could have been improved - every trade can always be improved, there is no perfect trade)

I did a few trades yesterday, long SSO in the morning as posted in twitter, which worked out. It had a typical 3 wave pattern with me closing out on top of the waves (again as posted on twitter and described in yesterdays comments).

I tried shorting mid day, first SDS got stopped out, I tried again and got stopped again. The second trade would have been in the money if I had managed entries and stops better. As you remember I had stated via twitter that if I did not see a sell off within 5 minutes I would close my position. The sell off never came and I had widened my stop after I saw the bigger jump on the 1 min as I wanted to protect myself from whipsaw action. As a result I had to take a much larger loss then I wanted right at the top. I went against my own recommendation. Bad trade management on my part.

1 winner, 2 loosers. Whenever I have a loosing trade strategy, the next strategy I take I generally use more money, not a lot but generally 50% more then previous position. Some may say its a mistake, I look at it from a perspective of wrong once, chances of being wrong again are less on second try, if and only if you trade a different pattern/strategy. Well it was the same pattern I tried and failed again. Managed to close the day up but not by much due to large losses on the second SDS trade.

58 comments:

  1. having problems with tradestation (my platform). They have been offline for the past 2 hours while I am in the middle of a trade. Bah. Cannot get anyone on the phone either. Anyone else using tradesation here?

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  2. just came back up just to see my futures contracts up 1.2% lol

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  3. I use TOS. You prefer Trade Station?

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  4. crazy markets yet again. Ok here is a trade update. If we see continuation on the upside get ready for a possible top at 10:05-10:10. The next 15 minutes after the top there will be very important to determine if we have another wave coming or if this is the top for the week.

    If we sell off right away it takes a bit more work to make a trade work here as it could be a mere profit taking to go higher. Profit taking should be done by 9:50 and bounce to go higher to mark the top during morning hours.

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  5. never used TOS, started with tradestation and been using it ever since.

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  6. ok time now, bounce here to go higher or just mere distribution to continue on the lower side. Volume has been better for once.

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  7. hi chris, do you think were approaching a good point to take a short long?

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  8. tradestation down again. On a day like today :(

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  9. working again, wonder how long. I was short off the open but covered as I did not see the volume I was looking for. Its a bit hard to say now what will happen.

    Keep in mind what I said yesterday regarding the new downtrend channel with a top of 856, top for the day was the open at 858 and sold off right away. So this may be the work in the new channel here. If this new channel is indeed intact and we will see a rally we would need to stop around the 850-855 range.

    We also still have our wedge trendline on the lower end. So its a bit difficult to say from here. As you can see my trade plan did not work out the way I anticipated so I need to switch it up a bit.

    As another FYI, whenever I make trade plans before the day starts, and it does not play out I normally stick to smaller day trades. There is no real decision yet but the new downtrend increased in probability.

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  10. looks like rally is in the works here. what do you think Chaugner?

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  11. 856 top for new downward channel still holding.....would have liked to have seen a sell off but no real volume.

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  12. yeah the new downtrend channel is holding but keep in mind that this is a pattern that is just starting to develop and can very easily get invalidated in the next 30 minutes. Based on what I am seeing, its actually more likely to have a rally here then a sell off. However nothing something I would feel comfortable trading. Looks like we may have to sit this one out again.

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  13. there is a small chance for a day trade here. Long 852, stop loss 850. only 2 points or risk and medium probability trade.

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  14. again only a small tiny "dip your toes in the water" type of trade. Not worth to chase it in my opinion.

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  15. well there it went lol 1 min after I had posted. Not sure though how much longer this is going to run.

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  16. waiting for a possible short setup now on the double top for the day.

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  17. good call!....i'm itching to short, looking for best point, thought it might be at 855 but it just rallied

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  18. yeah but most trades are not worth it. This market really has me puzzled, so much negative news, option expiration week, yet we are not doing anything.

    Patience, we will have much better opportunities to come very soon.

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  19. ascending triangle here from yesterdays low leading all the way up here to the top line. If it materializes we will have quite a big move up.

    Its very possible, we are still holding the trendline. Just moved my stops and have limit buy orders ready ;)

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  20. Looking for a sizeable bounce in this 854 area. Use caution. (depending on how you are setting up)

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  21. what price are we looking out for as the signal of the breakout?

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  22. yeap, potential base setup for break the high of the day. Very possible.

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  23. Adam, look at the previous low at 12:45, break of that and we may go back to lows of the day, we rally strong we take out the high of the day.

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  24. Thanks for the explanation,appreciated.

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  25. lol well thats how you build a base. May include that in a trade lesson to make it easier to understand. I have seen this so many times now, this time did not trade against it.

    Ascending triangle, breakout of the ascending trendline to go back to previous low, then rally to take out the high.

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  26. we may get some action after all today. 862-864 here we come, if we can power through that in a frenzy lets get ready for a short/medium term top at 871.

    Do not think we have the momentum for that today but let the market tell us.

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  27. we made new high. How does it look? a rally? I am long SSO small position with tight stop at 50 EMA

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  28. I have the exact same target of 771. I'm also keeping the possibility of a blow off top in that region due to short covering. That could take us to 779. I'll watch this one from the sidelines with some popcorn.

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  29. All FAZ addicts -- I'm thinking the rifin might top out around 605-620 area. It would take a strong move to reach that today. But this is certainly in range over the next few days. That would set an ideal FAZ target (if there is such a thing) in the $7.80 - $8.50 range by my calculations of the underlying.

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  30. here is the thing I am afraid off, that number 871-878 may never come. I think institutions will start selling off before then, the same way my 640 never came and institutions started buying before then.

    Bears are so freaked out now that no one is shorting anymore, everyone wants to wait for that perfect setup. 878 is that setup, we may never get into 870's.

    Again I am not sure and even now I am not following a real trade plan for the top. It seems the wedge is holding up very strong here, range is so tight here for the wedge, it can only go up to make a new high, if market is unable to do that, well the only other way is breakout of the wedge, which you know what that means.

    If we break yesterdays low, its going down strong at least for a strong retracement.

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  31. I feel the same way. start building short from 865 onwards. too many are waiting for 880. or it could go 890 and then fall down steep.

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  32. SDS @ 66.28, waiting to buy more.

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  33. wedge on the 1 min with false breakout on the top, needs to come back down. (ignore the open today and look at the top from yesterday to draw upper line, yesterdays low along the bottoms.

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  34. could be, but I am hedging with SPY calls as I add SDS. So be careful with your risk and money management. This has room to go all the way to 878.

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  35. per CNBC

    "General Motors CEO to Provide an Update on The Company's Restructuring Friday (story developing)"

    either 20 points up, or 60+ points down. Decent risk reward. Make sure you are hedged for this move.

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  36. its definitely not an easy trade, and there is no need to catch the perfect top.

    Risk management here is more important then potential gains, do not look at how much you can make here, look at how much you can loose, that should be the most important at this point.

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  37. Again out of SSO and in SDS small position.

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  38. where would you put stop loss at? Or play it out? GM will declare bankruptcy soon. That should have effect on down side.

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  39. SSO april24 call is only 10 cents now. If it goes up 20 points tomorrow that should provide decent hedge. If it goes down 60 points let go your 10 cents. what do you think? would buy in the money like april 23 for 50 cents? with SSO at 23.35

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  40. very wise words earlier chris!...as you cautioned..were now seeing a further climb..possibly to the 878?...waiting to go short...not sure how its going to close or whether to go short and hold overnight but watching closely....

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  41. thank you chris! i needed a clear indicator like that! much appreciated! one more little push up i think and thats it.

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  42. there are no guarantees in the market, but its a pretty strong point there. I think we done on the upside, just shy of a major short entry point, but I could be wrong. Will be interesting to see how many will chase the short and sell into this after we break down by more then 3 points.

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  43. Unbelieveable!! lol ...keeping an eye on the Dow

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  44. have to leave now. will be back online in about 45 min.

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  45. back now. What a day. So how did everyone make out for the day position wise? Nailed the entries? Already down after hours so lets see how we will do tomorrow.

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  46. I am in SDS at 66.10. may add tomorrow, if we see any push to 880. Chaugner, great work again and thanks for your guidance. I do understand there is no guarantee but your calls have been very good.

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  47. Your commentary was amazing!! please keep it up, i'd be lost without it. Thank you!

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  48. Took a small FAZ position at 8.85 and loaded up on SDS around 65.50.

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