Thursday, April 30, 2009

Nocturnal Action ...

Getting ready to leave the UK today. Lots of packing =)

My trade plan as per yesterdays comment was as follows. Short above 890 or below 872. Well we never managed to get to 890 and I had added some shorts after we broke the 874 level. I had anticipated further drops to close in the 864 range but those never materialized. I kept the short into the close which turns out at this point was quite a mistake. I had a probability plan for my position (close at or near 864) that did not occur so I should have either exited there, or added a hedge. Hindsight is 20/20 but its important to follow entry position probability rules, something I did not do yesterday.

Futures wise we are currently at 888, just 2 points shy of my preferred short point. While futures are never a real indication of where the market will head this overnight action here contains a lot of volume, a lot more then usual at this early hour.

As I am in a short now I have to worry about money and risk management. 895 is an acceptable level for the high so I have no choice but to carry my average price of 874 with me all the way there. If we are to get to the 890 range I will add the other 50% of my intended position at this level. At the same time I will wait for a slight pull back here in after hours and go long futures to hedge the current short. Similar to all those other times in the past the biggest priority now is to protect the position and of course my capital.

Can we sustain another GAP up? Yesterday, today, no fills, on top of all other previous unfilled GAPs that now amount to 6+%. We will have to see.


  1. Trade Plan: very similar to yesterday. 890-895 is my perfect short entry to add the other 50% on my existing short.

    Will keep short at this point unless we stay above 890 for more then 60 minutes. If that will occur I will post updates in real time.

    I do not expect a big down day today, nor do I expect a close at the lower ranges for the day. However I am watching volume here carefully to determine if this is a bullish close or not. Volume will be very important today, more then most other days so watch the 5 min bars as we approach tops and bottoms. Look at volume on the 1 minute bar for better visibility on action.

  2. Thanks very much for this and good luck with the packing/travel.

  3. ok have to admit I am a bit unsure of this action here. We just filled the GAP. The question is whether or not this will rally back up or we continue lower towards the 864 as the next target for the day.

    Based on the action we have seen this far it would be more probable to rally back up towards 882. We are not seeing enough volume on those down moves. Not enough to shake out all the longs here. If we get another 5 point push down on higher volume we may see quite a sell off today leading towards 857 or possibly even 850.

  4. HI Chris, I was away for the whole day ans sometine is it is good. I was down 10% in morning and and at the close I am 1% up. What do you think if it open gap down sell the shrts and buy around 880-900 region?
    Many bear blogs are very scared to remain in short because of fear of rally to 900-1000 -- at least a talk. so many have stops at around 880, 890 900 etc. May be bulls will run those stop and then take profit for big the down move.

    that is one reason, we may not see the 890s area again.

  5. added a new post to address your questions ....