Wednesday, April 29, 2009

04/30/08 Market Recap

FOMC promised and FOMC delivered, one of my personal rules is to not trade during an FOMC day or to do so on a very limited basis. So this morning instead of picking up two long I closed out two of my short positions. Over all not a good day as my shorts were up more than my longs, I also got stopped out of my EEFT short. The US dollar also took a big hit as well. For the last month lot of people have been saying this market is overbought and it can't go up anymore, and yet it keeps going up. We never broke the confirmed uptrend that we have been in, and i'm kicking myself for not noticing the obvious trend and instead trying to pick the top.

The SPX hit the key level of 880 that I have been talking about practically in every post for the last 10 days, todays high was 882 from which it immediatly went all the way down to 869 and ended up closing at 873. That was an amazing shorting opportunity as it was a covergence of a fib fan and a 23% retracement, I didn't take advatage of it as I was busy at work. This will provide some fairly good resistance if we come up against it again, a break through 880 and a close above will be very bullish. I would love to see this market go down as I see many good shorting opportunities and it will give me a good chance to load up on some longs. But in this run up we have blown through every resistance level, so it might do the same with 880 and that 10 handle down move was all that we're going to get.

New short position: AIT
















New long position: STZ
















On a side note, I got out of my CAVM long a few days ago, they just announced earnings after the close and are down 8% after hours. I had a pretty decent profit and I decided to take it because there was too much risk going into earnings. Earnings are equivalent to russian roulette in our current market, when I am swing trading(as opposed to buy and hold) I try not to hold equities over earnings. Of course it can go the other way as well, but I don't feel the probabilities are in my favor so I stay away from it.

Tuesday, April 28, 2009

04/27/08 Market Recap

More of a nothing day today, didn't actively trade and my portfolio ended slightly higher. As of typing this the ES is down over 13 handles and it is now at a critical point. If we see a professional gap down(+100 YM) I will look to enter some short positions. The market is still in an uptrend and there is still no reason to fight the tape. But it does look like that we might be in a topping process.


Another thing to note is that the NQ touched a key resistance level at 1385 and was automatically met by heavy selling. Bulls need this level to broken with good volume.

Sunday, April 26, 2009

Weekend Wrap Up (04/24-04/24)

Before I say anything I have to thank SOHU and PLCE for saving my ass this week, I got stopped out of several shorts this week but these two longs more than made up for it. I took off 25% of my position in both of these. The week started great for the bears (me included) but as it ended the NQ had made new(current) highs and the ES got with in 3 handles of its previous highs. I got stopped out of MET, JPM (because they both made new current highs) and took profit on my GENZ short which seems to be making a double bottom.

My portfolio is equally weighted to each side and once I get a better feeling for where this market is going I'll pick a direction. But I think we will see a correction soon as I see a topping process in the markets with less stocks making new 20 days highs as the market is making new highs. The ES broke up out of the triangle I posted on thursday and back into the wedge, we seem to be stuck in an upward channel. Breaking 871 will be good for the bulls and a break of 822 for the bear case. The ES is still coming up to that major resistance point of 880 (23% retracement and fib fan). I'll try out some shorting opportunities if we get to that level.

Missed opportunity: TRLG, 10 days ago I said it would be a good short unless in breaks that 14.50 resistance. Well it broke and it hasn't looked back.

Example of a good breakout stock using volume as a buy signal, FIG:

I have been seeing this pattern a lot recently, a stock shoots up on high volume then there is a period of consolidation on low volume(buy signal), which then shoots up again on high volume. You can look at FEED for this same pattern.

Friday, April 24, 2009

04/23/24 Market Update


ES looking like it's getting ready for a real move to the downside. Let see if this picture plays out.

Tuesday, April 21, 2009

04/21/08 Market Recap

Just a quick update as I won't be very active this week, I added some shorts and took profit on my CAVM long. I am definitely more bearish right now, my shorts out number my longs 2-1. Looking at the ES chart I am looking for rejection of the 845-850 level and for the wedge that was broken to hold as resistance. If it doesn't and we see a strong up move on Wednesday I will buy back some of my shorts.

Sunday, April 19, 2009

Weekend Wrap Up (04/13-04/17)

Not the best of weeks for me as I had a drop in my overall portfolio. We saw the s&p move right up to the price of 875 which I predicted last week when it was trading around 830, did I capitalize on the move up? No. No i didn't. My portfolio was weighted to the long side but my longs didn't perform the way I had hoped. On friday we touched 875 and instantly started to come down closing at 869. I'm predicting a move down from the 785-785 level down to 770 which would be a 50% retracement and then we start another uptrend from there. If that down trend breaks at the 61.8% level (745) then we could see new lows. If the fib resistance doesn't hold and we close above 880 on high volume then this prediction goes out the window.

Again I will be very busy this week and will not be actively trading, I'll just let my positions (which are already small) run and see what happens. I am currently leaning more towards the short side but only slightly. The market still seems bullish so there is no reason to load up the truck on the short side until we see some real signs of a market decline such as lower lows and lower highs, a negative breadth, and a break of the 5 day moving average.

I am looking at this developing wedge in the ES (which is a bearish pattern), a break of the wedge to the downside will be very good for the bears.













We are seeing a lot of garbage stocks that didn't really participate in the rally starting to make huge moves to the upside, this may be a sign that the market is coming to a turning point. Dr. Brett describes our current situation very well:
"Some of the sectors gained Technical Strength on the week, others lost a bit. This kind of mixed performance while the overall S&P 500 Index is making new highs suggests that the rising tide is not lifting all ships equally. I am watching this carefully, as such slowing down of strength is what we'd expect to see prior to a market consolidation" Link

I leave you with another visual summary of the current economic condition.


Wednesday, April 15, 2009

04/15/09 Market Recap

Well all my longs were down today and all my shorts were up, that sums it up pretty well. My stance on the market has not changed and I think we will see that 875 level before any real retracement. The only thing that will change my mind will be a break and a close below the 800 level in the s&p. Today my portfolio decreased by a few positions which I got stopped out at or took profit, BMS just wasn't going anywhere and when positions don't do anything for long period of time and don't progress towards my direction I tend to cut them loose and it has usually paid off for me. My portfolio exposure is much smaller now and I will be keeping it that way for the next week or so, i'm going to be fairly busy so I won't be paying too much attention to markets other than updating my stops and being aware of the market outlook. Will not be looking to add any new postions.

We are the bottom of that assending trendine which we broke through last week and it seems to be holding up as support. 875 here we come.

Tuesday, April 14, 2009

04/14/08 Lesson Learned

I got out of two trades today which I realized went against my rules, both of them unfortunately had to come at a loss. I first entered BAC as a short but what I was doing was exactly trying to pick the top so I got out in the morning at a small loss, I also posted a chart of MDOR (which I have taken off now) which looked very attractive from a technical stand point but I don't trade penny stocks because they are very sporatic and are too hard to predict. I entered MDOR at .85 and ended up selling it at .75 and took a pretty nice loss. One of the hardest things that I still have difficulty with is sticking to my rules. I didn't follow them today and as result paid the price. If I had stuck to my rules and didn't make those trades my account would be down 0.8% instead of 3.7, sticking to your rules makes a big difference.

It was a good thing I was hedged today because a bad day could have turned terrible. In unpredictable markets(which is almost always the case) it is important to be hedged, I am generally long right now and on days the market goes up I don't see massive gains which sucks but on days like today I also don't see massive loses. I find it very important to stay with in my risk tolerance, once I go outside of that I start becoming a bad trader. One of the reasons I have left the yen behind is that the moves were simply too big for someone with my account size.

Tomorrow "should" be an up day, as you can see from the chart we are at the bottom of the channel if this holds I will still be looking for that 870-880 range but if it breaks and we go down on strong volume I will be looking to go short specifically if we break the most recent low of 800.


Potential long candidate: WNR














Potential short candidate: TRLG

Monday, April 13, 2009

04/13/09 Market Recap

Today was pretty much a nothing day, my account was up a whopping .2%, I also got out of my AAPL short in the morning for a small loss of .5%. I just didn't have a good feeling about apple, this market has been up a lot and it seems relentless, and as long as it is showing strength there is no reason to go against it. I keep trying to pin point moves in the market with some of these short positions that I keep entering, but there is no point in trying to pick the ultimate top because that is next to impossible to do. I want to focus more on capturing the middle 80% of a move, wait for a stock to confirm the position which you want to take. If a stock you want to short keeps going up day after day wait for it to lose some momentum and once it starts making lower lows and lower highs that's when you can get in on your short position. The risk to reward ratio is much more to your advatage this way rather than trying to pick the ultimate top of the trend.

Today I trimmed my position in ORH in half and added a new short position in GENZ which looks like it is on the verge of breaking down, i'm looking for a break of 55. I am aslo thinking about entering a short position in BAC in the morning, I think if this market makes any sort of down move BAC will get hit hard. My stance on the market still hasn't changed I still think we will go up to that 870-880 area before making any sort of meaningful retracement. This market has been overbought now for weeks, and even though we have had this major run up we still have a declining 200 moving average which still means this is a a bear market rally, money is still net liquidating which is something a lot of people pay attention to.

Here is a potential "lottery" longs which I am looking at:

IO

Saturday, April 11, 2009

Weekend Wrap Up

I was trying to think of a way to sum of the state of the US economy yesterday when I stumbled upon this picture. You can go on and on about all the things the government is doing to try and stop the bleeding, but sooner or later that cow is going to die. With it so will the market.

On thursday I had another positive day but considering the big up day my longs really didn't do all that much, they were all up around 1-4% range so that was a little disappointing, but on the other hand my shorts were barely up with HRL ending up down.

In the morning I got stopped out of my DPL short at 23.42 which proceeded to go steadily down for the rest of the day closing at 22.75, but I have to stick to my stops based on what the chart is telling me disregarding any emotion I may have. I also shorted AAPL as it approached a 38.2% retracement and I believe that if the market decides retrace Apple will follow it closely.

I'm still leaning to the bullish side but very caustiously, I have some tight stops on my longs to protect my gains, but this market look like it will be seeing the 870-880 level soon. On thurdsay it broke through an important downtrend line that had been developing since October and is coming up to that key level of ~875 which is a 23.6% retracement from the bottom converging with a fib fan drawn from the 1932 low. This will act as very strong resistance and I am expecting a temporary bounce down from there.

Wednesday, April 8, 2009

04/08/09 Market Commentaty


Well the market didn't end up opening lower with any negative sentiment so I didn't enter any shorts, I attempted a scalp trade at 8:20am shorting the NQ at 1288 due to an ambush short which I quickly got out of at 1289.25 because I got bad feeling which turned out to be right as it jumped up to 1295 a minute later. We remained above that key 1285 level in the NQ (~812 in ES), we are also back above that trend line into the up channel and saw a nice bounce off the 23.6% retracement. If we break 834 I will be bullish but if we head lower and complete a mini double top we are in right now I will look to be short down to the 822 region.

Side note on the upcoming holiday this week, during holiday weeks (market closed on the friday or monday) there is a change in the general market trend and you see a reversal for that week, the next week things are back to normal. I don't really believe/trade these things but it is interesting to note.

Portfolio remains the same with the addition of one new short, HRL. It is in a triangle pattern currently and i'm looking for a break to the down side. As a fellow trader pointed out today, there is a whole lot of mess under it which it can find support around so it isn't the best of short ideas. I'm not too crazy about it either and I have a fairly tight stop on it. I have a feeling this one could bite me in the ass.

Tuesday, April 7, 2009

04/07/09 Market Commentary


I did a day trade today shorting CAI from 36 down to 35 but my portfolio remains the same. I also did a small futures trades going long the NQ from 1286 to 1289 for a quick scalp as in bounced off the daily vwap. My longs took a big hit today but i'm not too worried I have updated my stops which in most cases are protecting profits i've gained in the rally up and my shorts are up a little bit as well. If we do head lower which the futures are indicating right now(ES down 11 points) then I would be looking for support around the 755 and 732 which is the 50% and 61.8% retracements from run up from the lows. If those levels don't hold we could see new lows made.

We are finally seeing a series of lower high and lower lows in the market as well as a break in the uptrend line. If the market opens with fairly negative sentiment I'll me looking to go short the NQ and add some new short position.

Monday, April 6, 2009

Current portfolio and market commentary

Longs: ORH, HES, DBC, BPSG, CAVM, MA

Shorts: ACGL, BMS, DPL

Currently as is evident by my holdings I am leaning towards the bullish side, my shorts haven't been doing much lately but my longs have more than made up for it. If we get more downside to the market in the coming days I will be looking to reload on some longs. Long run I am bearish simply because there is just too much bad news out there and Geithner can only cover them up for so long before it blows up in this face. Getting "rid" of toxic assets...they're not getting rid of it they are only transferring it form the banks to the government. That means the government is in even more rough shape that before and the market will ultimately follow the government. And no need to mention the trllions then have been pumping into the economy my printing money out of thin air. It will come back to bite them in the ass.

If anyone is thinking about going long the banks here is a good read: http://www.time.com/time/business/article/0,8599,1888664,00.html

Here is the chart of a short position I entered today in ACGL, at good resistance around the 58 level which is alos a 38.2% retracement from the year highs.

Trading as a method of capital preservation

I have been getting into trading more seriously as of late and I will be using this blog as place to gather my thoughts, organize my trade performance, and come to an objective about market direction. I am in this game for one reason and one reason alone and that is to preserve and increase my capital.

I am a swing trader following whatever trend I think the market is showing me. My main instruments used in day trading are fibonacci retracements (mainly ambush shorts/longs), pivots based trading, and using the VWAP, TICK and ADD to measure market sentiment.

"They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side." - Reminiscences of a Stock Operator