Nov
4

Closing Thoughts

One thing I will be doing on Sunday nights going forward is writing out a mock script for the week ahead like I did this week. I think most people have a bias towards overtrading their account and having my script in hand caused me to setup my trading expectations before the week began.

 

Because of my plan, I have not suffered through the whipsaw machine the market threw at us on Monday and today.

es_013

If you have expertise in trading a roller coaster, perhaps you were able to play today perfectly (and if you played today well, how did Monday go? 1 out of 2 likely equals losses).

 

udn_016

After all of the movement and hype this week, we still don’t know what is going to happen with the dollar. Will it be a kiss of death at $28.50 or will UDN regain its trend? I would like get a direction on this one already; however, I’m also happy with the results of my long GLD so I’ll be patient.

spy_006

After all the movement, SPY closes just below the 50-day SMA at $104.92. We know the 50-day is support and won’t have any answer at least until Friday.

 

I already mentioned in the comment section today that I got stopped out of my SNDA short at the open. This was a really dumb entry on my part because I shorted the stock even though it was showing a pipe bottom. My rationale was that it was at resistance and a nice entry spot after bouncing from the 300 day SMA. I also discounted the pipe bottom because it was a daily pipe bottom rather than a weekly pipe bottom. Bulkowski’s research shows the weekly works better so I figured I would get in front of the pipe bottom on the daily. Why enter that trade with that potentially working against you? I deserved to lose on this one.

I also lost my Ford entry from yesterday. That also wasn’t the greatest entry because there was relatively low volume on the attempted breakout. I was looking for some long exposure yesterday and so I made the trade. I should have just reduced my index shorts. Again, you get what you deserve.

I was happy to get the REV short trade this morning. I’m already up nicely on that one and I feel very good about this entry.

Overall today was a nice day of letting my account work without doing very much.

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  • meanwhile, short 50% and long 50%--check out STT!
    I have the chart up w/ a 38.7 LONG entry.
    100%, I can exit out of STT $43-$44,, It’s already under the exit.
  • Zee, tell me if this is an accurate analysis of STT or whether you are considering other factors. The stock is at $40.64. RSI is at 28. The 200 day is at $41. The 300 day is at $42. The bottom BB band is just under $38.

    So the thinking is that there might be enough downside pressure to trap some shorts playing the 200/300 day SMA (which the stock is trading just under right now) but that there isn't enough momentum left to take out the lower BB before a bounce.

    I'm also thinking you know this stock pretty well and that it often trades back to the middle BB which is your exit.

    Your input would be appreciated.


    EDIT: Is the $38.7 entry using a $2 average trading range from $40.64? So you figure that you have a good shot at getting a fill and still close to optimal entry?
  • STT, the entry is based on P/E--of 9.2-10 ( eps 4.11) X 9.2 - 10 = 37.8 -$41.10
    I may get another chance at 38.7--STT already reached one of my 100% exits $43--due to DOW up 203 today, I had a target yesterday, QQQQ reaching 42.4 today, but I lacked the faith yesterday to go long the market.
  • Guest
    http://mikevadon.blogspot.com/2009/11/how-to-pr...

    I just looked at the McClellan Oscillator. It is indicating that we might be at a bottom, but at the same time today I was confused by the close.

    I also talked about the one signal that always seems to predict a severe market decline.
  • Definitely interesting, but I must say I am skeptical of curve fitting (back testing data and messing with the variables until you get the result you are looking for). Note that I am always skeptical but it is an interesting find and I'm always open to learning new things.

    Judgment is key in balancing an open mind verses not buying into BS. For example, even though my bias is that Elliott Wave is not helpful, I'm reading a book right now and learning about it so I'm not bashing something I'm not familiar with.
  • Guest
    Hehe. I believe all theories work for a time and then they don't work for a time. If all theories worked forever, then no one would be working and everyone would be trading the market. How many people do you know who make a living from the market or even professional gambling? I mean, those who do not have any other means of income besides the market? There are very few out there. If life were as simple as following a theory then everyone would be rich.
  • rosocecasita
    Considering I haven't developed a trading plan, sticking to it is very difficult!

    Do you have a good resource for developing one?

    (on another note, if you can think of any other good indicators, i'll put them into that page, and make you a co-editor)

    In terms of market action today, the spread between 15 min highs & lows, has been increasing, hit some 10-12 point spread between the bid/ask on /ES. (just looking at high-to-low-to-high or reverse)
  • Generally, the only indicator I use is RSI. I'll also use TICK and TRIN to assist with entries/exits intraday. I also use ATR (average true range) with respect to setting stops.

    Then, depending on market conditions, I'll look to the currency market and bond market for insight. For example, I'm using the dollar as an indicator.

    I did a book review on a book called Beyond Technical Analysis - http://www.chartsandcoffee.com/2009/10/beyond-t...

    The book is about setting up a trading system (ie., a trading plan) as opposed to picking stocks.

    Your charts looked interesting when I quickly flipped through. Hopefully I'll have time tomorrow to do a more indepth look.
  • off topic, Thanks CC, for the twitter button site--It looks great!--I'll try loading them in this weekend---
  • No problem. They are pretty snazzy. I've definitely had more followers since I added the button.
  • rosocecasita
    mostly, i look at each grouping of the charts, (i'll put the link up for snap links on the page makes it easy to open like 10 links in 1 click.)

    ALL of the HILO indexes are down or flat today, after ever single one of them hit over 95%, and some staying for extended periods of time at 100% of all stocks above their 10dma.

    on the 200 day, 150 day, and 50 day, all show similar 80-95-100% above their respective averages.

    but the 200 day ma of the 200 day ma , is between 40 and 80% below the 20 and 50 day ma, no support in sight.

    I could really careless about this because i keep blowing my account up, 2.5 times now, and i don't really know what size of positions, (small as ya can get $), and how to determine if the trade is even a good one.
  • A few thoughts:

    Keep trading small and keep learning establishing a methodical process. Your indicators are interesting BUT it sounds to me you are getting lost in the details. For example, a very simple trade that could be successful is getting long USO if it breaks its 300 day SMA. If you buy something off a breakout above its 50, 200 and 300 day SMA, it is likely a pretty decent trade and will keep you out of trouble. Also keep your position sizing in the 1-3% range.

    Stay away from options too if you are trading them. They only complicate things.

    You are getting a lot of experience now which is the most helpful thing of all. Confidence is required in trading and you can't have confidence unless you have been trading for years. Anyone that has been trading for a short period of time and says that they have confidence has false confidence. Once they hit a rough patch, they will short questioning and changing all of their techniques (see the chart in Beyond Technical Analysis).
  • The key to a winning trade is to KNOW your exit price, and if the stock is below the exit price, go long--I have trades where they are 100% you will win--because I can clearly see where the exit price is---
    This is how C&C operates, that's why I like his trading.
  • Philipp
    I enjoyed the honesty in your comments today and I agree with you that it is a good idea to stick with a plan in order to not get whipsawed. I think the market action today was terrible and points to a market that wants to go lower. I believe that we have now institutional selling entering the market every time the market has a decent upwards move so they can lock in their profits. I can't confirm my suspicion with any data but it makes sense to me....
  • Likely don't find out much tomorrow either. I'm just wondering whether Friday is going to break this thing one way or the other or whether we'll have to wait until next week.
  • Rd99Hse1
    Good work. I need a plan to stop the overtrading, as i'm supposed to be a swing trader with mid-term goals. I guess my ADHD kicks in and I get trade-happy. It's not killer, but I will make +15 trades in a week and still come out breakeven - or at least just more frustrated.

    I was thinking of getting into the Sunday night, week-plan habit, and now it seems I must.

    Take it easy.
  • I'm very optimistic about the weekly script. It is one thing to make a bad trade. This happens.

    On the other hand, it very frustrating when you have the right strategy but you execute improperly due to human error. For example, I knew not to make that SNDA short yet I did it anyway. I even posted to the group that it was not a good trade due to the pipe bottom but yet I went in anyway!

    The script helps prevent that. So much of what I do and the experience I have gained is about controlling myself. And I'm a pretty even keel guy. I suspect those with more hyper personalities have even a more difficult time.
  • Rd99Hse1
    btw, I'm not trying to self-diagnose myself into an excuse, but yea, I can be a snap-move kinda guy. LoL.

    Hardest thing is sticking to plans to stay OUT of market when I know whip is just going to affect judgement and account. With that said, the last 2 weeks have been best in a while for me. Now to preserve that...
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