03-30-14 Weekly Review & Watch-list

It seems like as we continued to get deeper into March, the more boring things got and I'm hoping we just hit the climax of boring as March comes to a close and we get into Spring time trading.  In hindsight the most profitable moments would have been to short the strongest market leaders right into their rising 50 day averages (ex. $FB, $FEYE, $GOOG etc.) and I feel that is a sin to do even if there is a rotation happening.  So for me, aside from some bond trading I didn't have much to do.  A clear theme we are seeing is money moving out of the high growth areas and into big cap tech and energy stocks.  This is overall a good thing for the market since the money isn't just leaving the market but I just don't care to build a portfolio around them until the market is participating to some extent as well.

Using Relative Performance to Trade Professionally

Using relative performance is a primary tool that I use to know what I should be trading right along side with trend analysis using multiple time frames.  I find that it isn't appreciated or talked about to the extent that multiple time frames and trend analysis is talked about so I'll do what I can to bring more light to it.  To start, I believe for swing trading in a 1-4 week period there is a larger picture of what is going on that you have to stay on top of, which I will try to explain better in this post.  Relative performance is a big part of this picture as is sector analysis and where the money is flowing.  For this post, since it is supposed to be giving you a feel for how to use this; I will be looking at the relative performance between Dow stocks and the Dow Jones Industrial Average as the index.

03-23-14 Weekly Review & Watch-list

If you were trading in the right places this week, it was just a normal week of trading nothing too crazy happened in the S&P even with all the noise Yellen provided.  FSLR went insane this week though and I was all over it starting Monday morning.  This is a large reason why I post to StockTwits, so afterwards when I am talking about how I caught a huge move you can go back to my stream and see exactly what I was talking about without any deleted or edited tweets when the move started taking place on Monday morning.  Moving on, I took home a few long positions but also with hedges on in more defensive assets with a bullish tone to them, like bonds.  For now the market is in no mans land without many good short setups, and long setups that need the market to at least hold up to get a bid.  In these market conditions I would rather just keep my size smaller than usual, be more nimble with the trades I take, and keep the profits I made on the bull move we just came out of.

03-16-14 Weekly Review & Watch-list

Two things I was talking about last week: 1) stocks were hitting resistance after making large moves, and 2) the strong stocks with potential breakouts started to fail.  These conditions led to the week that we just saw as the leaders came off their highs and many strong moves were coming off of resistance.  Another point I continue to make is the huge divergence in the VIX from the S&P and how that could impact the velocity of price if we do start selling off.  We haven't seen the velocity part but we have started selling.

During this sell off there will be opportunity in the making and you need to know which stocks are still very strong and will catch a bid even if the market stays flat.  I will be doing this by looking for stocks above a 50 day average and giving good setups while staying above.  There are also some bearish looking stocks that have remained weak and in consolidation during this entire move higher in the general market.  Some of these setups will be in the stock charts at the end. I haven't even considered looking at shorting these names until the overall market was weakening as well.  I will likely be going back to trying to keep an equal amount of shorts and longs just like I was during the last sell off and stick with which ones are working.  That way if the market keeps selling off I will keep shorting good setups, if the market bounces back I will keep buying strong stocks while managing risk in the losers and riding profits in the winners.

Emerging Markets Are In Jeopardy

What Is Having A Plan?

This seems to be the unspoken question among the new traders and when no one asks, no one uses a plan.  There seems to be no problem asking the more experienced traders questions like "where should I have a stop loss?" or "would you be entering here?" or "what are you going to do if 'xyz' happens?"  All of these questions are asking "what is your trade plan?" in disguise.  I notice that when traders are asking questions similar to these and they don't like the answer they get, they go ask someone else in hopes that their plan falls in line with what they want to do.  Why go through all this trouble when it isn't going to lead to successful trading anyway?  Because it makes people feel good about them trading with a lack of knowledge of their own style and tolerance.  Sorry if that is harsh but it's the truth.  It is OK to not trade while you are still learning the business, that is how I survived.

03-09-14 Weekly Review & Watch-list

For about the past four weeks the theme has remained unchanged, buy the stronger names with good setups and they perform well.  Fairly straightforward market conditions, yet people still refuse to believe it and continue to fight it.  I can understand that the market is getting extended and it will pull back at some point; but let the market dictate when and don't start trading out of frustration, also known as emotion.  With that said there were a lot of strong stocks with potential breakouts that buyers started backing off of towards the end of the week and put in a lower low.  In these situations I will be watching for where the next high takes place, whether it is lower or higher and that will dictate how I trade them.  There are also a lot of stocks that have made huge moves and are now hitting resistance, these stocks have used up their rocket fuel for now and likely need a rest whether through price or time.  This will naturally result in less setups taking place in my universe of around 250 stocks.

ThinkOrSwimmers - Use Your Data Wisely

I consider this post to be a public service announcement for all thinkorswim users out there.  I switched over from E-Trade to TD Ameritrade about two years ago (although they weren't always my primary platform) and ever since I have had nothing but problems with ToS, namely their inability to plot price quotes onto a chart (which is what I consider to be the fundamental, most basic part of a trading platform).  If you feel the same, luckily you have come to the right place for a solution to your vulgar experience with thinkorswim charting.

03-02-14 Weekly Review & Watch-list

This week was pretty routine as far as the broader indices go as they continue to climb a wall of worry.  There were some big trades including TSLA, MYL, WDAY, etc.  Friday got a lot of people rethinking their complacency as a high volume sell off took place in the S&Ps because of Ukraine.   The S&P actually ended up closing with a green bar and continues to make higher highs and higher lows above a rising 10 day average.  I don't know what else the skeptics can ask for to get long a few of these strong names and define the risk below a previous low.  The trend is still upward.