06-01-14 Trade Plan

Over the past two weeks I don't see how things could have gone any better for me in the sectors I was looking at.  Now we are up near a bunch of resistance levels in the NASDAQ and so far any selling has been absorbed.  I will still be on the look for new setups in individual names and paying attention to which sectors are setting up for new moves.  This weekend is looks like the financials and discretionary are looking best for fresh upside.  That's not to say that healthcare and technology are out of the game but they have had their powerful moves already I feel like.  They could continue higher and I am still holding some positions in there but I am always trying to stay a step or two ahead of the market.

05-25-14 Trade Plan

For the first time in what feels like forever we are starting to see some trending to the upside especially in the NASDAQ which is what price was suggesting anyway.  I'm conscious of that fact that we have had a big move into some potential resistance in the $90 area and at the same time I'm conscious of how this market moves when it is moving to the upside; very quickly in a straight line, which could be viewed on a chart as a 15 minute time frame with the 50 period average trending higher.  If we do continue higher next week I will be looking at $91-$91.5 as an area bulls are targeting in the QQQ.  As far as the SPY goes, I'm to the point where I just want to see some clearer price action before I try to read into it but closing at all time highs is a start and I'll be watching for it to hold the 15 minute trends with the QQQ.  Plus the NASDAQ is just looking so much better technically I would rather just put my energy and focus there.

With that said I'm not willing to give this market a lot of room due to the chop we have been seeing for months.. it really needs to keep holding that 15 minute trend for me to stay interested.  This would still give the SPY a chance to prove it can hold $190 while the QQQ prepares to break $90 in the ideal scenario.  Even if the 15 minute trends do break, there are larger trends building (130/65 minute) for back up if the market needs to build more energy.  The bond market is still trending higher using daily and 130 minute 50 period averages as support while putting in higher highs and lows and there is no reason to guess when that ends.

05-18-14 Trade Plan

Based on this week's price action the SPY looks like it is trying to get some resolution, and it's attempting to get it to the upside.  QQQ seems to be consolidating with a pattern of higher highs and lows.. and the Russell 2000 barely held onto the weekly 50 day avg.  As long as the SPY can hold above $187 and the 50 day avg, I don't mind giving the benefit of the doubt to the buyers since they have held their ground there (at the 50 day) in the past few weeks.  Like I have been saying if we do get upside action I much prefer using the QQQ to trade the area between $88-$91.  I like this plan even more now that the NASDAQ has firmed up against the Russell and shown some strength, now it just needs to hold above the YTD break even level or $88 to get me looking at $91 as the end result.

Since this is an index, it is going to be taking a lot of stocks with it if this does happen so if you start to see this playing out, it would be a good idea to start looking at tech and healthcare stocks for good bullish entry points.  I say tech and healthcare because that is the majority of the NASDAQ 100, and that will juice the stocks in those sectors.  I'm not ruling out a break down here for lower prices, but I will say that I don't know which stocks they would take down with them in this cycle of selling.. so with that said it would just have to be a "wait and see" to find out where the new down trends are emerging and hop on it.  My best guess would say they would take down the SPY and DIA but I would have to start seeing break downs hold and continue before I run SPY & DIA short side trading through my process and execute on it.

05-11-14 Trade Plan

Well it was another week of nothing (for my style of trading).. unless you traded earnings reports which isn't something I am doing at this point.  Twitter lockup was released and the "common knowledge" for months was that the insiders were going to let loose and beat the stock down to new lows and it was a lay up trade.  We all know how common knowledge is supposed to work in the markets but this time it worked and for obvious reasons in hindsight.  Speculative stocks are being shut down (fear is high in stocks like these), twitter is in a downtrend, earnings got a bad reaction a few days prior which led up to a perfect storm at lock up expiration.  FEYE GRPN WFM TWTR are all stocks that got hammered this week and they have all been in downtrends for a good amount of time.  A downtrend is a place that sellers are winning.  The moral of this story is to ignore everything, including common knowledge and the people bashing the common knowledge because neither of them know what is going to happen and study price and trends.  Even ignore me if what I am saying cannot be verified through price.  All you can do is manage risk and that should have been done a long time ago in twitter.

05-04-14 Trade Plan

This week the market threw out a bunch of mixed signals, which is normal for range bound trading.  I was willing to give the market the benefit of the doubt that it could make a move to all time highs but every time it got there it was met with strong sellers which reinforces the idea that we are just in a range.  The market no longer deserves the benefit of the doubt on my time frame and I need to see price close above $189 with some conviction to get interested on the long side.   What we did see this week though was the QQQ and IWM leading to the upside when there was upside action, and I know buyers are looking above that 50 day on the QQQ and liking that potential move up to $91 and it would also bring the pain to the shorts so I'll be paying attention to that probably more so than SPY getting through 189.  Any downside is already implied, sellers don't have anything to prove.. buyers do.  So if buyers can't put their foot down selling will take place, and honestly the risk/reward to the short side is in the SPY and DIA, not the usual selling suspects as of late QQQ and IWM which have the risk reward to the long side.  A very split market and we will just have to see how things play out.