06-08-14 Trade Plan

I am absolutely mclovin this price action..  All four indices closed on the highs of the week and all except the Russell closed on the highs of the year.  The first few days of the week I was tweeting about how if the NASDAQ broke down below that sideways consolidation, we could probably test $90 area and it is something I was ready for.  But every time we gapped lower into that channel support the bids were flowing in.. at that point I tweeted out that a 15 minute trend could be emerging if we could hold that upside breakout from the channel for new highs.  We got one test of that 50 period average on the 15 minute chart and that thing acted like a spring and took a boatload of good setups in individual stocks with it.  Notice how easy it was to prepare for either side of the trade as it was developing, no bias or opinions.  The ease of it likely has to do with the much cleaner price action we are seeing but the concept stands firm.  I had an overall bullish bias because of the larger trends (daily, 130m, 65m) and how many good looking setups there were in the stocks, but was prepared for either direction on the shorter trends (15m).


I'm going to include the Russell this week because I think it merits watching and potentially getting in on this action.  In the most simple terms, we are in a 15 minute trend (which just means the 50 period average is trending higher & holding on a 15 minute chart) in all the indices.  The 15 minute trend can hold for a lot longer than most think it can and can actually build the weekly candlesticks as it has been doing for the past three weeks.  The only thing I can really say here is that I will be trailing my stops along the swing lows in this 15 minute trend fiesta.  Also the Russell is being extremely strong and is now positive on the year.  I would like to see some kind of setup to get in on but won't force it if the market gives me nothing to execute.  Components of the Russell are also fair game now that it is participating, it is not something I trade all the time but the index is showing that there are setups driving this thing.  Here is the 15m trend on the NASDAQ.

1st Place Prize: Industrials (XLI); 2nd Place Prize: Financials (XLF); & 3rd Place Prize: Consumer Discretionary (XLY).  Energy was the third sector (along with discretionary and financials) that I mentioned I would be trading long last week and energy took home 4th place.  But who cares about 4th place.  Anyway it has been a banging few weeks for me.  I really can't say I am watching any specific sectors this week because everything is playing out now.  It is management mode on all levels for me; indices, sectors, & stocks.  There likely will be entries here and there but the big picture entries have come and gone my friends, until next time at least.

Now for my rant.. I'm not as tuned in to the noise as I used to be anymore as it has become intolerable.  But I do still hear it and read it in various places and some of the things I read just make me want to puke.  I see these people getting absolutely ran over on the short side because they were using their opinions as a directional indicator (deja vu right?).  While they are in the midst of getting ran over, they say things like "well i mean we just rallied pretty hard so we probably wont go higher, just hold it until you are right" or "sell (short) into strength"  Are you fucking kidding me?  I even heard "well we aren't going any higher so I'm selling XYZ" last week!  The bulls in this market are bold and they have the fed on their side with unlimited money printing abilities AND we know the fed is going to juice the market at a moments notice if needed.  Yet you still have people like this, well known people, telling you to trade off of their subjectivity.  When you hear people talking like this, you really need to understand they are clueless on how a market moves, they do not understand what a trend is, and they think their opinions are more powerful than trillions of dollars.  Well if you can handle getting run over weeks at a time, 10% at a time, then be my guest.  On the other hand if you want to be an objective market participant, ride the coat tails of the huge institutional money coming from the fed, follow the big and little picture trends to know exactly where you are in the market then there is a cure.  Be humble and understand the market is always right because that is what it does.  The market is the market, it makes prices.  That is all it does, it makes a price.  There is no right or wrong about that, it just is.  Once you do that, study how those prices change.  The beautiful thing about being an objective market participant, is you can always join the winning team.  There is always a spot open on the winning team in the market if that is where you want to be.  Understand that you are learning from the market, you are not teaching the market anything.  Don't be a perma-idiot.  I'm gonna give myself the hook now because I'm sure everyone reading this is already in the same camp, but thank you all for reading.. see you Monday.

Trade well,
-Michael