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08-31-14 Trade Plan
We had some sideways price action this week within the larger up trends. The week finished out re-asserting higher highs and lows in the 30 minute trend after some chop during the week. This move we are in is incredibly strong especially in the NASDAQ and the NASDAQ stocks are trading like a dream. We don't know how long these trends are going to hold, all we can do is follow the trend and use swing points to manage risk. The Russell is also holding a 65m trend very well and is still in a pattern of higher highs and lows. Next higher high would require breaking $117, or last weeks high.
Action Reaction
Here's a topic that I don't discuss enough so let's do it. Action reaction, we all know what it means but how does this fit into an execution strategy and analysis of a situation? It's a seemingly very simple equation, but your emotions make it an individualized process which makes it more complex and something you have to figure out.
It should be action-emotion-reaction. Studies have been done on how our emotions effect our decision making and what they found is that we essentially make a decision based on what emotion we are feeling. What this means is we have pre-programmed decisions based on emotion. Not specific pre-programmed decisions but we make the decision based on that emotion that we think will get us back to normal. It's a mind game you are playing with yourself.
08-24-14 Trade Plan
It was another week of up trending and some very aggressive price action as well. There really hasn't been a swing low since last Friday (15th) when the big sellers came in. This is price action going straight up, it does happen in this market at least. Every single time we get a bounce off the lows we go straight up like this holding 15m trends with few to no major swing lows, and every time you have people going crazy during market hours. People going crazy because "this price action is so great" and people going crazy because "the bulls are kicking our ass" and everyone is always seemingly surprised.
People tuned out of the noise reading price action objectively don't go crazy with the crowd, and the understanding of price paired with preparation makes being surprised not part of the equation. It comes across as boring, un-involved to newer traders because there is a huge emotional party going on that we don't participate in. I used to play that game as well, until I realized it was a psychological barrier to the level of trading I want to get to. Turn off the CNBC forever, it's a drug. I haven't even seen that flower logo thing in over 6 months, maybe longer. Look at things from the outside in and everything becomes very clear. Pick up a hobby for the down time you have during positions. Ok time to get back to the regularly scheduled program..
People tuned out of the noise reading price action objectively don't go crazy with the crowd, and the understanding of price paired with preparation makes being surprised not part of the equation. It comes across as boring, un-involved to newer traders because there is a huge emotional party going on that we don't participate in. I used to play that game as well, until I realized it was a psychological barrier to the level of trading I want to get to. Turn off the CNBC forever, it's a drug. I haven't even seen that flower logo thing in over 6 months, maybe longer. Look at things from the outside in and everything becomes very clear. Pick up a hobby for the down time you have during positions. Ok time to get back to the regularly scheduled program..
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08-17-14 Trade Plan
Things couldn't have gone better last week with regard to the reversal in the indices. To recap, the 30 minute trend was established on the way down so for there to be a reversal I was looking for the 30 minute trend to turn back higher with price making higher highs and lows. Even with the big sellers that came in Friday, the 30m trend reversal is still holding with higher highs and lows.
The goal of the bulls is to get another 65m or 130m trend in motion and keep it going for weeks so the 30m reversal is just what price is using to try to get there. The sellers have one last chance to gain any kind of control by holding the 130m trend lower in the SPY & DIA. This would mean they hold SPY under Friday's high and break Friday's low, which would be lower highs/lows and a reaction off of the 130m trend. Bulls still have more control right now though.
The goal of the bulls is to get another 65m or 130m trend in motion and keep it going for weeks so the 30m reversal is just what price is using to try to get there. The sellers have one last chance to gain any kind of control by holding the 130m trend lower in the SPY & DIA. This would mean they hold SPY under Friday's high and break Friday's low, which would be lower highs/lows and a reaction off of the 130m trend. Bulls still have more control right now though.
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08-10-14 Trade Plan
This week was just chopping around after breaking the supporting trends. NASDAQ is still sitting above the 50 on the daily chart and the S&P is sitting on a big band of support. The fact is the downside is too limited to actually hold short positions without daily down trends. Bears had their chance to do some damage this week and they did nothing. I've decided to wait for the bulls to make a move and see how much control they still have. If they can reverse the trend and bring back the rally mode then that has much more reward potential then holding short into support areas. If they can't then I am just protecting profits I made during the long rally we just came out of and waiting for more clarity.
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Stock Market Struggling with Momentum?
What does that even mean? No worries the WSJ has you covered. Let take a look at why the Wall Street Journal is struggling to regain momentum.
This article is what they pass as helpful information for retail traders and investors. I want to take just a second to look through this one with some added logic and thought that the WSJ didn't have time for.
This article is what they pass as helpful information for retail traders and investors. I want to take just a second to look through this one with some added logic and thought that the WSJ didn't have time for.
An early pop Thursday morning faded quickly, as investors continue to weigh an improving economy against the potential implications of future Federal Reserve policy. Geopolitical turmoil in Russia and Ukraine is also hindering the market; ECB President Mario Draghi warned about the economic risks Russia’s sanctions could have on Europe’s economic recovery.People take this stuff seriously. What they are doing with this paragraph filled with politics and hearsay is creating a narrative. They want you to think this is what is important for you to be successful, that you need to know the ins and outs of Mario Draghi and geopolitical turmoil to make big bold predictions and be successful based on them. Objective market participants are not "continuing to weigh an improving economy against potential implications of future Federal Reserve policy". They have a personalized process they follow day in and day out. That is a sentence filled with uncertainty, subjectivity, and wishy washy non sense. Exactly what you don't need to be successful.
08-03-14 Trade Plan
After a long up trend we are finally seeing some corrective action happening outside of the supporting trends. Last weekend I was talking about some of the warning signs we were seeing in the indices and what they meant if we saw some selling, and we did. It's a tough place to trade for someone in my time frame (1-6 weeks hold time) since the longer term trends are still moving higher and the intraday supporting trends have yet to fully turn over with successful back tests from price (which would make lower highs/lows and in effect create the supporting down trend).
There are two options in my opinion; 1) wait for a fat pitch to the short side (many stocks signaling short setups at the same time) with indices confirming or 2) do nothing and wait for more clarity with the relationship between daily trends and the supporting trends. I choose both, if there is a fat pitch of short setups with indices confirming then I'll take it and manage risk. If there isn't then I will just wait for more clarity and that could very well take more than a week. If the uptrend does restart I think that would take longer than a week to rebuild itself which is why that really isn't an option for this week.
There are two options in my opinion; 1) wait for a fat pitch to the short side (many stocks signaling short setups at the same time) with indices confirming or 2) do nothing and wait for more clarity with the relationship between daily trends and the supporting trends. I choose both, if there is a fat pitch of short setups with indices confirming then I'll take it and manage risk. If there isn't then I will just wait for more clarity and that could very well take more than a week. If the uptrend does restart I think that would take longer than a week to rebuild itself which is why that really isn't an option for this week.
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