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.


I'll be using the NASDAQ and tech stocks to trade the reversal if we get one and maybe the Russell depending on how it acts.  A reversal would mean we are seeing higher highs and lows on the 30 minute trend, since we are currently in a 30 minute down trend.  A 30 or 15 minute trend to get us back above the supporting trends and continue the rally.  That doesn't mean we should jump the gun and assume this is happening.  Rather we should wait for it to start happening then define risk and act on it.

Bottom line is we are still in no mans land, too close to support with long term up trends for shorting and not enough evidence yet to trade long.  That's fine, as a trader we have to understand this happens and be patient.

Even though we are in no mans land, I know I have no interest in trading short right now.  So the only thing for me to be prepared for is a reversal and that is what this watch list is for.  If indices reverse and stocks start to trigger there might be new additions to this list but with the information we have now, these are the best looking setups.

If we get a reversal only to see slow, indecisive price action with few stocks triggering then we are just asking for a lower high on the big picture daily chart.  With supporting trends already rolling over this is what could lead to a larger sell off.  This is getting too far into the future though, for now its just about whether we even can reverse or not and what to trade if we do.

Last two months of QE bulls, make it count

Trade well,
Michael