02-01-15 Trade Plan

After this week's price action I think it's safe to say that the sentiment of the last post was a bit premature.  That's fine as long as no one is digging in their heels and letting losers just hang out in the portfolio.  Take the stops and move on.  This is also why I always take what I call starter positions when I am first getting into trades (especially long side) because typically if a position is going to lose trend it does it on my first entry and I want that out of my portfolio with low exposure to it.  As a trend builds so does my position size so long as it falls within my risk parameters with my trailing stops.

So let's have a look at what happened.  First the SPY could not get positive on the year as break even acted as resistance once again.  Then Tuesday the NASDAQ gapped down back below the break even.  At this point all indices were negative on the year with no intraday trends, this is where we remain now.  The mistake I made was not waiting for a better low above break even to develop for a trend to come out of this chop period.

01-25-15 Trade Plan

Even with the shortened trading week the bulls were able to take the NASDAQ positive on the year and take out the previous high.  This puts the market in a much better environment for stocks to move higher so long as we can stay positive.  It should be mentioned that no other indices were able to take out the previous high nor go positive on the year.  To me that isn't as important as the price action in the NASDAQ because tech and healthcare are the leaders in this bull market.  That's also why I tend to put focus on one index here each weekend because all I want to track is the leader and get the outperforming stocks on my watch list to trade.

01-18-15 Trade Plan

Markets still remain stuck in a neutral chop period and negative on the year.  One thing I keep pointing out on the NASDAQ is the skipping rock potential if we were to break below the $100 level.  With each test of $100 we get a lower high and eventually if this continues that support gets too weak to hold price and it breaks through, like a rock skipping along the water.  What would invalidate that is breaking the previous high from 1/9 which would also put it positive on the year.  We will call this scenario A.

Bears best case is to hold price on the $100 level (below Thursday's high roughly), consolidate and build energy, then break support.  Energy is rarely built for bears in this market though nor has trading short done me any good in the past two years, which is why I'm still tip toeing around shorts when the signs appear.  I'd rather sell into strength with an intraday down trend below $100, even then the weekly trend is still well in tact and a full measured move down would still be a higher low on the weekly.  This is scenario B.  So those are the two scenarios for me, but for now I am still neutral on stocks.

01-11-14 Trade Plan

Markets last week were in a place of indecision and this weeks price action confirmed it even more.  The big level in the NASDAQ has been $100 for a while now and this week we saw buyers step in at that level creating an even more defined neutral standpoint for the indices.  There are clear levels above for trend resumption ($105/$106) and below for a break down ($100).  Until either of those levels are taken out I believe we are in a neutral market condition.  To me that means there is no overwhelming tide in either direction, even with the volatility we have seen.  My focus right now is on non-correlated ETFs like TLT, GLD, FXI and the strongest names on my watch list.  Possibly some short side trading as well if it presents itself.

01-04-15 Trade Plan

It looks like we are starting out the new year with a bit of indecision in the markets.  As it stands now the swing point that was put in on 12/29 is a lower high in the NASDAQ.  For real damage to the uptrend the market would have to take out the low from 12/16 which is also the $100 support level.  Resumption would more likely take place when price can get above $105.  Until either of those scenarios plays out I think we are in a neutral environment.  The Russell was the leader for the run from 12/17 to 12/29 and I still think it has great upside potential from a weekly chart.  The $118 level that I was watching for so long is back in focus again.  Strongest scenario is holding it along with the gap up from 12/18.  Overall neutral though until a clear direction is presented.