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03-30-14 Weekly Review & Watch-list
It seems like as we continued to get deeper into March, the more boring things got and I'm hoping we just hit the climax of boring as March comes to a close and we get into Spring time trading. In hindsight the most profitable moments would have been to short the strongest market leaders right into their rising 50 day averages (ex. $FB, $FEYE, $GOOG etc.) and I feel that is a sin to do even if there is a rotation happening. So for me, aside from some bond trading I didn't have much to do. A clear theme we are seeing is money moving out of the high growth areas and into big cap tech and energy stocks. This is overall a good thing for the market since the money isn't just leaving the market but I just don't care to build a portfolio around them until the market is participating to some extent as well.
Using Relative Performance to Trade Professionally
Using relative performance is a primary tool that I use to know what I should be trading right along side with trend analysis using multiple time frames. I find that it isn't appreciated or talked about to the extent that multiple time frames and trend analysis is talked about so I'll do what I can to bring more light to it. To start, I believe for swing trading in a 1-4 week period there is a larger picture of what is going on that you have to stay on top of, which I will try to explain better in this post. Relative performance is a big part of this picture as is sector analysis and where the money is flowing. For this post, since it is supposed to be giving you a feel for how to use this; I will be looking at the relative performance between Dow stocks and the Dow Jones Industrial Average as the index.
03-23-14 Weekly Review & Watch-list
If you were trading in the right places this week, it was just a normal week of trading nothing too crazy happened in the S&P even with all the noise Yellen provided. FSLR went insane this week though and I was all over it starting Monday morning. This is a large reason why I post to StockTwits, so afterwards when I am talking about how I caught a huge move you can go back to my stream and see exactly what I was talking about without any deleted or edited tweets when the move started taking place on Monday morning. Moving on, I took home a few long positions but also with hedges on in more defensive assets with a bullish tone to them, like bonds. For now the market is in no mans land without many good short setups, and long setups that need the market to at least hold up to get a bid. In these market conditions I would rather just keep my size smaller than usual, be more nimble with the trades I take, and keep the profits I made on the bull move we just came out of.
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03-16-14 Weekly Review & Watch-list
Two things I was talking about last week: 1) stocks were hitting resistance after making large moves, and 2) the strong stocks with potential breakouts started to fail. These conditions led to the week that we just saw as the leaders came off their highs and many strong moves were coming off of resistance. Another point I continue to make is the huge divergence in the VIX from the S&P and how that could impact the velocity of price if we do start selling off. We haven't seen the velocity part but we have started selling.
During this sell off there will be opportunity in the making and you need to know which stocks are still very strong and will catch a bid even if the market stays flat. I will be doing this by looking for stocks above a 50 day average and giving good setups while staying above. There are also some bearish looking stocks that have remained weak and in consolidation during this entire move higher in the general market. Some of these setups will be in the stock charts at the end. I haven't even considered looking at shorting these names until the overall market was weakening as well. I will likely be going back to trying to keep an equal amount of shorts and longs just like I was during the last sell off and stick with which ones are working. That way if the market keeps selling off I will keep shorting good setups, if the market bounces back I will keep buying strong stocks while managing risk in the losers and riding profits in the winners.
During this sell off there will be opportunity in the making and you need to know which stocks are still very strong and will catch a bid even if the market stays flat. I will be doing this by looking for stocks above a 50 day average and giving good setups while staying above. There are also some bearish looking stocks that have remained weak and in consolidation during this entire move higher in the general market. Some of these setups will be in the stock charts at the end. I haven't even considered looking at shorting these names until the overall market was weakening as well. I will likely be going back to trying to keep an equal amount of shorts and longs just like I was during the last sell off and stick with which ones are working. That way if the market keeps selling off I will keep shorting good setups, if the market bounces back I will keep buying strong stocks while managing risk in the losers and riding profits in the winners.
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