April 29th, trading the news...or not

I have never been one to actively trade news, I just don't think that I can expect a rational reaction to any news whether good or bad and I certainly don't expect to be able to guess the reaction.

The US Federal Government Report today was no exception. Had I ignored the fact that there was news afoot I would have fared better. I had two outcomes in mind and I picked the wrong one based on jumpy streaming data as the traffic spiked. I should have just waited it out a few minutes THEN decided what to do.

Trading the chart alone and following my entry rules would have been a better course of action and would have given me the opportunity to cash in on the initial reaction to the report.

Here is the chart for SSO, it is worth noting that my preset limit price to enter this was $23.75 on the first round, I didn't place an order on the second round, in transit at the time.

I would expect momentum and target moves following reports of any kind so these would have been stopped tightly or just exited manually for profit targets or chart weakness.

From a purely techincal view this chart shows the increased volatility in price in conjunction with a spike in volume as the price tests the 200 minute sma. The price falls off the top of the move in what might be construed as a bull flag but with the high volume continuing into the down move it could not hold...sell. The next entry as price tests the 200 again on good volume for a more likely smaller trade...the 50sma would be the first target for stop setting and would have been the exit.

Basically, report or no report this should have been a no brainer trade.

Here is SDS, note the failed attempt at timing the report momentum in the wrong direction. Same applies here for momentum and target exits.

So, once again I see that the chart really does tell the story better than any attempt of mine to anticipate anything other than the possible moves following the setups as they occur. Volume was hard to read as it had dropped back to a more normal level but the 200sma switches from previous resistance on SDS to support nicely, that alone makes this a decent probability trade.

The worst of it was deciding to not trade anything after these only to see a nice setup for SDS in the last 30 minutes tying the 200, 50 and 30 into a nicely indicated move.

Here's the chart for that piece of cake. So, once again I need to just follow my rules as I have them set out and I will do much better.

One thing to note about playing the trades based on the 200sma for entry. It would appear to be a better trade to play the price as a reversion to the 200 then use the 200 as a stop as the price crosses. Some other time I will look at these trades and see what I need to see in order to call the move.

Jeff.