May 5th, non-profit goal

Not much to say about the intraday market activity in the S&P 500 today, bears and bulls were uncommitted which makes for a range day. So, in the spirit of the day I took on more trades than I normally do, 10 altogether. I would consider that over trading as some of the entries may not have been justified or properly thought out.

Having said that I was working on a novel approach to the start of the day by setting out a goal, a non-monetary one by asking the question, "What do I want to work on today?", Inspired by Brett Steenbarger's post earlier today.

I decided to work on waiting for my target zone entry and getting my limit orders placed more timely.

Notice there was no hint of "making more money", "catching bigger moves" etc. I figure that if I can get into trades at better timelines then I can use tighter stop loss orders, have lower entry prices and be there when the moves do move. That will, eventually, turn into profits.

Here is the day chart for SSO, the Proshares leveraged ETF which exhibits the same rough pattern as the SPX, S&P 500 index. This is, more or less, SPY on steroids. The pivot point (blue line) and the yesterday's high (black line) are close tot he same area though.

From my pre-market journal entry:

"SSO to bump the 200sma then DT - at least range to the Pivot Point."

Well, it bumped and passed the 200, but I had a plan initially and it was close. So I am satisfied with that much to start.

Here are the trades in SSO, I should have followed my instincts and not placed any SSO orders so early, but the 200 crossings looked OK to test out my entries, they were tight, again, satisfied, just not the best ideas.

The TICK, as charted below for the same timeperiod as SSO above, has no real defined move past the + /- 800 (green and red). The trend, which is pretty obvious but I stuck the black line to represent the rough median, shows the inclination of the market to hover around neutral with a bit of a downward bias.

Here is the chart for SDS, Proshares leveraged bear ETF, for the morning showing my trades. This shows that my plan did, in fact, produce the results that I was looking for with my opening goal of what I wanted to work on today. Had I followed my original idea of only trading the downmoves toward the pivot (in SSO) which are the upmoves in SDS toward it's inverse pivot, then I would have made out better as I would have seen a 36 cps return instead of the piddly 13 cps that I did see.

In addition to having my entries down tighter and timelier I need to work on either following my pre-market instinct or at least recognizing the general trend as it develops better...or, more appropriately, not try so hard for the counter trend moves. I did like that little momentum move at the end of my SSO trading though. Once I realized that I could fade SSO off of the pivot back to the 200sma using the TICK as an entry trigger...that could have been made use of earlier in the day to my advantage...one thing at a time though.

BTW, I am glad that I did not try to trade into the afternoon as it was choppier than the morning and I might have gotten discouraged by the whipsaws. Looking solely at teh chart, without the TICK and anything else, I would have a hard time placing hindsight orders...although that muliple test of the pivot near the end looks like it needs some further investigation for possible setups in future...

Jeff.

Lunch interlude and beyond

I usually go home for lunch, and, due to a variety of variables, I end up going later than the classic noon lunch...but that is beside the point.

I opened up my trading platform and related softwares to see what was stirring. I tried a trade right around 1230h, once again, against my trading plan. I entered SDS on an downtrending 200sma...I was paying more attention to some twitters when I should have been paying closer attention to the market. Even so, an downward moving 200sma is pretty blatant and hard to miss.

I like to enter trades based on an upward sloping 200sma preferably with the 30 and 50 also above. These setups seem to work out the best partly due to they indicate a short term trend and partly as the price likes to crawl along the 200 often before making it's move, sort of a consolidation line. If it is downtrending the price often heads down for a bit first.

The one that I missed (yep, a day of missing here) was one that I aimed for, did not follow my rules completely...even though I was right I flubbed the entry as a result. Upward sloping 200sma, 30 and 50 above but I did not wait for the pullback to the 200...which happened afterwards while I was heading back to the office....to the penny. It also followed through precisely as I might expect it to. It did not move all that much but the entry was the idea, sort of a scalping trade at this point in the day, hard tight stops or just exiting upon apparent weakness.

I wasn't going to chart it, but here is the afternoon bit.


Jeff.

For the sake of a penny the dollar was lost.

Well, nothing was lost and, yes, for the sake of a few pennies a nice entry was missed.

Today was one of those days that I was hoping for, a trend setting right off the bell. As of right now it still looks that way but one ever really knows for sure.

So, after all of my hyperbole about "being there for the trend days" and seeing some really nice gains as a result, I missed the boat this morning... or did I?

The pre-market looked great, FTSE closed so no factor there at all, TICK all positive and strong for early trading, most sectors were up, swine flu down China stronger.

My journal entry included, "expect a small gap up or a strong start at $24.14, watch the range to $24.54". I set my limit order for $24.17 in expectation that the price would test the 200 around the $24.14 area...I watched as it hovered around $24.20-30 range. In this particular case I "should " have increased my loss allowance a bit to enter the trade at the 20 cent mark...but I did not. Where does one draw the line?

I also could have entered as the $24.54 level was breached as it did waver at that level before taking off again. Technically that would not have been price chasing as it was a level I established as support/resistance. But it was not in my initial entry plan.

Anyway, using my 50sma stop settings I see a 70 cent gain and the trade would have closed about 1045h. I would like to think that I would have given the price more room and stuck with the S/R line just under until the price either re-crossed above the 50sma or tested it from the downside and failed. I should look at using 30/50 crossovers for stop settings as well.

Analyzing the trade closer, as if I knew that I was going to be correct in my forecast and nailed the first entry, here is the chart:


Doing the math on the entries assuming that I start with 200 shares. The $24.54 entry takes me to ACB of $24.37 and my stop climbs to $24.42 for the whole position as soon as I enter. That leaves me with at least a few cents per share profit. Following up the the next support resistance level and deciding that the market is still strong another 100 shares gets added and the stop is as depicted. ACB is now $24.46 and the stop is climbing from $24.60 to $24.70 and caps out at the next S/R at $24.82. Paper gain at this point, if stopped at the end of the chart would be about 49 cps or $245.

So did I miss the boat? Am I disappointed that I did not chase the price or make some of the other nice entries?

I don't really think so as I am not really profit focused but I am learning focused. I got to watch a really nice morning uptrend and play the points along the way to see what I could have done. Yes, I miss not having a position in play. I don't expect that I would have entered the last 100 shares, but I expect that I likely would have entered the second trade addition...or at the very least still been in my core position. I was determined to trade according to plan and right now I am focusing on plays that include the 200sma entry. I need to start somewhere.

The market still looks good but not strong. I am going to watch closely as the price and 200sma approach one another later today as I think there may be an afternoon reversal in the works.

I think that I would be taking some of the position off along the way, perhaps a stepped row of stop orders in 100, 200 and 200 size closures to ensure profit and leave more room for more rallying.

Jeff.

Morgan Stanley, the alternate trades and April 21st chart.

I am trying to focus on one sector or index at a time in order to get familiar with the activity well enough that I don't have to think much about the indicators, just glance at them and know what may be coming next. As much as I may not be profitable right now I am gaining knowledge and that familiarity that cannot be gained in a strong easy to trade market.

Having said that I have kept my eyes out for those other gems that may be out there and are within my trading range. Morgan Stanley, MS, is just one such gem. Lots of volume, lots of activity and a price that allows me to choose a variety of position sizing.

The only real reason for not getting into this stock is that I cannot short sell in a registered account so my playing is limited to the upside trades so I am just on the sidelines for now. Later I may get my margin account going for some shorts.

This basically means that I am stuck with ETFs of the bear variety to play any downside.

On that line, I see some argument for sector rotation for trading. I see that this is similar to choosing a stock that may be a good trade on a particular day as, no doubt, the sector that a stock is in will be reflected in the stock movement, or the other way around.

I am trying not to get caught in the indecision that comes with choosing a different issue for a day as I tried that in the past and I invariably chose wrong and ended up fighting the tape for pennies when i could have grabbed a nice trend in one of my other choices... in hindsight of course.

So this is why I stick it out with one set of ETFs in one index right now. I figure that I will fight on those range days when almost no moves are terribly predictable but I will be there on those days that the ETF trends with the index. April 21st was one such day...and I recall not being able to trade until late in the day...after 1500h so I missed it but not due to trading something else, I just was not there. This was so shortly after switching to the NYSE that I don't know if I would have recognized the trend or if I would have just traded my plan and been caught up in the trend by default. I would like to think I would have been positioned right but I also think that I would have stopped out quickly.

I see that I did not post a chart for the day, I only had one trade late in the day and I am not sure now exactly why, my journal entry is not clear. I think I just felt the need to try a late day trade to see if I could catch the right side of the late day volatility... I was not successful.

Here is the chart with some arrows indicating possible trades and direction. I would be playing SDS for the short trades. I think that the TICK for the day was mostly positive off the start so today I would not likely have entered any SDS (short) trades at all. There are a couple of points where I may have entered additional lots along the way, perhaps not then so the point is moot. I might now once there is a enough money on the table to turn a profit even after the cost averaging.

SSO for April 21st:

The long green arrow represents my use of the 50 sma as a stop guide. I worked out a variety of methods of trend stop setting (125 sma, pivot point & support lines, 200sma stops) The 50 sma worked out the best price but even the worst was within 12 cents of the best. There were at least two more decent smaller trades after this main one, which I did not mark. These were the 200sma retest at 1500h and at 1545h.

For interest sake I entered long at 1535h, I must have been trying to get the bounce off of the 50sma, oh well.

Jeff.

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.