bankedout's trading journal

[bankedout]

I sold my remaining 350 shares of HDGE in pre-market today at $20.54

Total return on the 390 shares was +0.86% which I find highly disappointing considering how well I timed the market. I will be trading other products in the future instead of HDGE

[bankedout]

I just want to add a few things here.

I sold UVXY today because I think we are at a short term end of volatility. I'm worried that the product decays in value so quickly, that I should not try to hold it for weeks or months (even if I think volatility will be on the rise during that time). I'll keep an eye on it, and if it holds up OK, I will keep some shares for a longer term trade next time.

With HDGE I would not have sold all of my holdings if I was not fed up with the product. I think I picked the wrong product to "short" the market with. The managers picking stocks don't seem to be very good at their job.

My thoughts are the market will at least stabilize, if not put in a small rally here. Maybe a few days worth? Today the internals were much more mixed then the past few days where they were clearly bearish. Traders are cautiously sticking their toes back in the water.

My guess is we will have more downside over the coming weeks and months. I plan to hold some other bearish ETFs instead of HDGE. However they also have decay issues like UVXY. All that being said, I think they will still outperform over that time period.

My plan is to keep a medium term (weeks to months) short position open, and then trade the shorter term swings in between. My thoughts are that the current up swing (if/when it materializes) will be muted, and probably not worth trading.

Later on in the bear, I think there will be good rallies to trade.

I'm looking forward to using some of these 3X ETFs. They have decent volatility. I can see why they have become popular.

Good luck to all!

[bankedout]

Also if you want to build your own watch list of 3X ETFs, these 3 sites seem to have most of the products:

www.direxionshares.com/etfs

www.proshares.com/funds/#sort=Name&direction=asc&tab=overview&fundGroup=gearedShort3,gearedUltra3

www.velocityshares.com/products

There is also a comprehensive listing here:

3xetf.com/

As always, do your own due diligence!

[bankedout]

Since the markets had another morning where people decided to sell, I think we now have enough ammunition to mount a short term bounce worth trading. The internals (advancers/decliners & new highs/new lows) are mixed again, showing not everyone is on board with today's selling.

I put in 2 buy stops:

Buy 15 UDOW at $55.16

Buy 15 TQQQ at $53.01

I think if we can mount a reversal today and close higher, the short term traders will be scared in to covering their shorts. Also a few short term traders will feel compelled to go a bit long just in case the rally gets legs.

Overall though I think the elephants will squash the rally after a couple of days. So I don't plan to keep these positions very long if they turn out to be winners.

I also plan to heavily sell short this next rally when I sense it is running out of steam..... I'm guessing the selling in earnest is coming soon. We might even be able to drop off a mini cliff based on how negative things have become over the past week.

Both orders are based on the Nasdaq & Dow taking out their day's high today. If neither event occurs, they will be cancelled.

[bankedout]

Traders appear to be getting frustrated about the rally that never materializes. I don't feel comfortable selling short at these prices with the Dow & the Nasdaq appearing to need a relief rally first. The small caps and mid caps look like they could be sold here, but I'm going to wait a bit longer.

I do see BAC broke down instead of up from it's consolidation. I think that will bode well for the next selling wave.

I lowered my buy stops on TQQQ & UDOW to just above today's highs. We'll see if they trigger.

I think AAPL & GE need to get a bit of relief from selling before we continue down in earnest.

If I'm wrong about the need for a rise before the plunge, I may miss a really good collapse. I hope that is not the case!

[bankedout]

I guess it is never to early to start planning for the next downward phase.

The Nasdaq & the Dow were the leaders in the first phase. I'm thinking we will have new leaders in the next round of selling.

Individual investors, as represented by the small caps should become discouraged. TZA will be overweight for me.

Emerging markets will start to feel the pressure from the USA selling. EDZ will be overweight for me.

I think a big surprise will be Financials letting loose, as evidenced by BAC recently. FAZ will be overweight for me.

To cover the main selling SPXU should be the standard.

Wild cards: DUST, RUSS, & ERY I'm cautious about ERY because Natural Gas is not cooperating with Crude Oil right now.

That is my take at the moment. I do not have orders in yet to capitalize on these ideas.

[bankedout]

Today my buy stops were filled on TQQQ & UDOW

I bought 15 TQQQ @ $52.66



I also bought 15 UDOW @ $54.81



This represents approximately 20% of my account value. I anticipate to hold both positions one week or less.

[bankedout]

I put sell stops in place for UDOW & TQQQ just below Friday's low.

The premise of the trade is that the markets will go up from where I entered.

What I didn't take in to account when I set my buy stops to establish these positions was the day of the week. I set the buy stops where I thought the market would gather enough momentum to mount a short term rally. I thought we would at least take out the prior day's high.

What I think happened is that there was momentum, but the day traders and other short term traders wanted to go home flat on the weekend, so their closing orders defeated the rally.

I do think there is a decent chance of the market bouncing short term from here.

I don't like having sell stops in place on my positions. I don't want to get filled on an errant trade or computer glitch etc. However I'm also not willing to set my alarm clock on Monday morning just to monitor these 2 positions. So the stops are in place.

[sd]

The advantage of setting a hard stop when one is not under pressure is that one can exert as much control by determining a stop-loss level that makes sense while price is higher- That stop-loss can be set where one feels the stop makes sense.
If one waits to execute a mental stop- there are a lot of "What If" scenarios which likely would lead to a much larger loss-
Particularly if one has multiple positions open- It seems prudent in multiple trades & over time to have that hard stop in place- The more trades one takes, the higher the potential for an unanticipated market event/reaction to occur - One may not be at the computor screen as these unexpected events occur-
Stops just seem essential IMO- Good luck, SD

[bankedout]

Your analysis of stops makes a lot of sense. I have been trading without them in place for a while, but maybe I will get used to having them again.

I think not having them helps you to develop discipline. Because without discipline, and without stops, trouble is not far in the distance.

[bankedout]

I'm somewhat surprised that my sell stops held on TQQQ & UDOW through hurricane Sandy. Today we are seeing the beginning of the rally that I anticipated when I initiated those positions last week.

Now it is time to think about where I want to exit this rally, and where I want to sell short for the next wave down. I noticed that PFE has been cracked, so big Pharma could be on board for the next round of selling. BAC's breakdown wasn't severe, so I have to keep an eye on the Financials before selling them short.

I'll update when I get some orders in. Actions speak louder than words......

[sd]

I went long BAC and also C yesterday for a short term trade-
BAC closed at a new 6 month high and looks ready to test the $10 made back in March- November is a traditionally strong month for the market-
Both charts look similar-
With the Election up for grabs Tuesday, it should prove interesting indeed- I'm not sure how the outcome of the election will be responded to by the market. The destruction from Sandy is an obvious benefit to the business of construction/materials for the area. I'm not sure if the banks or BAC in particular will be seen as benefitting-
I expect a lot of those poor folks whose homes and businesses were damaged or destroyed did not carry flood insurance-
Good Luck on your positions-
I appreciate you taking the time to post your assessment of the market possible conditions and plans to try to profit -
SD

[bankedout]

I'm glad you enjoy my posts sd.

I no longer try to figure out why the market does what it does. I had to give up on that. With individual stocks, I believe you can understand the reason for some price fluctuations. However with the market as a whole it seems totally random to me.

Since I'm not trading individual stocks right now, I'm 100% focused on technical analysis with no fundamental analysis whatsoever.

I try to look at the chart I'm trading and decide where I think buyers will enter the market and where I think sellers will enter the market. If price does this, how will that make short term traders feel about their positions? If price does this how will that make medium term traders/investors feel about their positions. That sort of stuff.

Then I watch to see what price actually does, and if there is any reaction to it. Is there fear where I thought there would be fear? Is there greed where I thought there would be greed? Did buyers come in to the market where I expected?

That kind of stuff.

I'm pretty fortunate that right now I start work at 1:30 PM central time, so I get some time to watch the market live most days. I think that helps me get a feel for the action.

Best of luck to you. I see the market is fading the rally already today. I was thinking we would get 2-3 days of rising prices. We'll see how the rest of the day goes. Internals are mixed today so far.

[bankedout]

Today I purchased 13 shares of DWTI at $60.78 This is an inverse of crude oil. My sell stop is set at $57.09

Crude Oil looks vulnerable to me.

[bankedout]

My sell stops triggered in UDOW & TQQQ yesterday.

Results of the trades: UDOW -0.3% TQQQ -1.9%

A mistake was made on my part. I put sell stops below the prior day's low. However, the premise of the trade was that each day the ETF would have a higher low than the prior day. Therefore the sell stop should have been placed above the prior day's low. I'll try to correct my stop placement going forward.

Yesterday's trading action was impressive. I think the market is now screaming SELL!!!