bankedout's trading journal

[bankedout]

Looking at my totals above it appears as though I accidentally underweighted my Dow short. That is why I have the extra cash lying around. Hmmm.

[bankedout]

I corrected my error and bought 4 more SDOW at $73.09 this morning. Now my total position is 12 shares at an average cost of $72.68

[bankedout]

I raised my sell stops to a penny below intraday support as follows:

ERY $8.18
FAZ $17.37
GASX $16.18
RUSS $20.91
SDOW $72.04
SPXU $40.85
TZA $16.19
UVXY $29.69
SQQQ $43.34
EDZ $11.23

These stops are inching pretty close to breakeven for me.

One concern I have is volatility, which has remained much more tame than I expected.

[bankedout]

I see some buyers have stepped in this morning. Today is Friday. What needs to be answered is, do traders/investors want to be long, short, or flat this weekend?

My guess is the short term traders are closing their short positions today, which accounts for some of the buying.

Medium term investors/traders probably want to be flat or short.

Long term, who knows? Ask Buffett if he is buying at these levels!

[bankedout]

I have to head in to work in a few minutes here. At first I was going to cut my positions in half to lock in short term gains and keep the other half for medium term holdings.

However, it looks like the professionals came back from lunch and squashed out the short covering with authority. I think there is a decent chance we will see lower prices on Monday.

Good luck to all.

[bankedout]

Buyers managed to somehow hang on to a gain yesterday, though it looks like it was a difficult fight with sellers.

I think short term traders are starting to make the case that we are oversold in the near term and due for a bounce. However people with longer time horizons are still liquidating and cautious.

Volatility remains very low, which concerns me. The Nasdaq has just been obliterated the last two months, but the VIX is still showing complete complacency.

I honestly had expected more selling by this point, so now I have to re-consider my positions.

I looked through the mega caps (companies above $100 Billion market caps), and I don't see too much evidence of accumulation as of yet.

Hmmm.

[bankedout]

The monthly chart of the S&P 500 (photobucket is now making my charts blurry, if you know of a different site I can upload to, please share):



Obviously, we trade the very right hand side of a chart like this. For medium term holds (weeks to months) my general rule of thumb is if each bar is lower than the prior bar, the trend is down. If each bar is higher than the prior bar, the trend is up. If the bars overlap a lot, there is no clear trend.

All that being said, I think this chart is trying to tell me to stay medium term short, unless the September/October lows are violated.

What the VIX is telling me is that the market does not think this is a long term top at the present time. Therefore I should not expect large outsized gains from my short positions. Outside of the VIX, I still think this whole move up from the 2009 lows appears to be running out of gas. Which each move higher becoming more muted.

Now the short term part of my positions are a whole other story.

[bankedout]

If you drop down to the daily chart of the S&P 500 which is where most people manage their medium term trades, you can see the classic head and shoulders top:



Or for those of you who think in support/resistance/trend instead of formations:



In the blue line chart you can see why the short term traders are thinking it might be time to buy again.

[sd]

I think there is a logical case to be made that the market continues to 'drift' lower- There will likely not be the sharp-selling as the politicians are showing a willingness to comprimise and prevent the "fiscal cliff" from just happening due to lack of action-
There is still the big unknown of what the actual comprimise will entail, and even Cramer is suggesting to lock in some gains this calendar year on big winners- because higher capitol gains taxes are on the table for next year, along with higher cap gains on dividends-
I think we muddle forward-short term- Bulls are making the case for a 14-15 pe on the S & P is historically 'justified"- but the fear of the unknown future higher tax & gov't policy - will likely cause some immediate reactions in response to news that 'an agreement in principle' on the market plus side- or "The talks are stalemated by....." on the other-
I think the American public -on both sides of the spectrum- wants to see our elected politicians do what they were hired to do- and comprimise instead of staunch opposition needs to be the policy-This is what the market expects- That would inspire a relief rally of course.
You are right about the Vix, not excited per se-
All of the positions -Except EDZ ,UVXY had similar price moves- higher open, a pullback during news that talks of concilliation were being made- and then a move that closed higher-but not above the open.
On my single little short trade-I sold 1/2 the position yesterday- on price weakening & loss of momentum-
There will likely be lots of additional political posturing and analysis over the weekend that may set the tone for Monday's open-
You could consider yesterday's swing back low relative to where price closed- as a possible raise of partial stops-
But that may be too close to the closing price- Could consider reducing some position exposure if things don't look favorable-
While good trading advice is generally to trade the charts and not the news- in the short term the news appears to be driving the market-
Good Luck! SD

[bankedout]

And then there is the intraday chart, where you can see how the battles are being fought day by day:



You can see Wednesday morning's panic liquidation with that giant bar occurring in only 5 minutes of trading. Since then it has been pretty tame.

Overall I think it is still a bit bearish, but not a landslide by any means.

Honestly, since I'm not able to watch my positions all day long, I should not be trading in this time frame..... A good point would be I was sleeping Friday morning. If I was awake, I probably would have covered my short term short positions in the AM with everyone else for a tidy profit. Since I was sleeping, I have to come up with a better place to cover. Obviously the goal is to cover at a profit, and not be taken out by a stop for either less profit or a loss.

[bankedout]

My thoughts are that much smarter people than I will be analyzing the news and taking trades based on their analysis. I will see the results of their judgement in every trade recorded on the tape. Actions speak louder than words, and if there is something worthy of taking action, rest assured you will see it in the charts before too long. Like I said, when I'm trading indexes, it is pure technical analysis. Whenever I have tried to apply any fundamental analysis to what is driving the market higher or lower, I have totally and completely failed.

[bankedout]

Right now I feel as though I'm finally starting to grasp all of the knowledge that dbphoenix was sharing with me years ago.

What he ended up doing was throwing in the towel on the stock market, and making his living trading Nasdaq futures.

I personally think I have a better feel for the S&P than the Nasdaq, so perhaps I should go down his route and confine myself to SPXU & UPRO for a while. This would help me to hone my skills, rather than watching a number of different positions. Since, as you pointed out, they are all doing similar things.

Something to consider.

[dg]

or you could use UKK to catch small companys movement leveraged if you preferred stocks to futures.

[bankedout]

I'm going to try just trading S&P 500 index products for a while and see how that goes. I hope I can stay focused on this for at least 1 year to see if I can keep my account balance steadily rising with a single focus.

So as of now, I consider all of my positions besides SPXU as short term trades. As such, I expect to close them soon.

I'm going to treat my current SPXU position as a medium term short position.

I like the Russel 2000, but right now I'll just stick with the S&P 500. I think with leverage, it can provide the returns I desire over time.

[sd]

I don't think there was anything wrong with your approach- You were prepared to put it all on the line should X occur- You used stops in case the trades did not perform and to limit loss-
YES, the market is highly correlated now, and many stocks/indexes will trade in tandem periodically- but not totally so.......There are markets not so closely correlated.....
Most of the trades were indeed highly correlated- but that would have been a plus should the move had additional momentum.
In the past you've illustrated some compelling charts on the advantage of paying attention to longer term trends and signals-
If you trade only 1 market index you will be very focused- also very over leveraged- It would be like - Casino Royale- "Put it all on Red"
Consider expanding the potential tradable market to include that which is not in tandem- Thus, in periods of sideways action, you could perhaps find areas that lead the market directionally-
Perhaps a view that would include Hard commodities and emerging markets.- or the AG complex.?
Some areas that are not tied to the US market directly-?
Whatever your final choice is, I look forward to following your approach-
Good Luck! Sd