August 16, 2006 Stock Market Recap

What a day! If only they could all be like this. This kind of action, a nice steady trend for the whole session, is perfect for my style of trading. I would have had a record R-multiple and dollar day today if not for the partial profits I took along the way. But that’s the trade-off with taking partials. Taking them has been the right thing to do on most days, especially when we’re just chopping around. But today I could have doubled what I made (8R or about 6%) if I hadn’t taken any partials. Oh well, I knew when I decided to make taking partial profits part of my plan that there would be days like this.

For those who care (Dave?) here are the trades I took today (all off of 30-minute candles)…

I jumped in XLNX above the 10:00 candle at 21.80. Initial stop was at 21.45, just below the low of the day. This ended up being a 1.94R winner.

Next was TRID. Again, I bought above the 10:00 candle with a stop below for 25 cents of risk. I got stopped out on the next candle for a 1.14R loss. As you can see it turned around after shaking me out. This could have been about a 3R winner assuming no partials along the way.

Then I bought NTLI at 25.02 after it broke the high of the 10:00 high and the $25.00 level which I thougt might be resistance. I was able to grab a partial on the next candle once I had a 2R gain and moved my stop to just over break-even on the remaining shares. I got stopped out shortly thereafter. I made 1.07R on this trade but this is another that could have been a 3 or 4R winner. Oh well…

Next up was RACK, I saw the super narrow 10:00 candle but thought it was too tight, so I set an alert for the high of the day. I got long at an average of 21.3, with a stop at 20.97, below the 10:00 candle. RACK produced 3.44R of profit. This is a case where the partials and the looser stop really held me back. This could have been an 8R winner with my wider stop and a 10R winner with the tighter stop.

FDX was another good one that could have been much better without the partials. I got long above the 10:30 candle at 101.07 with a stop below at 100.62. I really liked that 10:00 candle and once I saw oil rolling over after the inventory report hit at 10:30 I just knew Fedex would run. Still, even though I *knew* I still waited for my entry signal. I made 3.63R on FDX but left another 3R on the table due to the partial sales.

Finally, another dud — ISIL. I bought above the 11:00 candle @ 24.36 with an initial stop below at 24.15. It hit my trailing stop around 1 PM for a 0.52 R loss.

Like they say hindsight is 20/20. If I had it to do over again I’d probably do things exactly the same way, especially given how the market has been prone to roll over mid-day of late.

Obviously it was a good day to be long. I read a couple of people talking about how the market was overbought this morning and that they weren’t going to chase. I’m not sure how they determined that the market was overbought early in the day but even now it’s not overbought on my rather fast stochastic settings (5.3.3). We’ll probably hit overbought levels on most of the indices tomorrow. But even then, if this is a true breakout the market can stay overbought for a while. I don’t put a whole lot of weight on any oscilltaors in trending markets. Just my $0.02…

Here are the charts of the indices:

Nasdaq showed good strength today as it barely dipped below the upper Bollinger Band. It still looks like clear sailing to the 2200 area. I’m not saying that we’ll go straight there without any gyrations — just that there’s not a whole lot of resistance on the chart.

New 3-month highs for the S&P…

The Russell 2000 looks like it’s hitting the wall. The 200-day moving average, the Upper Bollinger Band and the August high are just above…

The Dow made a new closing high for the summer but didn’t quite make it above the August intraday high.

No changes today…