The trippy market continues. They say it takes longer for tops to form than bottoms and I think we’re seeing a slow topping process unfold. If I didn’t know better I’d say somebody was propping the market up yesterday just to unload today.
We had mixed internals early in the day with the Nasdaq in the green and the Dow and S&P in the red. I always hate when the Nasdaq is up and the other indices are down or vice versa so I shut things down early in the day without making a single trade. It’s looking like the bulls may finally be out of buying (fire) power. The Nasdaq gave up all of its early gains and then some and all the indices closed down on higher volume. That screams “distribution”.
The 10-day moving averages on all the major indices are threatening to cross under their 20-day averages. The 10-days have been above the 20-days since July so that tells me that momentum is shifting in favor of the bears, if only in the short term. Stochastics also are in favor of the bears right here. Bombs away!
No changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Up |
| Intermediate | Up | Up | Up |
| Short-term | Up | Up | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
Completely agree, although I was bearish a week ago. We might see a month of pull back in my eyes. Bt the rally was very good and we had a great run. Quoting you “Bombs away”.
Had my best trading day ever today. For some reason I was dead on with my thoughts on market direction today. I shorted BIDU @ 98.25 and then added to the short @ 98.89 was a rough ride for a bit but I was able to cover @ 97.14. I also trade YM (DOW Emini) and made 42 pts profit. WOw I love amerika.
Thx for the site it seems great and I will start checking back here often.
Greg
Definitely gearing up for a broad pullback across the board. But quite frankly, I suspect it won’t last but a couple of weeks. I really think we are going to see another up move in the NYSE and NASD very soon, probably through mid December, then maybe the indices will pull back just before and during hte holidays as they so often do on the light volume.
But anyway…
My swing plays all got stopped out today. I’ve been using my own version of the MR. Swing method (suggested by Larry Swing). I’ve noticed you occasionally post some of his articles here, and they have some great info on money management, which is half the battle.
As for my day trading, the more I day trade, the more I ignore the trin. It seems the tick really controls the short time frames more than anything. When the tick runs consistently contrary to the trin throughout the trading day, I stick with the tick. The tick moves stocks, or at least seems to be a leading indicator. While the trin just seems ho-hum half the time. But when the two are in perfect sync…$$$
Just my two cents for the day. Wondering what others feel about the tick vs. the trin, and how they use them.
Also, I love day trading gap ups/gap downs. It just seems so much easier to take a small position in a stock that has already made a 15% directional move. If a stock has already moved 15% in a day, it only makes sense that it can pop another 5% or so. Any comments on this?
As usual, thanks for hosting this awesome site, Mike!
–van
I think there is an interesting parallel story. At the same time the market appears to be topping, the energy (oil) complex is picking up steam….it was nice to have “cheap” gas in the weeks before the election. :-” In the end, the steep decline in gas prices didn’t seem to serve its conspiratorial purposes, but perhaps a steep recovery will serve the next conspiracies well…
Hi Guys,
I stopped watching the TRIN/TICK and all the
rest a while ago, they seem to be confusing to
my way of trading. I just know the Support and
resistance levels, programmed them on my laptop
and watch. When they are hit, I trade.
Never was happy with watching too many things and thanks god that has ended while ago.
Yes, definitely, the stock that is up x % will/should gain another y% after some correction and that is where my support/resistance levels come in handy. I love
those kind of trades.
As I said earlier, I do not care about bull or bear markets, even though I have an opinion that the markets will crash if not in absolute terms, at least , in relative terms ( it is the dollar stupid!). This does not prvent me to buy stocks indices when I feel like. For me there is not long term without the short term begining it. So if I see my short term trades has a chance to continue I stick with it and that is the long term…
Shorted the QQQQ at the top of the day yesterday 43.25.
See http://borisc.blogspot.com
I agree with Boris on not watching TICK frequently during the day and using it as for a trigger for daytrades for me at least, though if it hits several strong minus or plus numbers within one day, I pay attention for starting possible swings in select ETFs.
I have been swinging long the USO for a week, and started a long swing in QID the other day because I am seeing what Duru has pointed out.
Think any intermediate topping out will be typically bumpy and my positions are sized accordingly with relatively wide stops.
I agree with Van, that price action which has proven itself intraday as being strong or weak, has a high probability of continuing up or down. I often see a stock that has made two legs up or down doing an additional third leg up or down for that reason. Therefore catching the third leg is of a higher probability than catching a second leg.
I also do not care identifying bullish or bearish markets, just the following: trending–whether up or down–and range-bound markets.
Hi all,
I posted above about my BIDU short before I was a member of the site but I’ve since signed up. I will forever be known as Kiloton here at TraderMike’s.
TICK/TRIN: For me using the TRIN helps me understand which way the market momentum is flowing, it also let’s me know which way the market has the highest probability of moving next. TICK is prolly similar in most aspects to the TRIN but I use the TICK for most of my entries and exits and the TRIN cannot give you that.
Wow, the markets were very tough to trade today IMO. I was sweatin bullets on my one and only trade of the day. I made a mistake and entered my first long on QCOM too early @ 34.86 it proceeded to fall quite a bit more in the first hour or so. I added to my position several more times along the way 34.70, 34.50 and one more time where I tripled down @ 34.38 all the while the market sentiment was in the crapper and I’m sittin in front of my monitors trading against the market flow. By now I’m REALLLY LOONNG! ! QCOM horribly bloody long I tell ya. I stuck with the trade for several more hours as it slowly crept back up to the point where I take my money and run. Sold my entire position in 2 trades @ 34.76 for a healthy $1,800.00 dollar profit. Not bad for 3 hours of work ehh. One of the toughest 3 hrs of trading I’ve ever had. :-w:-w
Thx
Kilo
Kilo, too early? QCOM broke clearly broke down from a tight .15 opening range, also breaking down from some clear consolidation on the daily. It triggered a short. Not only did you not close the long, you kept buying all the way down to some significant support, and held it for several hours. Sounds like to me that Lady Luck was only too glad to teach you that sucky trading habits work until the time they don’t.
Michelle,
The most important thing to prolly remember about my above trade is the fact that QCOM is very oversold on the daily charts. Its a fantastic buy and hold right now if your willing to hold it for 6 months to 1 year. IMO QCOM was a daytrade from the long side only due to it having a higher probability of rising in price vs going lower. When I’m daytrading I try to trade only the securities that I would be willing to take home with me and hold for awhile. That is a good rule of thumb for what to daytrade. QCOM fits that rule 100%.
Thx
Kilo
Michelle you are correct in some of your thoughts about that trade though. I entered the trade too early so I screwed it up from the start and it took a lil lady luck(Buying) to get me out of that trade alive. My adds were not at good prices but I tried to keep those quick adds to small lots. When I finally got my best trade signal I tripled down and went in huge. I only needed .20c to have a very profitable day so I went for it baby. :d
Kilo, daytrading means you close the position by the end of the day! Losing daytrades do not become investments. Because of that, daytraders need to go with the flow INTRADAY, in a fairly precise manner. The reason why QCOM tubed sharply in the A.M. was that experienced daytraders went short via automatic short stops with the break of that tight opening range. Triggers don’t get much clearer then that one.
For a precise short-lived daytrade lasting an hour or two, the daily oversold condition is meaningless. And if anything, the breakdown in the tight intraday opening range was ECHOED via the daily.
Why would any security not have devastasting and surprising news that can occur overnight? QCOM has some kind of protective bubble around it?
And yes, your saving your firing power until using it at significant intra and daily support–where you could have easily gone long for the first time–was a clever ‘pouring on the gas’.
But such cleverness will surely screw you up in the end by teaching you that sucky cowboy trading habits may work from time to time until the next time, when a big position in a stock keeps going down, until your account gets blown out.
The correct approach is when DAYTRADING one focuses on the skills and edges of daytraders, because pro daytraders, the one you are betting against, are trading that way.
To sume it up, I strongly disagree with your ‘daytrading’ rule of thumb of only daytrading stocks that you can invest in! Sounds like a good cover for not having the appropriate daytrading skills or methodology. And you are not only to get them, if you delude yourself that a daytrade that does not work is ok because it could make a good investment.
Sorry, there is nothing more clearer than your attitude towards daytrading that makes me realize why I take the money from traders like you on a consistent basis.
I’m a reversal trader so I do not trade breakouts or breakdowns from any tight trading ranges. I try to get in and out before the herd. This is the end of my 2nd year of semi-fulltime trading 3 days a week. In 2005 I hit over 82% winning trades on about 600 trades. 2006 winning trade percent is down to 62% for a variety of reasons but its quickly on the rise the last 4 weeks.
Thx
Kilo
High winning percentages are nice & all but are you making any money? One could have a 99% win rate and still lose money if that 1% of losers are huge. And it sounds like you don’t take small losses easily.
Hi michael thx for chiming in.
I made 17k in 2005 and I’m down 9k this year. I’d say focus is the #1 reason I’ve not done well this year. My first child and daughter was born at the end of last year and I’ve not been able to focus well for most of this year. I also changed brokers and software platforms at the beginning of 2006. I went from using active trader pro in 2005 to using RealTick in 2006. I’m now back to using active trader pro for the charts and entering most of my orders through my RealTick broker.
My trading strategy gives me the entries and the exits so its just a matter of mastering my own self-discipline + emotions that will keep my losses to a minimum. Position sizing has also been a problem for me this year. If I’m ever able to sort these few major problems out I think I will be on my way to reaching my goals and dreams of becoming a full-time trader.
Thx
Kilo
Kilo, reversal trading for your QCOM example would have consisted of your taking a long trade when it clearly reversed at the intra significant support level. That would have been the fade of the day. Instead you ‘reversed’ by enduring a draw down while the trending shorts were raking it in.
I love a good reversal myself (check out my MATR trade on this site). Reversal intraday trades require precise timing, just like trending intraday trades.
As for your profitable 2005 year, can just say that Lady Luck was not on strike for you that year!
Kudos to you for being honest and admitting that you’re down for the year. Good luck in resolving all those issues…. With a 62% win rate I’d think that you should at least be break-even, if not up a good amount. Keep those losses small!
Like most people with a problem, you hit on the solution yourself: position sizing and cutting losses.
With a winning percentage of 60% you only need to have your winners equal your losers, on average, and consistently manage your money to risk 1% per trade, to have those 600 trades more than double your money in a year. Do the math on it. That you’re not there is position size (consistent levels of risk per trade) and cutting losses and letting winners ride (average win > average loss).
There’s plenty of material here and on other blogs to help you…