A Stop Strategy For Longer-Term Trades
The GDP report came out
at a blistering 7.2% annualized. That had the market quite firm
going into the opening. My main concern was a Gap & Crap, luckily that
did not play out, in fact, were it not for my skittishness on the opening, my
initial Fade the Gap trade in Citigroup
played out quite well. Hey, you can’t nail them everyday. As the morning wore
on, though, C continued to trade out of
synch with the market. I had noticed that on Wednesday as well. With a few
other stocks on my list, there was no need to trade C;
I moved on to Texas Instruments (TXN).Â
TXN proved to be much more responsive to the
S&Ps and was trading quite fluidly. Go back on your 5-minute charts of the S&Ps
and TXN at the following times to see what I
am referring to:
All times PST:
7:40 AM
9:20 AM
11:20 AM
These should illustrate a nice correlation
between the futures and TXN.
Meanwhile the DXC
put in a solid performance, unfortunately, gold stocks suffered as a result.Â
While gold stocks came out of the gate blazing, they did have a somewhat
speculative feel, so it is not too surprising that they finished well off the
highs. The two stocks I follow closely and own as investments,
Newmont (NEM) and
Wheaton River (WHT), look a bit toppy on their daily charts. I
wrestle with trying to finesse an exit versus simply sticking with the overall
theme that gold is in a bull market and there are numerous reasons for it to
continue, albeit with healthy pull-backs from time to time.Â
As a short-term trader primarily, this is hard to
balance; technically you know there is a strong likelihood of price weakness.
However, I also know the likelihood of me getting back in is slim. For now I
will not try to outguess the market.
The same is true in FX, as I mentioned
yesterday. Time and a solid technical/fundamental story is your friend,
micro-managing only erodes returns. So, with HVT,
micro-manage until you are blue in the face, it is the proper strategy. With
longer-term stuff let reasonable stop levels take you out of trades, not your
desire to catch the top tick.
With that, I am off for the weekend to LA after
today’s session, not only to escape the smoke, but to visit friends and family
(Todd, you are buying the beers Saturday night, right?). Enjoy and be safe.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.