I’m Watching These Levels
This
past week and a half has been extremely busy and chaotic
for me. Due to this, I have been unable to spend nearly as much
time focusing on the market, and my trading, as I usually do. This will happen
to all traders at one time or another. Whether it’s because you take a vacation,
have other commitments, or unanticipated situations arise, there will be times
where you are unable to spend as much time focusing on trading as you normally
would. The key to surviving these periods of time, and possibly even profiting
during them, is making sure you are as prepared as possible.
I ALWAYS know my stop levels. Intermediate term
stops for all positions are listed on a holdings report I maintain daily. I also
keep notations for any short-term positions If for some reason your stops
orders are not already entered into the system, and you need to be away from the
market, a report like this or a spreadsheet will simply allow you to call them
in to your broker.
If there are one or two stocks that you are very high on, you may also want to
have buy-stops ready. In this type of situation, reduced position size may be
appropriate. Any additional risk that I see in a trade will lead me to reduce my
position size. If you can’t be in front of the screen to enter a sell-stop as
soon as the buy is executed, then that would qualify as additional risk.
In addition to having a list of stocks that are set up and ready to break out
(my “Watch Listâ€), I also always keep a few other lists of potential
candidates. First, I have a list of stocks that may need some more work in
building their base. Whether it’s the right side of the cup, a longer
consolidation in a flag, or some other pattern that I see emerging. By keeping
this list, I’ve basically done a lot of my research ahead of time for when the
base formation does complete. I also keep a list of stocks that have broken out,
and I don’t own, but would consider purchasing on a pullback entry.
These two lists will provide the majority of stocks that would move to my watch
list when I return from a market break.
It is not important that you do the same preparations as I do when you expect to
be away from the markets. What is important is that you are always as prepared
as possible in case something unforeseen occurs that forces your absence. It
will significantly reduce the stress of not being able to babysit your account.
As far as the market goes, it looks like today will be the second day in a row
of mild distribution in the S&P 500. The Nasdaq has also pulled back the last
two days, but it has been on lighter volume. So far, none of the selling seems
too intense, but it certainly bears watching closely. Hopefully, some of the
support that has built up recently will hold firm. For the S&P 500, the July 10
low near 983½ , the 50-day moving average around 971, and the 960-965 area are 3
potential support levels, with 960-965 being the most important. Since the
Nasdaq has led on the way up, you’ll also want to look there for guidance. The
levels I’m watching in the Nasdaq include 1707, 1685, and 1595-1615.
Good trading,
Rob Hanna
Â