Let The Trade Play Out Based On Your Analysis. Here’s What I Mean
If there is one thing that the market has reinforced
in the last month or so it is that speculation and odd behavior still
exist. Bad news is good news, depreciating currencies are viewed positively etc
etc. The question that everyone asks, at least those who are realistic about
the market is:
“When will the market yet again take out the perma-bulls?”
Well, if you are trying to trade with that methodology, you know it is very.
very difficult. Just like HVT trading, you
need to be patient and wait for your set-up. The longer your time frame, the
more time you need to be hunkered down in the grass. waiting for that sick
gazelle to stroll across the plains.Â
Technically, there were some signs yesterday that we may be on the verge ofÂ
that pull-back. Will it be deep, or merely a way to get the bulls to scurry for
a few days? The answer is not real important, the trade will last as long as
the momentum is in your favor. The hard question is when to pull the trigger.
For the record, I have a couple of long positions in my longer term-trading
account, none of which are stocks based in the US. I presently have only 2
shorts out (both tech stocks), and a couple of positions in currencies. By and
large, though, I am content earning interest in a money market account and some
CD’s denominated in foreign currency. My point is simple: this market feels
and looks like trouble. Will it be? Yes. Like one of my favorite market
observers states:
“Often wrong, never in doubt.”
I have little doubt that at some point this market will be in a world of
hurt. It may take 2 days or even 2 years. The point is to preserve my capital
in the meantime until I deem the striking point to be near. If I am wrong, get
out, re-evaluate and wait for the next time. Technically, there may be a set-up
forming.Â
Yesterday’s close of the S&P’s was rather ugly, a trade below yesterdays low
will invite me in on the short side.
You can play this any number of ways. Short individual stocks, sell an
e-mini, whatever your risk tolerance is. No, this is not a slam dunk, in fact
it may not even set-up. The Nasdaq continues to look better technically, the
semi’s look strong technically also. But, a signal is a signal.
My point is simple. Rather than trying to anticipate events that may or may
not unfold, let the trade play out based on your analysis when and only when the
technical signal appears. In the meantime, allocate your time and energy to
trades that are far shorter term in nature. For me,
HVT continues to be a consistent stream of income, albeit at a
reduced pace with the quiet market. But I am now sensing we may be able to pull
off a couple of solid longer term set-ups that would give a nice boost to total
return.
For today, the best hopes for the best trades will be off the economic
numbers released at 6:45 and 7 AM PST. Michigan
Sentiment and Chicago PMI. The
consensus is for a reading of 93 and
49 respectively. As is always the case, a
significant deviation from the consensus will offer up a great
HVT set-up.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and questions.
Dave