Saturday, March 31, 2007

Uranium Index, Week 11

There might be a pause next week, but trend is still up.

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The All Time Highs (ATH) for my uranium index is 26,529.74. ATH's typically act as a resistance level, and if I had to guess as to the reason why, it might be because there's also the potential for a double topping pattern to occur. So, there might be a bit of a pause as my uranium index approaches the ATH's. But eventually it will power on through, though I do not know when that will happen, or whether there might be another dip before that happens. You could buy now (higher risk, higher reward), or wait until it breaks above resistance before buying (lower risk, lower reward). My personal opinion is that lower risk is better than higher reward, but that's just me.
By the way, the 24100 level will now act as a support level for the index.

The merger completion date (April 13/07) between UrAsia (UUU) and SXR Uranium One (SXR) is fast approaching. My new list of candidates (to replace UUU) is as follows:

BaysWater Uranium (BAY.v)
Energy Fuels (
U3O8 Corp. (UWE.v)

Index Value: 25,826.16
Best Performers: LAM, MGA
Worst Performers: FSY, WNP

Index Performance:

Week 11:            +4.16%
Since Inception: +29.10%

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Review of March

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March has not been kind to me. I lost just over $800 overall for this month. This is considered a drawdown.
The reason for my poor performance was my attempt to transition into trading futures. I had just finished coming out of my slump in February, and was having a little bit more success with my trading in the early part of March. When I tried trading futures (again) near the middle of this month, I tried trading the Russell (ER2) again, with mixed success at best. That was when I made the post containing words of wisdom from some great traders, in order to draw some inspiration and turn my mental state around. Then at the suggestion of one of the commenters, I expanded my horizons and tried trading other futures contracts. I had initial success with trading Gold Futures. Then after a couple more mistakes, I learned when NOT to trade. Then came the FOMC day, which was my best day of the month. From there, things started to turn for the worse, which was this past week. I started to forget about when NOT to trade. I started to forget about doing what it takes to wait until the low hanging fruit appears. If you look at the history of posts in my futures trading, you can see how things progressively went downhill. I started to scalp more and more.
Frustrating doesn't even describe it anymore.

This is not the first time it's happened. I've noticed that I seem to periodically forget the rules that have proven to work for me in the past. It's not that I can't make good trading decisions. For example, in the Gold Futures trade, I made my analysis the night before, and knew about the support levels, planned, prepared for the days action, and acted decisively when the opportunity arose. The analysis and planning is what I attribute to my successful Gold futures trades.

Why did I stop doing that? The OMNI has to my knowledge, absolutely the best freely available and documented 4 month track record in SnP eMini Futures trading out there, and I threw their recommendations out the window at the first trading loss that I took. I am still trying to fathom how and why I am doing that.

The problem is that I periodically get into bouts of bad trading decisions as well. Once I make some bad trading decisions, I think I start shutting down my good habits. When it all boils down to it, the true root cause of the problem is that I start to lose confidence. Confidence is all about the capacity to trust in your own ability to perform. Things are unfolding exactly as I wrote about them in my post about the Habits of the Highly Effective Trader (see the Best Of tab). Each bad trading decision that I make robs my capacity to trust in my ability to perform. I start to ignore my analysis and planning more and more, and I begin to trust less and less. That naturally makes me more vulnerable to making even more bad trading decisions. The simplest example is the past couple days. The OMNI provided the day's recommendations. I worked out some of my own entry/exit levels, and the likely scenario of the day. Once the trading day started, the first loss I took resulted in throwing all trust in my own analysis and planning out the window.

The solution is blood simple.
Trade less often. Stop trading for the day when I make two bad trading decisions. Be even more picky about the high probability setups. Follow my trading plan even more religiously.

Now, the hard part is to execute this solution. Wish me luck.

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Thursday, March 29, 2007

Last Minute Buying in Uranium Stocks

There were a lot of last minute buying in many of the components of the uranium index that I was watching.

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Not sure why the buyers decide to buy these stocks at the last minute, but I did find it curious that it happened to more than a couple of the ones that I was watching. Perhaps it was the same buyer ?

I didn't buy Paladin Resources (PDN), even though there was a surge of buyers showing up in the last 5minutes.

Bought Mega Uranium (MGA) @6.42, stop@6.30

Bought JNR Resources (JNN) @4.02, stop @3.90

Bought BaysWater Uranium (BAY) @2.02, stop @1.94

Also bought UraMin (UMN) @6.05 (stop @6), but it did not show any last minute buying

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SnP e-Mini Futures Trade

"Co-ordinate what you see with what you know....." - Dr. Brett Steenbarger
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CORRECTION: I am a wimp.

While the OMNI keeps hitting for 10pts at a time, I am scalping for a couple ticks here, and a few ticks there. For some reason, I have lost the capacity to hold on to a winning trade. Several times this morning I had the opportunity to hold on to a winning trade and let it ride. (@1437.75, 1436.75, 1434.50, 1433.50). On all occasions, I end up being scared out of my position by some noise. I wind up scalping noise, and get stopped out by the same noise.
My broker must be absolutely ecstatic to have a tick hunter like me.
This is starting to get annoying and frustrating.

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Wednesday, March 28, 2007

Chart Review of Select Uranium stocks

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UraMin: Printed two low volume, inside days, uptrend intact, buy on break above today's HoD:

Paladin: chart looks good, uptrend intact. Hard to find a good entry point, although there is some weak support @8.96.

BaysWater Uranium: 10d EMA crossing above the 20d EMA, looks like it could break out. Buy on a break above 2.0, or any pullback that stays above the gap between 1.70 and 1.78.

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SnP e-Mini Futures Trade

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I've made additional markups to train myself to recognize the patterns.

I made a couple more scalps in the afternoon, both of them were for -0.50 losses. Afternoon was too choppy to trade, and I recognized it too late.

I also just realized that I should be using BracketTrader for this kind of trading.

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Silver Futures Trade

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I made 39 ticks on the Silver Futures (ZIK7) early in the morning, but gave most of it back on some stupid scalp trades that wasn't worth the risk.

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Tuesday, March 27, 2007

IPO: Uranium Focused Energy Fund

Forgot to keep track of this one, and now it's trading already.

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The Uranium ETF, which is sponsored by Middlefield Capital, debuted on March 16, 2007, at around 9.86 per share. The ticker symbol is TSX: UF.UN. Today it closed at $10 even per share. Glad I didn't sign up for the IPO shares However, since it pays a 5% yield, I am wondering if I should pick up some for my retirement account..... hmmm....

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SnP e-Mini Futures Trade

I really should stop trying to trade the non-trending days...

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I made 3 trades today. The first was for a 1pt loss, then I tried to make it back with 2 scalps, but with no success. The initial short was the correct play to make, but I just timed it totally wrong - again, due to lack of patience.
My (non-mechanical, and semi-discretionary) system generated 4 (relatively) high probability plays today, and even then, they were for an avg of 1point profit per each play. I will try out my system tomorrow for real.

UPDATE: OMNI was right on the direction again, although its entry/exit point was off.

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DayTrading Mega Uranium

I Day traded mega uranium (TSX: MGA) near the end of the day.

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6.25 was the resistance level on the daily chart for Mega Uranium (MGA). I had an alert level set @6.25, but I happened to be stalking it at the time, so I was able to see this breakout develop.
Once MGA crossed the $6.20 level, the price action started to come alive. I saw 65K shares on the ask @6.24. The bid started @6.20, then went up to 6.21, then 6.22. When the ask @6.24 went down to 45K shares, I decided to put in a limit bid @6.23. I lucked out and got filled (I was prepared to buy @market), and soon afterwards, I saw that the ask went down to 20K shares. Once all 65K was consumed, away we went. I watched the tape closely for any signs of stalling. No sign of momentum waning until I saw 50K shares on the ask @6.40. Immediately I sent my limit sell @6.39 and got filled within seconds. Again, if there was any delay, I was prepared to sell @market.
Fastest and smoothest $0.16 I've made in weeks.

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Monday, March 26, 2007

More Random Stuff

I'm bored, so I need to ramble on about random stuff...

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Noticed something about the other futures traders in my blogroll.....

I've noticed that TraderGav (tends to) trade the NQ contracts, while Boogster tends to trade YM, and Tedders exclusively trades ER2.
Everyone seems to have their favourite contract. Not sure why, and I suppose it's not really a earth shattering, paradigm shifting piece of information, but I did find that curious.
As for me? I am all over the map. Although I have not reported it to this journal, I've taken one or two scalps of Silver Futures (ZIK7), the Euro (6EM7), the Loonie (6CM7), and the Nasdaq (NQM7) just to test the waters and see what it was like. I have never tried trading YM, QM nor the grains. And I will probably remain gun shy for now about giving ER2 another try. Gold (ZG) and the S&P eMini (ES) remains my vehicles of choice - it just "feels" more "comfortable" to my personality type.

Right now, the best way to describe me is Uranium/junior miners with a bit of ES/ZG futures mixed in (although the Yen is starting to look more and more interesting). I think I will continue practicing trading futures until I have a system worked out. Once I have an actual system, then I will get back into re-vitalizing my US Equities and options swing/day trading. Either that, or if I get sufficiently bored with a lack of good setups in the futures that I am watching.
And there's nothing more "concrete" than a definitive criteria like "sufficiently bored."

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Scalping the S&P eMini Futures

"In the process of evolving as a trader, learn to watch yourself more....." - Linda Bradfore Raschke

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I was in scalping mode today because I just didn't feel enough patience was present in my trading. I made 7 scalps of the S&P e-Mini Futures (ESM7) today.

The losses that I took were basically due to a lack of patience in waiting for a valid setup. When I was able to wait long enough for a valid setup to occur, I had profits. That was the simple lesson of the day for me.
I also made one scalp of ZGJ7 for a 0.50 pt profit.

The OMNI nailed the move on both the ES and the NQ, but made the wrong call on the Euro. 2 out of 3 isn't that bad, I suppose.

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V-Bottom Pattern on Forsys Metals

Is the V-Bottom pattern tradeable or not?

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Babak talked about the V-Bottom pattern recently.

I saw another occurrence of this pattern today:

The V-Bottom pattern looks interesting. However, I am not sure how to find a low risk entry. How would you trade this pattern?

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My Uranium Holdings Update


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Many of the components of my uranium index looks like they are going to gap up above Friday's Highs. I will be updating the stops to my holdings as follows:

PDN: tight stop @8.70
UEX: stop @5.90 - this will indicate that the breakout has failed.
RSC: another tight stop @3.00 - this is a pyschologically important support level
STM: raised stop: should be 4.50, but I want to protect profits; my stop will be 4.60
EMC: stop @13.53
LAM: this guy is going to gap up, so my stop will be Friday's HoD @13.18

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Sunday, March 25, 2007

Bi-Phasic Sleep

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For the past year, I've noticed that my daughter sleeps 9 hrs at night, and about 1.5 - 2hrs nap in the afternoon. My daughter has been quite a model example of a biphasic sleeper. The biphasic sleeping schedule, in which you divide your sleep into two segments per day, is designed to maximize (well, increase) your effective sleep. The first segment is the nap, which is supposed to be 90 minutes in duration. The second segment is the core sleep, which is either 3hrs or 4.5 hrs in duration. The biggest advantage of biphasic sleeping is that you become just as productive but with less than the conventional 8hr sleep that most other humans require. There are many theories about the human sleep cycle. For instance, one theory states that humans sleep in multiples of 90 minute cycles. So, when you sleep for 8hrs, you wake up feeling groggy, but when you sleep for 7.5hrs, or 9hrs, you wake up feeling rested and energized. Steve Pavlina optimized his polyphasic sleeping to just over 20minutes in 4 hour intervals. Well, guess what: 90 minutes is an exact multiple of 22.5 minutes! No two humans are ever the same, so my own theory is that it's not a precise 90 minute sleep cycle for everyone; for some, it may be 95 minutes, for others it may be 85 minutes. Since my daughter sleeps in multiples of approx. 90minute cycles, would it not make sense that I should also be sleeping in 90 minute cycles, given that we share the same genetic DNA ?

Ever since I was laid off from work, I have been taking naps to supplement my core sleep at nights. My napping has not been consistent to say the least. Sometimes, I would take two 10min. naps, the first during 930a (PST) and 1130a (PST). At other times, I would take about a 1hr nap at around 130p, or a 20min. nap at around 1030a, or 5p.
So, since I am napping anyways at least once a day, I may as well try to structure it to conform to the biphasic sleep schedule to make it more efficient. The other reason for me to try this biphasic sleeping is because it fits my trading schedule. Since I live on the west coast, I must wake up by 630am at the latest, otherwise I will miss the market open for the day. The Wikipedia entry for BiPhasic sleep suggests that the 1.5 hr nap should be done at around 830pm. In my opinion, napping at 830pm would make it harder to transition to the biphasic sleep schedule. After all, if I sleep @830pm, why would I feel sleepy at the 130am core sleep?
I think I will try 12am to 430am as my core sleep, and take the 90minute nap at 130pm (which by the way, is 9hrs after 430am).
I will try this out for now and report on my biphasic sleeping progress as time permits.

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Market Sentiment

Just when you thought it was safe to go long.

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First off, I haven't really explained how I'm using the bullish percent charts to gauge market sentiment. But as it turns out, I don't have to, as Babak does a nice job explaining how the BP charts can be used effectively. It's also similar to how I'm using it.

The path of least resistance for the markets remains down because:
- RSI put in a lower low
- MACD is trending down
- Moving averages are trending down.

In a true market bottom, the opposite of what I described would happen:

- RSI puts in a higher low
- MACD turns positive
- Moving averages have stopped trending down.

Granted, I don't think that the market will go down in a straight line from here. We may see some more market creep upwards before we come back down. But I say that the path of least resistance remains to the downside because I want to remind myself to remain open to this potential downside scenario unfolding, and to prevent myself from getting too aggressive on the long side. Sure, we've had a rally week (thanks to the FOMC), but we're certainly not out of the woods yet. The market needs to overcome a few technical hurdles before it's safe to go (aggressively) long.
In my mind, this also explains why breakout trading hasn't worked as well as in the past. Bearish sentiment is now greater than a couple months back, which creates confusion, a lack of direction, and increased volatility. Certainly the lack of direction works against breakout trading.

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Weekends Are For More HouseKeeping

Couple of housekeeping items....

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Well, unbeknownst to me, I have been voted as one of the best and favourite blogs by the readers of Interactive Investor Blog.

Thank you!

I feel a bit humbled, and grateful at the same time. I mean, I did't even know that there was an Interactive Investor website was until I found out about it from Trader Gav. Plus, I don't think I've produced any content here that's truly deserving of any awards. And I'm not saying that to belittle myself in a reverse psychology sort of way. I'm just your average joe, on a journey, trying to navigate my way through this challenging landscape, and recording it into this trading journal along the way.
When I first started this blog, I wanted to join all of the zillion different aggregators out there like BlogTopSites. By joining them I was hoping to see traffic to my journal grow and grow and grow. But after a while, I had to take a step back and think, really think about what I wanted to do with this blog. Some days, it just doesn't feel that easy to maintain this blog, and other days, it feels easier to take this blog down a sidetrack. Once I decided that I wasn't going to chase after traffic, then things got a bit easier. I do hope to remain true to the purpose of this blog, which is first and foremost to document my journey (and hopefully my progression) as a trader. In other words, even if there were no visitors to this trading journal, I would still be committed as ever to make entries, because that is what I want to do with this blog - use it as a trading journal in the truest sense of the word(s). Everyone has their own methods for reaching out and helping others, and so by helping myself, and blogging about it, I hope that would also help you the reader, in your trading.
None of this should this be misinterpreted as an indirect criticism of anyone else.

This leads me to my other point. I think there are other blogs that are linking to me. If you are reading this, and you've linked to me, you may be wondering why I haven't returned the favour. The blogs on my blogroll are blogs that I regularly visit often enough to make them a part of my daily and weekly routine. And my daily routine should be centred around improving my trading. So if you are not on my blogroll, then that means either I don't know about you, or I haven't figured out yet how to incorporate your blog into my daily routine. The other issue is that the blogosphere is expanding at an exponential rate, with new trading blogs appearing every hour. I can't keep up, and I've stopped trying. If fulfilling the purpose of my trading journal takes me to a new blog, then I will include it, if not, then so be it.

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Friday, March 23, 2007

Uranium Index, Week 10

It's time.

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Regardless of what any of the
media pundits say about the good and the bad about uranium, my opinion is that it is always wise to listen to the message of the markets. Today, the chart said that it is time to get back into uranium.
I have been writing about this for the past 2 weeks. And finally, today, the scenario that I talked and talked about came to fruition. If any of you were following my Twitter updates, then you'll know that I bought many of the uranium stocks that broke out today.

Index Value: 24,795.86
Best Performers: FSY, URE
Worst Performers: MGA, KRI.


Week 10 :          +6.5%
Since inception: +24.0%

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Japanese Yen Futures Trade

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I made two trades in the Japanese Yen Futures, both of them losers.

The OMNI called the direction correctly. However, it also called for using a very wide stop, which actually became necessary as the Yen early on looked like it might challenge yesterday's intraday highs. I was uncomfortable using such a wide stop, so I just decided to sit and wait for a lower risk setup to occur. A high probability setup did occur soon after the Yen failed to reach yesterday's intraday highs, but I somehow managed to NOT spot it on the chart. Then that big down move happened, and I entered my first short expecting a second one to occur very soon. A second down move did occur, but only after I got chopped out.

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Thursday, March 22, 2007

Time to Get Back Into Uranium?

The Answer: Not yet, but......

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The Uranium Index closed at 23900 today, inching ever so closer to the key resistance level of 24100. Not every stock in my index looks bullish, but an awful lot of them look like they are waiting for something, a trigger, or a catalyst, what have you.

Here is the landscape:

On Monday, UxC will report the U3O8 spot price (but only to subscribing members). What are the chances that the spot price will actually drop, given that it has never dropped in the past, oh, 6 freakin' years? Of course, this Monday could be the day where it actually starts dropping in price. There can be only 3 outcomes in the spot prices - they go down, stay flat, or go up. Assuming an equally distributed probability for each of the 3 scenarios, then that means the probability of spot prices actually going down is 33%. In my opinion, I think the probability is significantly lower than that, say more like 20%.
So, I think the safest scenario is to assume no change in spot prices on Monday. That means if the index is to breakout (above the key resistance level of 24100), it will have to do so based on pure technicals.

Forsys Metals (TSX: FSY), tipped its hand and showed what could happen during a sector wide breakout. On essentially no news (I do not count the news of COMPLETION of the Ancash acquisition as significant news), it moved +$1.50 in about 3 days, good for 22%. I'm embarrassed to admit that I sold @7.89, because even I could not believe my eyes as I watched what it did for the past two days. I won't even bother posting the chart, because I sold out sooo soon. Anyways, what is interesting about Forsys Metals is that it was going through a volatilty squeeze, and broke out of it in a big way in the past two days.

Other stocks that are currently in a similar volatility squeeze (as identified by the arrows in the above charts):

These stocks in particular I like because they are above their respective trendlines. Also, using today's low as a stop loss presents a low risk entry opportunity for the above list of uranium stocks. I will start accumulating the above stocks on any intraday pullbacks.

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Chart Review: e-Mini S&P Futures

Had to take another look at ES today, to see if there was any possible play.

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Today's thesis was a pullback. However, the pullback did not go down to support levels, it just stopped in the middle of no man's land. That made it hard to figure out a possible play.
You pretty much had to prepare and plan this ahead of time, ie. if this happens, I will do so and so, etc.

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e-Mini Russell 2000 Futures Trade

ER2 is indeed a different beast from all the other futures contracts.

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ES is thicker (ie. there are many more players in the ES), and consequently moves slower than the Russell.
Today's futures trade was more a psychological victory than anything else. First step in the road to success was to prove to myself that I don't suck at trading ER2.

UPDATE: 815 turned out to be an intraday resistance level. Will see how strong this resistance level is in tomorrow's trading session.

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Wednesday, March 21, 2007

Wednesday's Trading Results

"Do what it takes to sit and wait until the low hanging fruit appears"
- Alan Farley

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I made just a handful of futures trades today, and was patient enough to sit on my butt and not trade until after the FOMC interest rate decision. Then I acted quickly once the decision was made public.
In retrospect, since ES was in such a small trading range, I should have placed buy and sell stops just outside of the range, ie. buystop @1427 and sell stop @1422. Had I had these stops in place, the break of the volatility squeeze would have put me into a position at a much better risk/reward. Oh well, something to remember for next time.
And of course, instead of getting giddy about making close to 10 points on my position, next time I will remember to focus on using the 5 SMA line as my stop loss guide.

The components of my uranium index got dragged up with the rest of the market after 215p EST. Not sure if there will be any follow through tomorrow, we'll just have to wait and see. Certainly there are individual components that are acting well, like FSY, UEX, and URE. The index is inching its way closer to the key resistance level. I will continue to play it cautiously, and with small lot sizes until I see a sector wide breakout.

For the past two days, I've been thinking about what would be the criteria that would demonstrate and establish that my recent string of profitable futures trades were not just a fluke. The only criteria that I can think of is one of consistency. Consistency comes from being patient, and simply waiting, and waiting (and then waiting some more) for the low hanging fruit to appear. For example, the trade in ZG this morning was considered low hanging fruit in my mind. I had a clear entry point, with a well-defined stop loss, but more importantly, I had a high probability scenario, because the 657-ish level was identified as yesterday's intraday support level. Now I just need to keep on doing more of the same

One last thing. There will be no more intraday update postings. I have joined the Twitter bandwagon, and will be posting my intraday ramblings from there.

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e-Mini S&P Futures Trade

Whatever Bernanke said, I wish he would say it more often.

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Just after 215pm EST, all 3 futures indices (ES, NQ, ER2) started to spike up in unison. You can't get a better signal than that. My vehicle of choice was ESM7, because it was more "tame" than the Russel.

I wouldn't mind seeing a few more days like this where there was buying panic all across the board.

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Gold Futures Trade

I seem to be on a roll with the Gold Futures (ZGJ7), so may as well take advantage of it while it lasts.

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657 was an intraday support level from yesterday. It was also identified by the OMNI as a buy support level. Will be keeping a close eye on the 657-ish level, there might be another daytrade in this, perhaps after the FOMC meeting ?

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Tuesday, March 20, 2007


Just remember, you heard it hear first

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Looks like WallStrip is doing a sector spotlight on Solar Power.
But, for the record, I was the first to put together charts for this sector.

Here's an updated snapshot of the solar power stocks that I highlighted in the post that kicked off this category.

I don't see any obvious sector wide buying. However, as always, there are individual stocks that are acting well. If the market bullishness continues, we may see some of these stocks break out. I'll be keeping this some of these stocks in a watchlist handy in case the market does break out.

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Review of my Holdings

I am holding YRI (AUY on the Amex) and FSY.

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I may exit Forsys Metals (TSX:FSY) before it hits my stop if the other components of my uranium index start dropping like flies.

Like Gold, Yamana Gold (AMEX: AUY) put in a double bottom, and now looks ready to challenge its 5yr high. Gold also looks like it is getting ready to put its rally hat on, especially given the weakness in the USD$ (again).

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Gold Futures Trade

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I made two ZG trades this morning.
On the first one, ZG gapped above yesterday's intraday downtrend. That was a bullish sign, so I looked around for a somewhat lower risk entry.

On the second one, it was a beautiful pattern. How could I not take a shot at this possible breakout ? Anyways, I bailed at the first sign of trouble.

Here is the reason why I did not trade ES this morning:

I would have been scalping for pennies and likely wind up in frustration.

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Tuesday Morning Update

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Gold Futures are up, and I caught a piece of that action, buying ZG @655.80.
This bodes well for Gold stocks (and perhaps silver and uranium??). I'll be looking for a play in AUY again later this morning.
Gold Futures (contracts) will roll over starting next week, so I will need to remember to use ZGK7.

UPDATE (550a PST): I sold my ZG @658.40, and shortly after, it runs up another 3 bucks! I thought it looked a little overbought and overextended above 658, but boy, have I been proven wrong !
The low volume on ZG is deceiving, there are obviously some major players covering their gold shorts right now.

UPDATE (715a PST): ZG is stuck in a range now (will post chart shortly). The indices look like they want to break to the downside, but I'm not willing to buy breakouts today. Man, I hope I am not done for the day.

UPDATE (805a PST): As I'm trying to post my ZG chart, and my alert for WFR goes off. Before I can even click the "buy" button, it shoots up to 57.44. Oh well, perhaps it can pullback a bit..... just for me ?

UPDATE (808a): ES, NQ, and ER2 are all breaking out, with me out of the markets wishing I was in.............. Oh !#@$$%& well. I think the markets are trying to train me to be patient. It's tough.

UPDATE (1024a): Looks like I am collecting some uranium again. Bought a small position in FSY @7.58, still holding MGA @5.90. Still haven't seen the breakout in the uranium index yet, although one or two select individual components (like the ones that I bought) are acting bullish.

UPDATE (1038a): stopped out of MGA @5.84, tightening my stop on FSY.

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Monday, March 19, 2007

Today's Futures Trades

Finally learned when NOT to trade futures, and that was the key for my profitable results today.

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It could have been the overall market environment today, but ES was more tame and well behaved, unlike its caffeinated cousin ER2. The better behaviour gave me time and confidence in identifying the trends, intraday tops, and bottoms. In the afternoon, when it was range bound, I decided not to trade.
There were a couple of times where I was tempted to go back to ER2, but really need to trade ER2 in demo mode before I can restore my confidence in trading that futures index.

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Monday Morning update

Uranium, commodities and indices

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Futures were more calm this morning, not like the chaotic frenzy that characterized last week's action. I traded ZGJ7 and ESM7 today, charts to follow. Still need to figure out how to incorporate TICK into my trading.
Because ZG is acting well, then it follows that the gold stocks are acting well also. I went back to my perennial favorite, AUY. Chart as time permits
Uranium stocks are acting well, I may try one or two small positions to act as my "barometer."

UPDATE: I bought a small position in MGA @5.90, and am holding it overnight. I've set my alerts on most of the components in my uranium index. If the whole sector moves later this week, many of my alerts will go off, at which time I will provide an update in this trading journal at my earliest convenience.

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Saturday, March 17, 2007

Uranium Index, Week 9

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24100 remains the key resistance level for this index. The action this week gave no clues as to which direction the index will be headed. The bounce that occurred in the earlier part of this week was encouraging, but it also made a lower high, which is not a good sign. It's safer to assume that the index will be trading in a range somewhere between 21000 and 24100 until it proves otherwise.
This week the index has demonstrated that it can and will ignore the influence of the the U3O8 Spot price going up. Whether it will be able to continue to ignore the spot prices in the future remains to be seen. Of course, normal logic dictates that the index should eventually respond to increasing spot prices. However, the market has, and is currently demonstrating the real possibility of uranium stocks decoupling from the effects of the spot price. As irrational as that may sound, it is a very real scenario. Only time will tell. Certainly there is no rush to buy in right now.

One other interesting development was the occurrence of flooding at one of the major uranium mines owned by Energy Resources in Australia. The effect of that flooding was to delay production, which caused the Spot prices to jump up yet again.

One last development is the closing of the merger between UUU and SXR. I received the voting proxy in the mail, and it seems that April 13, 2007 will be the date that the merger between the two companies will be completed. I have until that time to find a replacement for UUU in the index. I have pondered the possibility of splitting the contribution of UUU into two junior uranium companies, just to provide more diversity. Not sure about the good or the bad of this potential move, will have to think about it some more.

Index Value: 23,282.45
Best Performers: UUU, U
Worst Performers: CXX, FSY.


Week 9 :          -1.93%
Since inception: +16.40%

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Words To Trade By

Plans are useless, but planning is useful.

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It is better to be out of the markets wishing you were in, than to be in the market wishing you were out.

Don't have unrealistic expectations.

"Strong discipline 90% of the time is not enough because that last 10% of impulse trading will kill you." - Dan Fitzpatrick

"Keep your focus pure; looking at the chart when you have an open position leads to pre-conceived notions" - Oscar Carboni

"Do what it takes to sit and wait until the low hanging fruit appears" - Alan Farley

"Don't get overly excited about winning trades, and don't get overly despondent about losing trades." - Tom Bierovic

"In the process of evolving as a trader, learn to watch yourself more....." Linda Bradfore Raschke

"You have to have mental toughness because if you are wrong, you have to be able to take defeat and not lose your courage" - Angelo Reynolds

"There is always a point in every (marathon) run where you feel like hell..... but you just have to keep moving forward and keep putting one foot ahead of the other. It is the same thing in trading." -Larry Williams

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Wednesday, March 14, 2007

My turn for a couple days off

NO new posts until the weekend.

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I tried my ideas for trading ER2 today, and started out well, but still managed to lose money in the aftenoon. I got caught on the wrong side of the trade during that reversal in the afternoon. That sucked.
This is the second time I've tried to trade ER2 and failed. I will either need to get someone to teach me how to trade futures, or just forget about futures altogether.
Probably good to take some time off and shake off this loss.
Options Expiration is coming up on Friday, and many stocks will get pinned, meaning it will be better to watch grass dry.

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ER2 redux

Taking a second look at today's chart on the Russell 2000 Futures.

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The above is a 15-min chart of ER2, but with the TTM Trending Indicator paintbars applied to the chart. I got the TTM Trending Indicator from Boogster's blog. The 3 trendlines are 5,9,20bar EMA's. At the very bottom is the RSI(3) indicator. Looking at this chart has given me some ideas on how to play ER2. Unfortunately, they will require patience, which of course is not my strong point.
Most of today's bad trading decisions in ER2 came from not first answering the question "Where will my stop loss point be if I am wrong?" before I even consider getting into the trade.
Seems like I have a recurring problem of a short memory, and I am not sure of the psychology explanation behind that.

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Tuesday, March 13, 2007

Bulls Have Gone Into Hibernation

It's not going to look pretty for the bulls.

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The market moves in cycles. Welcome to the bearish part of the cycle as indicated by the bpcompq. Next stop is a drop to the 45 level at least. More likely we will see a drop below 38. That usually takes a few months of selling to get there, unless we get a major toilet flush in the next few days.
Although the most profitable shorts were made in the initial plunge almost 2 weeks ago, I think that there's still money to be made on the short side, but once the bpcompq drops down to the 45 level or below, the low risk setups will become increasingly hard to find. In fact, at that point, we'll likely see many market pundits calling for a bottom.
So, in other words, now is the time to strike while the iron is hot.

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Trying to Figure out ER2

It's hard to figure out the Russell 2000 Futures...

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The futures typically trades sideways with a lot of noise within a given trading range. But today the ER2 was actually trending, and trending well. Unfortunately, I manage to not only give back my half point gain, but lose another couple of points. I have to step back a bit and take a look at why I cannot make good trading decisions with the Futures.

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Tuesday Morning Update

Couldn't sleep, so I'll provide some random musings as they pop into my head......

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Futures indicate a gap down for this morning's market open.
Bid/ask on Uranium stocks are above yesterday's prices, indicating possible gap ups to open.
I don't have any specific plays in mind, so I will be going thru my usual sources for some ideas. Will be watching the uranium stocks to see if there's signs of any run past the 24100 index level.

UPDATE (725am PST): Oil seems to be working. Stocks identified by HCPG are breaking out, and I caught some of them.....

UPDATE (726a): Some of the solar stocks are still acting strong. Scalped TSL on the way to new ATH's, bid/ask was too wide for me to feel comfortable holding long. Bought FSLR twice on the way down to support @56.25. FSLR is actually showing sort of a U-Turn reversal pattern on the 5min. chart.

UPDATE (745a): Markets are down, but oil is up and I am playing oil today. There's always a bull market somewhere..... Oh yeah, I am also playing solar. Looking at ASTI for a low risk setup.....

UPDATE (820a): Whoah, even oil and solar is breaking down, looks like I'm done playing for the day.....

UPDATE (1020a): Well, IB keeps submitting my RIMM and ICE shorts as "Pending", so screw that, I went to short ER2, and got half a point (782.70, covered@782.20). Now it is stuck in a trading range, so instead of trying to force a bad trade to happen, I have some more randomness to ramble about......

UPDATE (1100a): Freefall of the indices has started. However, it's hard to find a low risk entry point on ER2, it chops around a lot even as it trends down.

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Monday, March 12, 2007

How To Trade Gaps, From Wall St. Warrior

This one is so valuable, it needs to be in a post all of its own.

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Wall St. Warrior is in the process of documenting in great detail how he trades opening gaps. The first in a series of articles is the Wide Opening Range Base and Break Pattern.
I was originally going to bookmark it in my, but I've decided to add it to my catalog of high probability chart patterns, since it is going to be something I want to use and study, and it has proven to work well Wall St. Warrior.

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The Next Possible Hot Sector ?

This sector deserves some monitoring to see if it will be across the sector bullish....
And you know how I love a good idea.....

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What do all of the above charts have in common?
They are all in the solar power sector. This sector has received increasing interest lately, especially since the Bush Administration is promoting solar power through its "Solar America Initiative." A google search of solar power is turning up increasingly more search results and news results.
Some of the charts look interesting, the remainder looks like it could use more baking time. Note however, that almost every one of the charts highlighted above is above its respective 50d EMA trend line.

Something worth monitoring.

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Base and Break Works

Only required ingredient for the base and break pattern is a little bit of patience.

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If a stock really, truly wants to run, it will provide a second chance. I caught FD on the second chance. The only problem I had with FD was that I couldn't press my advantage with bigger position size because I still have other positions open.

UPDATE: sold FD @45.34 just after 1130A (PST)

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Monday Morning update

Looks like the market momo has returned (in part)....

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Bought RIMM @135.65
Bought TSL @44.80
Bought NVEC @26.90 and @26.80
Bought ICE @131.45, sold @131.08 (can't win them all)....
Charts as time permits, gotta go back to my desk.....

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Sunday, March 11, 2007

Uranium Ideas

A couple uranium plays that I will be watching next week as well.

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BaysWater Uranium (TSX Venture: BAY) is being promoted by the U3O8 site. I think one or two newsletters are also promoting this uranium junior miner.

Volume is always the key with these junior stocks. Volume for Bayswater Uranium has been drying up in this most recent pullback, which is a good thing assuming the uptrend will continue. I will be looking for at least 700K shares on the next upsurge. There isn't a key, specific resistance level, but there seems to be an awful lot of price committment @ the 1.80-ish area.

PurePoint Uranium (TSX Venture: PTU) - there's an interesting write-up on PurePoint by MicroCap Mayhem.

PTU looks ready to continue its uptrend as well. However, like BAY, I would need to see some big volume return, and possibly a close above the downtrend line that I've drawn, around $1.80-ish area.

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Ideas For The Week Of March 12, 2007

All of the ones I dug up this week are low avg volume.

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CCMP: In a more calm environment, I would be looking at the break above 34-ish, but in this environment (and perhaps in all kinds of environments as well??), I am looking for a pullback to the 20d EMA

MHK: What's interesting about this chart is that prior resistance that acts as current support applies not only to price levels, but to trendlines as well, as shown in the chart.

AOI: Looks like a decent low risk entry @the 10d EMA:

Plus, there's DECK which should be good for a scalp of a few dimes.
CMGI looks interesting @1.70
If the market tanks again, I'll be looking at CAL.

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Friday, March 09, 2007

Uranium Index, Week 8

My reason for tracking this index has revealed itself this week.

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The index bounced back from last week's carnage, putting in a good showing of +5.49 percent for the whole week. Also note that the U3O8 spot price reported this past monday held steady at $85, so it also seemed unaffected by last week's plunge (at least for now).
More interesting however, is the line of resistance that I have drawn in the above chart. This line of resistance is around the 24100 level. I will be watching next week to see how the index will behave at around that level. Break above, and the bulls re-take control. Reverse and fall back down and this whole week was just a dead cat bounce and we will see a test of the 21000 level.

Index Value: 23,740.79
Best Performers: CXX, STM
Worst Performers: None.


Week 8 :          +5.49%
Since inception: +18.70%

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Friday Morning Update

CAL, cal, Cal, Cal, Cal....

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Shorted CAL @37.91, covered @38.11
(I would like to say that CAL stole my money the first time I tried to short it, but that's not what the Highly Effective Trader would say now, would he ??)
Shorted CAL @37.89, still holding.
chart to follow shortly.

UPDATE (1130a PST):
If at first you don't succeed, try, try again.

I was scalping ICE and SU with breakeven success until my alert on CAL went off. When the trade is executed according to plan, then you don't need to go and force any trades, or keep looking for more trades.
I feel a gap down coming on Monday morning, so I'm tempted to hold this short over the weekend. I've got about 90 minutes more to decide......

UPDATE (1215p PST):
Exited all of my CAL @37.65. I still think the markets will gap down come Monday morning, but I'm not willing to risk my hard earned profits just to see if I'm right.

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Thursday, March 08, 2007

Thursday's Trading Results

My trading indicates that I should be back on track.

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In the scalps that I did today, on only one of those trades, I entered my stops first before I placed my order. By entering my stop first, I was forced to think about the risk/reward of the trade, and the probability of my trade being a success. In general, it just made me think a little more about what I was doing. Obviously it has not become a habit yet, so I will need continue to work at placing my stops first before I enter my buy/sell orders. So far so good, I must say.

Today was the first day in a long while where I felt good about my trading. I mentioned before that I felt a shift in my mindset towards the viewpoint of patience. Well, it didn't show up in my trading until today. When I missed the morning breakout in RIMM, I resisted the urge to chase, because I kept thinking about how the risk/reward had deteriorated, and I also thought about what the Highly Effective Trader would do. The Highly Effective Trader is fast becoming a highly effective mentor for me.
The other confirmation that I had in my shift towards the viewpoint of patience was in the trade in SU. As I mentioned earlier, I had 3 dummy paintbars on SU on the 10-min. chart. That never happened before, so I felt the odds were good to go long. Of course, as soon as I went long, the price promptly fell $0.20. In the past, I would just bail in order to minimize the pain of a $0.20 loser. However, this time I noticed that the 9bar EMA was not violated, which meant that the trend was still intact. So I resisted the urge to bail and decided to wait for this thing to play itself out. As it turns out, SU obeyed the 9 bar EMA and went on to make new intraday highs. I sold for a profit.

Not sure why I didn't notice this earlier, but more often than not, either the 5 or the 9 bar EMA is a good indicator of the intraday trend, esp. if the two do not cross. That gives me two benefits: I can use it as a guide for where to bail if something goes wrong, and I can also use it for finding the low risk entries.

The market environment has changed, and I think it's taken me this long to adjust. Thinking that I have adapted to changing market conditions is one thing. But the bottom line is that I haven't really internalized that change unless it shows up in my trading. In other words, my trading will tell me the truth as to what I am really thinking. During my recent slump, my trading told me that I haven't really adapted to the changing market conditions. Today, my trading gave me the first sign that I have adapted the viewpoint of patience. There's still so many other things I need to do to improve my trading, but first things first, I will work on patience while the experience is still fresh and lively in my head.

One last thing - Go DECK !!

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Thursday Morning Update

Looks like I was wrong about Thursday being a down day.

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All 3 futures are up - YM, ES, NQ. Gold was up in overseas trading during the night, and looks like it will open up as well. Oil is up. Looks like we are going to start the day green, but we'll see if we end the day green.

Most of those who tried to short into the close yesterday will be forced to cover. But there's still the overhang of resistance looming in the indices. Watching.....

UPDATE: (10am PST) I've copied and pasted the dummy paintbar from one of the articles in MtM.
On the 10min. chart for SU, QT gave me 3 dummy paintbars in a row. Being the naive naif that I am, I took the signal and bought @83.87 (I think it was above 71 on the NYSE). Of course, the MM's spotted this newbie from a mile away and promptly took the price down 20cents.
Fortunately it did not break below the 9bar EMA. The 5&9 bar EMA are helping me out spot the trends. Take a look at RIMM for instance. I entered RIMM when it tagged the 5bar EMA just around 9a, but got out when the 5bar EMA started to flatten out, ie, momentum starting to die off (for now).

UPDATE: (1003am PST): I've done 2 scalps of RIMM for about 5-10cents each time, and a daytrade of SU which looks like it will work in my favour. That's all the trades I've made today. Pretty boring, but I made it a point to sit on my rump roast today if I don't spot anything that is sooooooo compelling that I cannot NOT take the entry (like that 3 dummy paintbars in a row, first time I've seen that since I started using QT!).
In a more bullish environment, I would have tried to chase RIMM's opening move - an admitted higher risk play. But not today, just mostly watching, and waiting, and rambling on.......

UPDATE: (1023a)
Since I have so much time on my hands, here is the chart of the SU trade that I made:

When it subsequently dropped down to the 9bar EMA line after the break above 71 at around 930a, I got a little nervous. When it goes down, I always wonder whether the trendline would hold up. I had the sell button ready if any significant volume showed up on the break below the 9bar EMA. Nothing happened, although it continued to make me nervous by hugging the EMA line for the longest of time. Then I started writing to this trading journal, and while I did that, SU decided to comply with the trendline and went back up.
Execution of the entry could have been better, ie. I should have a buy stop placed right above the 3 dummy paintbar, then that drop down to 70.80 would not have bothered me as much.

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