Sunday, April 26, 2009

OutLook for week of Apr 27/09


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BPSPX indicates overbought conditions, but so what, it's been overbought for weeks now. $NYSI has been so overbought, that it makes me wonder if the lows put in in mid-March was THE bottom of this bear market.
ES opened Sunday evening's session with a gap down, and never filled the gap. This is bearish. Will we see a repeat of last monday's selloff ? History does not always repeat, but it does have a way of rhyming, right ?
If ES makes it back above 858, I will be looking for a good place (and time) to short. Beyond that, there is plenty of support zones (mid 820's, mid 830's, mid 840's). In my opinion, the strength of the bulls will be measured by how much time ES spends above or below the mid 830's. Of course, we could also wind up with a directionless chopfest, in which case i will look for small scalps of 1 or 2pts.

As for the Euro, 1.315 should be an area of support, so I will monitor for an opportunity to go for a quick long trade.

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Euro Upside Exhausted?

Traded the EuroFx futures in the evening session.....

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Short E6M9 @1.3220, stop@1.3235, exited @1.3185

As mentioned in my Twitter tweet, I had a downside bias for the ES, and this also led me to a downside bias for the Euro as well. Euro opened Sunday Evening's session with a small gap down that was filled. But on the hourly chart, it looked like the odds were high of a continuation of the selloff that started near the end of Friday's session.
I watched the tape, and observed it spent more time in the mid 1.3225's rather than challenge the session high of 1.3241. So on the next time it made a new session low, I shorted. The retrace came as expected, but it was shallow, never exceeding 1.323, so my initial stop was safe!

Then I left my desk. I came back later to see it drop below 1.3190. My target was really 1.3155 (which is where it is currently trading as i type this post), but I covered my short @1.3185 for a couple of reasons:

1. I was not interested in holding thru a retrace that may go all the way back to 1.3220. As it turns out, the retrace never broke above 1.32, but who would have known that ahead of time?
2. If I had used the 9 or 20 EMA as my exit criteria, it would have gotten me out of the short at around the mid 1.3180's anyways.
3. I knew i would not have time to be at my desk to continue monitoring price action.

EuroFx futures (in general) does not move for more than 30pips without at least doing some kind of retrace, so I am learning to be at peace with hitting these small singles and doubles. I still long to hit those home run 100+ pip trades, but still have more mental preparation and tactical planning to do before I am ready.

Euro is around 1.312 as I type. Yeah it sucks to have covered my short too soon. Kind of bittersweet irony to be talking about hitting a home run one of these days, and having a home run slip away right under my nose. But I knew I wasn't going to be at my desk, and I didn't want to scratch this trade, so I exited where I did. I suppose I still have some more learning to do in terms of finding the happy medium between not letting a profitable trade turn into a losing trade, and letting your winners run.

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Sunday, April 12, 2009

Weekend Notes

notes for Monday, Apr 13/09

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Here's a chart of the SPDR S&P 500 (ETF) (Public, NYSE: SPY) from around this time last year:

Here's a chart of SPY for the past 6 months:

Is that deja vu or what? In the case of last year, SPY pulled back until mid-Apr/08, and the correction did not drop past the Mar 31/08 swing low; SPY went on to rally until mid-May. Will we see a similar behaviour?
NYSE McClellan Oscillator is in overbought territory, $BPSPX has surpassed Feb/09's levels, and the $SPXA50 is above 420. markets have been overbought for most of last week. The signs of a pullback are there, and that is how I plan to play it.

I will also be looking for confirmation of the continued correction in the Euro:

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Saturday, April 11, 2009

Playing Catch up


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I periodically forget some of my rules, and this recent trade below which I posted on Twitter is a good example of the importance of waiting for confirmation before entering a trade:

Entry: B+
Stop: B+
Exit: B+

Focus & Alertness: B+ (decreased thru the session)
Patience: D+
Discipline: C
Staying Out of Trouble: B+

The main things that I have been trying to work on improving is :
Patience: wait for confirmation before entering a trade, refrain from taking profits too soon/too fast.
Discipline: always analyze the chart before making trades, and only make trades that are based on prior chart analysis
Staying Out of Trouble: avoid temptation to overtrade, revenge trade, boredom trade.

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