Friday, January 29, 2010

Guest Post by a Frenemy

Our first guest post on the blog by none either than the infamous Dinosaur Trader

Great example of a disciplined day-trade lay-up using intraday set-ups and daily charts. In our opinion -- the absolute best way to trade. Well done amigo.

Written by Dinosaur Trader
Illustrated by HCPG

It was one of those days over here where there would be more distractions than setups. I had a dude tiling my kitchen, and a shaky internet connection that the cable company wanted to fix at 9:30am.

Another hurdle was a phone call from my company, harassing me about day trading my swing account. I tried to explain to them that fault lies with this damned HCPG newsletter I’ve been following. Guys buy “swing” positions, sell them the next morning, pat themselves on the back and then hurl shitbombs at day traders. Thing is, I can hardly blame them. This market has been damned shaky and every time it seems there’s real support, its violated faster than a meth addicted teenager at a dance club. I can’t blame HCPG for that, although there are unsubstantiated rumors about them turning their newsletter profits into hordes of meth which they are selling in rural america.. But I digress…

With the recent weakness in mind, I decided this morning not to chase price. Instead, I’d try and hang onto my swings and shift my day trades into shorting resistance. I was looking for “rhorts,” resistance shorts.

The OIH was outperforming. A few weeks ago, there’s no way I’d look to short the top sector on the day, but given the recent weakness, and the way rallies have been faded with consistency, I scanned the sector and found OXY approaching double daily trendline resistance.

The 20sma was first, up at 79.80 and on top of that, if things got dicey, I figured the 50dma should provide some resistance at 80.20. Instead of assuming I’d pick the absolute top, I set a few sell limit orders, laddered up starting from 79.60. Actually, that’s a lie. My first order was up at R1 at 79.42. However, OXY started to base just below R1 at 10:15 and I decided that it would probably shoot through there when the base broke and move to the 20sma. So I cancelled the R1 sell limit.

As it turns out, the 20sma was basically the top and I got off 3 limits for an average price of 79.75. The market was still strong at this point, and I exited half as OXY dropped back to R1 and decided to leave the other half stopped high of the day. Worst case scenario, I’d make a little money on the trade, no blood. Not bad considering the cable dude just showed.

The guy, an obese man wearing baggy pants, explained that he’d have to shut my connection down. So, I used the 15 ema as my target, set my buy limit, and let him grunt under the desk. His ass-crack was exposed in an inglorious manner, and I thought that MCD and NTRI might not be a bad long term stocks to tuck away in my daughter’s college savings account afterall.

The tile guy was in the kitchen talking angrily to himself. Normally, I would avoid such a situation, but having no control over my trading account with my internet disabled and not wanting to spend any more time with “Tony Asscrack” upstairs, I head towards the kitchen. The man had a small tile in his hand and he was staring at it and mumbling something obscene about the Chinese. I tried to slither by him and nearly made it out the door when he complained that the installation manual was written in Chinese. Apparently, the tiles were manufactured there. I considered adding some of that DYP back into my long term account.

I stepped out into the frigid winter air and started to pick up sticks. Yesterday, I had negotiated a deal with my neighbor’s gardener to remove my piles of leaves and take them to the dump. I found him outside smoking a cigarette in my driveway and gesturing towards the cable van which was parked, basically, on a pile of leaves. Tony Asscrack would have to come down and move it.

Back in my office, Tony Asscrack was staring with wonder at my monitors, which were flashing red more violently than a menopausal woman in a sauna. The internet was back up, the rally was failing, OXY had dropped right to the 15 ema, and I had just made enough cake to pay for my Chinese tiles. Exit $78.57.

I decided that, meth suppliers to rural america or not, maybe these HCPG guys were onto something.