Wednesday, October 13, 2010

New positions

Update, added DO to swing book.   3 longs, 2 shorts, net long.  With today's price action we are going to play it safe.
Update II:  sold a few GS, SWN, DO into the ramp this afternoon to lock in profits and go back to net neutral.
Update III: Sold GS swing flat, stopped out just over breakeven.   Sold DO for 1.8% profit, Sold SWN for 1.5% profit. Covered IWM/SPY short basically even (20 cents profit in one, 20 cents loss in another).

Flat.  Back to daytrading.

As scary as it is here we've initiated a few market shorts against the resistance points we wrote about a few days ago, so far  all small and swing size.   Definitely going against the trend here so no leveraged products and no real size.

Our average now   is short SPY 117.85 and IWM 70.36.   We're also long GS (in from yesterday under 153, pulled swing stop this AM when we added shorts in order to stay hedged) and SWN swing size.  Two shorts, two longs.  No leverage.

Why so hesitant?  Breadth very good today, strength all around, and we think now SPY could run to the intermediate resistance 120.   However, we had planned a short into this area for a while and want to at least follow it, albeit small and hedged.    Breadth is too good for any kind of reversal today so this is not an immediate satisfaction trade.    As we find long swing set-ups we will add those to the book going forward.

Tuesday, October 12, 2010

Next Focus

As we wrote in our newsletter tonight our focus for tomorrow is the very juicy short setting up SPY 117.6-117.8 and IWM  70.5

We're not too pleased with futures down .7% tonight -- always preferable for us to short the pop rather than chase price down in a market that has been as strong as this one.    Let's see if we can get a post FOMC rally into our resistance areas tomorrow.  

If the market stays weak all day then we'll have to re-assess to come up with an alternative plan.  We already listed one short on break of support in the newsletter and will look for opportunities in that direction if market shows signs of weakness.

As we wrote this morning in our StockTwits account "Traders we know who would never touch micro-caps are now all over them. Entering fume/giddy stage -- be nimble."   We feel that if the giddiness can continue into our short spots (SPY resistance less than 1% away from today's close) then a quick reversal will be coming.  If we go down tomorrow and base around these spots then the consolidation will take away from the set-up: we like shorting resistance into extended runs into resistance -- if market consolidates under then it becomes more of a long breakout than a short resistance trade. 

If you plan to take any action on our thoughts first think about what kind of trader you are and what kind of time frame you have.  We're very active traders who look for the best risk-reward opportunities that we can spot.  Even though we are looking short for our next big trade we had 8 long alerts trigger today (and we were long all day long but went into cash into the close).  Our next focus is the big short coming up but we will always defer to our set-ups (we also have multiple long alerts for tomorrow that we would take if they set).  We have our opinions and thoughts but we always defer to the set-up.  

If you're a swing trader it's quite possible we'll get our reversal, cover,  and pat ourselves on the back, and you won't have noticed too much action in your portfolio.    Know your time-frame!

We look for spots that we feel have edge to trade against:  this could be a target trade, a break-out trade, a support long trade, a resistance short trade, a short break-down trade -- whatever spot catches our eye as having good risk-reward.    We usually hit it hard and get out at least a portion relatively fast (reason we like liquid stocks).

Earnings season has begun, major resistance is around the corner, bulls pushing the limit with third-rate micro stock runs, and the USD is getting close to support.  All this means lots of trading opportunities for active traders.  Buckle Up!