Wednesday, February 02, 2011

What's going through our head

Update:  after the close our usual scans actually came up with a decent list of alerts (as opposed to when we wrote this post earlier today).   As always, if they set-up tomorrow, we will be involved.  But we will keep things tight and will be in pure-daytrade/ hit and run mode as we wouldn't be surprised to see alerts hit, get initial spikes up, and then see an intraday reversal.    As our readers know well -- No matter what our opinions we will always defer to our alerts and our set-ups. 


There's lots of stuff that's been going on in our head these last few days and we've touched upon a few of the subjects on Stocktwits and in our Newsletter but here's a quick summary.

First of all, and the biggest red flag of all, we basically have no good alerts left.  We have a few we're stalking but usually our lists are much more full.   The HCPG-alert indicator has proved its worth to us over the years and we rely on it heavily.   When we have no alerts, we feel no edge.  

On to more specific subject matter:

The USD is against major support.  Support of course can always be broken, and this one looks like it might, but usually what happens when you hit support as established as this one is at least a feeble bounce, be it dead cat or not.

 We posted this one a few days ago and nothing has changed -- against massive resistance while USD against massive support.  In our experience that is not a recipe for good risk-reward long.

There are many more examples of sectors hitting major resistance (including SPX itself) but let's end it a look at the Trannies which also are heading into major resistance from a massive move from the bottom. 

As short-term traders however we are always open to possibilities, as unlikely as we think they will be -- and the one we have to keep at least in mind is the USD breaking down through support without any bounce sending the market, and especially commodities,  ripping through resistance.   We think this is unlikely and if it does occur we have no problem underperforming for said time period.    We've survived and prospered in this business for over 14 yrs by not trying to catch every tick, but by entering positions in which we saw good risk-reward.    Our feeling is that when we have to think so much about everything instead of it being automatic, it means it's best to chill. 

We had no triggers today from our newsletter (a rare event) and spent the day in scalp mode around ES_F, NQ_F and SI_F which is what we usually do when we have no stock alerts to focus on. 

 On an additional note:  we have a new affection for silver due to how clean and technical the moves have been lately.  We noted late last night that SI_F was against the 50SMA and had travelled a long way -- it promptly reversed from that point on but still above the trend-line.   A move over the 50SMA most likely would gather some momentum.