Monday, August 29, 2011

Running Room

I am probably taking Friday off to De-Hurricane my yard. Total mess. At least the Comcast cable is back on though.

Running Room
You may or not know but it was a true FACE-RIPPER rally today. Last night I was thinking all the ingredients where in place; low volume this week due to power outages and the coming vacation weekend, a market that has been sold very hard for some time, and a new short interest high for the NYSE. Perfect set up for a real squeeze higher.

Here is my clumsy graph for the S&P 500 after today (click for larger):
Please note:
-I have been stressing a close OVER 1180 would get me more interested in the market as a buy
-1200 is another important level
-Market is above both now
The volume today was about as bad as it gets, but you cannot have everything. If trading was easy we would all be rich. And bored.

So is it all honey and sugar from here on? Do markets crash again? How would I know, I just work here!

Seriously, what I think we have now is the best long trade environment in some time. What makes it so good? The trades are backed by some key levels and the exits are clear as can be. All the "bottoms" and all the "important candles" of the last month or so never had everything working for them. Now they do.

I have been on the sidelines for a while because the market did not support my trading style. I cannot be on top of things all day long, I have to work. With a bit of support now and clear areas that signal trouble, stop losses might even be in place again! Amazing! For weeks if you were playing a spot a stop loss or cover was sure to get you executed during the wild swings that have been happening. Consider that if the general market can trend to the marked area of S&P 500 1250-1260, or even if it starts to roll over again:
-There is support at 1200 now
-Cut all trades at 1180, no wishful holding
Simplified trading. No emotion, just numbers. Like chips in poker.

I would point you to my "Go To" guy for these things, Mr. ChessNwine. Back on August 17th I noted a great post by Chess which set out the following scenario going forward:
" scenario that I am seriously considering is that we actually start to roll over for a few days and see shorts scramble into those bear flags proving true. At that point, we make a higher low on the S&P and then stabilize and turn higher. Since the market will usually do that which frustrates the majority, I think this scenario will frustrate those who have committed substantial capital looking for a market bottom as well as those bears looking for confirmation of bear flags in order to short. Here is what it would look like.."
I did not include the chart, but now I have secured permission, here it is:
That's messed up! That's why you need to read this guy. Thanks Chess.

To sum up, this is a supportive environment right now for long trades. The best in a while. Discipline on the last few drops really broke down, but now is a good time to make some moves but be ready to stick to your targets. Both to the upside AND downside.

I am so behind, and would like to do some screening tonight so that is all.

Added: Not all! Check out the only thing worth seeing from last night's MTV's VMA award show. Adele with "Someone Like You":


Have a good night.


Jennifer Hillier said...

You might find it interesting that I read every word of this post and maybe understood 5%. Takes me back to a class I enrolled in back in university called "The Mechanics of Flight." I dropped out after the second class, because hello, I was an ARTS major and there had to be a better way to get my science credit (I ended up taking Anatomy - much better).

One of these days you'll have to explain all this to me.

getyourselfconnected said...

It's not that hard really.