While most of the other bloggers write a good bit about their trading, I generally have not done so. Well, I do trade, and today was one of my better days, so I thought I’d take the opportunity to write about it.Â
Since November, I’ve been calling the turns in this market like a working-man’s magician (not to be confused with the space-alien magician). Yet, I’ve been trading small due to having a difficult time last year. Trading small has allowed me to regain my confidence, and have a modestly good year, so far.
My research on tops and bottoms showed that we were due for another rally. This research, coupled with the research of a few others, allowed me to feel certain it would come this week, although I expected another flush-out, and then a reversal day. I decided that when the relief rally developed, that I would cover all my shorts, and get really long. What’s the use of developing a great read on the market if you do not trade your convictions?
As I cannot trade anymore at work, or even get real-time charts, I’ve been working with my Dad and sometimes my wife to allow intra-day trades. I talked to my Dad last night on the phone, and told him I thought we were due for a rally. I asked if he would be around this week to place some trades for me. He said he would be.
So today, when I saw what Bernanke did, I knew immediately what I had to do. Making matters a tad more difficult was the fact that I had to be on the road at 9:15 a.m. to a meeting. The last time I was able to look at the futures was just before 9:00 a.m. I called my Dad, and told him that I expected the indexes to dip around 10:00 a.m. I gave him instructions to sell all my [[DXD]], [[SDS]], [[QID]], and cover my [[DE]] short on any dip. Once he liquidated those, I gave him a list to buy. I had him buy 300 SPY, 300 DIA, 300 QQQQ, and 300 UYG. These positions, coupled with a small position in [[MBRK]] would leave me almost 100% long.
Well, my Dad came through for me, big time. He waited and waited for a dip. Finally, after 11:00 a.m., he executed the trades. Excellent work, old man. Due to this maneuvering, my account had a second day in a row of outstanding gains, making a new high for the year.
My plan is to liquidate these positions into more strength, or near the 50 day average.
Overall, I am still bearish, and until the price overtakes the 50 day average and tests and holds it, I will not become bullish. Volume today was a joke, for such a strong move. In order for the double-bottom pattern to work, volume will need to increase if the indexes continue moving up. Fundamentally, Bernanke’s knuckleball may be a game-changer. However, I’m not qualified to judge such things, so I’ll continue to trade the technicals.
You, Sir, are 3% correct.
Good Day,
Fly
What about the third leg down …. can monetary policy really stop a bear in it’s tracks?
Is there any historical data suggesting that a bear can be stopped by a government agency and circumvented after the second leg down?
Just asking…..
Employee8- I’m still bearish. However, one cannot have simulataneously have a bear market without also have bear market rally.
As for your first question, I have no idea. I have researched the technicals going back 40 years, but I have not specifically cross-referenced them against monetary policy. Great question though.
My guess is, no. However, monetary policy can certainly throw a monkey wrench in the works. During the 2000 bear, the Nasdaq traded sideways for months before breaking lower.
Volume today was beyond a joke and nets a 400 pt run on the Dow?
What in the world does a TA person do with that type of info. What on earth explains the complete lack of volume today.
Seriously, that is really peculiar. I have a hard time really believing in this now after seeing that. Is normal volume suddenly going to reappear and buy more?
Fly, don’t hate. I did today exactly what you wanted to do, but didn’t.
So sorry.
Wow- my volume calculations
Nasdaq- 3rd best day since Feb. 1st
SPY- best volume since Jan. low
DJI- best volume since Feb. 1st
So volume was not terrible. However, for such a big day, I expected much better.
A TA person, with that type of info, looks to unload his shares quickly, into strength, or resistance, or both.
I think on a 400+ up day you have to take some profits. They don’t come along very often. You may get more strength, may not. If the market can go up 400+ in a day, it can do the opposite the next day. A new high in my account usually is a signal that that what the market giveth it can taketh away, and to make the moves to make sure I keep some to myself.
Pokey, agreed. I think I’ve said at least twice that I am looking to book profits, and quickly.
Awesome move!
Where do you see resistance in S&P? Nice job.
Pedro, I expect resistance near 1340-1350 on the S&P.
I will be as happy as a lark if I can exit my SPY as high as 135.
Fair enough. I’m just saying next time tell your dad that if the market goes up 400 pts to sell 1/3-1/2 🙂
No doubt Pokey. I was busy as fuck all afternoon, and until about 3:30, I didn’t even know if my new positions were in the green. At 3:50, Yahoo quotes were showing the markets up huge, but I couldn’t get my Dad on the phone. I tried his cell, and home. He’s retired. I’m like WTF! You’re not just allowed to take off without telling me….!!! lol
Get an Iphone and trade all day long…
Wolf, I do better when I’m not ticktarding my positions. Trust me, it is better that I make my decisions, place my orders, and then follow my plan. It is easy to deviate from the plan when I have easy access.
Srsly. Or get an aircard or something. If you go the PDA route, ninjas use Blackberries/Palm so that it looks like they’re checking corporate email. 3:50 you should’ve been concentrating on the toilet with a PDA. Or if you’re ballsy with personal info and want your own trading servant, you could 4-Hour-Workweek that bitch and get your own Indian trader.
Anyway, what the hell are you worried about? You got in at 11. The market’s fucked hard if it gaps down that hard tomorrow. You’ll likely fare better than my 100% position reversal towards the short side at 3PM.
Haileris, I think we were typing at the same time. See the above post.
I’m not all that worried. I would like a morning spike to sell 1/3, then I will give the rest another day or so.
Retail sales and CPI coming up. If bad news is good news again, going into fed week, I might hold all week. We’ll see.
I should add that my favorite indicator for these quick moves is RSI(2). Another move up tomorrow will place it near overbought, which will be a sell signal for me.
Wood, good to hear you’re hittin it. Pretty funny putting the old man to work, but what do you do when you can’t trade at work.
Woody,
Nice job, for a Southerner.
This is your blog now, ‘the Fly’ just works here.
-DT
M- hittin it good, just like the old days of TWW.
Anyway, I sold 1/3 of everything except QQQQs into the strength this morning.
DT: I owe a lot to the man. However, at some point, the student becomes the teacher…bwhwahahahahahaha (evil laugh).
Anyway, good to hear from ya. I miss your blog. Hope you are enjoying your time away.
Unloaded another 1/3rd before lunch.
My dad gave me $500 and wished me luck. Shook my hand and I moved out.
Count your blessings, shed. Your Pops is a good man.
I agree Boomer.
I feel terrible for him though as he has lost well over 250K of his life savings in a house flipping business in which his partner embezelled money and then basically left him with the final house in which the partner had gone way over budget. The house was initially listed at over 700K, last year. Now, I think my Dad has lowered the price to around 465K. My Dad is a self-made man, and this loser who cost him a third of his life’s savings started with nothing and has lost nothing.
You were braver than me Shed, glad you did well and I’m glad you took some of your positions off the table too.
Sorry about your Dad, that’s rough. I remember reading something about it at your old blog.
man, i am so sorry to hear that. i feel that pain.
my dad invented an instantaneous hot water heater, with low pressure requirements, for the 3rd world. his partner embezzled my dads large investment and then killed himself. asshole.
i hate thieves. i can deal with anything but a cheat and a thief.
The last third of my purchases have stops set at breakeven. Likely, they’ll get hit today. With the exceptio of UYG shares, which will likely gap below my stop this morning, every sell was for a profit.
Thanks for the WST, WS.