Wed 23rd

Regardless of what my post below says it wasn't all doom and gloom. Here are a few trades that worked as normal.

Bot BTU on the dip after getting stopped out twice buying the highs.

sold BTU after a long run

shorted TNA when emotions are rulingthe markets. this is where I usually thrive.

covered TNA after a good run

bot VXX at the same time as TNA short

sold VXX, taking profits

Strange days

Today was a very strange trading day. The PPT are really getting their act together and will not let the tape go where it seems to want to go. If you were trading or watching the action you saw how fast things moved to the downside when they did go. Then the move petered out and rose on a no volume candle and drifted upwards. The downward moves show me where the power is but these days you must remember there are forces that I believe are stopping it from finding its level.

Throughout my trading career I have never traded on news or tips or have expectations. My current feeling that the market is like an drunken, blindfolded elephant balancing on a 10ft. pole is due to the underlying conditions.

I trade on the candles, momentum and gut feeling. these have served me well for eight years through up, down and sideways markets. Today however I got the feeling that my edge is being marginalized by the unnatural forces propping up the markets. Things are not following through as they have done 1000s of times before.

I am always more than happy to follow the manipulators in either direction but the tape action today was ultra difficult. No big losers, no big winners but just a lot to starts and stops. Scalping mode was about the only technique that paid off today but that gets tedious pretty quickly.

Hopefully the action will show itself a bit more direction up or down in the coming days. Until then I will be playing the pops and pullbacks more aggressively to get a jump on the micro trends available. Or maybe just take a holiday and wait it out.

Connecting the dots

You've all seen those kids colouring books that have pictures that appear after you connect all the numbered dots in sequence. The market is like that when you trying to decide on the best course of action. Generally it is the big picture that tells you what to do in the individual stock and generally stocks follow the market flow.

However in the case of V this afternoon it was trading on its own story and rising strongly in a falling market. I am long it. The 13:55 candle on V is green making new highs, the 13:55 candle on the QQQQ shown here has just taken a big step down red.

So I am ready for the probabilities to assert themselves and prepare to exit this long, take profit and get short.

It worked out perfectly both directions as the post below shows.

The impetus for me to cover my shorts this afternoon was when I saw what was happening on the QQQQ. This screen capture shows the Qs cease their downward trend and a green candle shows up. Well, that is all the signal I need to cover the shorts or sell the inverse longs and bank the profits.

Connect the dots of the big picture and the direction of the small picture you are in becomes much more clear.

And another thing, turn off CNBC as it is just a concentration breaker all day long. You need to be able to recognize and act on what the market is showing you and not be distracted by the constant bombardment of bullshit.

A few minutes left in the day,

time to wrap it up

LULU short

LULU cover

of course I had to short V after it stalled, you never know where it might end up..

cover V when downward momo stalled

The Finger strategy revisited

On excellent trading days like we are seeing today, this strategy works very well.

Just don't out think yourself...

V new highs entry

V shows red candle, momo stalled , exit

CLF new lows entry

CLF cover momo stopped

APOL new lows entry

APOL cover on the first real green candle

TNA also had good downward momentum this morning.

TNA short

TNA cover

I noticed gold stocks were weak this morning, shorted them and got stopped out, then bided my time for another short opportunity.

GOLD short

GOLD cover

GG short

GG cover

AEM short

AEM cover

Probability and timing the market

From looking at some of my trades today you might be wondering how I can time the momentum so well. The APC trade here in particular seems like magic but here is how it happened.

Being short APC I am looking for a good time to cover. The key being that 10 minutes earlier RIG already made a jump up. I'm long RIG and watching profits grow. APC is still meandering lower. Most other oil are rising now too. So it is just a matter of time statistically speaking before probabilities start to lift APC. My gut feeling said this is no time to be short APC and if a short is no good, I must go long. The odds say so.

Moments later it starts rising strongly.

If an initial entry shows profit and the stock is lagging in comparison to its peers, the only logical action to do is to add size.

So it is far from being magic. It is just seeing and recognizing what the markets are doing and acting on the information.

1st chart is short cover and long entry

2nd chart is exit.

Alerts

Since I mentioned alerts the other day there has been a bit of interest in them. On GG here I set an alert at $45.57 which was below the high but above the consolidation range. I had noticed other gold stocks rising so I wanted to be prepared if GG broke. Moments later it did so I bot it a few pennies above...

sold it after a good run