Saturday, September 27, 2008

Putting the blog on hold for now, Thanks for your support.

My apologies to all the readers who've supported this blog. I should have come to this decision a bit sooner. I've tried to hold off in the attempt to resume blogging at some point. I feel that about a month ago my ability to blog has gone down hill. It's a combination of less time, more focus on trading setups and a fairly busy personal/work life.

At the present time, I'm simply unable to put in the effort and set aside the time to blog consistently.

I will still be trading on a regular basis. The markets have definitely been more difficult over the last 2 months. I feel like I've navigated them fairly well. Most of the accounts I manage are at or near all time highs. Had I gone through a similar trading environment even as little as 6 months ago, I doubt I would have been able to say the same.

I've learned a lot about trading through blogging and definitely appreciate the time put in by other bloggers. You never really realize how much time and effort is put into blogging until you attempt to do so yourself.

In the future event that I will be able to resume blogging, I'll be sure and get the word out.

Thanks to all of you for your support on this blog and thanks to Jamie, HCPG, Brian Shannon and Jason Leavitt, among many others, for helping me become the trader I am.

I wish you all the best of luck!

Thursday, September 4, 2008

Key to Success: Patience

Patience? What?! The market was down several percentage points across the board and you're talking about patience?

Yep. I've kind of realized over the last few weeks that I simply don't have the time to post every trade I make anymore. I've had some pretty solid trades (maybe some overconfidence played a part in today's early entry?) and in the past (before residency started), I would usually put together my daily posts right after the market closed or in the final hour of trading. But now, blogging isn't really that high on my priority list as far as importance or in things I have time to do. That being said I still do want to and do enjoy posting material my readers will actually be able to make use of instead of seeing trade example after trade example. Besides, Jamie already does a great job of that :)

While I'm at it, hopefully this recent leg down in the market hasn't really surprised anyone. The $VIX chart I posted last week gave me some indication the market wanted to head lower relatively soon and a lot of the leader stock charts I was looking at (i.e. RIMM, which has made a fantastic short recently; AAPL, etc). If that wasn't enough to convince you, then Tuesday's price action should have been another clue. When the market gaps up to the point where the Dow is up nearly 250+ points, only to end in the red... is just about as bearish as you can get.

So anyhow, back to patience and how it deals with the market action from today.

Let me start by saying I was fairly patient waiting for a setup to trigger, just not patient enough.

I've been watching the XLF for the last week or so waiting for a short entry (via going long on the SKF) and this morning I jumped the gun. I entered before I normally would have and as a result I was stopped out. At that point I called it a day because I had broken a trading rule.

Now here's what I was watching and waiting to setup:

Now this is what I did:

And this is what I should have done:

So despite being patient, and carefully stalking which trades I wanted to enter... to put it in baseball terms: I swung too early. I didn't wait for the pitch that I had planned for. As a result, not only did I get stopped out of this trade, but I also lost out on what could have been a potentially huge day.

Now I'm not even saying I would have captured the entire move. I know for a fact I would not have. As you can see by the first image in this post, that my initial target was around the 21.30 area, which correlates to about 117 on the SKF.

Patience as a trader is very important. Even with developing a watch list or having a few select trade ideas, you are constantly given the chance to enter those trades at any time. The key is having the patience to wait for the right setup. Waiting for the right setup minimizes your risk, maximizes your reward and gives you the highest probability for success. I clearly didn't do that today.

And now that we've had a huge down move, the key going forward will be having the patience to wait for the next setup :)

Hope that helps. Any feed back on this new 'feature' would be appreciated. If so I have ideas for other "Keys to Success."

Monday, August 25, 2008

$VIX: Bullish Wedge - Does the market want to head lower?

In conjunction to taking a look at the index charts, I'll also take a look at the $VIX. To me, its clearly forming a bullish wedge and today's move just solidifies that opinion. (I had drawn in the wedge shape over the weekend).

1260 will be a very important level for the S&Ps to hold.

IWM: Median Line failure, RIMM: Base & Break, Base & Break down / Descending Triangle / Median Line failure, and an Inside Bar reversal.

Here's a 30 day x 15 minute view of the Russell 2000 ETF, the IWM.

This chart shows the Median line failure on the IWM. I traded it as a long with the TWM.

Here's the 30 day view of RIMM x 15 minute bars. You'll see the fairly nice channel it's formed over that time period. Once I have a well defined channel, one of the things I like to pay attention to is how it responds to movements with in the channel.

The blue circles are a good illustration of that. While to the blind eye or those charts that aren't using channels, RIMM may have appeared to be treading sideways in a range between 125-135. Taking a closer look at the chart it shows how RIMM fails at each subsequent channel line (first the outer upper limit or the 100% line, then the 75% and 50%).

You'll also notice that when RIMM breaks the downtrend line I have starting at 135 from the peak on August 11th through the peak on August 15th, that it fails to even challenge the recent highs of 135 and instead pauses at 134. There's also a bit of negative divergence there (not highlighted on the chart).

** Side note: has anyone else noticed my overshoot theory (with other technical patterns, etc)?

So now taking all that information above, I throw even more details at you :) I apologize if this seems a little crazy, but in sake of time constraints I've used the same chart to illustrate how you can follow one stock that can setup again and again. Being familiar with how a stock trades, and what support / resistance levels it may respect definitely help.

My only real regret is not letting todays trade run a bit more, or taking a partial and letting the rest run.

Sunday, August 17, 2008

Apple: Channel Breakdown, Negative Divergence

It's been a while since I've posted. I think this is just about the longest I've had in between posts. Part of it is that I don't want to put up posts just to have something posted. I'd like to have some real value behind the content, which could actually serve as an example and demonstrate something useful.

Posting will probably remain a bit slow until the Olympics are over. I'm also trying to get more reading done (both medical and trading related).

Anyhow, here's a channel breakdown example on Apple.

We'll start by taking a look at the daily chart.

Here's a 20 day view of apple with 15 minute bars. Notice how there's a trend acceleration (light blue channel) inside a primary trend or channel (purple channel). From my previous posts on channels, you'll notice how the channel lines tend to serve as support/resistance.

Finally, here's a 5-6 day view of that same chart. I've zoomed in to try and identify what I was seeing take place over the last week or so before I took a short entry.

Most of the annotations are on the chart and I hope it didn't get too cluttered. I wanted to try and point out as many things as possible as I felt there was quite a bit going on.

I think AAPL can put in a bit more downside here, and I may be looking to reshort on a low volume pull back higher.

Older Posts