Trader MD

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."

Posted by Trader M.D. at 11:01 PM 1 comments

Labels: Channel, Failed, Gapper, Keys To Success, XLF

YGE gapped up with the solar sector only to sell off and almost fill the gap (gap remained open). It was on pace to post higher than average volume and gradually worked higher to form a base at 23.47 & also 23.62. I entered on the break @ 23.47.

I sold too early again, like my OII trade from last Friday. It's going to be something that I gradually work on. Still a very solid trade.

Kudos to the HCPG crew.



FWLT gapped up with FLR and was a Trader-X style gapper play.



FLR and FSLR were also great gapper plays today. I missed the entry on FSLR and passed on FLR.

I picked up KSU as a swing. I closed out OII as it hit my target ~76. Hopefully it can pull back and form a nice low volume handle. That would make for great C&H and set it up for a nice run higher.

Speaking of Oil stocks & C&Hs, take a look at SLB.

I ended up taking the last 2 hours of the trading session off, but apparently the Steel stocks I highlighted last night took off fairly nicely (esp CLF). Keep an eye on them for continuation tomorrow.

Posted by Trader M.D. at 1:44 PM 5 comments

Labels: BasenBreak, FWLT, Gapper, HCPG, Triangle, YGE

SOHU, from the watch list, formed a nice orderly symmetrical triangle, which failed just below 77.

You'll notice as I was annotating the chart for SOHU, it began to break down out of the triangle/channel. I passed on this trade as SOHU was still above the VWAP (Volume Weight Average Price) for the day. In addition, I've seen that failed moves in 1 direction tend to exaggerate the move in the other direction.

If volume had picked up considerably to the downside and offered an entry point below the VWAP (which was ~75.50 at the time), I would have been more open to looking for a short entry.



JASO formed a bull flag after gapping up and was holding up fairly well considering market conditions and how FSLR was acting. I got whipsawed out as sellers came in at the ~23 level. While it went on to run much higher for the day, I let my stops work for me.

I was a bit aggressive with the trailing stop after exiting a partial position just below resistance, but with the market conditions and with SOHU reversing on me, I didn't want JASO to reverse on me as well.



While I was a bit aggressive with JASO, I still would say I did a decent job managing the trade.

That clearly was not the case with OII.

I've noted my lessons from the trade on the chart. I clearly didn't let my stops work for me.

OII could have been a big winner.



Below is the daily chart for OII. Today's gap up knifed through the down trend line of the recent triangle type formation. I didn't enter at that price of ~68.50, but instead waited for it to settle down and entered a swing position (separate account) as it broke back above the ~69.48 level (which is also where I simultaneously entered my day trade that I highlighted above).



Have a good weekend & get some rest. Next week is options expiration and we'll have a fair bit of economic data.



I'll be out of town for part of it and celebrating the other half with mom. Happy mother's day!

Posted by Trader M.D. at 12:28 PM 0 comments

Labels: Flag, Gapper, JASO, Lesson Learned, OII, SOHU, Swing, Triangle

It just goes to show you that you should trade what you see and not what you believe will happen. If you asked me yesterday and with the initial reaction to CF's earnings after the bell yesterday, I would have guessed the Ag sector would have continued lower and I did mention that in last night's watch list for today:

That probably would mean more selling for Ag, and more break downs for Coal, Steel, Energy, Solar names.

Woops :) Anyhow the Ag sector started off slow and then they all started to move higher one by one. I went through all the charts of sector and found IPI forming a nice Cup & Handle.



SOHU was from last night's watch list. It was forming a nice bull flag on the multiday / daily chart. Some @#$! analyst at Citigroup upgraded it in the premarket to have it gap above the bullish flag.

It probably would have been a pretty nice swing entry on a break of the bullish flag, but I didn't want to chase it.

Anyhow, it set up with a bull flag later in the day. I only got a partial fill so I scrapped my trade shortly there after.




Have a good weekend :)

I'll be watching the 2008 NFL Draft. Go Niners.

Posted by Trader M.D. at 1:16 PM 6 comments

Labels: CupnHandle, Flag, Gapper, IPI, Lesson Learned, SOHU

Posted by Trader M.D. at 2:02 PM 0 comments

Labels: BRCM, CSX, Flag, Gapper, NSC

I've finally got my blogger up and going. There still are some kinks I need to work out, but in the mean time I've been able to annotate and post Friday's trades.

I've done most of the commenting on the actual images and they can all be clicked on & enlarged.














Keep RIMM on your watch list as its in the process of breaking out of the C&H highlighted on it's daily chart above.

Be sure to check back in later this weekend for an index recap & stocks setting up for the next week.

Posted by Trader M.D. at 4:24 PM 0 comments

Labels: BasenBreak, Fibonacci, Gapper, MON, Pivots, RIMM, SINA, Triangle

DECK gapped down on the open in 'sympathy' with CROX. It had been on my watch list for the last 2 weeks and I had previously posted the chart below on the blog as a potential bearish wedge.

After gapping down, DECK had retraced almost back to break even before falling again. Towards the lower end of the opening range high, it began forming a bearish flag. I entered on a break of the bearish flag.

Price declined in an orderly manner, and accelerated to the downside before it began to bounce off of the 123.6% Fibonacci extension. I took partial profits at it bounced from that level and tightened my stop. The trade stopped out shortly there after, and I ended up with a gain of a little less than 3R.

DECK looks to have the potential for some more downside here, especially if the market &/or retailers head lower.

Posted by Trader M.D. at 12:38 PM 0 comments

Labels: DECK, Flag, Gapper