In a perfect world the market consolidates ahead of the Fed, the Fed announces and the market drops a bit, and then the market rallies to new highs into the close and we continue the bounce today and tomorrow. But that's a perfect world.....In our real world we could see the market make a follow through move ahead of the Fed and then traders use the announcement to blow-off the last of the bounce from yesterday and it's all done for awhile. I will be ready for either scenario.
Although the market had a nice bounce yesterday, and my posture is Intermediate Term Neutral and Short Term Bullish, I will still be playing short swings until we go Intermediated Term Bullish.
6:00 pm MT: Market Wrap: We got the "real world" scenario number two today, which was a pop ahead of the Fed and then a fade to end the day. The scenario played out exactly as I described it above. Once again the fade happened in the last 15 minutes. The Fed cut rates 50bp, which means that Benny is continuing to settle down and not trying to be a rock star anymore, we'll see if the trend continues. The rate cut was largely psychological because the LIBOR has been coming down despite the Fed cuts, and banks have been focusing more on short term loan risk rather than the Fed target rate anyway.
The Dow hit my resistance line in the 9,300 area and faded back to end the day. Earlier in the day I had nice, profitable intra-day call swing trades on AMZN, RTN, DIA, SPY, and AAPL. Going forward, it may be that we don't see the market confirm a Triple Bottom until after the election. In fact, if I was a Big Money trader, I wouldn't want to put most of my money to work until after the election uncertainty was over with and I was confident in the policy-making of the new White House and Congress.
Here is a chart of the Dow showing the short-term resistance and support areas and the intermediate term support zone:
(click on image to enlarge)
(click on image to enlarge)
I was the guest on Ben Watson's Volatile Market Open House today (Home Page, lower right link to Open Houses, then Archives, then the last one on the list dated today). The whole thing is about an hour. I did some market and trading analysis in the last half hour for anyone that is interested.
Hi all
ReplyDeleteIs everyone just waiting for the Fed announcement?
Claudia,
ReplyDeleteI got in a DIA call when it dropped about 1.30 out of the gate. Currently up about 9% and waiting for the fed...
Joe
yup, watching and waiting. SPY seems to want 95 to hold as new support.
ReplyDeleteFrancis
Good for you Joe!
You know, I have to confess I am a little frozen with analysis paralysis. Feel like my cautiousness may be holding back too much, yet fear another whipsaw down. Think I'd better take a long walk and distract myself to return with a clearer head.
ReplyDeleteGood trading all.
FRancis
Well, what a wonderful day. I KNEW I should have gotten out of my call when the market made its way back up to 9350. But instead, decided to hold until about 5 minutes until close expecting the market to keep rallying. Of course, the market sells off and I break even on a trade that should have been highly profitable.
ReplyDeleteI hope this didn't happen to anyone else!
Joe
Just when you think its safe to go back in the water......
ReplyDeleteThat was incredible to watch the futures drop more than 50 points in 10 minutes. No coincidence that it happened at the very last 10 minutes of the day. Talk about the big boys doing some profit taking!!!
Dwight, that was great in vc today, how you snipered 3 trades in 10 minutes perfectly and earned an averge 10%. Stuff like that in this insane market is exactly why we need you. You are the man!
p.s. does this set us up for another down day tomorrow in your opinion?
Joe,
ReplyDeleteTOS is doing a trader lounge on the new software for iphone now.
Hey gang,
ReplyDeleteAnybody got whiplash? What a strange day!
Bought a SPY 93 put at 1 min. before close yesterday and held it all day long until 1 min. before close today for 14% profit. With today's intraday action, I really felt really queasy about holding over night AGAIN. I think GE's Immelt gave me a gift in the last few minutes. I hear he made comment that guidance for GE's profits was flat for 2009. That's why the market dumped just before the close.
I think I'll go for a walk, too, Francis.
Steve, Dwight's too good, isn't he? Golly, I wish I were nimble and shrewd!
How did everybody else fare today?
Don't beat yourself up, Joe. I've done the same as you did today and stayed too long!
ReplyDeleteI listened briefly to the Trader Lounge on TOS, and Tom (one of the chiefs) was saying that there was no defense a trader could have had for the craziness that happened in the market today; even with all their spreads and what not. He's never seen anything like it.
For me, I really did just get a merciful break in escaping today. Very thankful.
I think Dwight's the only trader who knows how to ride these rapids...
Hi all,
ReplyDeleteI'm new to writing in but I've found all of your entries very helpful with my trading.
Can someone help me find "Ben Watsons volatile market open house"? The directions on Dwight's post don't help me.
Thanks,
Scott
Nevermind... I found it on the IT homepage, duh. I hope my trading is better than my ability to find the open house!
ReplyDeleteScott
Joe,
ReplyDeleteYou are not alone. Today is the first day this week that I finished in the green. Seems like I keep getting in at just about the time the market decides to reverse it's oh so short trend. I know just how frustrting that is to see a highly profitable trade turn RED at least you did not loose. What I have been doing to combat this is move my stops up to lock in the gains - this way I may not always win big but I KEEP profits. I did that on SPY today - entered 2:55 EST and exited 3:25. Sometimes it gets me out too early but right now I am more focused on preserving my capital. Thanks for mentioning using the 30" charts as a guide for support and resistance that seems to work with entry on the 5 and 15 time frames.
Francis,
Analysis paralysis is my middle name and it has kept me out of a host of good trading opportunities - I have a hard time with this. A coach once told me that " you want to prove to yourself that this is not a good trade and if you can't find enough reasons maybe it's one you ought to consider" I think I've taken this too far cause I will find plenty of reasons why not to trade :)
Good job on that SPY put Laurie - you're definately right about Dwight
Tomorrow's another day.........
Gang,
ReplyDeleteIf there is one thing to take away from Dwight's coaching it's the candle sticks. I watched a rising 3 on MCD play out and I watched my bullish engulfing on K yesterday. The patterns, through repetition are starting to emerge.Probably cause I see at least 1-2 of the same ones on a stock every day! The hardest part is to act on it NOW and not to wait and see if you were right or wrong on your analysis. That's my problem!
Anyway, rumor has it that Mr. Margin Clerk comes in and starts covering margins at ANY price about 3:30 but he's been getting back from his 6 Martini lunch a little later and bringing his street pals (no pun intended)to help him sell.I think they came back sober yesterday, though. So I didn't take any trades today although I was looking at a lot of shorts setting up at resistance with with low risk.
Good luck Tomorrow!!
Gary
Claudia,
ReplyDeleteThanks for the tip on moving the stop up. I never even considered that! I used to do it, but haven't done it in a while. I'll use that tomorrow!
By the way, when Dwight said in a perfect world the market fades after the Fed announcement then rallies into the close.. Why does it fade right after the announcement?
Joe
Claudia,
ReplyDeleteCongratulation on the green trade! Some weeks are harder than others, for sure. I've wished I could click "undo" more in the last couple of weeks than before.
Francis,
You probably saved some $$ today.
Gary,
It's not so much the candlesticks but remembering to watch for their confirmations that are difficult for me. I'll get in a trade, but realize the confirmation for the pattern isn't there yet. When to tell when a stock's rolling over still fools me, too. A quote from one of my kids as a toddler reminds me, "You get better if you practice!" We've got to thank Dwight for his patience with us. We need a lot of repetition!
Welcome, Scott!
Looking forward to your posts.
Amen to ALL of your posts today. I did not trade today. I cannot listen to Dwight on VC and trade and wonder what Bernie is going to do-overloads my brain!!
ReplyDeleteLike Dwight said yesterday-paper trade, paper trade, paper trade.
We are all like the train going up the hill except WE KNOW WE CAN!!
Happy trading,
Margo
PS Many thanks for Dwight.