I got the feeling that if the market stayed open any longer or if the FOMC announcement, State of The Union etc weren’t on the horizon things could have gotten pretty ugly today.
AAPL opened positive proceeded to trade up almost 10 points from the opening before rolling over and coming back into the opening range. GS & JPM both violated Friday’s lows and closed more or less on the lows of the day. I actually expected things to get a little more ugly considering those two stocks violated such important levels.
Yesterday I said that the only level that matters right now is SPY 109. It survived the initial test this morning and closed hovering tight above it at 109.31. This only reinforces the importance of this level in my mind.
DIA, IWM, MDY, QQQQ & SPY all have more or less the same daily chart. They started to roll over early last week had two really ugly red bars last Thursday & Friday consolidated with an inside bar yesterday and threatened that Friday low today. I feel that it is really important those lows hold. A test of those levels made early tomorrow will probably be bought ahead of the Fed announcement but a second test especially after the announcement with some volume behind it could be trouble. I am not going to stand in there and buy em on any test of these levels, but watch out for a bounce the first time around in case you are looking to get short.
I expect that tomorrow will be like most Fed day quiet and choppy before the announcement with the potential for some fireworks after. I will be trading very selectively if at all in the morning and early afternoon looking for levels to be established. I had some success today shorting resistance at moving averages and I suspect that will be a theme going forward. The stock has broken down through the MA tries to retake it fails and then rolls on that failed momentum and hopefully a market selloff.
Take it easy tomorrow before the announcement watch to see if we the index’s are holding and then see if it is safe to buy dips to important support levels or if you should be getting short.
Best Practices In Trading: Getting To The Next Level
21 hours ago
Any examples of some trades you took today? What averages are you talking about? 20 EMA on daily? Thanks
ReplyDeleteI have 3 examples two that I took and one that I didn’t. INTU & SWN both opened weak and came in to a support level they then proceeded to bounce with the market and try to recapture the 50 day MA. As the afternoon went on and the market rolled they both rolled back down through the 50 day MA and to the lows of the day. The 50 day gives you a good entry point on the way in and a pretty clear place to stop yourself out if you are wrong.
ReplyDeleteOn AMG the 150 day MA provided a weak bounce early in the morning and then acted like a lid for the rest of the day. When the market rolled at the end of the day it really picked up a head of steam. Unfortunately I didn’t take this one but it is a good illustration of how the MA can act as a lid on a stock in a weak market.
To answer your other question I look at the 20, 50, 150 & 200 day MA. I believe the higher the # the more significant it is and there for provides better opportunities for shooting against it.
These are just 3 examples but if you look through your daily charts you are going to find a number of these situations where the stock traded up through the MA couldn’t hold on and rolled.
Thanks for the quick and detailed response I really appreciate it.
ReplyDeleteMy pleasure. If you have any other questions let me know I love to talk about this stuff.
ReplyDelete