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Trading With A Business Plan

Tuesday, March 30th, 2010

Today is Tuesday, March 30th and the markets are marking a little time.

We are almost running out of room on the market here, maybe one more day or two max to see what the market has in store for us. There are some key unemployment numbers coming out on Friday and it would not surprise me to see the market wait for those numbers to trade off of.

In the market sentiment area, we moved up again last week, about +2%, getting closer to that 55% area, currently 49%,  where we will likely see a reversal of this move up. It all depends in how the market handles the move up. Originally, when the market got to the 1120 area a place where I was looking at, we backed off, but only to come back up off that. I could see that this market had a little more left in it a few weeks back. I did call for a reversal rally, but I did get a little weak in the knees so to speak. Non the less, the market did continue to rally and here we are.It would appear that the market has more to move up, so don’t take any strong stands on market direction short just yet. Let it do its work and assess it on the way.

In today’s market action, we saw a slow market, below average on the futures contract volume. I have not traded the last few days as I was taking some time off traveling with my wife. I did get into it late today for two trades. The first one was for 1.25 & 2.00 points, first trade and the second one was for +1.00, 1.25 points and .25 points. All gains for session. I took only one tick of heat on the first trade and two ticks of heat on the second trade. I usually only run a 4 tick stop on all trades, which gives me the ability to keep my losses small and at times get some pretty good little runs.

As I was talking about trading within your dominant personality in my last post, it took me a long time to find out that I am a scalper by nature. That is my dominant personality while trading. I do not have a great amount of patients, so I make that work for me, instead of fighting it. Trading the way that I do, works great for me. I only see myself getting better and some time this year I will set off on a journey to live a large part of my dream. I have been holding back on taking this journey for a few reasons and in future posts I will explain more, but I am preparing to do what I have posted on my website in the business plan section. Top right hand corner, home page. It shows a possible scenario of gradually increasing your contract size to bring in the equivalent of 1 million dollars in a year trading for only two points most days as a base target goal.

I am not in a hurry to start this, but I will set off on my journey some time this year. I find it very rewarding  in helping a few traders meet there goals in the mean time, while I continue to get my own personal act together. All of the things I write in my blog are really for me and I learn each day I write and am exposed to new experiences in the market. This is all in preparation for me to take this million dollar journey, but to do so, a trader needs experience, screen time as well as all of the mental conditioning that comes with the trip. Teaching, explaining, showing and talking about my personal trading method, gives me the floor to refine and execute my strategies. It has proven to be a winner as I have seen while sharing it with others.

So, as the days and weeks unfold, I am in training so to speak for my own personal market journey and dream. It is easier to trade with small size as I am currently doing, but this is only temporary. Trading three to five contracts is a lot easier than trading 20, 30 or 40 contracts. Being well capitalized makes this venture a little easier and another reason for my delay. When the time is right, some time this year, I will do just what I am saying. Starting with only one contract and increasing my size to reflect what I talk about on my website. If I can do it as I write, others can do it too. To make a million dollars a year trading is not easy, but I do believe deep inside that I can do it. It really is no different than what I do every day that I trade now, pick up 2-4 points a day. Doing it with large size is something I have yet to prove.

It is a lot of fun and I do enjoy teaching and exposing myself to new reads, patterns and market conditions. I don’t think I have shared this before, but this gives you a little insight into my large overall plan within “Sniper Day Trading”.

I hope to bring value to my readers and members all along the way, so stay tuned, it is going to be a great year.

Two Scalp Trades – Market Awaiting Unemplyment Data

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Round 2 for possible surprise rally? or Not !

Wednesday, November 25th, 2009

Today is Tuesday November 24th and the major market index’s are showing signs of life.

The short-term trend is just barely down and I am measuring this on the 120 minute bar chart. Any significant uptick will turn it UP, so we will have to see what tomorrow brings us. The daily trend is clearly still up and as well as the weekly. The monthly will have to wait still yet another month to make things clear.

That is how it measures up as far as the technical picture is concerned. As mentioned, any significant move higher from here will more than likely spark a big short covering rally. We are pretty much in the same place as we were 4 days ago.

The trigger points have been clearly established and now even more so at this point. Pressure points are  built up on both sides of the fence. This is where you need to be careful and wait for confirmation to buy into the argument of a solid longer term pull back. We are not there yet and the price action is confirming this to be true AT THIS POINT. 

The bullish sentiment, as of its last reading 46% is in the middle of its range. A reading of  55 is considered very bearish and 35% bullish. We are in the middle. The bearish sentiment is very weak which does signal a bearish tone, only 22% of the experts are bearish, which is really not good for the overall bullish argument. This represents conflicting attitudes and does not represent a consensus on future direction at this time.

That being said, you still have to give the benefit of the doubt to the bulls, until and unless the markets say otherwise. So lets see what happens. As I said last week we are in a position to spark a big short covering rally. We have not been able to take this market down as of yet and it may be that the positions are just building. That may be true, but the same can not be overlooked for the bullish side of the argument. A break out over the most recent high could spark a rally that Wall Street was not expecting and with it, bring a wave of buying that will only cover loses for the short sellers.

We really just need to let the market tell us, but don’t be surprised if we get the surprise rally I was talking about. Stay open-minded until it becomes clear as day.

I did place a few trades today and I will have to say, I was not to happy with it. I was a little early on a few trades and I had to endure a little heat. The first trade I did intentionally place a larger stop to accomodate the volatility, 6 ticks. The market went against me 5 and was still alive. That was really OK, because I intentionally allowed for it. A couple of the other trades were a little a to early and should have waited.

I don’t like to have the feeling that I am going to miss a rally, that I am pretty sure is coming. I hate that. I need to be OK with missing it.  Today is worked out, the trades did not go more than 3 ticks against me but it did not have to even come to that, if I had waited for the right timing.

Maybe my next session will be better. It may look like I am being overly critical of myself given the good results, but I don’t look at it that way. Doing the right thing at the right time is the most important, not the results, because I know that if I do the right thing most often, the right things will automatically take care of itself.

Thats it for now, I will probably not trade on Wednesday. The price action is usually a little strange during this Holiday week, although today looked pretty normal overall.

Until my next post, I wish everyone a Happy Thanksgiving to you and all of your families.

Vince

http://www.screencast.com/t/ZDUyZjk0Yzgt

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The Market Index’s Will Soon Show Its Hand !

Friday, November 6th, 2009

Today is November 5th and all is well on Wall Street.

The Dow was up 203 points and the S&P 20 points. This is really exactly what I thought would happen. I did not know that most of it would come in one day, but we got a pretty good bounce back up. There would seem to be a little more room in the move. If the overhead resistance comes in, it will put the breaks on the index slightly higher from where we currently are, just a few S&P points higher, maybe as high as 1080 on the CASH Index, but it will probably be a little less than that. I hate to say that word, “IF”. That is really the only thing that we can count on for sure, IF THIS, THEN THAT.

Let me spell this out, very clearly. The Dow and S&P have to break a new high to keep this thing alive and It needs to happen here soon. If the last pivot low on the Dow and S&P get taken out, you are going to see a lot of selling. More than we have seen in some time. That is the long and short of it. The market can do what ever it wants, I only identify that there is overhead resistance just above us. If it gets taken out and a rally comes in, great. That is what I like to see right now anyway. All I know is, the move from the March lows has almost been satisfied by retracing back 50 %. (S&P 1120 and Dow 10,300) I don’t know what that is going to do to the overhead resistance? Will it be that if it gets broken, it will clear the way for yet higher prices, no one knows?

Trading to me, is about probabilities. Finding an edge and consistently exploiting it. Trying to map out the daily, weekly and monthly charts only lay the ground work for what I do for a few minutes each day. Trying to pick up a few S&P E-Mini points a day is all I ask for.

As I stated, successful trading is finding something that works and having the will power and focus to follow it. All we look for is an edge. The edge is bigger for some and smaller for others. All successful traders have found that edge. That is why they are successful. Have you found your edge? Some people look for a lifetime, bouncing from one thing to another.

Everyone who aspires to “Trade for a Living”, needs to find that edge first. It is always best to know what kind of trader you are and want to become. I for one, do not like to hold positions overnight. I look for small bursts of movement that last usually just minutes and occasionally I can hold it for an hour or so. I do not like to give back good gains. I just don’t do to well with that. Maybe in the future, that will change, but I doubt it. It has not happened as of yet. 

The reason for that is, I don’t look for “Home runs” all the time, but occasionally I get one, but I am interested in “Singles and Doubles”. You see, that is not like everyone else, but that is me. I trade according to what works for me and I find that, the shorter the time I am in the market, the better.

Anytime you have a position working in the market, you have exposure. That exposure is called “Risk”. I like to keep the risk as low as possible. Right now I want to keep my risk very low and I am just trading very small, I will increase it when I have less distractions. I am updating my website, adding new things and looking into others. I am not super focused as I should be if I was trading with increased size.

I guess my point above, was to find out what kind of trader you are and how much risk you want to expose yourself to. Then find something that can give you an edge and try and be consistent. Small profits are OK, as long as you get them consistently and don’t allow yourself to have ”BLOW UP DAYS”. That is a total No-No. Don’t do that, ever. You do a lot of damage to your confidence when you allow that to happen, not to mention your account.

Be OK with taking a loss and a loss for the day. If you are getting stopped out of your trades again and again, you are not having a good day. JUST STOP. Don’t let your ego get in the way and say to yourself, “I am going to do this, I have to come out on top”. It is fine to positively program your mind for success, before you trade, but once you are down and struggling, you have to know where it is in the session that you will stop trading for the day, that is a must.

To me, it is just like trading without a stop on your position. That is crazy, don’t ever do that. That is like walking a High Wire  without a net, if you fall, you die. Same is true in the trading ring. While I am at it, “Do not move your stop down, only up”.

Those few things right there if traders would do, could make all the difference in the world and to their bottom line. Ask yourself, do I do any of those things mentioned?  If you do and you want to change, accepted the fact that at times in life we all need help to get where we want to go, then I may be able to help.

Once I finish updating my site, I will have the time to grow the small group of traders I currently work with. If you are interested, my course fee’s and personal mentoring will be less than half of my posted price on my website. I have a lot to offer if you need it.                                                   vinnie@sniperdaytrading.com

Until then, Good Trading

Vince  

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Will Dow Jones Industrial support hold?

Monday, November 2nd, 2009

This post is for Fridays session, October 30th.

The market sold off like fiercely on Friday and took the Dow down about 250 points. The S&P was off about 30 points. I did think that a re-test of the Wednesday and Thursdays low would come, but not so fast. I thought we had at least one more day to top out for the counter trend rally. There was news that came out on Friday, not really sure what it was to tell you the truth, but I could only imagine that it wasn’t good and the market reacted to it. It is to be expected.

Let me tell you, that in the month of September and October, the general public has become bullish. The last two months has only produced paltry gains when compared to the gains of the previous six months. That is where all of the money has been made. The general public is always late to the party and I don’t imagine that this time is going to be any different.

Mondays session is going to tell all, at least for now. What I mean is as I was telling you last week that the Dow has been outperforming the S&P and that was a problem. Well, it is not only the S&P that it is outperforming but the other index’s, but in a bigger way.

Based on my experience and I did not see this or hear this from anywhere, but years of seeing price action at work, the institutions are lightening up their riskier positions and reallocating equity assets in the high quality Dow Stocks. I mentioned this a couple of weeks ago, if I remember correctly. That is pretty typical at market tops

The Nasdaq Index is at a double bottom from its most recent pivot point low, something that the S&P is thinking about doing, to follow suit. The Russel 2000 Index has already overwhelmingly broke its most recent pivot low, by a wide margin. The Dow on the other hand has not broken down yet at all, but is sitting right on a major trend line support.

So, the Dow is the strongest, next comes the S&P 500, then the Nasdaq and lastly the Russel 2000. If the Dow holds and moves higher, the other indexes will only be making a counter trend rally, but will still remain in a down-trend, stopping at overhead resistance. Once the Dow does break down, all of the other Indexes will only go down that much farther and faster. There is a lot of room for the market to move back to the middle of its range of the last 8 months.

The last thing I will say about all of this tonight is, “Earnings”. I don’t follow this much either, but just the big picture. The projected earning that Standard & Poors are putting out for the S&P 500 for next year are a bit of a fairy tale. They have been constantly wrong and now they are painting a wonderful rebound of large proportion in earnings. Anything is possible, but I doubt it. I had heard, according to Bloomburg, that the S&P has had declining earnings for 9 straight quarters and only this last quarter have they been able to increase earnings. Those increases are from very depressed levels, not that hard. The increase in earnings in my estimation is coming from cost cutting in various forms. You can only cut cost so much and for so long, before you can not cut anymore. Where are the increases in sales going to come from. No one is spending and no one is lending and money??? INTERESTING.

That is why, the market is going to adjust itself to reflect where it is going to be in 6-9 months from now, probable lower. Just now the S&P is turning their earnings, like this month. If you invest in these companies now, you are going to pay way to much. But that is what the public does. You needed to be invested at least 6 months ago to be able to enjoy some of this rally, not two months ago, like I talked about at the top of todays post.

We need to see what the Dow is going to do in Mondays session. If it to breaks support, then all of the indexes will have downside momentum working for it. But if it can hold, there is now room for it to clear 10,300, a complete 50 retracement from it’s all time high. The S&P numbers for the same retracement are 1120. We got close.

The sentiment numbers backed off just a little last week. It is sitting at 48% Bulls. A reading of 55% is considered bearish. We only got as high as 51. One last push to the numbers above could push the reading to 55%, the big word in there is COULD.

Friday’s session was incredible. So many great clear signals all day long. I only took one trade and it was split up, what I call a “T-2″.   The first half for +1 point and the second part for 3 1/2 points. I was in the market for less than 1 minute on the first part and 4 more minutes for the second part. I really only had my screen open for 15 minutes, start to finish. There will be plenty of other trading days to capture higher point returns. But my daily goal was meet, no struggle, no fuss, no mess. Just the way I like it.

Until tomorrow

 

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Are Trading Markets getting ready?

Wednesday, June 10th, 2009

Today is Tuesday, June 8th and the markets tried to rally again, but no go. NOT YET !

Well, it’s only a matter of time until the indexes get going again. I see the market marking a little time by moving sideways. As I said yesterday, the momentum is still up and you have to give it to the bulls. If there is one big down day, that may change things, but it still looks good for a continued move up That is just how I see it at this time.

The day’s trading went well with over 3 times daily goal, not too bad for a couple of hours. Not many losses at all. I will have to say, that I need to work on my first trade of the day. It looks like I am a little off on the open. I think I am still adjusting to the new schedule – or I may never get used to it. I am not a morning person! I guess it will work itself out, but I do have to give this some thought. It is much better to have your first trade right. It sets the stage for a smoother morning.

One thing I did a little differently today was pick the top of the market just right and still only work with a 1 point stop. I had three ticks of heat, but not 4. Still alive and made it to the other side where I picked up 5 solid points. I closed up the computer after I placed the trade and said that if my stop holds, great. When I opened it back up an hour later, I may have a nice surprise. Well I did, with a 5 point gain right to the bottom of range on the close.

I like it when that happens.  I only put one contract on so it was not a huge $ gain but it still counts. My stop will cover me even if the computor is off. Again, I don’t do this often but I felt I saw the very top of today’s market and did not have time to sit and wait for it to do its thing. So that’s why I went the way I did on that.

Quick post today, I will return tomorrow with the latest !

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Market Indexes, Holding On To Their Gains

Thursday, April 23rd, 2009

Today is Thursday, April 23rd and the markets are not giving up their multi week advance, just yet.

With one hour before today’s close, the S&P is up slightly and the Dow is up about 30 points. Recently the market has flattened out and one would come to expect that a deep pull back is brewing. That may happen, but don’t just bet on it yet. We will need to see more in the next couple of days.

The market sentiment has not come out for this week, but it did move up 6 % to from last week, which would represent a neutral reading of around 44% ( 35 is bullish and 55 is bearish). I would definitely be watching those numbers. If the bullish reading increases to the 55% range, start looking for a multi week short entry. It may not come for some time, we will have to see.

There is more room on the upside for this market to slowly drift higher. The current daily trend is still intact, although it is in dangerous waters. Generally, if the market keeps going higher from here, I think there is a greater risk for a sell off of a greater magnitude. If this does happen, the bullish sentiment will continue to inch higher slowly drawing unsuspecting new money into the markets. A lot of people are currently taking the bait. Be careful, this market can implode.

There are so many things that can go wrong with the whole structure of the economy, banking, corporate profits, unemployment, another wave of foreclosures and the list goes on and on. Don’t get sucked in, be careful. I just read on Yahoo news the 10 largest countries that could collapse. Mind you, some of them are small, but Mexico was on the list as well as Argentina and Venezuela.

The Mexico one would be very bad and it could easily spill over into our country. Again, caution is in order. That being said, there will be a lot of increased volatility once the news starts to heat up. Let’s hope it stays quiet for a while. I can handle low volatility just fine. If things do change, I will be looking to do more Pyramid type trading to capture some of those bigger moves, but with very low risk.

Today’s trading went just fine, I did not stick around too long. I just picked up my daily goal and called it a day. I am still not feeling very well and I am not too sure what it is. It is definitely slowing me down from doing other things and I am not really liking it too much. I plan to rest up over the weekend and whatever is bothering me, I hope it’s gone by Monday.

Today’s numbers went like this: 3 losses, 9 gains and $1,200 in profit. I had two split trades, the first one for a loss and one after that for a gain. Mostly, I traded all in/all out today. The first two trades were losses and the second one had a two tick slippage to it, making that loss worse.

Both of the first trades were bad trades. What I mean by that is I did not go into it doing and seeing the right things. If I take a loss and I did the right things, no problem. But when I go outside my trading plan and go in too early or too late, I get a little miffed.

I took a 10 minute break and tried to get things sorted out and did. Almost all the trades after that were gains. I am pretty sure it was because I was not feeling good, I did not have good focus and patience before those trades went off. Oh well, I came right back to catch my daily goal without much problem.

I will keep my eyes open for another pyramid trade set up and if I see a good one, I will try and record it.

That’s it for now. Have a good day.

http://www.screencast.com/t/2UAgzMNA Today’s equity chart

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Today’s low needs to hold, so far so good

Monday, February 2nd, 2009

As of 8:40 am on Monday, February 2,  the S&P 500 cash market is pulling up off  its low of the day. As I write this, we are up +9 points off this low.

I stated on Thursday’s blog, we were going to go down for the next few days with a market turn expected on Friday or Monday. Well, it’s Monday and we are starting to turn now, but what happens now is not going to count because it’s how the day ends up. The market needs to stay above the lower purple line on the daily S&P chart posted below. Very important low. 

We are currently in a short term down trend and that trend will likely stay in place until the outside trend line gets broken to the upside. I have anticipated a short term market bounce, but that cannot and will not happen until and unless the technical picture supports that opinion. We shall see.

With today’s day trading, I was able to pick up my daily goal plus.  Here are the trades.  +4 ticks, -5 ticks, +2 ticks, +9 ticks, -4 ticks, +2 ticks, even , +4 ticks, +3 ticks.  The total of these trades comes to 3  and 3/4 points for the morning. I will show you the trades below.

I was not that happy with the  two losses that I had, not because they were losses, everyone has there share of those, but because they were not good trade setups. I waited on a few trades and let them go and that is ok, but those were good trade setups and I got a little impatient and took two less than desirable trades for me. Not to worry, I came right back and picked up some nice trades to recover. 

Today, I have at the bottom some of Friday’s early morning trades and today’s early morning trades. I did not take these trades, but it is nice to see where and what the trade setups look like. There is a nice market flow to the early morning action. One thing I noticed while looking at these two charts is that Friday’s open and Monday’s open look almost exactly the same. They both started off the same way and continued to trade in the same manner. Just an interesting observation here.

I will soon be trading this morning. I need to get my schedule lined up first. But as you can see, you can trade any time of the day. The middle of the day tends to be slow, between 9 a.m and 11 a.m. It usually picks up after that with the institutional traders in New York coming back from their late lunches. 

That’s it for today, I wish you all the best.

Vince

http://www.screencast.com/t/NdN6sA3AXpP      Some of today’s live trades

http://www.screencast.com/t/EAE9lZXyrl             Daily S&P 500 update

http://www.screencast.com/t/x4GFgN6Z4B       Friday’s early morning potential trades

http://www.screencast.com/t/DFwszVb3rt         Today’s early morning potential trades

http://www.screencast.com/t/cayVwMI6b       Took few more trades 16 gain 3 loss 1 flat

http://www.screencast.com/t/Ruglbpu5           Chart of the day equity curve

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Very important post, long term picture

Friday, January 30th, 2009

As I post this on Friday January 30th at 8:17 am the dow is off 114 point adding to the over 200 points + loss from yesterday and we have some real selling here.  The S&P is off 14 points now and adding yesterdays loss of 30 points that’s 44 points of selling  since my call, -5%. 

If you look at the S&P you will see that it needs to stay above the purple line across the bottom. That is the line in the sand. I think it will hold for now. Look at the purple line from above and you will see a wedge forming. That formation can last for quite a while, bouncing in between those 2 lines, it could be a few months. As it gets strung out, it will have built up a lot of pressure getting people to establish positions on both sides of the market and the struggle will continue. After that point, a break to the downside will have resolved the struggle and a very large wave of selling will kick in pushing the Dow, S&P, NASDAQ and other major indexes to the downside taking with it more of America’s wealth.  That is just one man’s opinion and is not to be considered investment advise. Everyone needs to choose for themselves what is best for them in their own investment plans.

What I see is a web being laid out, like what a spider would do in order to catch his prey. He lays the web, one string at a time until his trap is set and he waits for the victim to walk into it, of its own free will.  Investors have been trained to buy the dips, thinking that the market has fallen so far that it can not fall any farther, so they buy. I am speaking of long term investors and not traders here. Just keep an eye on the two purple lines and let a little time go buy and let’s see what happens. I would say that for us to be prudent, we need to interpret what is happening and not so much predicting it. I to need to remember that although it makes for some interesting reading.

This is what is happening right now. We are in a consolidation phase trying to put in a bottom but need to stay above that bottom purple line. I have seen it a thousand times, once that support gets broken we will be going down at least to test the previous low. For now, it remains in tact and we can expect sideways to up over the weeks to come.

Let me give everyone a little more perspective on the long term trend. I will post a monthly chart of the S&P with my method attached to it. My method works on all time frames as you can see in the daily and now monthly charts. We have had 4 trading signals since 1995 and I caught all of them exactly as laid out on the chart. If you had positioned yourself at these turning points with your 401 k’s and IRA’s you would be at the top of the heap, instead of the bottom of the barrel.

Don’t mean to be insensitive here, but with all the experts out there, I have learned to trust myself instead, by getting educated. Who could blame you for staying invested during those big down periods? I could go back to the 1930’s and the charts on the screen will look exacting the same, giving excellent buy and sell signals, telling you when to stay invested and when to step aside in cash waiting for the right time to get back in.

As you can see, it is not the right time to get in yet for the long term investor. You are trying to catch a sharp falling knife. Do you know what happens when you do that? That’s right, you get cut. Just say no, for very long term money, its not time yet. When the two lines cross to the upside, that will be a different story.  In time you will learn to read price action, or you should strive to do that with no indicators at all, other than the price charts themselves. I can show you how to get the same entries as I have posted on the monthly.

Ask yourself, if you had invested in 1995 and got out at the high of 2000, what would your portfolio look like?  Then, to stay in short term treasuries until July of 2003, when you re-entered the market as it took you fully invested to January of 2008. You would be doing well.

People have been told that you cannot time the market. That is what they want you to think. Who is the “they” you ask? It is anyone who has a whole lot more money than we do. You will get a pretty long list from that. To answer that question,  I would say, that’s a bunch of ______, well, you know what I mean. The public has been trained / conditioned / manipulated etc. to believe this and so it is why they get fleeced time and time again. Don’t let that happen to you. Get educated and put the odds back on your side.

Very important: look at the long term monthly chart of the S&P.  Using my method I have been able to call every major market move since the early 1980’s when I started following the markets. I will post more of those charts in the future to help you see what I see. Again, my method works in any time frame. I currently trade a very small time frame, 100 tick S&P e-mini, unless the volume changes drastically. These charts are based on volume and not time. That is why I say, “I have seen the daily chart setup that we are now looking at a thousand times”, because those are the same looking setups on any time frame and you can expect similar market reactions.

O.K. that is it for now. I wish everyone the very best.

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Break out or Break down?

Tuesday, January 27th, 2009

I am in a “wait and see” period on this market direction thing.  It is going to take a little time.  One thing for sure is that we will see increased volatility again very soon. 

The market appears to be moving sideways in order to establish a move up, although it is in an established downtrend as of now.  If I was trading the daily market now, I would either be short or out as of now because the trend currently is down. Look at yesterdays post on the daily S&P and you can see we are in a downtrend.  The market needs to break the outside downtrend line to establish a sustained move of any significance.  It is getting closer but not yet.  All one can do is wait it out and see.  We do not have to predict what is going to happen but need to react to what is happening and that is very different. That is the same for day trading as well. 

Always trade in the direction of the trend.  Some people like to trade counter trend, and it can be done, but you need to be very skilled and selective.  I don’t trade that way even though I can spot a lot of trades that fit that profile.  One reason I try not to trade that way is because you want to train yourself to do things the same way all the time. 

Let me explain further before someone is ready to disagree with me. There are always different trade patterns and setups. All of those look different and I trade those different patterns all the time, but those patterns all fit within my trading methodology and the execution is almost always the same for me. I am trading with the short term trend at that moment.  I cannot tell you how many times I have seen the trade go my way when the conditions are lined up. It just happens.  That is why it is best to wait for the trend to establish, without being too late and end up chasing the move.

I did chase one move today that I can remember and I payed for it with a lose. I could have easily let it go and waited for the next trade, not more than a few minutes later.  This is one of the reasons I like to trade the way that I do. If you miss the bus, another one is coming in just a few minutes. But you need patience. 

In fact, these are my three essentials for success:  Focus, Patience and Discipline.  Those three are the key to trading my method and I am sure many other methods as well.  I will throw in one more essential while I am at it. Controlling fear and greed is essential.

We all need to find that spot in our lives that can free us up from feeling fear.  This fear comes in many forms – fear of loss, fear of failure, fear of missing a move, and even fear of success. There are many more of these fears out there and it is different for everyone. 

Greed comes in with changing regular setup for a bigger target, when it really does not call for it, staying in a trade too long and then hoping it comes back.  Some of these are encompassed in the discipline side of trading. If you have a clear plan laid out, it is essential that you follow it. Doing so takes the pressure off you.

In today’s trading, I have a few clips for your review but there is no sound today.  I am trading more often than I usually do, but it is just temporary. Very soon now, my trading time is going to be set up in the early morning open, first hour. 

Those who have recently inquired about a trial, I will be in touch with you this week. Have a great evening.

Vince

http://www.screencast.com/t/9tIohYVKe

http://www.screencast.com/t/JRSfaknX

http://www.screencast.com/t/Wo5W0XYTH0

http://www.screencast.com/t/ntTvHFmaJ

http://www.screencast.com/t/LmCK7lFaHvg

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S&P 500 building base for move up next week

Friday, January 23rd, 2009

Well, its been a little while since my last post and I am glad to be back. The Holidays were a bit more time consuming this year than they normally are.

The market has been holding on to its retracement level in the S&P 500, just above 800.  Back in December, I said that 800 needed to hold to remain in the uptrend we have been trying to put in. So far so good.  The market moved up about 15% from that call and then back down.  It is now at the breaking point and needs to move up from this short term consolidation of the last week.  There is an outside trend line on the daily charts that needs to be broken to the upside for the uptrend to take hold.  This right now is acting as resistance, but once that gets broken to the upside, the path will be cleared for higher prices.  I will post a chart of what I mean, so take a look below and check it out. 

This week the bullish sentiment dropped and that is good for the bulls.  The more people that think the market is not going up the better chance it has to do just that.  Now the reading is 38% with a reading of 35 as very bullish. It had gotten up to 43% and just this week has backed off to 38.  The market could base for a few more days getting the bears to bite on the downside theory.  The new numbers come out on Tuesday of this coming week.  If those numbers fall to below 35%, we have a very good chance to rally 10 to 20 % for the overall market. 

Unfortunately, if this happens, I believe it will be short lived and will set itself up for another big drop, making fresh new lows.  Not a pretty picture, I know, and I don’t like to think that way, but the way I think is not going to change the market.  In past recessions, this would be the turning point to buy and the recovery will be first seen in the stock market, before anyone else realizes it.  The market always looks out 6 months to a year in the future and if it smells a recovering economy, it will rally in anticipation of the reality.  On the other hand, it will also know if it (the economy) is still on the ropes and going down for another beating, which is what I expect to happen after this rally.  The market will do what it has to do in order to draw in new money,  getting people to bite on a recovery scenario, only then to be gored by the bear trap.  So be careful out there and plan ahead. 

As far as daytrading is concerned, as I have said before, it does not matter what the market does, going up or down.  We position ourselves to take a few small pieces out of the market and hit our daily goal of at least 2 points + on the S&P 500 per day.  It may not sound like a lot, but it adds up nicely when you get it every day and gradually add to your position size.  Below are some of the trades I have recently taken to show what I mean as well as the long term S&P 500 daily chart that I mentioned earlier.  I may post again before Monday, have a great week end.

Vince

http://screencast.com/t/3bdutjDWE    some of today’s live trades

http://screencast.com/t/bcOk1lFX3     some of today’s trades with commentary

http://screencast.com/t/jJJ7nwxws     daily chart with notations

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