For the next 50 trades I make, I will force myself to consciously focus on a list of trading rules and check off each rule before making the trade. Rules will include things like: is the pattern confirmed, does volume support the move, is the broad market moving in the direction of this trade with conviction, do you have a 2:1 reward-risk ratio, what is your entry and why, what is your target price and why, when do you know you are wrong and need to sell, is the 20 day moving average above or recently crossed over the 50 day moving average, are bolligner bands expanding (or has price recently closed above a donchian channel recently), what is your protective stop going to be. I think I will stick to these fundamental trading rules for now. After I make at least 50 trades, consciously going through the steps of my new rules, it should start to become an automatic habit. If not, I will do it for another 50 trades. Also as I work towards automation, I will gradually introduce new rules to the list and analyze the change in my performance. Naturally, some will stick and some will not. I may even decide to cut out some of the rules and experiment with simplifying my rules into a few basic components.

If you think that I started this blog to impress people, you are wrong. If you think that I started it to get a following or gain market share in the over-crowded market of trading related websites, you are more wrong. If think that I started this blog to make money from viewers through subscriptions or adds, the joke is on you as I have no such goal. The truth is, I started this blog for me. It’s all about my personal development as a trader. Writing an honest review of my personal trading performance and criticizing my personal mistakes to benefit my trading abilities is one of best ways, if not the best way, to improve my trading skills and knowledge. That’s all I really care about.

The funny thing about this “blunder” is that I still do not know what the result will be. Some traders would tell me to close the position here, but I plan to manage it instead. I will give the trade a chance by waiting until the close on Monday. If the reversal is not going to be confirmed, I will exit my trade. If it does get confirmed, then I will hold. If managing my mistake was more complicated then I would probably just exit at the open on Monday. Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Money management and risk management are a couple of the most important aspects of trading, and yet they are so basic and straightforward. Capital preservation comes before profits… always.

Happy Trading,

Jason

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The SPY had an inside trading day today (did not make a higher high or lower low). Everything about the neutral sideways action screams consolidation at this level, which can be expected after the recent moves. Consolidation is not a bad thing. In fact, it is healthy and welcomed by most traders as it provides confirmations of certain moves as well as set ups for other moves. The current consolidation on SPY could be a swing low, or a bearish pennant. Of course we will have to play it as we see it. Do not be early though. It is crucial to wait for confirmation of the formation you are trading. Always trade with a stop loss and manage your risk appropriately.

Thanks for being a part of Swing-High.com!

Talk to you tomorrow,

Jason

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A Bearish Pennant patter is forming on the SPY 15 minute chart which could break to the down side. From there, expect to see support at 102. If the SPY puts in a swing low at 102 and re-tests the 108 area, that could be the start of a Head and Shoulders formation, which would be extremely bearish. We will have to trade it as we see it.

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Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.

Happy Trading,

Jason

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Looks like we will just have to wait and see, but the markets still look like they want to go lower from here. Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Capital preservation comes before profits.

Happy Trading,

Jason

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The markets are higher today on news reports. CIT Group (CIT)  filed for bankruptcy over the weekend, which had the potential to act as a Lehman Brothers type catalyst leading to a “Black Monday”-type drop in the markets. However, Ford (F) beat earnings expectations by posting a $1 billion profit and providing positive guidance. Keep in mind, much of Ford’s earnings can be attributed to Cash for Clunkers, so weigh that with a grain of salt. ISM Manufacturing Index data came out better than expected this morning as well. Pending Home Sales also beat expectations. That makes it three to one for news supporting the bull side today.

The VIX has a healthy pullback in the making today at about -7%. The VIX is finding support at the 50% Fibonacci Retracement Line. The TICK is surprisingly neutral and the TRIN is reading slightly bearish. With the divergent action in the market internals, this pop today looks like a sympathy bounce.

The SPY is finding resistance at the 50% Fib line of a recent sell off which also happens to be the round number of 105 and the bottom of Thursday’s candle. The Russells (IWM) are still in a confirmed double top. The Financials (XLF) are relatively strong today, which might be attributed to CIT Group’s (CIT) bankruptcy. The Nasdaq (QQQQ) and Russells (IWM) are showing relative weakness intraday.

In general, I am picking up short positions and will continue to do so if the markets stay bullish. Today’s action is looking a lot like a sympathy bounce (much like last Thursday). I plan to play the downside with a basket of inverse ETFs (most likely: TZA, SPXU, FAZ, EDZ).

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Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Check back this evening for your Post Market Analysis.

Happy Trading,

Jason

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The SPY monthly chart closed below my thick red trend line. SPY also broke down out of its rising wedge on the daily chart. IWM has a confirmed double top formation on the daily chart. The Nasdaq (QQQQ), Russells (RUT), and Financials (XLF) have shown significant relative weakness lately which is important because they are often considered leading indexes.

I made a couple of day trades this week. I had a 5% gain with SPXU on Wednesday. Played TNA for a healthy profit on Thursday. Much to my regret I sat out Friday. However, I am mostly in cash, so I am content with my neutral position (especially because I am not net long). I do plan to start picking up short positions on Monday morning and throughout next week.

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The markets are looking very bearish. Please do not read this the wrong way. I am not excited because stocks are declining and wealth is being destroyed. I am excited because stocks are moving quickly and in an increasingly decisive manner. I like to couple fundamental analysis with technical analysis, and the fundamentals have been screaming at me for over a year that stocks should go down. Now, finally, after more than six months in a “bull market” or “bear market rally,” the technicals are joining in on the bearish chant.

Do not let this scare you if you are a new trader. There are many ways to play stocks to the downside. The most simple play in a bear market is to move into cash. If you do not own stocks, you cannot lose money as prices decline. In fact, your broker most likely pays you a tiny amount of interest on your cash; you could also buy short term bonds. Many traders will short stocks in a bear market (sell high, buy low). If shorting is not part of the trader’s strategy, buying inverse ETFs is a valid play to benefit from downward moves in select groups of stocks or indexes. Options traders buy puts in bear markets to make money on the downside.

As you can see, there are plenty of ways to profit in a bear market. If you want me to explain a strategy in greater depth let me know. Otherwise, I will explain strategies at my discretion.

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Capital preservation comes before profits.

Happy Trading,
Jason

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No trades for me today as there is too much uncertainty at this point. If SPY breaks down out of its high base I will start picking up short positions (most likely FAZ, TZA, and/or SPXU).

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Thanks for being a part of Swing-High.com. Always trade with a stop loss and manage your risk appropriately. Check back later today or tomorrow for your Post Market Analysis and/or Weekend Review.

Happy Trading,
Jason

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This morning, a couple major economic reports (GDP and Jobless Claims) beat estimates. Keep in mind that much of the GDP increase can be attributed to government involvement and that detracts from the significance of that GDP number. Keep an eye on the economic reports due tomorrow morning. The big ones are Consumer Sentiment and Personal Income and Outlays. Also due tomorrow morning are the Employee Cost Index and the Chicago PMI.

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Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage risk appropriately. Trade carefully over the next few days. There is a plethora of uncertainty in the markets right now, in either direction.

Happy Trading,
Jason

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So is this a sympathy bounce or a swing low? There is no confirmation either way at this point in time, but confirmation may come tomorrow or early next week.

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Last night I dumped SPXU for a healthy profit on the day (in at $44.02 out at $46.22 for a 5%+ gain). I thought it would be prudent not to hold that position over such big economic news. I was proven right today and my “insurance” paid well. This morning I traded TNA long from $38.27. I was stopped out at $38.75 on a healthy bull pull back which leads me to believe that my stop may have been a bit too tight. The reasons behind my stop decision are under consideration.

Thanks for being a part of Swing-High.com! Always trade for a stop loss (even if you get stopped out) and manage your risk appropriately. Check back this evening for your post market analysis.

Happy Trading,
Jason

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Things are looking extremely bearish going into tomorrow’s trading session. Keep an eye on the GDP and Jobless Claims reports that are due at 8:30 tomorrow morning. These are major economic reports (especially GDP) and can act as a catalyst in continuing the downside move or can cause this sell off to slam on the breaks and reverse hard. It is pretty much do or die time for the bulls. Either we get a swing low here, which still would not be very bullish because of all the deterioration we have seen in the technicals during this sell off, or it is game on for the bears.

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Things are getting ugly out there once more. At this point in the markets it would be prudent and safe to wait a few more days for conviction to the downside before going all out short. Keep your heads down traders. Remember to always always always trade with a stop loss and manage your risk appropriately!

Thanks for being a part of Swing-High.com! Let’s continue to make some money.

~ Jason

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