711 replies to this topic

[CLK]

I think trading successfully requires 80% price following/reactionary trading, vs. guessing where turns are going to happen. Taking a position looking for a turn usually forces me to hedge which creates an almost impossible chance to profit when time errosion is happening to both sides. Most of the time when you get a turn you will get a retrace to minimize the drawdown before reversing positions. Most big gap downs get a retrace if not that day then the next. The market turned down on the 17th well ahead of the 21st big sell off and there was no daily turn up prior to the 21st. I think micro managing too much, hedging, trading too often and anticipating instead of reacting just erodes accounts. I do have some eod daily systems that at extremes at least warrant standing aside for that day if the trend is still intact. I loaded a bunch of March 31 237 Calls when if I had checked my daily would have shown me we were likely to have a down day, I could have avoided that by selling near the highs or just going flat.

Edited by CLK, 01 April 2017 - 04:01 PM.

[lawdog]

Thanks, CLK. There are lots of things to consider. I try to anticipate a bit, but as I have often posted, making money is generally about reacting properly, as you suggest. I will anticipate with smaller positions, but when the anticipation begins to be confirmed, I will increase the bet. Money management is key. You can be so right and lose so much money. I hate waiting for the retrace, but I'll bet if you look at most turns, the retrace happens more often than not. Still, when I see something coming, I hate to wait for it, which is one of my trading weaknesses. 

 

As for today, the bulls are probably thinking this is just a normal weak hands Monday selloff, maybe to a double bottom. But I think it may be more than that. The bounce from last Monday's opening lows has been very weak, and yet the oscillators, etc. look like there was a strong rally. So a lot of work was expended for very little gain. Before this is over, it could turn out to be a triple digit loss in the spx. And who knows, 2400 may very well be at least an intermediate top, which won't be seen again for some time, e.g. autumn.

 

As I have written numerous times, the ultimate direction is determined by how many points are gained in rallies and how many are lost in declines. That sounds almost fatuous, but the point is there is much to be learned by looking at how much effort goes into an advance versus a decline. I see the market having a much easier time falling than advancing, at least based upon the past 5 weeks or so. The market perhaps has perfection baked in, and we know that perfection rarely happens.

 

The trick here will be knowing when the decline ends. I am looking (hoping) for some kind of washout with extreme oversold conditions. 

[SemiBizz]

 

Financials outperforming to downside...

[lawdog]

Thanks, Semi. 

 

Today is a disappointment to both bulls and bears; bulls probably lost some money and bears, heck we can catch a break with any kind of decline. But the initial declines often start modestly with the bulls still buying the dip, but if they can't get the market moving to new highs, we just might have something going to the downside. Predictions are very hard to make, especially about the future. One hour left in the trading day and we are down about 6 spx points. As CLK wrote above, 80% of trading is reactionary. What is my reaction? I think the market wants to weaken my resolve to be short, so I will give it some more time. First day of the month, especially April, should be an up day, so perhaps it is the bonus money and 401k money that is providing the lift. An overbought market is not suddenly safe with one or two days down. 

[lawdog]

ff'ers are bulled up today, 7 pts to 3 based on 2 pts for fully long, 1 pt partial. still at 50% short. nothing certain yet, but setup still favorable for a decline.

[CLK]

Flipped to short 15 min. ago. Futures down all night, I think that shows up in cash now.

[CLK]

Added.

[lawdog]

I'm with you, CLK. Added 10% to my short, up to 60% short. That's getting pretty heavy and gaining confidence. The players in this market don't realize what is coming. They are buying thinking they can get out quickly if it turns. Quickly will not be fast enough. I'm looking for a truck load of bull horns littering the arena.Don't be fooled by the "strength" today. Today should belong to the bulls anyway. I don't care. If they run it at the close I will add another 10% short. This will not be pretty.

[CLK]

IWM is still on a daily sell, SPX is the most manipulated index there is I believe.

Edited by CLK, 04 April 2017 - 11:23 AM.

[CLK]

Should sell for an hour or so now at least, 15 min. STO turning.