February 29, 2008
Market turmoil, But we've seen it all, Short --> $500 profits
Nasdaq Emini 100 5 min Chart
Hi,
Alot of readers have been asking me what I have been up to the past few days... I apologize for the lack of updates.. Well, if you observed, the market has been extremely range boung and volatile during the past few weeks.. So what's the best thing to do for day traders like us who can take leave whenever we want to?
Yup, I took a holiday.. :p I decided that it's a good chance for me to rest, relax and stop thinking about the market... This is good to refresh your mind and when you return,, sometimes you might find new perspective to the way you trade...
Ok, enough of my personal stuffs, today's trade is simple... reasons for shorting:
1 obvious downtrend, market gapped down and never recovered
2 Stochastics cut down.
3 Price bounced off the moving averages.
Enough reasons for me, I shorted 1 contract at 1766 and another 2 more contracts at 1756 when it broke the morning's support line.. But this turned out to be a bad decision... price did not move much further after I shorted the 2 contracts... and stochastic exhibited signals of cutting up the oversold line... I exited at 1751 with $500 profits.
PS: I might be taking another long holiday, this time maybe a month, bringing my family for a tour.. but we are really still planning it... ;)
Author Michael Taylor : 5:34 PM | comments (0) | trackbacks (0)
February 20, 2008
Closure of Gap --> $160 profits
5 min Emini Nasdaq 100
Hi,
The markets have been extremely volatile lately, I have not seen such volatility for a while now.. I would advise all traders who are new to this game, to stay out of the market for a while.. Just obseve how it moves.. Don't trade, more than likely you would get whipsawed out of your positions easily.
As Stochastics formed a double bottom and Short-term MACD cut up the zero line, I longed 1 contract at 1772 for a gap closure play... Yes, the gap did close but almost immediately, the next candle was a doji... this was bad signal for me, and I did not double up my position... I exited at 1780 with profits of $160.
Author Michael Taylor : 5:23 PM | comments (0) | trackbacks (0)
February 14, 2008
No Trade Today. Bernanke worries about recession.
5 min Emini Nasdaq 100
Hi,
The market's undecided on direction and price just hover up and down.... although on hindsight you would have noticed that there is a slight downtrend, the relevant question is whether you would trade in such conditions? There's no need to play cowboy here...
If you observed, Short-term MACD hardly ever crossed over the zero line.... and price action was choppy...
But if you really have to take a position... you would have to short when stochastics are just cutting down the overbought region.. Otherwise, it's wiser to just stay out of the market.
Fundamentals:
Wall Street retreated Thursday after Federal Reserve Chairman Ben Bernanke predicted a "sluggish" economy until later in the year and more mortgage-related losses at banks. The Dow Jones industrial average fell 175 points.
Though the Fed chairman's comments suggested the central bank is still open to further interest rate reductions, the tone was, as expected, somber. Bernanke said the housing and credit crises have weighed on the economy and curbed hiring. If the job market deteriorates, consumer spending, which is crucial for economic growth, will keep dwindling.
The Labor Department said Thursday the number of workers filing unemployment claims fell 9,000 to 348,000 last week. But after the January jobs report that showed the first net jobs loss in more than four years, Wall Street remains worried that businesses are becoming cautious about hiring and that unemployment will compound the debt problems that have been slamming the markets and the greater economy.
After three strong days on Wall Street, investors found scant encouragement in Bernanke's testimony and cashed in their gains.
"He was more bearish on the economy than he was before," said Arthur Hogan, chief market analyst at Jefferies & Co. After this week's better-than-expected report on January retail sales, investors found Bernanke's assessment of the economy particularly disheartening.
"To have the Fed come in and talk about how things could be getting worse, not better, kind of takes the wind out of their sails," Hogan said.
Author Michael Taylor : 5:59 PM | comments (0) | trackbacks (0)
February 11, 2008
No Trade today.. Why? Read on....
5 min Emini Nasdaq 100
Hi,
You might think that I missed out on a long trade today... but I have my reasons on why not to trade...
1 Price action is sluggish... If you observed, there are alot of doji candlesticks with long whiskers.
2 Short-term MACD is rarely below the zero line. Hence although it cuts it signal line... it does not constitute a powerful cut. There is not enough momentum for it price to go up.
If you think that stochastics are signals good enough for you to go long, then you are wrong. We use an arsenal of technical indicators to make a decision. Never use an indicator in isolation.
Author Michael Taylor : 5:19 PM | comments (0) | trackbacks (0)
February 7, 2008
Pending Home Sales fell 1.5%, Market up, but met moving average resistance and plunged --> $1520 profits
5 min Emini Nasdaq 100
Market gapped down today but immediately covered the gap... it further went on to recover some of yesterday's losses...and even went over all my moving averages.. I missed this long trade... instead, I was looking for a shorting opportunity... It came when stochastics and Short-term MACD started to cut their signal lines which was accompanied by a red candlestick... I shorted 1 contract at 1772 and another 2 more contracts at 1752 when price broke the resistance set up by the morning sessions... I only exited at 1740 when stochastics started to cut back up from the oversold region with $1520 profits.
Fundamentals:
Industry data released Thursday show pending U.S. home sales fell 1.5 percent in December to the second-lowest reading on record, another indication that the housing market is worsening.
The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell to a reading of 85.9 from a downwardly revised November index of 87.2. The reading was just short of the record low of 85.5 it hit in August, at the peak of the worldwide credit squeeze.
Analysts had predicted the index would rise to a reading of 88, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.
Typically there is a one to two-month lag between when a buyer signs a home sales contract and the closing of the deal. Sales completed last month and into this month should be reflected in the December reading.
An index reading of 100 is equal to the average level of sales activity in 2001, when the index started.
The Realtors group also lowered its forecast for U.S. existing home sales this year. It now projects sales will fall to 5.4 million, down from 5.7 million in 2007.
Author Michael Taylor : 5:39 AM | comments (0) | trackbacks (0)
February 6, 2008
Productivity numbers disappoints, Stochastics down, MACD Down --> $1280 profits
5 min Emini Nasdaq 100
Hi,
Market made a desperate attempt to recoup yesterday's losses but it couldnt break through the moving averages..After forming an ascending wedge, it broke down. This was accompanied by a down turn in Stochastics and Short-term MACD cutting its signal line.. I shorted 1 contract at 1794 ... You can see that price trended downwards and I was safely holding onto profits already..
There was a slight hiccup in the stochastics as it cut up the oversold line... I did not exit and I was still having profits and wanted to see what happen next, I did not expect it to go up and cut my moving averages... As expected, price accelerated the down trend and cut the support at yesterday's closing price... I shorted another 2 more contracts at 1778... and finally only exited at 1762 when stochastics cut up and Short-term MACD cut the signal line. Profits of $1280.
Fundamentals:
The Labor Department reported Wednesday that productivity, the amount of output per hour of work, increased at an annual rate of 1.8 percent in the October-December quarter, down from a 6 percent performance in the July-September period. The slowdown reflected the fact that overall economic activity skidded to a near standstill in the final three months of the year, with the gross domestic product rising at a barely perceptible rate of 0.6 percent.
Labor costs rose by 2.1 percent in the final three months of the year, after having fallen by 1.9 percent in the third quarter and 1.1 percent in the second quarter.
The increase in productivity in the fourth quarter was nearly double what economists had been expecting, while the rise in labor costs was slightly lower than expected. However, analysts cautioned that much of the strength in productivity reflected a sharp drop in the number of hours being worked by the self-employed, while the huge jump in the third quarter reflected the big increase in economic output in that period.
Author Michael Taylor : 5:15 PM | comments (0) | trackbacks (0)
February 4, 2008
Market down again. Broke moving averages, Stochastics down --> $460 profits
5 min Emini Nasdaq 100
Hi,
Market just went down and down today,, but there was not a clear signal to short. I wasn't even thinking of going long.. if you look at stochastics, you might find several signals for you to go long. But do you want to take the risk? Is the reward worth the risk? I don't think so... When price broke below the moving averages, I knew that things were going to turn sour... I just patiently waited for a chance to short...
Finallly my chance came towards the end of the trading day... when price formed something like a double top, never managing to break above the moving averages and stochastics started to turn down... I shorted 1 contract at 1837 and another 2 more contracts at 1832.. I held it all the way till the end and exited at 1826 with profits of $460.
Author Michael Taylor : 5:24 PM | comments (0) | trackbacks (0)