Hammy Trades: FEED, SH, LDK, GNK, SWC

I went crazy today and made a bunch of trades.

FEED: Out at 2.93 from 2.35 (nice)

SH: Out at 72.16 from 78.63 (ouch!)

SWC: In at 4.4, out at 4.75 (nice)

LDK: In at 8.3, out at 8.15

GNK: In at 15.05, out at 15.40

Exhilarating.

At the end of the day I realized I was seeing too many mixed signs about the market. I had been a converted bull for a few hours, buying break-outs like it was 2007, but then realized that after having some fun in the water, I shouldn't forget to watch for lurking sharks. I have a feeling some of the giddy bulls around here are going to get their prairie oysters shucked off unexpectedly and ground into oblivion.

I'm probably wrong. Hopefully I'm wrong--it'd be great to see a confirmation of a new bull market. We'd need two things to set a new trend, at least according to the Dow Theory:

The breakouts I bought today will SOAR if news turns out well in the next few days. I'll catch the late train and bank less dough, paying for my uncertainty.

Spy Trends

anyone else been having a bad week?

Time to make some decisions.

When I traded into SH at 791, I stated the following:

What invalidates your assumptions? Breaking back into the last up-channel would signal another trend-change. There is high possibility of sideways action, fake-outs. We’ve seen one lower high, and have now broken the downside too. To shift this trend, we’d need both a higher high and lower low.

here is a look at my market trends in the S&P when I bought it, then (3/30/09):

Well, based on the assumptions I made when I bought it, this trade has gone kaput. However, I’m tempted to hold on to see it test the prior up-trend from Feb 9, around 870. If it passes this, then that’s a good case that the bull market could end. That would be a higher high, and to confirm the uptrend, we’d see a higher low.

This was, primarily, a channel trend, and the price action has broken out of the channel. I need to look and see how hard I should hold to the trend integrity principle: If it breaks out of the trend, the trend is likely to fail. So I look and see : How much has it broken out by? Has it broken out and re-entered before? Did I draw the channel incorrectly?

I redrew the channel. It actually works nicely and makes me sort of want to keep holding onto the short. This could be the exact pivot point for getting short:

Here is one of my lessons learned.

To restate what I said in the picture, incase the graphic is lost ever:

“The ‘channel’ trade is good as long as the price pattern stays inside the channel. There are a few things I’ve learned to keep in mind from now on: The upper and lower limit of channel trades is dynamic. Prior to each day, or each week, determine what price level invalidates your price range. Today, it was around 830. I mistakenly had 845 in my head as a sell point, but that’s the limit from a few DAYS ago. Had I sold at 835, I would have saved myself from a 23 point short squeeze, as we ended today at 858. “

I’m going to hold onto my position. The downward trend hasn’t been broken yet, and we’re at the top of the upward channel I drew. I think selling right now might possibly be the worst thing I could do.

I’ll review this in a week to see how it went.

On a separate note, keeping charts and blog posts of my trades and market outlooks has pointed out nearly half a dozen serious mistakes I commonly make. Many of them, when they’re pointed out (by myself through reflection, usually) seem obvious and glaring, but they never were until I attempted to explain my thought process. I’m definitely getting better at this. It’s just taking some time!

SPY Resistance at 784

I'm short from 791. Look to crack 784 as support, but you might want to wait until 780 (as indicated by matt trivisonno, is the level of support whose break led to the 666 plunge. )

Hammy Trade: SH

Bought 90 SH @ 78.63:

Your assumptions: This is the next intermediate leg down in the bear market. I could keep this until a)the bear market signals a shift in trend to Bull, using the dow theory, or b)until it reaches the bottom of the channel again, at which point I could take a small long position.

Time Range: The down-leg will probably last for about 3 weeks, about how long each prior downleg in this channel has taken. The recent intermediate reaction took 22 calendar days. I'm looking at the same time-frame.

What invalidates your assumptions? Breaking back into the last up-channel would signal another trend-change. There is high possibility of sideways action, fake-outs. We've seen one lower high, and have now broken the downside too. To shift this trend, we'd need both a higher high and lower low.

Target Price: $85+

Stop? I expect some volatility and upswings. As long as my assumptions are still valid, i'm not going to put in a stop. S&P 820 is currently where I'd clearly be wrong.