day trading recap 11/09/09

Where is the Volume?

The only part missing from the market making new highs is the fact that we don’t seem to have real volume behind the volume. If you look at the SPY over the course of the last few months, you can see that the markets have gone down on higher volume (a usual sign of distribution) vs. day that the markets are up (for instance the SPY traded 142mm shares, vs. the avg volume in the last few months of almost 200mm shares). Granted the fact that only the Dow Jones has made a 52 week high today may be the reason for the lower volume in the SPY and NASDAQ; tomorrow we need to see all three markets take out the 52 week highs, ideally on higher volume, other wise we may start to see the classic set up for a sell divergence in the markets.

 

 

The one sector that lead the way higher in September, the financials, they need to start performing better for this rally to stick. Earning seasons is coming to an end, so plenty of number crunching has taken place with the analysts; the only sector left to report is the retail sector. For the most part analysts have not lowered their expectations going forward… so the only variable still missing from this rally is the volume… I’ll be looking for that tomorrow and the rest of the week.

Gold up, Jobs Down$

Gold futures finished at an all time high after surpassing $1100 an ounce earlier in the day as unemployment topped 10.2 % in October, the highest in 26 years. The dollar fell as it became clear that the Fed will not be able to raise interest rates any time soon. This however, did not give much clarity to the stock market today. Volume was light and lacked a true direction. It was promising for the markets that the jobs report did not cause a sell off, but rather the markets held tight and once again traded above 10000.

Today we witnessed many of our own traders try to make something out of nothing. There was no clear order flow for most of the day, yet many were trading actively, causing nothing more than frustration and a negative p and l. It is these type of days when discipline is put to the ultimate test. It feels as though stocks want to move, yet they never really go anywhere. If you are having a hard time deciding whether you want to be long or short and you are flipping back and forth, then you should in fact walk away and do nothing.

As we enter the last couple of months of the year, we expect more of the same. Many days in which there will be no clear direction and days were there is extreme volatility. On the days of extreme volatility we need to be diligent and take quicker profits and quicker losses.

$Debbie: Where should our focus be on this challenging first week of November’s trading?

At the end of each day, moments of “what the heck happened today” or thoughts of “I can’t seem to trade myself out of a wet paper bag” flood the minds of developing traders like myself.

As is always the case, Debbie looks back at the charts for answers. In this case the SPY tells the whole story.

Monday (2nd): Spy opens strong, takes out opening range,  turns and sells off breaking previous day’s lows, loses its mojo down, and bounces back up and trades in the daily range from around 1:00 PM ON.

Tuesday (3rd): Spy opens in the middle of the previus day’s range.  The days price action  starts, remains, and finishes inside the day’s price action which was inside the previous day’s price action.

Wed (4th): Spy gaps up (above the previous day’s price action and trades in its daily range all day and then gets wild and crazy due to FOMC announcement. But despite announcement price action remains inside the day’s range.

Thurs, (5th): Spy opens strong, breaks out of opening range, trades sideways from 10:45 till the end of day making highs by a few cents at best and then pulling riught back into the days range. At 3:45 ish the Spy took out its high of day and closed close to it.

So, basically we have been range bound and even when there is movement such as in yesterday it certainly cannot be considered clean price action.

The bottom line is much of the opportunity presented this week has been stock specific and/or available but whippy.

If a trader kept losses small or has small gains then I would consider that a success.

Where should our focus be?

We need to keep focused on the important thing which is ….

With all of this challenging price action presented this week there is surly some  nice, smooth, methodical price action is right around the corner . Our job is to keep things tight until then and then kill it when we get it!!

Profitable trading all!

Debbie

$Debbie: Opportunity Missed When Simplicity Is Overlooked

After reflecting on my first three days of trading in November, I have once again been reminded of one important word. That word is…..

SIMPLICITY

Specifically, this first week of November 2009, has been rocky. As a developing trader I feel a little pushed around and a bit dizzy from all the up and down movement and mixed messages in direction.

The first day of November I traded well, followed by the second day where Debbie put on a few good  trades that did not follow through and a couple more that she got a little stubborn with, followed by today where Debbie took some heat, fought back, and ended the day with a little scrape.

While doing my homework, I realized that each day there has been opportunity and Debbie has been looking so hard for the opportunity while being afraid she’ll miss it and trying to make sure to check that all “things” line up for the almost perfect trade that when the actual opportunity arises Debbie is either late to the party or misses it all together.

The example today was HIG. Debbie got pieces of it but not what she should because she was late to the party.

The only thing that anyone would need to identify that HIG was the place to be short today is big, red, candles.

 As long as someone knew Red+Candles=Sell and keep selling as long as the candles remain big and red then that someone would have made their month in P/L today.

The point here:

Keep things real simple so that opportunity does not pass you by. Sometimes it really is as simple as

 RED+CANDLES=SELL, SELL, SELL

 

Profitable trading all!

 

Debbie