Home > Chart Talk, Lessons from the trading floor, Market Set Up, Trade Replays > Waiting for Money to be Sitting in the Corner

Waiting for Money to be Sitting in the Corner

Our job as traders is to make money when its available.  It is the markets job to provide this opportunity even if its 10 minutes or 3 hours.  Today many of the stocks on our list set up very nicely and many of our traders killed it today when the money was there to be made. 

As we had posted on twitter this morning, the first level to watch as resistance after the gap up was 113.25.  We basically hit the level to the penny on the open and then retested this level around 10am.  This was the first signal that the longs were not working.  Now you could have argued finding a weak stock and getting short around this level but I was looking for a little more confirmation in the market being that we were up around 100 points at the time.  We had a few traders in the office who shorted Western Digital(WDC) around this time and cleaned up when it broke the 35 level. 

The next level we were watching in the SPY was 112.77, which didn’t hold as a level and after that 112.42.  Basically the 112.50 level was holding until around 12:15.  When we finally broke I starting building a position in the weakest stock on my list which was Best Buy(BBY).  I put the first piece of this trade on with the intention of adding on to this trade when we broke 37.40 which happened to be when the SPY’s cracked the next level of support at 112.  This was an easy trade to hold as were most of the shorts at this time as the market told you when to cover when we bounced of the ever important 200ma on the daily which is 111.20. 

Today was a day where your pre-market homework paid of in a big way.  Identifying levels and knowing what you will be doing around these levels should be the majority of your pre-market analysis.  Making sense of the price action before the trade happens enables you to get a head start and build a position before the momentum move in your favor.  This way you are not missing trades but just waiting for them to follow through.  Best of luck with your trading and have a great night. 

Kyle

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