Posted on July 28th, 2009 by
Mojo
‘The market moves to confound the most people’ is certainly an appropriate comment on the past couple of weeks. Technical signal after technical signal has been broken with more and more bullish movement. Even those these are low volume times and notoriously difficult to trade I’m still struggling to not get caught up in the emotion of it.
So where do we sit today? Looking bullish and a bit overextended.
We have several bullish indicators shown on the chart. Typical behavior from here would be to see a slight retracement down to 8900 and continue to the upside. Be careful not to go crazy and put on a bunch of bearish trades as we drop a little. With low volume, lots of junior traders, and little idea of what’s going to happen I would expect that volatility will increase and whipsaw will continue.
My calendars should do well and I will move my iron condor further out.
All the best,
Mojo
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Posted on July 17th, 2009 by
Mojo
A little more than a month ago we were talking about our approach to the 200 day moving average. In particular how we were going to bounce down from our first touch. That happened around Jun 8th finally finding support at about 8250 on the 25th.
After a another short run up and slightly deeper dip to the downside we have now reversed hard and we are sitting just under the 200 day moving average again.
Chances are good that we will bounce away from the 200MA again but those probabilities get less and less on each attempt. If we do bounce down I wouldn’t expect too deep of a retracement (8200+).
I’m going to use this downturn as an opportunity to closed down some bullish trades for profit and move my bearish trades further out.
Mojo
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Posted on July 14th, 2009 by
Mojo
If you are trading iron condors in the RUT right now be very careful. Expiration week is usually bullish (70% of the time) but the RUT is setting up a minor bearish reversal. Take a look:
We have been moving pretty slowly to the downside so I would expect the same. However, with Summer in full swing, low volume patterns are weak. If this pattern breaks to the upside this week expect some big moves.
Bottom line: If I get close to my profit targets on my ICs, I will go ahead and exit.
Mojo
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Posted on July 7th, 2009 by
Mojo
The low volume, crazy, mixed markets of Summer continue. By leveraging my June 11th post about the bearish forecast for the Dow I’ve reached a new account high and I’m closing in on 15% YTD. I’m using a three legged approached that consists of discretionary day trading for days that are lightly trending, automated day trading for strongly trending days (where system trading does well), and then positive time decay / delta neutral trades (iron condors and calendars) that work well when the other two don’t.
Even though in these low volumes days technical setups are less valid we can still make money by trading carefully. The Dow is looking weaker setting up a descending triangle that can rattle up or down between 8500 and 8300 pretty easily. Once it breaks that lower support the Dow looks to finish in the 7600 range.
Although this is at conflict with my ‘gut’ instinct that I believe we will be more bullish than this I still want to pay heed. Whenever my technicals and guts are conflicting I consider this a lower probability environment and will either pass on the trade or size down. Remember its more important to sit and do nothing than it is to try and force a trade.
I hope everyone had a great fourth!
Mojo
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Posted on July 1st, 2009 by
Mojo
Well, we are clearly in the summer doldrums. SIGH! Low volumes, weird patterns, and lots of frantic activity in the morning followed by pretty sleepy afternoons. Monday was a nice run up and then ZZZZZ. Tuesday was a nice run down and then ZZZ. I used yesterday’s run down and increase in volatility to lock in the lower strikes on my iron condor for August. Fills were very tough so I ended up having to break my vertical into two separate orders to get filled.
If you are day trading, be sure to stick with the morning activity and then take the afternoon off.
Mojo
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