No News Monday Recap – 1/24/2010

As 'No News' Monday ends, and the markets are closed briefly, I like to sit back and review the charts.  I wasn't expecting much for the day, but somehow in the in morning I got it in my head that I think the market should sell gradually down.  I'll tell you why later.

You know what that means, the market doesn't give a 'F'  and rips in your face.  I want to give you a summary of what was going through my head. 

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I sold nearly ever pop, and all was going well until 10:30 AM EST, at that point we just started to stair step up.  I kept selling pops, taking 5 tick profits.

Next thing I know I am adding to a losing trade.  I stop out when we break the high of the day.  So I set aside for lunch and brew over why I just gave back my AM profits, grab some lunch.

I come back, review the chart, and decide to sell short with a stop somewhere above 780.   Now, most new traders might look at this chart and say why are you selling, thats bullish.  Wrong.   Look back a few days, weeks, and that 780 was an area of contention.  It's also R3 on the pivots.

So I sell into 780, and we drop back to 778, nice.  Take 5 ticks, 10 ticks, 15 ticks, flat.

We rally back to 780, so I'm thinking I remeber those days when everyone bought all day and they sell at 3pm maybe 3:30pm if they are being greedy.  Sell it again.  780.

And we aren't moving.  Just sitting. 3pm no sell. we break above 780.  Big bids.  I hate taking loses.  I sit tight.

We drop to 779.  Do I take 5 ticks?  Now I am being greedy, I want my morning profits back.  Back to 780, a few ticks over.  

Now, I think 'guess I should have sold'.  I add a few contracts.  Now I am just being obnoxious.  I fully expect to get slapped.

3:19 PM, we break 779.  R2 is my target. and bam 777 prints, close enough for me. Flat. Profits. Happy. I win Mr. Market.

 

Looking back its easy to say , o' triple bottom I would buy thee.  Except bottoms look more like a cliff.

 

And you know what?  This is bad, stupid trading.  The whole day I am fighting the market as it rallies. I add to a losing position. BAD TRADING.

What's worse?  I am rewarded for it.  For breaking my rules, I am rewarded. BAD TRADING.

What should I have done? Looked at the chart. Got Long. Stayed Long. Sold into resistsance. No Stress. GOOD TRADING.

 

 

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Ok, so that was my thinking. Why was I adamant about selling short?    Silver. Gold. Oil. Nat Gas.   They were all selling, commodities were selling.  Euro was in rally mode, cognitive dissonance.

What happened today?  The Indices found buyers, commodities did not.  We are still balancing.  Topping.  Consolidating.  Faking you out.  Trading.

I think the move in the Indices SPY, DOW, NQ, RUT was due in part to the currencies.  I still can't explain the sell off in commodities, though.  

Why aren't the commodities in rally mode with the USD falling ?  

 

 

And the currencies, I loath thee.

 

 

 

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