Wk21: Market Recap

“Sell in May and go away” holds true for investors once more as heavy selling continued last week, the biggest monthly loss since February of 2009. Volume was well above average on this past months selling and with all the news overseas, investors are shaken.

Why do we care about the “investors” if we are short term traders? Investors are the ones that move the market on a month to month basis, while certain day trading and high frequency firms have the power to move the markets intraday, the longer term trend is established by the longer timeframe investor.

As short term traders, the first thing we want to do when starting a new day, week, or month, is to identify what trend we are currently in on the longer timeframes and work our way down to the timeframe in which we trade.

Wk22: Market Forecast

In the week ahead look for these news announcements to act as potential market movers…

This week is sure to shed some light on the next longer term move. If we continue to sell off, massive panic could ensue, however I do not believe this will be the case. It would make sense that we see 1125 on the S&P, at least before we see 1040 again. This would be a great opportunity to add some swing shorts and take profits on longs. Below are the pivot levels for the week and month.

Our line in the sand for the week will be $1122 bullish above, bearish below, meaning if we break above this level, we will look to double top on the S&P, if we come up to 1122 and fall back down we will look to a target of $1005 on the S&P, yikes.

Wk22: Watchlist

These are some of the stocks we’re long and short going into this week. We will follow up in the week with some additional names to establish new positions in.

Bullish: AKAM, CIT, DTV, DNDN, NEM, SNDK

Bearish: DIA, GRMN, PBR

Daily Reflection: 05.27

Let's not load the boat long just yet. Grabbing a few shorts as we inch higher is a smart play as we continue to see lighter volume on the rallies. Tomorrow we should see some decent trading in the morning then a very slow afternoon session as trader's head out early for a 3-day weekend.

Wk21: Watchlist

Longs: ABX, GG, NEM (Same sector), AKAM, DTV, CMG, DAL, SNDK, NFLX, VCI

Shorts: GRMN, LEN

Daily Reflection: 05.25

Have we hit a bottom? Today’s price action sure seems like it. We opened the day at -140:1 breadth and closed at 1:1 grinding higher all day. The market is heavily extended to the downside and has held support at the 2010 lows. When we see a daily hammer candle pattern (on the SPX) as large we’ve seen today, it is common for us to gap higher the following day. If this does occur, we will be looking to add to long positions and enter new positions at a pullback to tomorrow’s gap fill of 1073 on the ES.

Daily Reflection: 05.24

With a VIX near the 40s, we are expecting a lot of volatility this week. A lot of news announcements can act as catalysts, not to mention the situation with the EU. We remain delta neutral.

Wk21: Market Forecast

Many good nuggets of information can be found in this weeks daily reflection posts. This week we are expecting some sort of bounce. News announcements can be found here and include GDP on Thursday. Volatility remains high so be prepared form continued large intraday swings. We are expecting volatility to remain high through the summer. Volume remains higher on the down weeks and lighter on the up weeks.

Daily Reflection: 05.20

First the scare, then the tear. Last Thursday’s price action was essentially mimicked today only with less violence. Below is an excel spreadsheet I use to record the market internals. The important columns to note are the Trin and the NYSE % change. The light orange dot represents a bearish Trin close on the day, the following day we had a bullish Trin close, but a bearish market. This is an extreme warning signal. When we see Trin readings above 2.0 and fail to rally the next day we are headed for an extreme slide which happened the following day (see red dot).

Where to go from here? We continue to stress the important of remaining delta neutral or at least hedged if you are delta long. We will be looking to add shorts/puts on any bounce.

Daily Reflection: 05.19

A choppy day today, but again nice size intraday swings on the /ES. The 6E was a nightmare to trade and we will be treadding lightly for the remainder of the week. We have three scenarios for tomorrow.

1. If we move up to $1123 and and sell off, we will have a downside target of $1088.

2. If we move up to $1123 and continue up through $1129 will have a bullish target of $1203.

3. If we open and do NOT trade up to $1123, but sell off from the open breaking our 1098.75 lows, then we will trade back down at $1056.