Seeking Alpha

Chart Swing Trader's  Instablog

Chart Swing Trader
Send Message
Hi, I am a 33 year old part-time trader that started this website as a way to improving my skills as a trader and also sharing my thoughts on the market. I am a follower of the CANSLIM method of investing developed by William O'Neil, founder of Investor's Business Daily. I have adapted this... More
My company:
Chart Swing Trader
My blog:
Chart Swing Trader
View Chart Swing Trader's Instablogs on:
  • State of the Stock Market - 8/25/10
     A volatile day today on Wall Street, but a positive one for the bulls, as the trading was very similar to yesterday with the exception of the final two hours.   The bears followed through on the late swoon Tuesday by pushing stocks lower in the first half hour of trading, but like Tuesday, the bulls did bounce back and close the opening gap by lunchtime.   Stocks drifted lower for the first part of the afternoon, then bounced again.   This bounce, however, was much stronger than yesterday's, and instead of fading into the close, the bulls were able to push stocks higher in the final hour and finished with gains.   Volume looks like it will be a good bit lower than yesterday.

    Technically, what happened today in the afternoon what was I expected to happen yesterday afternoon, with the bulls taking charge a bit and putting bullish tails on virtually all the indices and ETFs.  The Russell 2000, which I showed yesterday holding its July lows, never broke yesterday's lows today and looks alright.  Financials did undercut yesterday's and their July lows, but closed way above and that is positive.   The S&P and Nasdaq both also undercut yesterday's lows and finished positive for the session.   Overall, the potential is definitely there for a bounce given these bullish tails, but it is not a certainty.

     Russell 2000
    XLF

    The reason a strong bounce is not a given is because there is a lot of overhead resistance for the indices to now deal with, and that is what I will be paying attention to over the next few days.   My eyes will be closely watching the 9 day moving average, which acted like a blanket the previous two weeks on any bounce attempts we saw.   I am also watching the 2155-2160 area on the Nasdaq as that former key support could easily become key resistance. 

    Nasdaq
    Charts from Telechart, Courtesy of Worden Brothers, Inc.

    I was stopped out of my position in PWER this morning at $9.43, giving me a 2% loss.  That proved to be the low for the day, which was frustrating.   I do believe that getting stopped out and immediately watching your stock move back up is one of the hardest things to deal with psychologically as a trader.  

    For my trading, the situation the past two days was quite frustrating, but also one of those ones you really can't do anything about.   I was a day early with my timing in terms of a potential bounce and when I got stopped out of all of my long positions so quickly, I was in no state to hop right back onto the horse and try to ride some longs again - I did not trust the bounce the second time.   The sell off late yesterday put too much doubt into my mind about a bounce really occurring and being worth playing, so today I did nothing.   I will probably do nothing the rest of this week to be honest.   My timing was off by about 24 hours and looking back, I probably would have traded the same way again if the situation arose exactly the same way. My idea and thought (cover shorts and go long) was correct, but I just acted on that thought a bit too early.  

    You are always going to make mistakes as a trader and one way I know I have grown personally over the past year or so is that those mistakes don't bother me anymore.   It still sucks to make them and miss out on moves, but I accept them and move on, all the while hopefully learning something from them.   If you can't accept mistakes and let them eat at you, you will never grow as a trader and never reach your full potential.  

    I start back at my full-time job tomorrow and with meetings all day, my trading will change a bit over the next few months.   For any of you that pay attention to my tweets on Twitter, there won't be too many during the day anymore.  As for my trading, I am 100% in cash right now and will stay that way likely for the rest of this week.   Today was certainly bullish but I don't think it guarantees anything.   A relief bounce here could last 3 days or 3 hours and you just have to watch carefully over the next few days for clues as to which of those two it will be.   I think a lot of traders are expecting a nice bounce which is one reason I am not totally convinced it will happen.   We'll see I guess.   Take care and good luck Thursday.
    Tags: PWER, XLF, SPY
    Aug 25 4:15 PM | Link | Comment!
  • State of the Stock Market - 8/24/10
    A wild day on Wall Street today, as stocks gapped below key support to open the session and sold off hard for the first half hour of trading.   From there, however, the market bounced hard all the way into lunchtime.   From 11:40 until 2:40, the market pulled back again, but then another soft bounce took place into the final hour.   Once again, though, the bulls showed how weak they are, as the bears took control again at 3:35 and sold the market back off into the close.   Volume should be heavier than yesterday.

    Technically, a lot of the indices I follow are at different technical stages right now.   The Russell 2000 for instance bounced off its July lows this morning nicely and still is oversold, so a bounce materializing there looks somewhat promising.   Financials are very close to their July lows but have not officially tested them.  The Nasdaq on the other hand gapped below the key support around 2155-2160 (mentioned numerous times over the past few days) and has quite a ways to go before challenging its July lows. The S&P tested its mid-July lows around 1056 but could not close above that level and still has a ways to go before testing its July lows.  So overall, a mixed bag - we could bounce here, but given the weak close, perhaps the morning bounce was about all we are going to see from the bulls.   How's that for taking a stand, huh? 
    S&P 500
    Nasdaq
    Russell 2000
    XLF

    If you follow me on Twitter, you know that I made quite a few trades today.   Going into the day, I was quite happy to see futures down so much as I was (and have been) heavily short the past week or so.   I also knew that in this summer market, where breakdowns were "good" and breakouts were "bad", it doesn't pay to hang around a trade too long, so when I saw the early action, I decided to take profits on all of my shorts.   I covered LVS for a 7.3% gain, AAPL for a 4.25% gain, and AMZN for a 2.2% overnight gain.   Those are still not the type of gains I aim for on trades, but in this market, I'll take it.   My main account is up about 7% over the past week as well and I can't complain about that.  

    At that point, after using a few scans from Telechart that showed the market quite stretched and individual stocks quite oversold, I decided to put some longs on with tight stops.   I entered PWER at $9.63, IDT at $15.32, and IDSA at $13.65.   Using Telechart, I was able to simply pull up my main momentum scan (for the strongest stocks over the past six months), sort them by RSI (2), and then found these three that were all stretched and in the case of IDT and PWER, very close to support near their 50 day moving averages.   IDT did not work out, as I was stopped out at $14.94 for a 2.6% loss.   I was also stopped out of IDSA late at $13.39 for a 2% loss.   I guess I would have been better just stepping aside after covering my shorts but you're always going to make mistakes as a trader. 

    I'm not sure exactly where we go from here - around 3:00 I really expected a further bounce tomorrow, but that was a very, very weak close and I am not so sure now.   With one long position and no shorts, I am leaning slightly long, but that's strictly a guess.  My PWER trade has a stop in place and my risk is limited.  A move even lower than today with some real panicky selling coming in would not shock me and if it happens, I'll just be in cash and feeling regret that I covered too quickly.   The market is always trying to trick traders, and with that close, there is a good chance that it tricked me early in today's session.  We'll find out tomorrow.    Good luck Wednesday. 


    Disclosure: Long PWER
    Tags: PWER, LVS, AMZN, IDSA, IDT, AAPL
    Aug 24 4:22 PM | Link | Comment!
  • State of the Stock Market - 8/23/10
    What started out as a positive session turned into a very bearish one today on Wall Street, as stocks rose early for about 20 minutes before falling hard and giving up all of their gains and then some.   Around 11:00, they found a bottom, but the bounce was very weak and very slow and ended as the final hour started, with stocks falling again into the close.   I don't have the final volume totals but it looks close to Friday's levels.

    Technically, the 9 day moving average proved to be important as both the S&P and Nasdaq climbed up to that level almost exactly before reversing lower.   Right now, the markets are below all of the moving averages I use and until they get above them, I can't even think about getting long.   We're still forming a range here, particularly on the Nasdaq, and with the moving averages forming the top of the range for the S&P, I think it is going to be much harder for the bulls to break us out of the range than it will be for the bears to take us lower.    

    I think the Nasdaq holds the key to this market over the next few weeks - the 2155-2160 level is of utmost importance for the bulls right now.   This number corresponds with the July 20 low and has been tested now four times in the last two weeks if you count today.   There was a subtle difference today, however - the previous three times, the market bounced right off that number and closed a good bit above it.   Today it closed at its lows.   That's why I am expecting a breakdown below that level soon.   The more something gets tested, the more likely it is to eventually break, and I think we're getting near that point.  


    We are still in the midst of summer trading however, and because of that, I do worry of another whipsaw on a break through the lows shown in the above chart.   I said Friday that this is a market full of weak bulls AND weak bears.   Today certainly proved the weak bulls part.   The bears have another opportunity here but have to advantage of it.  

    I made one move early in today's session, covering BIDU at $80.41 for a 4.75% gain.   I almost covered my LVS short pre-market as it looked to be opening above my tightened stop loss level, but I held to see what the open would bring and because of the fade, I still have both AAPL and LVS short and will continue to hold them, although my stop losses will be tightened to breakeven after today.   AAPL in particular looks poor here as it started to breakdown from a bear flag.  In hindsight, I should have kept BIDU but I was expecting a bounce around the 8/12 low.   I did start a short position in AMZN near the close today at $126.75 - forming a bearish wedge here and if the Nasdaq breaks down, I think this will follow.  

     All Charts from Telechart, Courtesy of Worden Brothers, Inc.

    Good luck tomorrow - hopefully you have playing defense since August 11 and haven't been hurt too badly with this choppy move lower.  My numbers are still bearish and until we get above the moving averages, there is no need to try and be a hero on the long side.   We should be able to tell tomorrow if the bears are stronger and ready to take over the market or if they are just as weak as the bulls.   If so, we're in for more chop.   Take care.


    Disclosure: Short LVS, AMZN, AAPL
    Tags: LVS, BIDU, AAPL, AMZN, SPY
    Aug 23 4:28 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Most Commented
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.