What next?

This blog post comes after a big down day for the market = 1.62%. We remained short going into the day even after yesterday's good rally. I closed VST/ ST short positions (read 5 under timeframes ). I still remain short on the IT position but took 1/3 off the table, following my scale out principle. The market basically boxed swing traders for the last 2-3 weeks, harassing us in the VST/ ST signals = all fail. One day like today compensates for the small losses we had in the last 2 - 3 weeks; actually not only compensates but makes the account positive for the last few weeks.

 

Anyway, what is next? What is the direction going forward?  I don't know. All I do is to follow the trend. How long this downtrend lasts? I don't know again. However, I see signs of the last phase of this down trend. One of the signs is in the chart below. We are entering an area where this chart indicates bottoming of the market. The last time I posted this chart was then . Of course, the market did rally few days later. Unless the market structure changed (from bull market to bear market), this barometer should still do good. I am not just talking from this chart's point of view. I have few barometers which are showing the same signs of bottoming. Bottoming could take few days. There may be divergence sometimes. We don't know. What does it mean to us, traders? We don't have to buy everything like crazy. Why? Price still rules. If market swings wildly, if market takes you off the rider, if you have doubt that market is going to turn, if you think you have earned good profits = fine = remain in cash till the signals change again to buy. But, please do not start buying before the market turns, that is not how it works.

 

 

Resistance is SPX 1978. Support should be around 1940 area. More to come in the next post....

 

 

Market update

VST/ ST/ IT - Turned to sell as of close yesterday

LT/ VLT - Buy

 

 

We can use today morning's bullishness to sell short SPX. Previous market update here

Market update

In my previous post, I indicated that we were rather flat going into FOMC. So, we did not participate in the rise and decline of the markets since.

Previous market update here

If you followed the previous market update or if you followed my FOMC post, you should still be good (= market did not move much either way since 1 week) and be unscathed. I closed most of my holdings prior to FOMC, so I had a 1% profit on the previous IT signal. What now?

Market update

VST/ ST on a buy

IT turned buy on 09/18 close (today's weakness should be good to initiate a buy with a stop...)

VLT/ LT - Buy

I am stressing on the stop this time because the breadth is very weak in the market. While we are still on a buy on all timeframes, this uber bullishness could turn into a disaster. Then, we could simply sell short and wait, right? Not really. We do respect price, hence we follow price. However, it helps to look around what breadth is doing to be cautious.....

Gold update
VST/ST/IT/LT - Sell
VLT - changed to Sell but we will wait till month end for confirmation

Have a good trading!

p.s: I do not have any positions on BABA now but I did daytrade on the IPO day few times for a 1% net gain on the account (not BABA position)....



FOMC Forecast

If you look at the economic calendar, there is an important announcement every single day of the week. While they may be important, I do not care for most announcements = I do my own trading based on the market technical regardless of what the outcome may be from the announcement. However, there are some very important market moving events like FOMC meeting announcement. We need not read all what is published on the announcement, as we can seldom trade markets based on announcements. In other words, the outcome of these announcements will manifest on the technical charts very soon = we begin trading at that time.

What do you do before, and after the FOMC announcement though? Like I said above, FOMC is noise to me. But, the noise can hurt us sometimes. The noise can throw the technical out of the charts, before, while and shortly after the announcement. I have seen traders say "this is a trader's paradise". If I traded on FOMC days in the past, I had mixed results with gains sometimes and losses sometimes = ineffective. Hence, I have learnt to stay out of the market starting 1 day before the FOMC announcements till 1 day after. If I participated, then it would mean I had small positions which would not impact my accounts much. I could be in the middle of a good trade which I may lose if I get out. Unfortunately, we may feel so sometimes that we shoulda participated in XYZ trade. In the big picture though, it helps to stay out of the noise. It kinda feels like fun to be the audience when every single media outlet and every trader/ investor is pretending to be panicky after the FOMC. If possible, I get the front row seats = listen to Bloomberg/ CNBC. It doesn't hurt to just enjoy the weather outside on such days though.......= take a break!

Happy FOMC day for all market participants!! :))