Monday, February 28, 2011


hypothetical trade:

gap down --


starts to recover, pulls back
at PRECISELY 11 AM - creates a 3rd touch on lower trendline -- possible entry with .10 stop - goes on to move 1.30 - with no pullback

key: waiting for 3rd touch, waiting for 'on the hour' moment.
also: internals were mixed -- leadership was notably weak - to support going short.  Gap up open (in IWM) exhausted buyers.

Friday, February 25, 2011


wait for whole number area to break -  then some kind of dragonfly candle - or enter later at trendline break.  Should be fast and immediate - no heat / no waiting.

Wednesday, February 23, 2011


mostly the same:

every trade must have a stop that limits losses --  my worst trades are my 'highest conviction' ideas.  I need to prevent myself from talking myself into holding for extended losses.

We are now in a correction so technicals won't work.

Must avoid holding thru these times --  fear taking over.

I have the capacity to rebuild...  must be slowly.  Must not add to losing positions.  Must see the market structure.

Learn from losses. Only way to move forward.

Friday, February 11, 2011

missed runs


why: too fearful, wasn't patient enough to wait for the big up candle.  All were acting well.

Solution: start with smaller position. Maintain stop area (break of clear support) then add as strength is seen.  Accept slightly larger drawdown. 

Must accept losses to make gains.

Saturday, February 5, 2011

twitter quote

You can't stop the waves, but you can learn to surf.

This is the essence of technical trading.  You are very much a surfer on the ocean, waiting to catch a big wave.  Sometimes you are carried far, sometimes you fall off.  Sometimes the wave dies as soon as you get on.  But you accept the (hopefully small) losses and keep trying.

The waves that will carry you far are the strong stocks with powerful volume.  Volume is key.  There are other elements like a small float and sometimes a high short interest that can create a powerful move (see SFLY).  Hot sectors can also push stocks.  ARMH sells components for iPads -- the stock trades at over 10x revenues but it won't slow down.  It will of course, slow down eventually -- but this is the nature of the ocean -- always changing.

You never get attached to these stocks.  How do you attach to a wave?  You ride the wave, you stop riding the wave, you ride the next wave.

Changing, changing, always changing.  But done right, your portfolio moves in a single direction.



except for Monday's small win, I did not accomplish my goal despite many opportunities.  I had candidates lined up each day.  High volume story stocks like  RAX, SFLY, CRUS  --- these are the kind of hot stocks that are safe to trade intraday since you can easily risk $100 to make $300 - $500 on each trade.  These trades are actually quite safe -- the strong volume is the wave of power that keeps them moving up on each breakout. 

They appear unstable -- and they will be -- but for the day, the only way to make money is to go with the trend when the volume is there.   Instead, I dabbled in TZA and gave away profits.  I shunned strong stocks.

This market is currently in a bubble.  The hot stocks are very very hot.  The rest are not.  Money keeps searching for a home and cash is not king.  I am probably early in being short with TZA.  I knew the first week of the month would be strong -- it always is.

The negatives are creeping up but not there yet -- the volume is light.  A few leaders are really broken like AMZN.  OIH is overextended.  The dollar has woken up.  Nonetheless, there is hot money pouring into tech, software and chips in particular.  Valuations are beside the point.  QQQQs hit a new high but AAPL peaked in mid-January.  The light volume is the issue -- all good waves require power and without more power, the danger of a fast and sudden pullback increases dramatically. 

My plan now is to remain heavily in cash and trade power stocks intraday.  I get the sense most people are happy to be long -- fear is gone... and there's plenty of stocks to play.  But I remain cautious until we see more participation from the market.  Breadth is bad which is another warning sign.  But waiting for a correction is futile.  However, I think the dangers of a pullback now have increased greatly so I will not hold positions either. 

Next week - I want to again attempt to make more money daytrading. This means:

having a short list of hot stocks that are moving with heavy volume.  Buying these stocks on trendline breaks - just like on a daily chart.  Key is:

1) Story stock in strong sector
2) tight float
4) expensive price -- will seem ridiculous in value
5) up day in market.

Tuesday, February 1, 2011

today's weakness

I bought AIG after noting a 3 bump support pattern.  I bought, set a tight stop -- waited... stock began to break out.  I grew fearful since the move took a while to materialize and didn't want to get stopped out.   The entry was correct and I gave up 1 point upside.

I bought AMSC -- based on volume / ER positive guidance.  Waited for pullback. Entry was okay.  Stock stalled and I sold before it hit my stop.  The stock did indeed pullback through my stop but eventually ran .80 from my entry.  The stop was a bit too tight and I was far too fearful of  getting stopped out.

I bought CYOU yesterday and sold too early and did not hold through strength.  Stock ran 5 points beyond entry. 

The fear and lack of confidence is costing me big gains.  Meanwhile, I patiently sit on losers.  I got out of SOL  for a gain but first took a large drawdown with no plan. 

I feel comfortable daytrading as I don't have to hold overnight.  However, I need to be able to let winners run and let go of the fear.  The plan is the plan.  My losses are always contained but I still don't want to lose.  I need to accept losing so that I can allow winning big.  

The other thought is to accept what you see.  Strength pays -- strength always pays and a trend follower must follow.  Accept what you see.  Allow the market to call direction.  Ride the wave without emotion.