Market review 3/30/2016

I took a couple flat trades to start the day in X and WTW.  WTW was a red to green that popped right out of the gate but quickly failed.  X pushed to open the day above resistance on the daily and ORB'd.  I missed my sell order by 1 cent.  Ended up selling flat.  Can't complain too much it took a nice dump after my sell and has traded ugly all day.

FANGs had some profit taking today on day 3 of the move.  I took advantage of that.  Kind of upset I did not catch the bear flag on NFLX but I did not want to chase.  FB was my big winner.  Pretty easy stuff on these today.  Gap up and fade on failed follow thru.

Solid day.  I love being done with trading by noon and avoiding the chopiness of the afternoon.  Staying disciplined

3/28/2016 Review

I took an early loss on SM.  I had some gains on a red to green.  It popped quickly but then was smacked down at resistance and had a downtrend day.  The thing I missed was trend had changed.  So the higher probability trade was wait for some weakness and get short.  I had just not considered this.
All oils and obviously /CL crude or USO whatever I decide to look at was starting to trend down.  Check SM daily to see the trend change

Facebook was another top watch today.  It had gapped up over resistance.  I was watching for a pullback and got exactly that.  

VRX I had this on watch but failed to pay proper attention to it and missed the trade.  Very clean mover today and you had clear bias.

Only 2 trades today.  I am now trading just til 11:30 AM and calling it quits and avoiding the chop.  Nice day 1 of this with good gains and good discipline.  

Creating a watchlist and the morning emotion.

Understanding the morning in trading seems like the hardest thing in the world.  Its very volatile.  It can give false signals.  It can confuse the crap out of you and have you down a few hundred bucks within 3 minutes of the market.  I experienced a ton of hardships attempting to learn the opening bell of the stock market (that is between 9:30-10AM)  I just sucked at it so I just quit trading it.  But I have always been told it is the most profitable time to be trading.  I knew there was a way I just had no idea how to fully grasp the concept.

One of my best trading buddies is Jon Schrager.  We talk constantly about charts, our ah ha moments and anything that we can use to better our trading.  We are constantly trying to learn and share ideas.  Recently we have been talking about some things we have learned about the open.  Most of what I am blogging about right now I learned from him.

That was my watch-list entering Monday 3/21/2016.  Now I was unable to trade the open but lets look further into the Daily and intraday charts of a few of these stocks

This was the daily entering Monday.  I can almost guarantee most people saw red and were only preparing for a short.  Me a month ago would have done the same thing.  Review my plan for the day, If SM gaps up or bounces at the open I would short.  But if it opens weak I am looking for a long.  Before I get into the intraday action notice a few things.  Stock is in a bullish trend.  It had already pulled back from 20.50 to 18.00 in one day ( a pretty big move for a 18ish dollar stock)  What do you think could happen if the stock drops any more, is there more likely to be more sellers then buyers or visa versa?

1.  Stock opens weak and even pierces the previous days low.  Your first thought is "This is probably heading lower.  Nope, stock explodes and goes green.  Anybody that shorted is out now.  Its rejected at "baby" resistance and pullsback to 2 which forms a higher low and mini flag with a wick and then its off to the next level of resistance for almost a 1.75 move depending on where you bought

 WLL this one had a similar daily chart as SM but under the hood it had not actually gotten to an area of interest for a bounce as you can see from my notes.

This opened up similar to SM and tried to actually go green but failed quickly.  Again from my notes I was not looking for just some weakness to go long I wanted it to flush out to 7.50-7.80.  If I was trading this I would have taken it short on the break flag crack as soon as I saw that wick into resistance and the 20ema.  Not too surprisingly the low of the day was right in the middle of the range I was watching a bounce for.

I had SM on watch today for a weak open red to green.  As soon as it broke the highs of the previous day and tripled tapped it was off to the races to the next level of resistance 20.50s

Jon actually found this one for watch.  Stock was over extended on the daily.  Ideally the plan would have been for one more push until resistance on the daily (around $23)  But the stock had other plans in mind.  Lets first notice that the stock was extended on all time frames even intraday from Monday.  It gapped down under and was under support now.  Many times you could get confused and think that it actually held a support based on the first candle but the stock was extended and trend had just changed with the gap down.  Stock forms a bear flag and the quick flush is on.

NFLX see notes pretty self explanatory.

Lesson from the past few days.  The open can be easy if you know what to look for and how things COULD react.  Because in the end the stock could do whatever it wants.  1.  Know what the trend is
2.  Is it closer to support or resistance. 3.  What did it do on the previous day 3.  If it gaps up or starts strong my plan is X  If it gaps down or starts off weak my plan is Y

Watch-list 3/16/2016

The 1-2-3 set up intraday

Ahhh, the 1-2-3 intraday reversal pattern.  One of my favorites that I have not played in quite some time to the long side.  It is one of my most profitable trades with a very high win %.


Here is a link to my original blog on this subject.
http://pittstrader.blogspot.com/2015/05/playing-1-2-3-set-up.html

Many oils had this same look today.  All on 30 minute support and put in a beautiful reversal pattern.

You wait for your higher low (confirmed on the wick)  and its off to the races.  If you time the pattern you weren't ever in a losing trade.  EMAs also helped to time your entry.  If you held for the whole move (Unlike me)  that was almost a $2 gain on 15 cents risk.

Chart reviews 3/10/2016 30 min charts

What does the chart say?

I had a nice learning experience today watching the way SM traded today.  Many oils and other names followed the same type of pattern/move today.

This was the chart at 9:40 am this morning.  As we can see the trend had changed.  We had a small gap down and a lame bounce into now resistance.  A short could have been taken here with a stop over high of day

Here is how it played out today

Interestingly enough, I never saw a short set up at #4 until recently.  The stock traded to the top of the range.  It looked like it wanted to head higher but it was at the top of the range.  This is the fade spot.  When the stock doesn't follow thru on a "long look" and its at resistance you can take a short here.  This stock gave a nice and clean move to lows.  Sometimes they break to new lows like WLL today and others it tests to near or at the lows.  Either way there is a nice and easy trade here.  To an untrained eye this could be difficult to see.  (It took me almost 2 years to see it)  Now it is one of my favorite looks.  

What a difference a year makes

I feel like I have grown a shit ton as a trader over the past year.  It's crazy looking back at how little I knew even 3-4 months ago.  I am making trades and entries I would have never made a short time ago.  My best days used to be 300-350 dollars.  Now I can make that in 1 trade.  It all has come from more experience and screen time.  If you are still new to the game and still feel lost, it will get better if you are persistent and most importantly learn.

I love this quote I saw posted yesterday- "Success is walking from failure to failure with no loss of enthusiasm"  That's how I have felt about stock trading my first 2 years.  It was nothing but failure after failure but I still loved it.  Because I knew there would be light at the end of the tunnel if I stayed persistent, continued to learn, and found my niche. 

Stock trading in hindsight can seem so easy.  You see the support, the resistance, the pattern, boom there's the entry.  Ahhh it was so easy, how did I miss that?  Well when things are moving fast it can be difficult to spot things and it can be tough to get your hands to make the entry even though you know you should.  Mostly because of doubt or previous losses.  

Learn. Figure out what you are good at.  Figure out what you are comfortable with.  Figure out what actually works in the stock market.  It took me a while to figure this out but I now have a system I can use day in and day out.  I used to be a breakout trader.  They seem to be the easy thing to do.  You buy the breakout and it's supposed to go higher.  Well to me there were too many negatives to this strategy.  Mainly risk/reward.  Just think of the change in your game if you can risk 20 cents instead of 50 cents on a trade.  Obviously your risk is smaller if you are wrong, you can buy more shares, and you can get more of the move (and scale out easier if you wish)  Below are a couple examples from today (3/1/16) and one from Friday (2/26/16).  I don't think I would have made these trades a few months ago, now I salivate when I see them.

Looking at these charts, I honestly don't think I would have made any of the trades a few months ago.  Now I look at stocks charts like the game of chess.  You have to look at the big picture and before you get in determine where the stock can move to.  You have to see 30 minutes, maybe even hours in advance of what the stock might do.  Only then will you get dollars out of a move instead of scalping for 20-30 cents.