I entered the trade at 752 with HSD getting filled at 38.96. I was looking for 758 like I said in the initial post, but I was not patient. I'm using this journal to keep disciplined, but it's challenging. If I entered now at 758 as I said I would I would have got the fill at 38.39. Stop is at 761 which is near support/resistance on a 10 day candlestick chart and looking to exit at 740.
In hindsight I entered at the beginning of the counter uptrend and did not wait for it to complete. Next time I will look for reversal candle on 2 day 5 minute chart.
**** Confessions of an Undisciplined Trader So I did not stop myself out at 761 and I just watched the market all day even though I didn't do this last week. As a position trader I felt that watching the market minute to minute was disorienting. So as I watched my position get away from me I kept telling myself I would sell into the counter downtrend and minimize my losses. However, in the end I sold in an emotional panic at the highs of the day and got filled at 36.89. These trades the last two days have just about wiped out my gains from last week and left me reevaluating if this is what I want to do. I am taking a breather because I'm doing the same things I did when I was unsuccessful in previous attempts. Perhaps, I need to trade something where I can actually place the stop order rather than having a mental stop and relying on executing it. Need a breather to see where I want to go because I cannot afford to lose the trading capital I've got at the moment.
I watched the HSD a bit today but found not enough volume for me. Perhaps take a look at the HXU and HXD. They have more volume and with the HXU you can cut your losses at 1 cent if you feel your on the wrong side of the trade as it rarely gaps hard against you, providing you are trading Direct Access level II. They generally lag slightly behind the S&P.
Thanks for the tip Boise. You're right that the liquidity isn't there on HSD and spreads are wide. I will look at the TSX ETFs, but I don't have a source of real time charting. I just use bigcharts.com and that's why I like HSU and HSD. That said I went out and bought HSD at 35.18 when the index was at 790 a few minutes ago. I will exit if I think the market wants to go higher instead of taking profits over the next day or so, but 800-810 seems like extremely solid resistance.
My take on things right now: The Fed didn't reiterate Bernanke's 'the recession will be over comment by the end of the year comment' in today's rate decision and said there were only signs of further contraction, but I don't think this is anything new to anybody. Nike reported a 47% drop in net income year over year for the last quarter after market close and orders for Nike apparel for the upcoming quarter are down 10%. General Mills reported a 31% drop in earnings this morning, and revised their forward guidance for 2009 EPS to $3.37 - $3.89 from $3.83 - $3.87 - quite a wide range I'd say especially on the bottom end. Looks like it will continue to be challenging for corporate earnings going forward with little visibility for earnings recovery. However, Oracle somehow managed to beat earnings expectations and even announced a dividend of all things - I'm not sure of the motivation behind that one. FedEx announces before market open tomorrow and this is a bellweather for economic activity - the market expects bad numbers, but we'll see what they say about upcoming quarters if anything. I guess we'll now see if I get burned by momentum or if the market is ready to come down to earth.
In addition to holding my short on the S&P 500 using HSD I went short a few minutes ago on the S&P/TSX 60 using HXD getting filled at $25.69. I made this move based on today's candle printing above the upper Bollinger band indicating a possible reversal of the current uptrend. I will place my stop at 540 on the index which does not correspond to any support/resistance, but is just above today's intraday high. Of course breaking to the upside would mean there is no reversal in the secondary uptrend.
I placed limit orders to sell both positions expecting both markets to close near the lowest levels of the day. I was filled on the TSX 60 short via HXD at $27.16 and was not filled on my S&P 500 short via HSD. I'm looking to reenter the HXD position as I expect the TSX 60 should be able to reach 520-521 on Monday. And I will continue to hold the HXD with the expectation the pullback will take us to at least 750 over the next few sessions before it is complete. It's hard to say if there will be tight trading ranges early in the week or a continuation of the pullback. In the absence of news I'm inclined to say that the market won't make significant moves until the Durable Goods Order numbers on Wednesday. However, if market sentiment turns more bearish over the weekend there may be more continued selling.
The markets this morning now have more details regarding the Obama administration's plan to remove toxic assets from bank balance sheets. Ultimately, this is what is needed to get credit flowing again and the recovery under way. However, the question in the short term for me is do the markets believe this plan will work? Will banks sell the assets and will private investors buy them with government backing? I will be watching the S&P 500 at open to see if it opens high and trades higher or opens high and trades lower. I believe 780 is a resistance level that may indicate further direction if it holds or is broken to the upside. I am unsure whether I will reenter the TSX short I traded out of on Friday and will decide what to do with the S&P 500 short based on this morning's action.
Well, the market opened much higher than I expected and has traded up to 800 - the path of least resistance. I contemplated unloading my short at the first retracement of the day's opening gains which took the index to 785, but I did not execute. Currently, I am debating whether to hold and keep my stop at 810 and see if the market sells off with durable goods on Wednesday or adding to the position at 800 and selling on a possible retracement to 790 today or dumping the position altogether and waiting for a better opportunity. From a fundamental perspective I want to know the banks' position on Obama's offer to buy their toxic assets. From early reports it seems private investors would be willing to buy with the government guarantees, but who wouldn't if it meant buyers would have no potential losses. What does it mean for the banks - is it a good deal for them to sell based on whatever price they can get or would they rather hold and hope for a suspension of the mark to market accounting rule? Another thought is if they do sell and free up the balance sheets to increase lending does this mean a return to increased inflation - and how does the Fed balance rate increases in a bid to halt inflation yet not stifle any recovery?