Curious how many of you short even tho the overall market is up? A few stocks came across my radar screen that said "short me" but I did not, since the SP 500 and NAS were both still "long" condition. I subsequently missed some good trades. JBLU, IACI, PNRA some examples thoughts?
Since you're talking about stocks...I tend to keep a portion of my portfolio long and a portion short at all times -- it's not right for everyone, but it hedges your risk. So I'll short stocks that are rolling over regardless of what the market is doing, and I'll try to get long some strong stocks. Like right now....market has been going up, but I see a lot more short set-ups than longs. So, my portfolio is net short 50%. I swing trade....
Thought... On the basis, "you can try anything if you're disciplined about stops", playing to nail a short at a top is OK. (Chasing or averaging into short losers in an uptrend, however, is not.)
Also, and I could be wrong...I think the underlying stocks can foretell what will happen with the index. Right now a lot of stocks are breaking down....therefore, I would not be suprised if we've seen a short term top in the market...
well, being a Stan Weinstein student, and also a reader of Bill O'Neil, it has been pounded into my small brain that the overall trend is hard to fight. however, it is frustrating to see JBLU decline after I actually told myself that "hey, JBLU looks like a good short" weeks later, I was correct!!! (dammit!) maybe this is where NLP could help me, removing barriers and all that stuff more comments wanted
I would guess that about 60% of my trades are against the trend. I am constantly looking for stocks that are showing relative strength or weakness against the overall market, and then waiting for the overall market trend to provide the best entry points. ie: waiting for an uptrending market to pop a downtrending stock into resistance.
There are a couple of issues to consider 1 Donchian: In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons - a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100% 2 Velocity of move. In an overall market uptrend yes stocks will break down but the move to lows will be punctuated by frequent countertrend rallies. But once you have a confirmation of trend change the velocity of down move will increase. 3 Were you getting other long signals and what would have been profit in those moves as against taking these short trades.
I have a "watchlist" of about 30 stocks that I compiled which responded to EMA crossover very well. Obviously, some stocks trend well and some don't. Also, what works today may not work tomorrow. These points are all noted. What I literally did what take all the SP 500 and 600 stocks and back test them over 3 years. This took many weekends of my time, just ask my wife. I wanted "index membership", mutual fund ownership, and 1+ million share volume daily. JBLU was one of these stocks. So was PNRA. Anyway, both could have been shorted a few weeks ago, but were not, due to the "dont fight the overall trend" mantra Since the market has been up since March, I have had no fresh buy signals from my watchlist. I previously was in UTSI, DLTR, AMR, long. I am getting some new short signals now, TSCO is one of them
MDave Landry's swing trading style has really helped me out. I bought his book, and have found that he has some really good set-ups for getting into shorts that are "rolling over". Anyhow, I think it's an issue of getting used to flipping through the charts and recognizing "break-downs"....TSCO definitely looks like it could be one of these.... He looks at the 10 MA, the 20 XMA, and the 30 XMA. When these transition from long (10>20>30) to short (10<20<30) they form a "bow-tie". He then waits for a pullback from the low and shorts beneath the previous day low. TSCO is doing this right now. He places stops above the high of the pullback...so somewhere around 41.50+some safety factor (5-10 cents). Just one way to get into these types of situations. You could have done this for JBLU too.