How oversold are the markets here?

Another trading week begins tomorrow and whether we go up or down, one thing is for sure....its not going to be easy out there. So, I thought it would be helpful to step back and have a look at where we are currently in the bigger scheme of things. 

The McClellan Oscillator is basically based on the advance/decline statistics of the market. Since we look at the indicator from a relative point of view, for the purpose of this post it is not necessary for me to go into the specifics of how the indicator works. But for those of you who are serious about using this indicator, I would encourage you to get a feel of how it actually works. As we will see in the charts below, the indicator works rather well in identifying overbought and oversold conditions. I would rather go by it than use stochastics or RSI which can stay in extreme conditions "forever".

Let's start with the NYSE McClellan Indicator. I opted for a two year chart as I wanted to compare the pullback here with the severe drawdowns of the last two years. It seem like the indicator has gone lower only 5 times in the last two years. Only three times before in the past three years - October 2008 and March and November of last year - has the indicator gone below -100. We are currently at -93.47.

Now, on to the Nasdaq McClellan Indicator. It seems to be a point from where the market has bounced at least 5 times in the last two years.

Conclusion: It wouldnt be surprising to see the markets bounce from here. But at the same time, we certainly have gone a lot lower in the past, though I do not see a March or an October coming. No way are things even half as bad as they were then. I still do believe that any bounces should be taken as an opportunity to get out of or lighten up the long positions and initiate short positions.

What do you readers think? Drop in some comments or answer the poll on the top!

BTW, I am sorry but its looking more and more likely that I wouldn't be able to do the second part of  Confessions of a Recovering Trader trader tonight. While it is relatively simple to come up with posts on the market like the one you are currently reading or watchlists, CORT kind of posts require one to be in the zone and really into it. I promise to come up with the second part of the series soon. I apologize for the delay and hope you readers understand.

Take care and good luck trading!

Why I am writing Confessions of a Recovering Trader

Update: I, for one, am surprised by the poll numbers (on your right) till now. I expected more of you to be bearish rather than bullish? What gives??

---------------------

Dear readers, expect the part two of Confessions of a Recovering Trader sometime later today. I am writing this post to keep a log of how I suffered and eventually got out of the trading slump (hopefully!). Let's not kid ourselves here....I am sure this is not the last trading slump I will ever have. So, this will hopefully turn out to be a nice reference for the future. And I know there are a lot of you newbie traders out there frustrated by your losses in the past couple of weeks. Hopefully, this post will be of some use to all of you too. As for the more experienced or better traders than me, I welcome any advice on how to recover from shattered confidence or you sharing your experiences.

When I started writing this post, I had no intention of turning it into a series. But as I started putting my thoughts on "paper", I realized I had a lot to say and there is only so much that I can write in one sitting, hence the multiple posts. Who would have thought that writing about your mistakes and failures could be so draining? :)

Enjoy the Sunday with your family and friends!
 

Confessions of a recovering trader Part 1

As I started to write this, it came to my attention that this is the 50th post of this 3 week old blog. Trust me, dear readers, I wish this post was written in happier circumstances. Actually, strike that off....the circumstances are still happy. We should never let our trading emotions or results define our lives. So, let me rephrase that....I wish this post was written in a happier part of my trading life.

Firstly, since this is still a new blog and to truly get this post, you readers have to understand where I am coming from, let me start off with a short introduction. I hope the regular readers would forgive me for digressing. Dear readers, like most of you, I am not a full time trader. I trade a four figure account. I dream of the day I could have enough in my trading account to bid adieu to the blasted pattern day trader rule but that's not going to happen anytime in the near future. Like most of you, I started by losing money but I didn't give up and learnt from my mistakes, hopefully like most of you too. For more on this, please click on the label introduction to your right. I still make stupid mistakes. I am nowhere as good a trader as I want to be and I know I can be. I have improved enough to be up over 170% last year after commissions. And no, I dont trade penny stocks. Yes, all you readers who trade with a small account, knows commissions are perhaps the biggest drawback of trading with a small account. I started this blog finally three weeks ago to fulfill my long held, but always neglected, goal/plan of starting a trading journal. The aim of this journal is to make me grow and improve as a trader, and if you readers can benefit from my experiences, all the more better. I have nothing to sell you and don't ask you for anything. Even if I am up 100% the next month (I wish!), I am not going to charge you for sharing my stock picks or watchlist. And since I have nothing to sell, I have nothing to hide! I am brutally honest about my shortcomings as a trader and my losses. In fact, every week, I report my account status after commissions. How many blogs do you know who do that?

Which brings us to this post. If you are a regular reader of this blog, you know I have been in, and still am, in my worst trading slump for over a year. I refuse to offer the market conditions as an excuse. As short term traders, we are supposed to make money ever week, irrespective of whether the market is up or down. I blame myself. I made stupid mistakes, mistakes I thought I had grown past. But as all you readers who have traded for a decent amount of time now, market has a way of bitch slapping you and showing you your place as soon as you start showing the slightest signs of arrogance of overconfidence.

But more on that and how the lack of confidence has affected my trading, and how I am trying, sometimes desperately, to overcome this slump tomorrow. Its late now and the bourbon in my hand demands my full attention....I hope you readers will join me in my journey to become a better trader.

Take care and good luck trading!

P.S.: I would appreciate it, if you readers, could take a moment to answer the poll on the top right. Thanks! 

Jan 25 - Jan 29 completed trades

Let me start this weekly review by apologizing to the regular readers for not writing a daily review yesterday. I had a busy schedule later in the day which didn't allow me the time to right one.

As I wrote in my Thursday's evening post, I expected a bounce in the market and I had pointed that the bounce should be taken as an opportunity to get out of existing longs and start new shorts. And I was exactly right!! Unfortunately, I didnt do such a good job of following my own advice. If you go through my last week's posts, I had a very good track record in calling the markets this week but hardly made any money out of it. I believe that's all part of the lack of confidence when you are trying to come out of a slump. But more on that in a special post tomorrow - Confessions of a recovering trader.

I got out of BA at around breakeven, not liking how it was behaving. A decision based on watching the tape, rather than reading the charts. It turned out the decision was the right one. But then I made the mistake of trying to call the bottom in SWC by entering a small position it  around 10.32, a position I still hold.

Coming back, to the weekly review of the completed trades. As I had said before the week began, the plan was to trade small and trade less this week and I am glad I stuck to it for the most part, though I could have done a better job. As you can see in the table below, I had a very cautious approach this week, something I will discuss the advantage and disadvantage of in the forthcoming post that I mentioned earlier.

4 profit, 0 losses - +1.3%

Average profit - + 0.325%

Average loss - N.A.

Total account down 3.2% YTD

Open Positions: NEP, AUY, SWC (Heavy losses in NEP being responsible for most of the monthly losses but am very confident about this position. AUY and SWC are too small to impact the account. Will get out of them Monday, so they will be reported in next week's trades.)

Note:

1) The table shows only completed trades of the week. The positions that are still open will be accounted for in the week that I close them.
2) The YTD calculation includes the open positions. I just take my account value at end of Friday and calculate it. So, it also includes commissions which do matter a lot to a small account like mine.

Which other blog reports results after commissions? :)

Keep an eye on Gold here

Quick post....GLD trying to form a double bottom here. Positive MACD divergence. Could easily make a move to 110 here if the support holds. For gold miners, I like AUY which I hold.



Position update: I got out of Boeing at 62.06. Didn't like the action on a positive day (till now).

How to know when to exit your position?

This started as a quirky post but quickly turned into something probably more useful. I admit the post is based on personal experiences. Luckily, I do not make these mistakes any more....at least not very often ;). Enjoy!

1) It is time to sell when.....you find yourself using extra technical indicators on charts to justify holding your position that you didnt use to get into it in the first place!

2) It is time to sell when.....you find yourself going to yahoo message boards to see if someone has some positive news that you don't know!

3) It is time to sell when.....you find yourself justifying to yourself holding a position for fundamental reasons when you entered it for technical reasons!

4) It is time to sell when.....when you ask an "expert" on twitter or some blog to chart a stock checking for entry when you are already in it!

Let me know if you readers have any other such fun "indicators" and I shall add them.

Bounce coming.....but be careful!!

Not much to say today really. The bears have it but they couldn't do a convincing break of the 1085 region. A close of 1084.53 on the S&P is NOT a break. Remember, that TA is an art and not a science. So, don't get lost in the decimal points!

Lets have a look at DJI and Nasdaq to assess the damage done to the charts today. I am doing the daily review in a different style today.

DJI -

1) Closed right at support

2) Got stopped right at resisitance

3) Notice the relatively much higher volume in the recent down days

4) Stochastics oversold - This doesn't necessarily mean a bounce as oversold can easily turn into "more oversold".

My thoughts: A small bounce could be in the offering. But the high volume on the down days hints at a longer correction. A bounce should be taken as an opportunity to get out of existing longs and initiating short positions rather than getting into new longs.

QQQQ -

1) Right at two important support levels.

2) Volume is even more bearish than DJI.

3) A break of support could take it all the way to 40.5

4) Strong resistance at ~ 45

5) Stochastics oversold.

My thoughts: A small bounce could be in the offering. But the high volume on the down days hints at a longer correction. A bounce should be taken as an opportunity to get out of existing longs and initiating short positions rather than getting into new longs. Yes, this was copy paste from DJI :)

Position update:

Didnt have time to see the markets pretty much all day today.  Got out of SWC at breakeven. Got into Boeing (BA) at 61.99. I had explained my rationale behind this move in the post late last night.

Good Luck out there! Will be back later tonight with some picks for the watchlist.

     

Boeing looking good here

Kinda getting late and the chart pretty much says it all, so I wont say much here. Look out for a move north of 62 on high volume



Good Luck!

The bulls fight back!

What a day! Fascinating stuff! Both the bulls and the bears went head to head, fighting for control of the markets, and I would have to give today to the bulls. Like I have been saying for the last few days, 1085 is a very important level for the bulls and they fought hard for it. At the end of the day, they ended up not only holding on to 1085 but also regaining 1091, another support level.

Where do we go from here? Unless the President says something that really hurts the Street tonight, I see us going up tomorrow. Looking a little more ahead, I am willing to stick my neck out and say the bears do come back in the next few days. I still maintain - 1085 region is the key.

Personally speaking, I could just observe the markets for the initial part of the day. I took very small positions in AUY and SWC, small enough for me not to think about them at all while I was away from the markets.

To end this post, a little word for the President before tonight's address.....Mr. President, the election ended over a year ago. Its time to stop campaigning, and start governing.

$HUI looks interesting here

$HUI - Gold bugs index - seems to be at an important juncture and looks interesting here.

Had a bounce off MA(200) today and finished right at an important support level. If this support holds, a run up to 440 - a 10% move up - could very well be on the cards where it will face trendline resistance and MA(50)

On the other hand, a failure to hold the present support could take us all the way down to 360, the next support level, a 10% move down.

The index does look a bit oversold, so odds would be in favor of a move up.

As far as gold miners are concerned, I follow NGD, EGO and AUY but I am sure you guys have your own favorite gold plays. I recommend keeping an eye on your favorite gold plays for the next few days.

It is not easy out there....

Well, it certainly is not. Instead of declaring a winner tonight - bulls or bears - why don't I let you guys decide.

Bears - If you are a bear, you have got to like the close today. The market finished well off its highs of the day, in fact it finished in the red.

Bulls - If you are a bull, pretty much the only thing that worked for you is that the support levels I pointed in the post last night - 1091, 1085, 1070, 1030 - still hold.

Funnily enough, another thing that could work for the bulls is that kinda everybody now seems bearish and expects the markets to fall. The market is great in doing the unexpected....or maybe expecting the unexpected makes the unexpected expected. lol. Fun, isn't it?

I would personally try not to hold any shorts overnight till the market breaks 1085. That is still the key number for me here.

So let me know whether you guys are bullish or bearish here!

Almost forgot....I pretty much did nothing today. I got stepped out of my RMD position for less than 1% profit. Overall, I am pretty pleased with the patience and discipline I have shown this week. My confidence still hasn't recovered from the blow(s) last week but I like the way I am playing defense here. It's something that doesn't come naturally to me.

Good Luck tomorrow!

S&P - 1030 If 1085 breaks ??

The futures are down a decent bit despite a great earnings report from Apple. Now, when you have stocks going down in spite of great earnings, it is a pretty good confirmation of the market topping out, for the short term at least. So, I decided to have a look at the support levels for S&P.

The red lines show the resistance levels and blue lines the support levels. I am afraid the resistance levels look pretty solid as we can see, with the benefit of hindsight of course :), that the topping out was a slow process and we have the MA(50) acting as the resistance too now.

With the support levels, its a different story. The immediate support is at around the 1091 level and it looks like that might be easily taken out tomorrow. The next support level is 1085. If this breaks, we have minor support at 1070 and then I am afraid, we have to go all the way down to 1030 to find the next major support level. So, it looks like 1085 is the number to watch out for on the S&P tomorrow. If that breaks, we could very easily be seeing 1030 in the near future.

Support levels - 1085,1070,1030

Good Luck tomorrow!

Bears win today

That's how I am calling it. As I wrote in my post last night, I was expecting a bounce in the markets and even presented some charts to back my case. Well, not surprisingly, the bounce did happen. But not impressive....not impressive at all.

Either way you look at the bounce - the strength of the bounce or the volume behind the numbers - it wasn't very encouraging. Some of you readers might not agree with me but I expected more than a 6 point bounce in the S&P after a 60 point drop in the last three trading sessions. So, that's why I am giving today to the bears. I am attaching the S&P chart below for your perusal. Notice how it ended in the lower end of the daily trading range and the lower volume compared to the last two trading sessions. Since the DJIA and Nasdaq charts pretty much tell the same story, I am not attaching them.

Personally speaking, I got out of my SBIB position for less than 1% profit at 5.38. And good thing that I did, as it made a low of 5.18 after I sold and finally finished at 5.01 It was certainly pleasing to finally get a trade right after the week I had last week. Sometimes, a well-traded loss gives you a lot more satisfaction than even a 10% poorly executed profit. I took a very small position in RMD at 53.20 in the later hours of the day in the hopes, or rather with the plan, of catching a potential breakout. See the chart below. The volume seems good and a move above the high of the day today could quite possibly lead to a big move up.

Overall, I am still inclined to agree with my post from yesterday - any bounce on weak volume should be shorted. I still see the high volume decline last week as an indicator of a looming correction. However, we are in a news-driven market here and whether you are bullish or bearish, taking smaller positions and trading less is probably the thing to do.

Take care and good luck trading!

What to expect next week?

Here's to a new week and new beginnings! But before we begin, there is a new poll to the right and I would really appreciate it, if the regular readers could take a moment to answer it. And if you are new to this blog, maybe you will go through a few posts and answer the poll too. Its been two weeks since I started this blog and it would be nice to have the feedback. Thanks!

That being said, where do I see the markets heading next week? Given the severity and the extent of the fall in the last three sessions, I expect there to be a bounce early in the week. Let me present to you a chart to state my case for a bounce.

The chart below shows the NYSE Advance-Decline Issues. As you can see, we are well into the oversold region, so it won't be too out there to expect a bounce either Monday or Tuesday. But if there is one thing that we learnt as traders from 2008-09, it is that oversold can very easily become more oversold.



Do I expect this bounce to last? In word one, no. Let me back my reasoning again by some charts. Take S&P for example. Look at the amazing volume to the downside in the last two trading sessions. This is not your normal pullback and could very possibly be start of a major correction. Look out for the volume of any possible bounce. A low volume bounce could be a good opportunity to go short. I have marked possible resistance regions on all three charts below. I wouldn't be surprised to see a low volume bounce to around the 50MA region and then down we go again. Its pretty much the same story for DJIA and NASDAQ charts too.







Personally speaking, I have to try and get out of the rut I have fallen into in the last two weeks. So, I have decided I will be trading small and trading less until I get my confidence back. Wish me luck! There are many blogs out there which claim unbelievable gains and hardly any losses, but in how many blogs do you actually get to see and experience the journey of a trader trying to get out of a losing streak? :) Hopefully, my experiences will be of some help to a few of you readers too!

Take care and good luck!

Lessons from my mistakes

“All men make mistakes, but only wise men learn from their mistakes.” 

- Winston Churchill

The regular readers of this blog know that I had a brutal week last week and by now, also know of the exact trades I made. (For the uninitiated, please see here and here). But you also know of my determination to learn from my mistakes, and make last week the most "profitable" week. I have thought long and hard of my mistakes from last week, the kind of mistakes I thought I had stopped making, and reached some conclusions about where I went wrong and how not to repeat these mistakes in the future.

 

Here it goes.....

1) When I started trading actively about a year and a half back, my biggest problem was learning how to take losses. After I learnt how to take losses, the problem evolved  into how to deal with these losses emotionally. I am glad to say that now I am quite comfortable in taking a loss. But in going through my recent trades, and you can go through them too here, I have realized there is a disclaimer attached to the last statement.....I am "pleased" in taking the first loss. I am comfortable in taking a second consecutive loss. But after three or more consecutive losses, its starts affecting me and thus my trading. I start getting the feeling of trying and getting my money back from the markets which as we all know, is a very very wrong and quite possibly, disastrous emotion. Markets owe me absolutely nothing. So, this brings us to my first "rule"

 

Start trading real small after second consecutive loss.

2) The second rule follows directly from the first rule but involves two losses on the same day. You gotta know when to hold them and you gotta know when to fold them. Most importantly, you gotta know when to walk away.

Stop trading for the day if I take two losses on the same day.

3) Both the above rules apply to losses. But I have noticed that one has to be careful while doing well too. My account was up almost 10% for the month and ~ 175% in the past one year before last week. Trading seemed easy, in fact a little too easy - the easiest it has ever seemed. Looking back, this should have been an alarm bell ringing loud and clear right there. The markets have a way of bitch slapping you when you start showing even the slightest signs of overconfidence. So, that brings us to rule number 3.

 

Be extra cautious when in the middle of a hot streak and at the slightest sign of overconfidence, start trading small. 

4) I shouldn't have to explain this one to you readers if you have read the posts of last week.

 

Always have a stop loss in place for your positions if you cant follow your screens even for a minute. 

 

That's what I have till now. I will be labeling this post "lessons" for easy access in the future. I will be adding to this post in the future as I am sure I will be making more mistakes, but hopefully not the same ones. 

 

Let me know if you readers think I have missed out on something and should add some more "rules". Growing and improving together as traders is the whole purpose of this blog and there is no better way to learn than from each other's mistakes.

Jan 18 - Jan 22 completed trades

 Its tough to write this post. If you have read some posts from earlier this week and have ever been through something similar, you know why. I didn't feel like opening my trading account but this post had to be written. This whole week was nothing but one stupid mistake one after another. But I have to admit to all my mistakes and since I have started this blog, I have to admit them publicly. So, here they are....a display of my stupidity for your perusal.

1 profit, 6 losses - -8.11%

Average profit - + 6.8%

Average loss - - 2.48%

Total account up 0.311% YTD

Open Positions: NEP,  SBIB

But I am determined to not let the past week go waste. I am going to work hard to make this the most "profitable" week.  Look out for a post on the lessons learnt from this week sometime tomorrow.

BTW,  the picture above which I just added, in case you didn't get it, is of a phoenix rising from the ashes :)......Enough said!

Note:

1) The table shows only completed trades of the week. The positions that are still open will be accounted for in the week that I close them.
2) The YTD calculation includes the open positions. I just take my account value at end of Friday and calculate it. So, it also includes commissions which do matter a lot to a small account like mine.

Which other blog reports results after commissions? :)

Confessions of a desperate trader

Let'see....I am not quite sure how to start this. How about the beginning?

I woke up late this morning feeling pretty good. I had decided last night I would take a loss on my now rather huge SWC position. I guess for those of you who are uninformed, I should go back a little further. I hope the regular readers wouldn't mind this small digression. I had entered SWC day before yesterday at 13.44. It had ended the day at around 3% profit for me. The next morning i.e. yesterday, I wasnt able to watch the markets in the morning hours. I have a stop loss for all my positions (except NEP) but its a mental stop loss. So, even though I was going to be away, I decided against entering the stop loss. What difference could a couple of hours make in a position in which I was already decently up, right? Anyway, to cut a long story short, the complete details of which can be found here, I ended the day almost doubling my position at 12.70 (I hadn't averaged down in over a year before this) and the stock ending at support on 12.51.

Back to this morning.....So, I woke up thinking that if the stock broke 12.50, I would sell it without hesitation, learn from the mistakes and get on with my life. Opened my account to have a look at the pre-market around 8:30 and it was down to almost 12!! Now, this was a different ball game altogether! I was ready to take a loss at 12.50 but 12??!! I decided to give the stock a little more time. Surely, the gap could be closed after a 10% down day yesterday.

Well, within around the first 5 minutes, the stock broke 12 and went straight to 11.60. Let me tell you dear readers, if I say that I didn't feel good at that moment, that would be the understatement of the year. And all because I was stupid and careless enough not to enter the stop in before I left yesterday! Remember, thanks to me averaging down at 12.70, the first time I had averaged down in over a year and something that I would never ever recommend, I had a large position in the stock. Much larger than the positions I usually take. It finally went below 11.50.

I was long also DXCM at that time. I decided to enter a stop loss in that at 9.48 while it was trading at 9.55. But by mistake, and I dont make mistakes like this - ever- I entered a stop limit instead of a stop loss making me exit my position at 9.55. Small difference, I know, but I hope this gives you readers an idea of the kind of day I was having and the mental state I was in. From the proceeds of this stock, I took a small position in SRS as a hedge against my long positions. And as soon as I took it, the markets turned from down 80 points to down single digits. Yes, this was the kind of day I was having. I wondered what I had done to incur the wrath of the stock Gods. Certainly, the stock Gods were displeased.

I hope that from the above, you all have an idea of the mental state I was in. It is necessary that you do because only an understanding and appreciation of that could possibly make you understand what I did next. The only consolation that I had at this time, if any, was that at least I wasn't on margin. I had seen my almost 10% gains for the month disappear in less than a week and was now negative for the month.

In a moment of madness - it has to be madness, there can be no other explanation - I decided to double my existing position at 11.65. And yes, I was in margin now - 50% in fact. I guess there was some thinking behind my decision. I had seen volume to the upside now. PAL, also a palladium producer which moves along with SWC, had started a move up and was doing pretty well. By this time, losses didn't mean much to me. So, I decided to place this one large bet with a stop loss at 11.48, the low of the day. If it didn't work, I would lose just a little more and what did a little more matter by now anyway. As much as I try, you being the smart readers that you are, I cant defend my actions either to you and most importantly, to myself. Like I said, I was doing stuff and making mistakes I hadn't made in over a year. Certainly I was desperate, and hence the title - Confessions of a desperate trader.

To cut this already pretty long story short, the stock Gods finally took pity on me. I sold my now very large position at 12.11 and 12.15 for a very small overall loss. Relieved and carefree now, I decided to sell my SRS position too for a small loss. You might think that that it turned out to be a smart move in the end but it was not. It is the most stupid thing I could have possibly done at that time. That's why this post gets the label "mistake".

Admitting to all these mistakes in a public forum like this hasn't been easy. But like I wrote yesterday, I could quite possibly lie to you readers but how can I lie to myself.

I ended the day still positive for the month, but the lessons learnt this week should and would not be wasted or forgotten. I will be back later this weekend with a post trying to figure out the mistakes made in my worst trading week for over a year and how to correct them.

Hope all you guys fared better than me. If you had a bad week too, lets keep learning and try and become the best traders we can be. Good Luck and thanks for reading!

BTW, I entered SBIB later in the day. As I got up to leave the room for a few minutes, I had a smile on my face. I had a stop loss entered.

Why I started this blog?

This blog was started a little over a week ago with the aim of making me a better trader. And if you readers do join me in this journey and pick something along the way from my mistakes, all the more better.

I am up around 180% starting from January last year (for more details about me, please see my introduction) after commissions. Why I specifically mention after commissions is because I trade with a really small account, so commissions do account for a lot. So, if anyone tells any of you small account traders that you cant make it with a small account, I am the living example of yes you can! I wont lie to you...it is much harder with a small account, but it is very much possible.

In this blog, you wont find me talking about all my winners. I am not selling anything to you readers and have nothing to hide. You will see my losing trades and also see me getting frustrated with my losses sometimes. I am sure the same happens with you guys sometimes too. I report my weekly P/L after commissions....ever seen a blog do that? I do it because this blog is supposed to be a trading journal and its purpose is to make me grow as a trader. I can quite possibly lie to you readers but I cant lie to myself. So, I promise to brutally honest, both with my losses and my emotions. If you are looking for a blog that will make you instantly rich, then this is not a blog for you. I do not trade penny stocks and do not look for 100% gains. If you want to grow and improve as a trader, then I believe maybe my experiences might be of some help to you. Sometimes its just nice to see somebody out there struggling too and having the same difficulties that you guys face :). My 180% profits might give you the impression that I dont struggle a lot, but trust me I do!! Just read my introduction or for that matter, my posts of the last one week.

It is clear to me that somewhere in the last one week, I have slipped up in my trading and am making rookie mistakes. It is time to think about what these mistakes are and correct them. Admitting about them and writing about them in a public forum might make be just a little bit hard, but I do believe it will go a long way in making me a better trader. So, look out for a post on my mistakes in the last week and how to correct them sometime during the weekend.

In the end, I would just like to wish all you readers good luck in your trading endeavors but please just keep in mind that making money is certainly not everything in life.

Take care and good luck!

Got to stop the bleeding....

Update: I added a little quote on top of the page. Don't know about you guys but I could use a little inspiration right now!

What a day! Personally speaking, got bitch slapped by the markets. It is said that experience is the worst teacher but I would say the stock markets are. There is no easy way to learn but the hard way. But a little background first.

Again today, I had no access to the markets from the open till 11:30. When I tore myself away from the pre-market, things looked nice and rosy out there....

NEP had news out at morning and was trading around at around 10.20, up ~ 5%. Palladium was steady and SWC was also up. Goldman had reported huge profits, and was looking good pre market. Like I said, all good....All this lulled me into a false sense of complacency and I decided since my stocks were far away from my potential stops, I did not actually need to put my stops in. If you think that was the stupidest move of the year, you got that right.

Came back 11:30. NEP ~ 9.25. SWC ~ 12.90 (In case you wanna know, my stop was 13.60) and DXCM ~ 9.50. I was in 30% cash if that seems to be any consolation.

Frankly speaking, I was disgusted with myself and didn't know what to do. I am fine losing money, but throwing it away....not good. When you dont stick to your stop loss, its like your last area of defense is breached and you dont know what to do. I thought of selling, but it pretty much seemed like closing the barn door after....

NEP closed at 9.43. DXCM at 9.75. SWC at 12.51. I added SWC at 12.70 on a triple positive MACD divergence, a pattern which has often worked for me in the past.

Overall, the selling was brutal. Its not a good sign when Google reports the kind of earnings that it did and still gets crushed after hours. Not good at all. The second level of support that I had pointed out in the post yesterday held for S&P and that is an important number to keep your eye on. I think its not a good time to go short right now as it might be a little too late for that. Maybe after a weak bounce.

As for my positions, I have got to think about it. Should I rip them off like a band aid and just take my losses? Or should I wait for a bounce? I might just go with the former as I hate counting on hope. That has never worked for me. If its any consolation, I am still overall positive for the month in spite of a horrible last week. But way below my close to 10% gains earlier in the month.

Well, there is a lesson to be learnt here and I think it is to always have a stop in place when you are away from the screen. If I can apply this lesson to my trading from now on, I will consider today's losses well worth it.

Hope all you readers had a much better day than me!

This one definitely gets the label mistakes! :)

Watchlist

FSLR - Close to an important region of support. Keep an eye on it for a possible bounce. RSI and stochastics are both in the oversold territory and a nice looking positive divergence on the MACD. Remember - this is a stock that has gone down on high volume! You must keep a stop loss below the level of support.



CSIQ - Another solar play in the oversold category. A nice doji formed today at the MA(50) mark. Once again, in trying to play these stocks for a bounce, you must have your stock loss in place. A stop loss below MA(50) should serve the purpose.



NKTR - A stock from my watchlist on Monday, some of which did surprisingly well today. Really nice looking consolidation around the 12 mark after a huge move up on great volume. I would look for entry upon new highs if there is decent volume.



PRGO - Another stock doing well from the watchlist posted over the weekend. Decent looking volume pattern! Small pullback on low volumes today. Again, an entry on new highs if accompanied by decent volume would be a good entry point.



I also like SWC, PAL over here as Palladium is making new 52 week highs even as I write this. I entered SWC at 13.44 earlier in the day today. I also like DXCM - my election result pick - which held up rather well today and I am still holding it. Since I posted about these stocks just yesterday, I will just refer you to those posts.

SWC, PAL, Palladium
DXCM

I hope some of the stocks are of some help to you! Let me know if there are any stocks that you readers like for tomorrow and I might add them to the list here.

Good Luck and Take care!

Update: CYTX: Great looking chart! Great looking volume. A buy above 9.50. Thanks to Lee, one of the readers, for pointing out this one.



Any more picks guys??

Why am I still bullish?

Well, the title says it all, so without further ado, lets have a look at the charts of S&P 500 and Nasdaq.

S&P bounced from an important level of support today around the 1130 mark. Also providing the support in this area is MA(20) at 1133. If the bears do manage to break this level up support, their job still wont be even half done! As S&P has another even stronger area of support at around the 1114 region. Making this support even more important is the presence of MA(50) around the same region. Until this support area is broken, buying on dips should be the story of the day. On the flip side, there is a resistance level at 1150 mark.



Its a similar looking chart for the NASDAQ with the first level of support being in the 2270 region and the second stronger level of support being in the 2220 region. Resistance around the 2325 mark.



Unless these important levels of support are broken, I think being bullish is the high probability play.

To wrap it up:

S&P 500:

Support 1 - ~1130
Support 2 - ~1114
Resistance - ~1150

Nasdaq :

Support 1 - ~2270
Support 2 - ~2220
Resistance - ~2325

Good Luck and be cautious out there! I will be back later tonight with some charts for your watchlist tomorrow.

Position Update

What a day!!!! And I bled....sort of....Hope you guys had a better day than me.

Actually, I didn't do much today. I seem to have a great gift for picking bottoms. Unfortunately, this gift works only while I am selling a stock!! lol. Now, only if I could make it work while buying a stock too! I got out of WYNN at 67.26 for a loss north of 6%. If you have followed my posts, you know this is relatively a huge loss for me considering the fact that I usually take losses pretty early (see weekly review under label for details of all my trades).

I got into SWC at 13.44, the reason for which can be found here. As you can see, Palladium made a pretty nice comeback today.

I still hold my position in NEP and am pretty comfortable holding it in spite of the losses.

I am pretty pleased with the way my election result pick behaved today and and am still in it.

All in all, I am in a little over 30% cash.

I like the way the markets closed today and will be posting the market indices charts with support and resistance levels later tonight.

Election result pick!

The election result in Massachusetts - a shocking loss for the Democrats and the 41st vote for Republicans in the Senate - could quite possibly hurt the health care bill. This is in all probability good news for health care stocks, which were already up today in anticipation of this news.

I think one way one possible way to play this scenario is DXCM. This was on the watch list I posted yesterday. I admit when I posted the watch list and even when I entered the stock today, I had no clue this stock was in the health care sector. I just play the charts with no concern for what the company does.

But this happens to be a stock not only in the health care sector but also in the Medical instruments and supplies industry! You do know the significance of this if you have followed the health care bill.

The stock saw a great move up on Friday on massive volume. It not only held the huge gains today, but also had an impressive move up - the reason why I got in it today.



I would recommend this stock for your watch list tomorrow as a high probability play.

Good Luck and Good Night!

Palladium update

Firstly, I apologize to the regular readers - I wonder if anyone of you can be called regular though as the blog is just over a week old as of today :) - for posting about Palladium again!! As you know, I have posted about these two stocks regularly and I hope at least some of you benefited from one of these picks!!

The fact of the matter is PAL is up over 18% and SWC over 9% since I first recommended them last week. Ever got into a stock and it just felt right? Forget about the charts and indicators. It just feels good and you know you have a winner on your hands. It is a great feeling, and sadly I dont experience it very often :), but thats the way I have felt with these stocks in the last couple of weeks.

I wont go into all the reasons why I like Palladium and these two stocks in particular. For more on that, please refer to the earlier posts here, here, here and here.

Firstly, lets have a look at the palladium prices. The chart still remains a thing of beauty! As of right now, it stands at 465+.



As for PAL, its been almost a parabolic rise from less than 3 to around 4.80! This rise has been accompanied by a significant increase in volume as marked on the chart.



SWC had a huge run up today - a +13% day on significant increase in volume. After the big move to 12, it consolidated for a while on relatively lower volume and then finally came the big move up today.



Now, for the million dollar question - do these stocks still look good even after the huge move up?? And the answer would be a definite yes!! Like I have stated before, overbought and oversold indicators like RSI, stochastics work only in ranging markets and should be ignored for trending markets.

One of the mistakes I used to make earlier, and still sometimes do, is think that the stock is too "expensive" after a big move up. This comes from the fact that at the back of my mind, I think that since I knew of this stock from a lower price, I regret not getting in earlier and thus as a defense mechanism, my mind thinks the stock is too "expensive". But the market doesn't care at what price you could have got the stock!! All the market cares about is NOW! And how do we know what the market is thinking - by looking at the volume. Look at the bullish volume patterns in both these stocks. Such volume cant go waste!

Can there be a period of consolidation or a pull back? Certainly, especially after such huge moves up. In fact, I would welcome a pullback on lower volume or consolidation right here for the stock to form a base at these levels. In the end, how you want to play it is your call. If you are a momentum trader, jump right in or if you are a position trader, wait for a pull back.

I guess that will be it from me today. All the stocks in the watchlist yesterday closed in the green. I would love to say that that's because I am the best stock picker there is, but we all know that that's simply because the markets had a very nice move up today.

Overall, I would advise the readers to tread carefully out there. This is still a market which could swing wildly on news. Nobody got broke taking profits and remember to keep those losses, and there will certainly be losses, small.

Good Luck and Take care!

Position Update

A satisfying day which could have been better...but no regrets.

Like I wrote at the end of my last post, I had no access to the markets from 9 to 11:30 this morning. A risky scenario considering I was heavily long. I knew the Citi results but the pre market was giving me little clue on what to expect later today. So, I decided to place some sell limit orders to just lighten up my positions.

I placed a sell limit for NEP at 10.40. It never touched that price, so I still own it and am very comfortable with this position.

I placed a sell limit for SBIB at 5.49. My entry point was 5.50. It reports day after and no way I was going to trust a banking stock through earnings. I was pretty confident that it would test 5.50 - its resistance - so placed the sell limit at 5.49. So, a loss of 0.2%. It had a high of day of 5.61 and closed at 5.50. If I had been able to watch the markets, I am very confident that I would not have been able to sell at the HOD, but I would have at least sold at breakeven including commissions. Oh well....but given the same choice and the same circumstances, I would do the same thing all over again.

And now....SWC. I have been crying myself hoarse about Palladium, SWC and PAL since the very first day I started writing this blog around a week ago. The regular readers of this blog know it. Well, SWC looked pretty nice in the premarket. But still I held a fairly large position, a little too large to be comfortable with when I couldn't follow the market, so I put a sell limit for 45% of my position at 12.80. And let the rest run. And run it did!!!!!! SWC closed at 14.10 with a gain of over 13%! I sold the rest of my position at 14.10. I wasn't comfortable leaving single day gains of over 10% on the table in earnings season. Looking at the charts, had I been able to follow the market, I would have sold half of my position at 13.50 and still be holding the other half. Still, cant really complain.

I still hold my WYNN position which I hope is a WYNN-win situation :).

I entered into DXCM at 10.05, a chart which I posted in the watchlist yesterday.

So, that's how I stand. I covered all my Friday's losses and then made some thanks to SWC. Hope you all had a nice day today too!

I will be back later tonight to have a look at the watchlist, and maybe also a review of SWC and PAL. Take care.

Watchlist

Tuesday update - more charts - in the end

Hi readers!

The following are some stocks for your watchlist for Tuesday. These are all stocks that performed rather well, or at least decently, on Friday which we all know was a down day. So, the logic behind these picks is that if the market goes up from here, these stocks will lead the way. Of course, if the market goes seems to be going down, be careful going long.

How you play these picks is your call. If you are a day trader, you might want to just jump in with the momentum. If you are a swing trader, you might want to wait for a pullback. However, I have pointed out some obvious entry and stop points for these picks.

BTW, there is a new poll to your right. Please take a moment of your time to answer it. Thanks!

Without further ado, here are the picks....


CHKP - Really love the volume pattern in this one. As you can see, its close to making new highs. If volume cooperates, I wold recommend the crossing of the high of the day on Friday - 34.60 - as an entry point if you are interested. Watch out for a run to the upper end of the trend line. ~ 36.



DXCM - What a strong day on Friday!! Look at the volume patterns for the last 10 days or so. Very bullish indeed! Again, getting in as it crosses the high of Friday - 9.89 - seems like a good possible entry point to me.



CGA - Nice bounce off the 50 day MA on Friday. I like these kind of plays which have an obvious stop loss point. A nice doji formed on Friday. A run up to 18 is on the cards if the market cooperates.



FEED - Nice bounce off the support which also happens to be close to MA (200). Its close way off the highs of the day on Friday spoils the chart a little though. The volume patterns look really bullish though for the last month or so and a breakout move from here wouldn't surprise me at all.



That's what I have for now. The regular readers of this blog know I liked PAL and SWC last week. As Palladium made new highs even on Friday, I still like them. I also still like WYNN which I continue to hold going into next week.

Let me know if there are any charts out there that you like and I might add them to the list. I myself might add more charts to this list if I come across any more plays that I like.

Thanks for reading! I hope some of these plays prove to be profitable to you.

Tuesday Update

I found some more nice charts while going through my scans today and I thought I would share them with you readers. Here they are:

FLOW - Look at the volume pattern on this one! Volume is pretty much the most important factor for me when I look at charts. A nice test of support on Friday followed by a big move up. Remember, all this on a down day. This looks good to run some more!



NKTR - Volume again. I like how it closed close to the high of the day on Friday. Has been testing 12 recently and could really run if it crosses it.



PRGO - Trying to cross the resistance. Get into this only if it crosses the resistance as it might possibly be topping. I like how the price range has got smaller and smaller every day. See an explosive move coming in either direction.



I might not be able to get into any of the picks tomorrow as I wont have time to follow the market in the morning. But if any of these stocks move, I hope some of you readers out there are able to benefit!

Take care and Good Luck trading!

Jan 11 - Jan 15 completed trades

4 profits, 3 losses -  + 10.2% 

Average Profit - + 3.23%
Average Loss - -  0.91%

Total account up 4.87% YTD

Open positions: NEP, SWC, WYNN, SBIB

Note:

1) The table shows only completed trades of the week. The positions that are still open will be accounted for in the week that I close them.
2) The YTD calculation includes the open positions. I just take my account value at end of Friday and calculate it. So, it also includes commissions which do matter a lot to a small account like mine.

Which other blog reports results after commissions? :)

Life is too short to be worried about money

Those of you who read my last post know I celebrate my losses. And those who know me know that all my celebrations include decent amounts of alcohol. Who am I kiddin here?? Make that decent - large. So, that's where I am coming from, so please excuse my ramblings.

But this is my blog and I am going to write what I feel. So, I do not apologize for my ramblings. For those who are disappointed about the losses today....who cares?? Life is too short and unpredictable to be worried about money all the time. If you are playing the stock market with money you cant afford to lose.....sorry Sir, but you are an idiot and I have absolutely no sympathy for you. For those who are smart enough to play with money they can lose and lost a decent bit today...grow up!! If you are lucky, you are with people who love and care about you. Not everybody is as lucky as you! Don't ask me how I know. Some of us are blessed to be loved so much and yet cant be with people who love them. Again, dont ask me how I know. For those who are sleeping next to your loved ones tonight, dont forget to tell them how much you love them and how empty your life would be without them. If you have kids, can any profits take the place of the smile of your kids? Spend time with them this long weekend and forget about your positions. You dont know how lucky you are to be surrounded by the people you love and who love you in return. You better damn well appreciate it!!

I am gonna label this post "introduction" because if a wasted man tells no lies, then this post is about me. I am going to go fix myself another drink. And you, better love and cherish your loved ones and the time you spend with them!

Carnage Review

OK! What has to be done has to be done. Just as one celebrates the spoils of war at the end of a victory, one must assess the damage at the end of a defeat. I will just state the facts. Here is how my portfolio fared today.

NEP down 3.11%
SWC down 0.88%
SBIB down 2.04% (from the price I bought today)
WYNN down 2.33%

Overall account - down ~ 2.25% today.

In the last couple of months, my account has gone up over 60% with no losing week which makes this day kinda hard to take. In this time, most of my losses have been around the 1% mark, so that means I haven't been exposed to losses of this magnitude for a long time. Whose fault was Today? I can think of three factors - Me, me and me!!

I might have still been able to sneak in a positive week, but I will have to do the math for that. More on that during the weekend!

How did you fare today?

Update: I just wanted to share with you readers an interesting habit of mine. I always go out and "celebrate" a decent down day!! And never a big profit day. It helps me put profits and losses in perspective.
With losses - I trade with money I can afford to lose. I can still party!
With profits - The market giveth, the market taketh. Stay humble.

Possible reversal ??

Check out the pretty decent positive divergence in MACD. Indicator of a reversal soon??



11:04 Update. I would never tell anyone to buy anything on a day like this but seriously guys, just check out SBIB. MTL too.

13:54 Update. Palladium again trying for 450. I like both SWC and PAL here.

Position update

Entered SBIB at 5.50. Here's why:



10:02 Update. Horribly in the red today!!!! Definitely the worst day in months.

10:15 Update. Since I want this blog to be not just about stock picks but also trading emotions, I have to be completely honest. And at times like these, brutally honest!! Feeling like a real idiot here and really disappointed with myself. Why didnt I listen to my own advice and tread cautiously?? Well, actually I did....until yesterday. lol. Hope you guys out there are doing better than me!

10:19 Update. And I DO NOT blame the markets. This is all me, me, me!! I am going to stop seeing the screen for a while.

10:21 Update. I just got the chart of the day award at chartly on stock twits. You have to find this funny!! The markets sure have a twisted sense of humor!! lol
BTW, the mention was for the chart of WYNN that you see below. Not bad considering it was my first day posting on chart.ly :)

10:40 Update. And here is the glass being half full, make that 3/4th full moment of the day....At least I am not long solar stocks!! lol

10:46 Update. SBIB showing admirable strength. Not really worried about WYNN. Palladium holding up well too. Hmmm....

10:53 Update. The market close to its lows but most of the stocks on my watch list are well off their lows??!!

WYNN - one for your watchlist

I almost forgot about this one. WYNN broke through a long term resistance today with decent volume. The chart looks good and I entered at 71.84. I highly recommend this for your watchlist tomorrow.

Palladium and how to play it

If a picture is worth a 1000 words, then this one is worth at least 10,000!! So, am just going to show the chart and shut up!



Like it?? It gets better....It touched 450 today after hours!!

Well, the thing is that palladium is an extremely rare metal, so there are not too many palladium plays out there. And unlike gold, palladium is widely used in industry, namely the automobile industry. I guess the huge car sales in China kinda help!!

SWC happens to be the largest miner in North America.



PAL is a smaller, more diversified miner. This little guy has had a parabolic move up and still refuses to give up!



PAL had a nice move up today and is on 52 week highs and SWC didn't have a similar run today inspite of being a pure Palladium play which PAL isn't. As you can see in the chart below, the two stocks tend to move together with PAL being more volatile of the too. It wouldnt be wrong to expect SWC to play catch up tomorrow.



Let me know if you have any other nice picks for tomorrow!
Good Luck!

Update: Here's the real time link for Palladium in case any of you decide to play it

All that glitters just might be gold!

I stumbled across a pretty interesting chart. I had noticed earlier today that the gold miners were down in spite of an up day in gold. So, I had a look at the chart of the gold bugs index ($HUI) a little while back. And its at a very interesting position!!

$HUI is indicating that gold miners are a screaming buy right now!! Its right at the top of MA(20) and above an important trendline. Now that's what I call a low risk setup with an obvious place to set up your stop. If gold cooperates there is no reason why we should not see a decent bounce in the gold miners from here.



And it gets even better, here is a longer term chart.



BTW, if you like the above chart, wait till you see the Palladium chart!! I will post those later tonight.

Here are a few gold miners that I keep track of. While the individual charts are not that impressive, I like these plays because of the above shown overall gold bugs index chart.

If you want to pick a setup that has shown considerable strength even during gold's recent correction, then EGO is the pick for you. Hasn't suffered a major correction like other gold stocks. In fact, it was up today too despite the gold miners index being down. Watch out for a clean break of 15.



AUY - MA(20) providing support. So your stop point is obvious.



NGD - A smaller miner. I like it over 4.40



GG



XRA - A break of 8.50 and we are off to the races again!



Palladium just made new 52-week highs even as I was preparing this post. I will post about it later tonight.

Good Luck tomorrow!