Monday, September 20, 2010

Stock market review

It was one way traffic at the markets today as the bulls really manhandled the bears. Early in the trading session, the market broke through the multi-month trading range, taking control of 1130 in S&P and 2325 at Nasdaq. These important resistance levels will become support now. Let's have a look at the index charts.

S&P - The next resistance should be 1150 with 1130 as support. Some consolidation would count as healthy over here.

Nasdaq - Took out the 2325 level, whose importance I have pointed out many times before here, so I won't go into it again.

Russel 2000 - Unlike the above two indices, still to break out of its multi-month trading range. Nonetheless, a big move up today and it finds itself right at the top of the trading range.

Another chart that I would like to point out here is XLF - Financial sectors ETF. It still finds itself stuck in the trading range. Keep an eye on the 15 level tomorrow. In my opinion, if the market has to continue its impressive run up, it is imperative that the financials break out of this trading range. 

Personally, I entered MIPS at 8.40. A lot of setups presented in the watchlist yesterday did very well today and I hope they were of some use to your readers!

Take care and good luck!


Anonymous said...

hey PT,

Need your strategy on position sizing. how do u decide the position size on a stock. do you usually put 100% of your money?.

the reason I'm asking is I'm a very good technician. Usually my bets are right, but need to improve my position sizing aspect.

Please throw some thoughts and tips.

positiontrader said...

The position sizing strategy I adopt is simple. The closer the stock is to the stop loss point, the more the size of the position. The size of the position thus depends on the risk involved in the trade. More the risk, smaller the position size. In this case, I consider adding at support or preferably, on the move up.

Hope this answers your question.

Anonymous said...

got it. so it varies and depends on situation.


positiontrader said...

Yeah, everything varies depending on the situation. The only constant is controlling the risk.