New Entry - ADSK

Alright now - NO WHAMMIES!!!!

The markets gave me the bullish entry signal (which was a cross up out of the oversold area of the stochastics). Of course, you don't SOLELY rely upon just one item, you gotta look for other items to confirm the move. Take a look at the markets below:

In addition to the stoch crossing up out of the oversold zone we also have:

1. The proceeding 3 days the bears could not get the market prices to go any lower (i.e. the bulls are here - at least for now).

2. An opening gap in all 4 markets

3. After the open all 4 markets proceeded higher

4. 3 of the 4 markets traded above their 50 day moving average (except for that slacker IWM).

So, now that the markets are showing a BOUNCE, it's time to get into a bull play. This is going to be a short play - maybe 2-5 days. I'm not looking for any prices to shoot to the moon, I'm simply looking for a pullback from this bearish short term trend.

I did a search for stocks that were above their 50, 200, and 20 day moving averages (i.e. all the stocks that are stronger/leading the markets) and stocks that had been oversold and have their stochs just coming up out of the oversold zone. This basically means that momentum has stopped going down and the bulls are coming back in and momentum will now go up - at least in the very short term.

After searching, I got my best candidate - ADSK, here's the chart:

I'm looking for decent open interest in the call volume and therefore I'm going with an October 26 Call. So we have TONS of time, but again, I'm only thinking a few days. I figure on prices going up about 6% from here on this bounce up to the 30 level. But we'll let the market's tell us when to get out because in the end - IT DOESN'T MATTER WHAT I THINK, IT ONLY MATTERS HOW THE MARKET TRADES.

So, I'm long ADSK October 26 Calls at $3.12

Patience

Right now I'm being patient and just waiting for the right opportunity to get into a bullish play. The markets are oversold right now and anytime the bulls should come back in and push the bears back a bit.

The opportunity to get bullish may come tomorrow or the next day. In any event it should be soon. But, I don't want to get antsy and just jump in right now, only to find the market continue to drop lower. (kinda like what I did with that IWM call the other week).

Just be cool - it'll come...

IWM update

Looking back at my entry, it was not the best entry. I was above the 50 day moving average in a recent break of it - suggestion of bullish trend continuation. And, I did have the other markets that lined up with IWM, however I made a couple of mistakes.

Unfortunately sometimes you don't CLEARLY SEE your trades and this is a perfect example of that.

Look close at the chart below:

The green shaded candle was my entry day. But there was a problem here, the stochastics weren't low enough - they should have been in the oversold zone under the "20" mark and moving up higher. Instead they were kinda in the middle - this is too wishy-washy, you don't have a clear direction from the stochs - and we don't like that. Big Mistake.

However, once I took the entry, I should have gotten out on the yellow shaded day. Sure, easy to see that now - BUT, I did have an indication on that yellow day. Look at the stochastics that day - they were dropping. Even though the prior day was lower, and the yellow shaded day was higher - the stochs were still dropping (they SHOULD have been going higher if the price was going to go higher).

I got out of XRT, and should've gotten out of this trade as well.

OK, so now I realize I'm gonna take a loss on this one. Fine, I'll let the markets have the first shot at me. I'll get them back.

Now I have to figure out a good exit in order to minimize my loss. My plan is to wait until we get a bounce back up - possibly to just under the 50 day moving average and then close this trade for a loss.

Like I said, I'll let the market take the first shot. Besides, I'm a bit rusty from live trading and could use the rust to be knocked off in order for me to get back up and running.

Thank You Lord

For the insight on XRT. As you can tell from yesterday's post, XRT just didn't "seem" to be acting the right way if it was going to go up. And today look what happened:

As you can see, we had a gap down and after the gap down, price continued down. Glad I got that intuition, saved me from a loss (greater than $2.00).

I am still in IWM, and I'm looking to get out of it. However, I don't want to get out of it today when we are at the lows, I'm looking for a bounce back up and then I'll look to get out and will then look for new trades.

XRT Closed

I closed down the XRT trade yesterday. The reason I closed it down was because it (along with the markets in general) aren't really moving anywhere - they are basically going sideways.

Since it's going sideways and not going in my intended direction, it seems to me like it's just kinda floundering around. I'd rather use that money in a better set up than a stock just floundering.

Check out the XRT chart to see what I mean - I got in on the green day and out on the red day.

I made $1 on the trade, but the trade commissions (what my broker charges me) cost me $3 - so I lost $2 - as in 200 pennies on this trade. I could've made it break exactly even or took in a tiny profit as compared to a tiny loss (by spending some time to watch it fluctuate and then get out), but I'm not overly concerned about a couple of dollars - literally.

I also got out because the markets seem to be floundering as well. Like I said, I'd rather take that money off the table and wait for a better entry. Here's a snapshot of the markets:

I'm still in IWM - I figure that this is my only trade and I have plenty of money left for new trades, and this has NOT given me any real reason to get out, so I'm staying in it.

From here, it's a wait and see - I'm a cherry picker, I wait for the best set ups and then I get in. By doing this I put the "odds" more in my favor - I'd rather have the best of the best, as compared to trading just to be trading. Besides, you make much much better profit being a cherry picker.

New Long Entry - XRT

Give me a "P". No, not for "Pat" Sajak, instead for "Profit" from this trade in about a week or so.

Yesterday the markets gave me an indication that we are going higher. The markets gapped up at the open and then most of them moved higher. So yesterday was a very bullish day. Today a pullback is expected, and that's exactly what is happening.

So, I looked for a good entry and found one in XRT. Check out this chart:

Today's entry is in green. If you first look at yesterday's candle you'll see that we had that nice pop, just like the markets - so this stock follows the market nicely.

You'll also notice a few things if you look close enough:

1. The MACD lines have been going steadily bullish

2. The stoch had a crossover

3. The 50 day moving average was broken to the upside yesterday and we're testing it today.

I like this entry because we are getting in at a low point, so there's more room to move before we hit our target, which is just before the next level of resistance around the $40.90 zone.

I got long Sept 36 Call for $2.83. Looking for this to be a week or two trade. We should get maybe another sideways day and then get a few good bullish days.

I'll solve the puzzle shortly Pat, and will take the prize, thanks.

Time to Play

Time to start playing this market.

I've been waiting for a confirmation from the markets to get in and I got it today. Here's what happened today in the markets:

First you'll notice that we're currently in an uptrend - i.e. higher highs and higher lows. The next thing you'll notice is that we're above the 50 day moving average for these markets. Lastly you'll notice that we had a nice little pullback and then a bounce off the 50 day moving average (or close to it) and the stochs are looking like they are going to cross up (i.e. bullish).

So, I did a ton of searching today but wasn't happy with anything. Either earnings is just around the corner, or stocks are hitting resistance with this big day up, or the volume on the option contracts aren't to my liking. So, I went with IWM - the bottom left market. I took a long call option on this because it's the laggard regarding the other markets. Notice the recent highs in each market and contrast them with where the price closed today - DIA is leading the market, SPY is just behind that, followed by the QQQQ, and finally our boy IWM (slacker).

So, I'm looking for the other markets to pull slacker-boy along. Here's his chart without all the markings:

I'm looking for price to get at least around 69ish. I'm thinking a higher high and a continuation of this uptrend. But, I'll let the markets tell me when to get out, that's just my idea for a target.

I went long September 63 Calls for $4.75. Not looking for a home run, just a nice base hit. I'll get out with a loss if we break below the 50 day moving average and below the most recent low. However, I don't plan on taking a loss, I plan on getting profit on this trade.

Game on, let that wheel spin Bob!!