8/16/2010 premarket | Bulls on Wall Street

8/16/2010 premarket

 
 
 
Morning folks.  Looks like we got another weak open. Futures are dipping slightly on news that Japans economic growth sharply slowed last quarter. Traders will be awaiting reports on the housiong market and regional manufacturing today.  The market is setting up for shorts though on a light bounce.
 
 

The market is setup for shorts, but entry is tricky here.  Stochastics are oversold.  However, price is under the 50 day moving average.  Entry here can be taken with different risk strategies.  

 

The first would be to place a stop right above the 50 day ma.  The problem with that is the market is oversold and could bounce before resuming the downtrend.  

 

The other strategy is to place the stop over the 200 day moving average.  This protects you from getting stopped out of a profitable trade, but increases risk.  If taking this strategy, it would be prudent to decrease position size.

 
We use the SPY two ways. One you can actually trade the etf using strategy above. The 2nd is to time your entries into stock positions using the SPY as a guage of where the market is going.

 


 

 Its also opex week so beware of funky moves that come out of nowhere

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