SPY analysis. Focus list extended, but near entries in MUSA, NFLX, CLDX and GS. Strategy for taking shots in extended markets. Solar ETF.
Key Pivot Levels: 197.03 : new high resistance, 194.68 20 dma, 190.75: 50 dma and old high
Under the Hood:
We had just talked about the bollinger bands contracting and getting close to an expansion stage, and just like that we get price jumping over resistance and hitting the top of the band (not on chart). Now we’ll see if price rides the top of the band, or pulls back. I received two types of questions about SPY today. Either you wanted to know about trading long the breakout or shorting it.
I would not short just yet. While we could get a pullback, we are close to a support base. I like to short when there has been an extended move. If price rises from here, only then will I look to short. Remember that when you short a trending market that is overbought, you have to let it get extreme in order to put risk and probability in your favor.
I did not trade the break, though I know some of you did. Stops should be placed under today’s candle.
Trading Game Plan and Risk/Trade Management Tips:
For the most part, take it easy and wait for things to setup. It’s tough to sit on your hands, but sometimes that’s the best route to take. Manage current positions and monitor watchlists. Do not chase stocks that are hot or that you feel you missed. Inevitably that’s when they turn around.
While I advise taking it easy, I am never opposed to taking low risk shots even if they end up being losses, as long as they are *small* losses. If NFLX pulls back a little and you feel there is a decent support area to place a stop that would give you a 4:1 reward to risk, go ahead and take it.
Just remember when things are extended, they can snapback at any time. This is how we adjust. We take smaller than normal risk. If you normally risk 1 percent, get it down to .5 percent or lower. If you normally take trades with 2:1 reward to risk, bump it up to 4:1. This is what a trader does to put things in his or her favor. You must adjust.
I exited LNKD and WOOF today. Both were short of targets. With WOOF, it’s been long enough and price moved up big close to resistance today. Once it’s been two weeks and my target has not been hit, I am more apt to cut out before my target is hit.
LNKD was a tougher decision. I wrote about it in the alert.:
I took full profits in LNKD at average price $173.20. This was a tough decision. Here is my response to a member question about LNKD.
Member TS: I know you don’t typically do this but does it make sense to move stop on LNKD. Its $10 above entry
My response: I have been struggling with this all morning and thought about taking profits today. The problem with moving the stop up is there aren’t many logical places that give me 2:1. We can’t set the stop at a 10 point gain…we’ll likely get stopped out. So right now it’s either take a full profit and get the 2:1 gain, or stay in it. Tough decision.
So basically right now it’s take a full profit and get 2:1 or stay in it. I feel like the market is extended and I may get back in at a better price. This is a risk as it could continue higher and hit my initial 3:1 target. The decision is made easier since I did get my required 2:1 risk ratio.
Here is the Trade Journal with current open and past closed positions, along with stops and targets.
The Focus List
Most of the focus list is extended. If I see a shot that can be taken, I’ll send an alert tomorrow with a qualifier that risk as percentage of account and risk as in risk ratio should be adjusted to market condition as discussed above.
Here are a few stocks still near good entry levels:
GS is right at entry level. The long tail today is a concern. Why did it pullback and not hold when the market was so strong? Nevertheless, the risk parameters discussed yesterday are still valid.
CLDX comes from BoW and Trade Report member Alvan. Excellent volume pattern to go along with price. Price bounced at the 20 dma today. Entry on weakness. Stop around $16.
I would imagine we’ll see some volatility in NFLX. Pullbacks toward the bottom of today’s breakout bar offer good risk ratio.
MUSA is holding the long tail candle that tested the 50 dma a few days ago. The stock had a long run up and normally I would be all over a pullback to the 50 dma. The problem is the volume on pullback, which was very strong. Still offers good risk.
Click here for link to monitor the focus list.
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market.
Some leaders, like NFLX, PCLN and AMZN were on fire today. It’s a bit surprising that Z and TSLA did not participate.
Sector and International ETFs
It is surprising that solar did not participate today, with the ETF and stocks like FSLR and CSIQ not doing much. I’d love to see a pullback.
Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way. It is important to know these rules if you trade off the Report.
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1 thought on “Market Speculator Part Time | Swing Trade Report”
Can you explain how you use negative divergence or rather how you contextually interpret it – I’m unfamiliar with it but will google shortly – thanks. Paul – great work as usual