This market is just goofy. I didn't take any trades today. I saw a few candidates, but I thought the market would gap and consolidate for the whole day. I didn't expect things to move up as much as they did. Shows you what I know.
Today's action makes tomorrow's even harder to predict.
I'm happy to sit on a 14R gain for the month and make a new start in October.
Yowza!! That was one ugly day. I had no idea that the bill wouldn't pass. I thought it was a done deal.
This could actually be a good thing. It's a much more natural way for the markets to get back to equilibrium. It will be a shocker for a while, but eventually things will come back around. They always do. If you go back and look at the tremendous hits the market took in 1987, 1998, 2001, 2002, they look like mere blips on the screen. Someday this will be a blip as well.
But today people feel that the end is near. That can be good for the markets too. We've gotten way too cocky since 2003 and arrogance creates the problems that we are seeing in the market today.
My dad called me today worried that I was getting my buttocks kicked and destroying my financial future. I assured him that all my money was currently out of the market and that I was doing just fine. He asked me if this was the end of the stock market as we know it. I asked him if he remembered the crash in 1987. He said, "You know, I really don't. It must not have affected me that much, because I don't remember it at all."
As devastating as that crash was in 1987 (a loss of 40% on the DOW--20% of that in ONE DAY), when you look at the chart you can see that things recovered to where they were before the crash in just two year's time. The markets have a remarkable ability to heal themselves and even though everybody is saying "This time is different!", I really think that this will end up being an amazing opportunity to buy some really beaten up stocks on the cheap.
So even though the headlines are screaming "BIGGEST ONE DAY LOSS IN HISTORY", they are referring to dollars lost--not percentage lost. If we were to duplicate that October day in 1987 the DOW would have had to lose over 2200 points today.
If this deal falls apart--watch out!
I'll be happily watching from the sidelines. I've considered taking my 14R gain for September and sitting on it until things are more clear. Things are far too messy right now to try and be too fancy.
Things at my job have become more complicated as well, so I just might have to sit this whole thing out anyway.
I went back and looked over AAII's data for the Zweig screen since 1998. This has been the worst year for the stock screen since AAII began tracking it. AAII tracks the stock screen on a monthly basis. Here's the breakdown:
From January through September:
1998 31%
1999 16.3%
2000 40.2%
2001 19.8%
2002 12.9%
2003 38.1%
2004 25.2%
2005 25.7%
2006 7.2%
2007 15.9%
2008 -10.5%
This was a topsy turvy week. I was very hard to grind out anything as the markets waited for the decision makers in Washington. I had a few good trades go bad as the market chopped about.
I made 5.42R for the week thanks to today's trade.
The Zweig RS 5 screen lost 5.5% this week. Zweig MACD lost 8.22%. Ouch.
Finally, I get a trade that works out the way I planned it. This trade came from a NR7 signal using Trade Ideas. I spotted it just as it was breaking out of the "bull flag" consolidation and I put a stop just below at 20.06. After leaving money on the table on several of my trades recently, I decided to place a limit order at 21.09 where I estimated that the "measured move" would end.
I went for a bike ride and returned to find the stock sold. I assumed that I had stopped out with a 1R loss but then I noticed that the limit order had triggered. The stock was on its way back down when I got home, so I was relieved to see that I had benefited by unemotionally trading my plan.
In the past I would have trailed my stops using the 20EMA (green line) as my threshold, so I probably would have sold at 20.70. Corey at Afraid to Trade (my mentor extraordinaire) challenged me to change the way I was setting my stops and determining my exits when I spoke to him last week. I owe him for the success of this trade.
I shouldn't trade on days that I have obligations. I don't seem to take everything into account and I end up making hurried decisions. Today I took 3 trades and lost 1.10R total. Toward the end of the day I was actually up 1R but as the market rolled over I lost two thirds of the trade. Oh well.
It was pretty choppy out there today, so I guess I don't feel too bad.
LLL was a stock that I was watching throughout the day. Check out the wicks on those candles. Days like these are hard to trade.
Sometimes I can't believe the mistakes I make. This weekend I vowed to hold my positions to their target and avoid trailing stops. The two trades detailed here are obvious examples of how I broke that rule. I wanted too desperately to keep my profits and I placed my stop along the 20 EMA instead of shooting for my targets (blue arrows). For the day I lost 1.82R. Crud.
I was glad to see that the market didn't scream forward again today. I think this pull-back is healthy. I have no idea where we're headed, but it does seem like all the rules have changed. Crazy times.
When I lived in Romania, I was introduced to the country's obsession with a simple dish called Mamaliga. I tried to like it, but to me it was bland and the texture made me gag.
My friend Gabi has created a YouTube video of how to make the dish. You can see it on his blog that is dedicated to all things Mamaliga. He cracks me up.
I'm still pretty ignorant of stock market history, but from what I read from people who know, this was one unprecedented week. I'll have to admit I was feeling a little odd on Thursday and Friday. It almost felt like the end of the market as I knew it. Everything seemed to be changing, and I became worried about my future as a trader.
Friday's opening gap made it nearly impossible for me to get into any trades with good probabilities. It seemed like every stock gapped up 3-6% and then flatlined the rest of the day. There was really no wiggle room for me to trade in. That's OK, because I took the day off and got some stuff done around the house.
It's crazy that the markets ended up pretty much where they were before the week began.
The down days were good for me as I made 11.22R for the week. I'm thinking anyone with some good sense could have made a LOT of money this week.
The Zweig RS 5 screen lost .20% this week while the MACD screen (with only on candidate) made over 9%.
Trader Mike has a good post about the spikes that a lot of stocks showed during Friday's frantic trading action. I noticed strange spikes on a lot of stocks yesterday and that's part of the reason I stayed out.
If any of you were wondering what really caused the market's unexpected surge around 2:30 today--I sold all my long ETFs in my long-term portfolio. It always works that way.
Today I lost .23R on two trades. Again, I didn't trade my plan. I had my stops way too close and I got jumpy with every move. Here are the two trades I took today.
That was buttock ugly. I managed to squeeze out nearly 3R on two trades. I could have made a lot more but once again I had an appointment that kept me from managing my trades. Some day I'll be able to do this without interruption.
Charles Kirk has a very well written and thought out piece about our current situation and government interference.
I was way wrong when I decided to go long in my retirement portfolio. I haven't been able to pull the trigger and dump the losers.
I've seen a bit of the world, but this video that I ran across this summer inspired me.
Where is Matt Video
Does anybody out there have experience trading on the go? How do you keep things secure? Do businesses with WiFI hotspots get upset when you're streaming quotes over their bandwidth?
My goal is to start traveling with my family in the next 3 to 5 years. I'm planning to set up a "home base" in a country that is cheap to live in and friendly. I lived in Romania for two years so that seems to be a logical first base.
Despite this being the suckiest market day in quite some time, it was my best day trading so far. I managed an 8.77R gain. It could have been more, but both stocks spiked around 3:30pm and stopped me out before they continued downward. Oh well, I'll take what I can get.
Unfortunately my two highest "R" gainers for the month came on trades where I risked half of what I normally do. The first was the result of my fear of more losses, the second was today on AIV (chart above) where I only got a partial fill. I decided not to chase the stock and canceled the remaining order--crud.
I honestly thought that the market would capitulate at 3:30pm and come roaring back as the bargains were snatched up by the big players. I was pleased to get out of my trades quickly despite losing 2R in the process. Better safe than sorry.
I'm not sure where this leaves us. Is the selling finally over? I have no clue, but I think this day was healthy for the market. We didn't have any "rescuers" today, and the market was allowed to adjust on its own. It's about time.
Here's a trade I should have taken on Friday. I'm learning that narrow 30 minute candles aren't confirmation enough for a high probability trade. BEXP showed a "bull flag" on the 5 minute chart at the same time it was painting a narrow 30 minute candle (around 11:30). If I had bought it when it broke out from the "flag" pattern and held until the end of the day, I could have had a 7R profit. 
Daytrading makes news like this less scary:
US asset prices tumble
Wall Street Bankers Teeter
Lehman Heads Toward Brink
Wall Street Prepares
Tomorrow will be very interesting.
Maybe I won't have my regular Diet Mountain Dew for breakfast tomorrow.
The week started off good for me and then I blew it. I got too cocky and started trading outside my plan. I ended up the week down .21R but it sure feels like I was down more. I could have had a very good week if it wasn't for knee-jerk trades that I shouldn't have taken.
For the month of September I'm down 2.55R.
The screens came to life this week with Zweig RS 5 making 2.43% and the Zweig MACD making 3.5% (on one stock -- COH).
I didn't think yesterday's gains would disappear quite this fast. My trading was a mess this morning and it was all my fault. I started with the right attitude, but I jumped in way too soon and bought 4 stocks that had nothing to do with my trading plan. I even bought DELL because I heard that the CEO (Dell) bought a bunch of stock. Apparently I have learned any lessons over the FIVE YEARS OF SIMILAR MISTAKES.
I stopped out of DELL quite quickly and went long on three others. What is my deal?!!
I stopped out of them rather quickly as well. I was down 4R and felt like a complete moron.
So I dusted myself off and decided to trade like I did in August. I waited for the kinds of setups that worked and found a couple of winners. NRG was my biggest R win. It was up 8R for a bit before recovering a bit for a 5.5R gain.
Overall I made 3.53R today. It should have been a lot more, but I'll take it.
I thought when I started using real cash that I'd become more disciplined. That hasn't been the case. I find myself getting out of trades too quickly when they start going against me and obsessing about taking gains too quickly when I've made some money.
I've also tried too many "hot dog" trades where I have no real confirmation, but the temptation of making quick bucks overwhelms my logic and risk management. Hopefully today will boost my confidence a bit, and I'll apply the lessons I've learned--but probably not.
I wasn't too thrilled about taking any positions today despite everyone being thrilled about the bailout and the subsequent market gap up of over 350 points on the DOW. I was pretty sure that things wouldn't hold up all day, and they didn't. I decided to take a few positions around 11am and a few of them made a few bucks and a few lost a few. My portfolio lost about a tenth of a percent overall.
My most recent post has garnered a LOT of e-mail and a few comments so far. I am surprised by the number of people who get upset at me for some of the decisions that I make about how I spend my money. My viewpoint is that it takes money to educate myself, and some of that money is going to be wasted on stuff that doesn't teach me anything (other than to avoid wasting my money like that again!!).
I've spent a lot of money on services, newsletters, trading plans, mentoring, screeners, etc., and with very few exceptions, I've learned from all of them. Trading is a discipline that's in constant flux and has billions of bits of information that are impossible for anyone to totally comprehend. That's what I enjoy about it. It's new every day and there is always something to learn.
You can't be a tightwad with your money if you want to learn how to trade. There is lots of information out there for free (including this blog), but you've got to pay for the deeper stuff that can only come from talking to people who can actually show you how to make money because they've done it.
Yeah, I made a dumb mistake buying this last bit of information. But I'm not flailing about like a chicken with my head cut off. I have the discipline to make money as a trader, and I've made a lot in the last few years.
This year has sucked, but I think I've grown more as a trader this year than the last 5 combined. I'm within a few months of actually fulfilling my goal of trading full time for a living, and I was nowhere near that just six months ago.
So be assured that I'm doing OK. I haven't gone insane, and I'm not a sucker, or "completely clueless" (most of the time). I wasted 70 bucks, but I'll be able to recover. Trading isn't easy, and I think that I'd be doing everybody a disservice if I avoided discussion about the boneheaded decisions I've made.
I've been receiving daily e-mails from momentumstockpick.com for the last few years. They advertise "Powerful stock market resources and tools for day trading with our strategy. Discover momentum stocks in a snap and choose only the best every day."
I thought I'd give it a try--for $70 I could learn a few more things.
My loss is your gain. What I received was a link to a website that was basically about 4-5 pages of very basic information that is shared by every stock blog out there. The gist of the article encouraged looking at free news sites and buying cheap stocks that have news announcing new stuff. That's pretty much it. Revolutionary.
I traded like an idiot today. Down 4R. You name it, I did it--over-trade, revenge trade, breaking trading rules, not following the plan, entered the wrong order. Just stupid.
I rushed into things because I had an obligation so I wanted to get my positions established before I had to do anything else. That was my first mistake. So then I chose stocks that didn't fit with my system at all. I was buying right an left--anything that was moving down with the market.
Then the market started shifting upwards and it all came apart. I had a feeling that it might go that way after the sell-off yesterday.
I'm going to start posting my weekly and monthly "R" values instead of percentage up and down. It helps me in my analysis, and it should allow StockPunk readers to get a more "scalable" idea of how my performance has been.
My goal is 100R (or doubling my account) by next summer. I'm pretty confident I can do it if I avoid the mistakes that I made today.
My first day trading real money with the new system. It's a lot harder risking real money, but I managed to gain 1R today trading 7 stocks. I was up over 2R for a bit but decided to hold on to my short positions because the market was trending pretty strongly. It didn't work out the way I planned but that's the way it goes sometimes.
I'm pleased as punch to be able to gain 1R on a day where the market had some pretty huge losses. I used to dread days like this. I would watch pensively as my positions got decimated and I would grudgingly pick up the pieces at the end of the day. Now, I can decide whether or not I want to participate in the action and I can take positions that follow the trend of the market.
I'm finding that on trend days like this, there are often too many stocks to monitor and it becomes more of a crapshoot. I missed CME even though it was on my watchlist. It ended up with a 5R gain. My biggest gain was 1.85R today.
I've got everything setup and I must say I'm impressed with TradeStation. It offers a lot more than my Scottrade Elite platform did. I spent most of the day learning the system and I plan to make my first trades tomorrow. Exciting.
We had another non-committal day today. I saw several good setups and I'm starting to think that meandering days are good for my system. I have trouble on true trend days. I don't have enough history to make a judgment one way or the other, but things will be clearer in the coming months.
I bought a 22" monitor over the weekend and I've become one of those "snobbish" multi-monitor traders. I'll have to admit, having more than one screen makes things much easier. I was wishing I had a couple more today.
My money is still in cyberspace somewhere so I was unable to trade today. That was a good thing as I was completely surprised by the reversal that happened today. We got a indication that things were going south and that the trend would end at the moving average crossover. That probably where I would have closed out any longs that I had.
With the news that Gustav wimped out and the subsequent drop in oil prices, I thought this would be a strong positive trend day. Shows you what I know.
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