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).
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