Mid-Term: UP
Short-Term: Down
Thursday 9 May 2013
9 May 2013
For a reactionary day it wasn't what we expected markets to do. Nonetheless, we had a down day... The short term trend has made a change but still at overbought so this could pop back up at anytime. The method of trade here would be to go short with a small position until the mid term trend has turned agreeing with the short term trend. Usually we would not trade against a trend but short term moves are ok so long as the position is minimized. This allows you to get as close as possible to the top or bottom of the trend change.
Mid-Term: UP
Short-Term: Down
Mid-Term: UP
Short-Term: Down
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I have a short position on SPY around 162 from May 7 that is underwater but I intend to ride it through without stops due to my conviction for a near term correction.
ReplyDeleteI also attempted a further intraday setup trade on something that resulted in it not working out due to the bizarre market behaviour. On 10-min or 30-min charts there was a Head and Shoulders pattern set up that involved LS forming early Mar 8, the head forming eod Mar 8 to early Mar 9, and RS mid-day Mar 9 with an upward sloping neckline around 163 that completed the RS.
It broke below 163 to 162.96 (matching an earlier intraday low point) and then promptly rose very quickly to new daily high at 163.7 (above earlier 163.43) to invalidate the HnS technical follow through. But from 163.7 it later quickly declined to the mid-162.4's, which was an even lower low than the prior 162.85 and now also below the neckline.
I got stopped out at 163.25 which was the top of the right shldr, but I do not think this is normal or typical market behaviour! There was essentially two fakeouts: the initial false neckline breakage and then the false indicator of resumption of bull run after running to new highs and then selling off to new lows.