Party Hats
Well, 12k on the Dow has not only been pierced but "closed". For the first time in history, the DJIA closed safely above the 12,000 level. If you don't think there was a battle for this, just look at the intraday graph. Traders were shoving each other back and forth over this line the past couple of days.
I took a snapshot of this chart today and was going to post a "looks like a buy!" (really! honest!). Anyway, Google (GOOG) posted their results about three seconds after the market closed today, and they were fantastic. After-hours trading has the stock trading about 30 points higher than the close. Let's face it, Google is a money machine.
The Russell 2000, as represented by the ETF IWM below, is truly at a crossroads. Just look at those lines converging.
One of the four rules I have written on my laptop is "Never do an ad-hoc close." What I mean by this is that, once in a position with a stop in place, I don't change my mind about it later out of boredom or doubt. The position stays.
This rule came in handy with CTXS. I had bought puts on it, but the graph was looking sort of hum-drum. I wasn't sure it wouldn't pop up in price. But I stuck to my rule and let the stop order do its work. CTXS got nuked today, and I got out of the position with a profit. (My stop was never triggered, obviously). So let your stops do their job. Don't monkey around with the position once it's in place.
I mentioned this one before, but for those interested in shorting the world of real estate/REITs, try symbol IYR. There are puts on it (although fairly thinly traded), and this looks like a good long-term short play.
That's it for today.
6 comments:
Never act in the first 30 minutes of the trading day.
Never lack a stop price.
Never open a trade prior to your target entry.
mmm, words to live by for sure, I really try to obey rule #1 if I'm thinking clearly. I like to wait an extra little bit after I make a decision to trade. Since were asking questions..... What was the 'Ken Brockman' reference to in the "I,For One, Welcome Our New Bull Overlords" post? There was a label for it, but nothing in the main text. Maybe something to do with the title?
Doug
Master Tim,
Can you please share your stop loss rules on stock trades?
What about index option trades? Do the same rules apply?
What's the average % loss on your option trades?
I apologize if I'm getting too personal. I'm just trying to find a way to minimize my option losses while still giving the stock enough room to breathe.
I've recently started buying more intrinsic value for my short-term trades (2-5 days)and more time value for trades longer than a week.
Your insights are greatly appreciated.
Thanks
P.S. I welcome everyone's thoughts.
To respond:
"What was the 'Ken Brockman' reference to in the "I,For One, Welcome Our New Bull Overlords" post?"
It's a nerdy reference. I got it wrong, actually - it's Kent (with a t) Brockman, from The Simpsons. See http://en.wikipedia.org/wiki/Slashdot_subculture
"Can you please share your stop loss rules on stock trades?"
It's not some arbitrary percentage-based rule. It totally depends on the chart. It varies from chart to chart, but there's definitely a point on the chart which indicates that I'm wrong, and I set my stop there.
Damn, CAT was on my rader yesterday, maybe a bouce would allow for a grab of of a half decent position. I got the Simpsons ref, cheers to nerdiness!
Harf not to trade in the first half hour when you have to go to work early!
Talk about missed opportunities.
I was just thinking of shorting SNDK. What a fall! NVDA and BRCM also fell hard.
This garden is full of fruit ready to fall, but the question is how to find which one will fall when you short it? All the charts look beautifully ripe - signs of reversal, MACD starting to turn down, RSI and Stochastics overbought. So many stocks, so little time.
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