Tuesday, April 01, 2008

April 1st

A strong day to be sure and a technical surprise. The only thing lacking was convincing volume. April Fool's? We'll have to wait and see. With the open above R2 I was, of course, the inveterate pessimist, looking for the gap fade. However, when the Qs coasted through my 9:38-9:48 window with little sign of weakness other than the unconfirmed signal line, I decided caution was the better part of valor and held off. With the 10:30 low showing strength, the Qs at R3 and the 10/20 5M SMAs showing no sign of a cross, I entered at 44.70 at 10;30, with one eye on the exit door and the other firmly on the 10 & 20 bar 2M SMAs (I switched time frames to the 2 minute bars after the entry). At 12:24-12;28, with the Qs now at a stratospheric R5, showing a little squat bar with a doji top, the signal line heading down and the parabolics firing a SELL, I closed my long position at t 12:30 at 45.18.
Net results:
Time in trade: 120 minutes
Net gain: .48
I obviously left some money on the table, but for an intra day trade the results were acceptable for my risk comfort level.
I'm off to spend some of my hard won bux at one of the area's better golf courses.
These are the good times.
Some further thoughts unrelated to the Qs:
Although economic fundamentals continue to deteriorate, the markets always manage to find ways to confound technical indicators. Such was the case today.
I'm not a power shopper, but I do inevitably spend time in a variety of retail stores. One observation I've made is that sporting goods stores are invariably devoid of customers most of the time, often with more staff than shoppers. This coincides with the dismal performance of the sporting goods sector for the past 6 months (and more). Some stocks worth checking out for possible shorting opportunities include BC, HZO, BGFV and DKS and today's rally should only increase the attractiveness of those shorts.

2 comments:

Andrei said...

Hi,
I understand your very cautious trading. I saw the same strength and the open right through R2. On a strong trending day, how come you do not let your profits run and just follow specific moving averages, such as the 20 dma, instead of the reversal of the SAR? I have done some backtesting and found that on these days, even on regular days, the market holds the moving average and give more room for movement if i follow the moving average?

bzbtrader said...

Yes, well, everything is always clearer in hindsight unfortunately.
I do rely heavily on the 10&20 SMAs as I noted in today's post. My mistake was to follow the 2 minute bar signal and not the 5 minute bar signal, which would have kept me in the trade until the end of the day. I also had a smaller trade in EK today which I followed on 5 mimute bars into the close. .with clearly better trade results. I'm always learning. Thanks for your comment.