WhipItAround.com

I considered simply taking the day off after handsome morning gains.  Instead, I traded smaller size and only took very high probability set ups.  The result was approximately $500 of additional profits.  This was one of the easiest days of the year to trade, whether you are a scalper or buy and hold kind of guy/gal.  All you had to do was buy every dip and sell on the rip.  There were no major rotations down.  Every time the mkt advertised prices below support, buyers showed up with extreme vigor.  It was almost like prices were being advertised to lure in the shorts and then the big boys jammed it higher and squeezed the shorts out to form consecutive new highs. The only potential short set up I saw was near the end of the day when the mkt failed to make a new high.

I suppose a buyer is a buyer, but do you ever ask yourself who is braindead enough to continue shorting this mkt as it goes higher and higher?  I say this only because the price action indicates to me that new highs are being made from the shorts getting jammed higher.

I decided to post my P&L on a daily basis as a motivation technique for myself and for marketing purposes.

Another excellent analysis from Tyler Durden (see below).  However, I think there is a good chunk of delinquent borrowers that attempt to pay what they can each month even if they are behind.  Really makes you feel like a sucker for acting responsible. 

http://www.zerohedge.com/article/guest-post-americas-stealth-stimulus-plan-allowing-its-home-owners-be-deadbeats#comment-143660

I’m sure all the bears will be feasting on this recent financial crisis in the Middle East that produced nearly a 5% plunge on the German stock market and a 2.5% decline in S&P futures.  Tomorrow, the market could bounce off these levels, but please take this warning seriously: there is much more downside risk than upside risk in the market.  I’d much rather be out of the market than in at this point.  I’ve followed the market for a while and have realized that intelligent investors/traders must read between the lines.  For example, the Fed pleased the stock market by maintaining a 0% interest rate.  Yes, money is cheap, but things must still be pretty bad if the Fed is still giving money away for free at 0%.  If I was Helicopter Ben and thougt this recovery was sustainable, I’d raise rates to at least 1%.  Then again, that would create a rally in the dollar and hurt US exports.  The Fed has your savings rate set at 0% to suck you into the market and hence recapitalize the ponzi scheme.  Does anybody remember what happened after the Fed reduced rates in 2001?   

I am not saying we are headed into another Great Depression, but it is worth noting that sovereign debt exposure was one of the main reasons the global economy went into a depression in the 30s.  There could be a number of systemic black swan events in the future.  What if investors began to reconsider their risk appetite for U.S. treasuries?  What if investors began to doubt Japan’s ability to repay their debt which is 200% DEBT/GDP?  What if people began talking about the amount of exposure European banks have with E. Euro, Baltic and emerging markets?  What if unemployment continues to rise?  What if there is a geopolitical crisis that results in a dollar rally and commodity burst?  What if?

The moral of the story is that you can’t listen to Cramer, politicians, the president or anybody who would be fired or lose money if they told the truth. 

On Wednesday, I noticed some peculiarities in the market: financial stocks, the Russell and GS could not catch a bid and traded weak all day.  Normally, when GS pukes, so goes the market.  I think an inside group of people knew about the Dubai debt crisis and this is why the market traded so strange.

I completely redeemed myself going both ways today - long and short.  Almost a $3k day, bringing average daily profits up to approx $800/day. 

I am a short term trader, however, I advise caution on the bulls, as the mkt seems very heavy here and i see some bearish signals including weakness in financials, small caps and major resistance around 1100 on the S&P.  That being said, I wouldn’t be surprised to see the bulls wash out the shorts one more time.  I don’t think this market will give up until the earlier of (a) the shorts getting exhausted or (b) the beginning of the new year.

Enjoy the weekend.

I was in a bit of a slump with negative results on Friday and basically breakeven on Monday and Tuesday.  After trading yesterday I journaled all my positives and negatives and noted all the trades that shouldn’t have been executed.  It was remarkable because all the losing trades did not fit my trade criteria while all the winning trades did.  Often times, one bad day leads to hesitance which results in missed opportunities and higher anxiety.  I realized that after a negative day, I was hesitant to take trades that fit my criteria, I was too eager to get out of profitable trades and I didn’t use appropriate size for good trades.  This is why it is so crucial to have rules and trading criteria– it prevents you from missing opportunities and chasing trades that are not there.  Focusing on the process- not P&L- always leads to consistent juicy P&L.  Today, I followed my system and took all mandatory trades, however I did find myself taking a couple of trades that did not fit my criteria with small size, and you know what happened?  I got stopped out.

I am done trading for today and am happy to see that today’s trading profits exceeed all my losses from Friday and Wed.  I am now ready to bank some coin.