A Good Day and SSO Stop

Needless to say, today was a good day for me, as all four of my trades based on the "bottoming thesis" did quite well.

I received a number of questions about my stop on SSO. I'll go into more detail tomorrow. I was stopped out of half my position, but re-entered after the previous low was recaptured. More details to come.

Quickie Trade Update

I've been even busier than usual, so another quickie trade update. I took partial or full exits in all of my shorts. The AAPL and FSLR shorts have been magnificent.

I added 100 shares of MON at $119. If things slow down a bit tomorrow, I'll have a full update.

Tomorrow I may take a pilot position in an oil or gold stock. I am looking for a nice bounce to initiate some more shorts.

The private chats were a huge success. If you missed out (I had to cap it at 5), I plan to do a few more later in the week.

BTW, if anybody would like to trade their Best Buy gift or store credit, I have over $200 in Barnes $ Noble store credit to offer in trade. I would also sell the Barnes & Noble cards for 80 cents on the dollar.

Quick Trading Notes

I covered some of my shorts today, though I am still holding the GS short.

I was stopped out of BIDU. Still holding MON.

I made two trades today. I bought SWN, an independent oil stock that I like quite a bit. I also initiated two shorts, AAPL and FSLR. These are quick momentum shorts based on broken trend lines, which make them low risk, high reward. If the broken trends are short lived (which I suspect, especially with AAPL), I will have small, insignificant losses. If there is a sustained downtrend, I could make big profits.

I hope to have details on the trades posted this weekend.

Catching a Breakout Early: CF Trade

On Tuesday I bought 300 shares of CF at $92.05. Today the stock broke out over resistance at around $100 and closed at $107.76. I sold half my position near the close at $107.34 for a $2293 gain (+16.6%). I am holding 150 shares and will buy more on a pullback to $100, if it's orderly and on weak volume. I've moved my stop on the remaining shares to $97.

As expected, I received a number of emails today. Arthur's is representative of the bunch:

Can you tell me why you entered this trade. I have looked at all of your recent trades and I am having trouble figuring out your entry points. It amazes me that you continually pick big winners just before they break out. You are either a great trader or you are very lucky.

I am hesitant to call myself a great trader, and I certainly do not believe in luck. I firmly believe that those who are lucky put themselves in the position to receive what seems to be luck. I'm not talking "The Secret" self help bullshit here. What I mean by putting yourself in position with regards to trading is undergoing the hard work of understanding markets, your system/setup/edge and risk/reward.

Let me get specific about the CF trade. First, let's look at the overall market. Early this week, I was looking to increase my long exposure, while still maintaining a healthy dose of shorts. While I do think the market is headed down, I also thought we would get a bounce going into the holiday since the market was so oversold and we had a historical trend on our side (Christmas/end of year).

I do not like to play bounces in broken stocks, so I was looking for strong momo stocks to play. One sector full of momentum plays is Ag. I've been looking to get long and ag related for a while now. CF, MON, MOS and AGU all looked attractive, but I went with CF because I liked the volume pattern and a cup and handle seemed to be forming. My target was $90-92, which was at the bottom of the basing pattern and would give me a good risk reward (stop would be placed under the 50 day at $87).

I am not precise with entries. I don't have to have that perfect entry at $90. Early in my trading career, I missed a lot of big gains trying to be perfect. Now, as long as the reward to risk ratio is acceptable, I'll enter early on a setup that offers an edge.

Unlike many traders, gurus and technicians, I can't give you a precise stochastic reading, fib retracement or precise reason for entry. While I do rely heavily on accumulation/distribution indicators, much of it is just having an intuitive feel for the trade based on experience. For me, it boiled down to the following:

statistical edge that overall market would bounce
strong sector
strong stock within sector
nice chart, price and volume pattern
acceptable reward to risk

That's it. I placed my trade, set my target and stop, waited and "got lucky".

Note: AAPL is up 8 points from my Tuesday entry and RIG is up 4. I took partial profits in both, along with in the DRYS and EXM and housing shorts.

Ain't No Glass Chin Here

I'm taking it on the chin today. Not only from the market, but readers as well. It's comforting to know that I can bring so much joy to so many of you. It seems some of you derive a lot of pleasure from my pain. I guess that comes with the territory, especially with the profits and win rate I've enjoyed this year. Yeah, that is a jab at the petty bastards that bombarded my inbox. May you rot in 10 feet of bull dung!

I haven't covered any of my shorts just yet. As I constantly preach, it's important to let your stops work for you. As of yet, no major S/R points have busted, so I remain in bear mode. However, we are getting close. For instance, my stop for AAPL is a tad above $181, and the stock closed at $180.22. My QID stop is around $37.60, PGJ at $34.50 and MER above $60.

While I'm not concerned about any losses I may suffer from the above trades, I am ticked off about not entering MA at $181 (it's currently at $195.60). I outlined it in Monday's video, and pointed out that it is a better bounce play than bearish looking setups like AAPL and GOOG. Note that MA was up 6.30 percent today , while GOOG moved only 2.77 and AAPL 3.09 percent.

My mistake with MA was waiting for too perfect of an entry. I've talked about this before. I am not usually all that precise with entry points, as long as risk/reward is good. What was I thinking!!!