Archive for November, 2012

Swing Trading Week in Review – November 23, 2012

Sunday, November 25th, 2012

Swing Trading BLOG – Swing Trading BOOT CAMP

$DIA - Swing Trading ETF

First things first…

Happy Thanksgiving! We hope you and your family enjoyed your holiday!

The markets opened with a bang this holiday shortened week.

Monday traders watched as the market GAPPED UP after weeks of relentless selling pressure.

The move was somewhat expected (as we mentioned in last weeks post) since the market was trading in severely OVERSOLD territory.

All three indices traded basically drifted higher on LOW VOLUME the entire week.

You can argue of course that this low volume is to be expected on a holiday week but we know that it is also a telltale sign of a retrace in down trending market.

The "bounce" was a big one nonetheless.

The Dow Jones Industrial Average rallied over 400 points in fact.

The sellers have taken a break (for now at least) and that is a good thing.

The thing to remember though is that we are still in a text book DOWN TREND.

This latest "bounce" was a retrace on LOW VOLUME.

So what happens from here after such a big bounce?

Who knows.

Some people are calling for the BEAR to lose steam and the BULL to return.

More are saying prepare for a lengthy BEAR market by getting your SHORT strategies ready to launch.

What do we say?

We say…WHO CARES???

As short term traders we need to be ready for whatever the market decides to do regardless of direction.

We are NOT investors.

If the market rallies higher? Great I have a strategy for that.

If the market starts to sell off again? Perfect because I have a strategy for that.

In last weeks BLOG post we gave you the details of our trading plan for this past week.

It played out almost exactly as we described.

Our remaining SHORT positions were stopped out so we were flat going into Tuesday,

The stocks that we mentioned that were showing signs of strength ($K, $V, $CREE, $FB) made some nice moves higher.

Did we jump onto the LONG side?

Not at all. We traded our plan and our plan was to reevaluate after the retrace was confirmed.

The gap up and drift higher scenario would have kept us out of the market anyway.

In hindsight the moves in these stocks would have produced some nice profits.

Our strategy (in this case) was not to buy stocks on a "bounce" in a strong down trend.

We followed our strategy and watched the market for the last 3 days of the week without doing anything expect getting ready for the next move.

Next week we will be watching to see if the down trend shows signs of returning.

If it does we will get SHORT all over again.

If the market shows signs of change (from BEAR to BULL) we will be prepared with a list of LONGS to jump into.

We always try to teach you you be prepared for anything and act accordingly when its time.

This upcoming week is no different!

Until then…Good Trading to YOU!


Swing Trading Week in Review – November 16, 2012

Sunday, November 18th, 2012

Swing Trading BLOG – Swing Trading BOOT CAMP

$DIA - Swing Trading ETF

The SELL OFF continues!

The markets opened up on Monday with traders anticipating the selling was (hopefully) coming to end.

Mondays lack of volatility was quickly followed by a bearish engulfing reversal bar on Tuesday.

The sellers then continued to bring the market lower to end yet another down week in this most recent downtrend.

This move brings the major indices down to a severely oversold level so a "bounce" next week is a probable.

Looking across the list of sector ETF's we see now that every major sector is trading below the 50 day SMA.

This includes the ultra strong Homebuilders ETF ($XHB) which finally broke down this week.

$XHB - Swing Trading ETF

So with the market turning extremely bearish and the chance of a "bounce" this week what is trader to do?

Well it really depends on your trading business plan.

Does your business plan keep you out of LONG trades in a BEARISH market?

Or does your plan let you trade both LONG and SHORT regardless of the trend?

Your plan should be based around your individual trading beliefs and personality so make sure you take the time to lay out your plan.

With that being said we need to decide which action (if any) we will take if we do see the market "bounce" next week.

If the market does indeed bounce we anticipate being out of most if not all of our STS trades.

We would not look to get LONG but merely let the market play out a reevaluate once the retrace was in effect.

We also would not look to add any more SHORTS at this point even if the market continued lower out of the gate on Monday.

Chasing the market down at this point has low probability of success.

We will continue to be in SHORT mode until the market gives of signs of change.

There is a short list of stocks ($K, $V, $CREE and $FB looks interesting!) that are holding up during this down trend.

As always we will have these on our watch list to see if the strength continues.

Follow your plan and stay on the right side of the market.

Until next week…Good trading to YOU!

Swing Trading Week in Review – November 2, 2012

Sunday, November 4th, 2012

Swing Trading BLOG – Swing Trading BOOT CAMP

$DIA - Swing Trading ETF

**Our thoughts and prayers go out to the victims of Hurricane Sandy**

After a historic decision to close the US Stock Markets both Monday and Tuesday we opened up on Wednesday with a bit of uncertainty.

Low volume was the theme even as the market popped a little on Thursday.

Friday brought out the sellers again and starts what appears to be the next leg down in this recent down trend.

If you at the charts you can see that volume increased and the bearish engulfing bars created on the three major indices are down right bearish.

The one bright spot this week?

The Homebuilders ($XHB) actually traded to a NEW HIGH despite the overall bearish conditions.

That is about as good as it gets since almost every other sector sold off with the market.

A few weeks back we mentioned that the Gold and Silver sector ETF's were losing steam.

Friday both sectors got hammered!

$GLD - Gold Sector ETF

The technology sector and the tech heavy NASDAQ have been the worst performers with no end in sight.

The Energy and Oil sectors look like they are heading lower.

The chart of the Financial ETFs look interesting.

$IYF - Swing Trading ETF

Will this lower high lead to a head and shoulders pattern on the charts?

Time will tell but learning to spot patterns as they form is a key to trading price action.

Next week should be a big week in the market and you should expect some volatility.

Have a plan in place and trade it accordingly.

Keep the victims of Hurricane Sandy in your thoughts and prayers and as always…Good Trading to YOU!

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