The Complete Trade Risk Blog Roll

Publishing market analysis and trade ideas since 2012.

Balanced market day 4

overall market outlook, gap analysis, trade expectations

Do not overthink this market. Traders can extract all types of analysis and thoughts from the recent action and quite honestly it is really simple. We are in a range bound, balanced market where both buyers and sellers are finding value in initiating trades. Fading the extremes has been working. I am not claiming it has been easy, as it it is always more difficult to act in the moment then analyze after the fact. Until we see a definitive breakout or breakdown similar to what we saw on November 7th then I will be focusing on this approach in all stocks (as most are in this balanced state) specifically on my entry position,  and not chasing the excitement.

30-Minute key SPY levels
  • $SPY support at 137 - 138. recent support zone where we have seen buyers step in.
  • $SPY resistance at 139 - 139.5. recent resistance zone where sellers attack..

Early signs of buyers

overall market outlook, gap analysis, trade expectations

Friday we saw the market stop the recent downward selling pressure ever since the elections and close in the green. It would have been even better had the markets closed at 1pm since we were nearly 15 handles higher in the SPX cash market but nonetheless the buyers efforts were there. Overall I believe we will see some two-way trading today in a balanced type environment with a bias to the upside. I will be looking for some range bound setups if we can carve out clear ranges on some of these stocks and indices looking to fade directional moves (unless we get a clear change of character break above yesterday high/low of day etc).

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Just another AAPL knife catcher

apple swing setup

apple swing setup

 

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Live to fight another day

overall market outlook, gap analysis, trade expectations

The sellers were out in full force yesterday dropping their stock right down the elevator shaft, nearly 3%, in the major indices at the lows. Admittedly I tried to exercise some knife catching around 140.4 in the SPY as per my tweet yesterday late morning and I was naturally bulldozed over. But in this business, even the most aggressive (low probability) ideas are allowed so long as you manage the risk accordingly. I lost 30% more than my average losing day yesterday but thanks to [relatively]proper money management that is nothing of significance to the overall account. I cannot stress enough the importance of having a concrete plan when it comes to RISK. I am a discretionary trader in my approach to the markets, I do not have a red light, green light system, I do however have a RIGID approach when it comes to managing risk. You will not survive in this business without one.

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Trading the election results

overall market outlook, gap analysis, trade expectations

Futures are all over the place, ping-ponging back and fourth between cash SPX 1410-1425 ($SPY 141.6 and 143). As a day trader I am looking for opportunity, in any direction. My instinct is to be more long with a 1410 open and short bias if we opened towards the top of the range towards 1425. The reason is simply because we are in this wide trading range (with some air pockets in between). I doubt I will be trading the SPY itself, but its necessary to know where price is trading with respect to value while taking trades in other equities. In other words, if I see a great short opportunity in another stock and the market is not settled down into support at 1410 I will much more willingly take that short with more conviction/size knowing the market has more room to easily fall to the downside.

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Election day–all is quiet on the market front

overall market outlook, gap analysis, trade expectations

Yesterday we saw sellers auction price down to the previous major support zone around 141. That level proved to have value as buyers supported that area and closed us on the highs of the day. I am not expecting fireworks today, given we will not have the election results but I think it will offer some 2-way action with a bias to the upside. I would anticipate the 142.6 zone we fell through on Friday afternoon to be the cap to our follow through bullish move today.

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Bulls break us out!

overall market outlook, gap analysis, trade expectations

Yesterday we saw a breakout to the upside, with conviction. We broke through the 142.2 previous multiday resistance and never looked back. Coming into today we are seeing gap up follow through and I am in a clear ‘look for long setups’ mode. Coming into the day completely flat (as always) I will not be jumping in immediately looking for us to shoot to the moon. I have a handful of stocks I will wait for the morning excitement to settle a bit, look for some pullbacks/flags/bases and try and get on board for any second attempts higher.

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Cash Market Trading Resumes!

overall market outlook, gap analysis, trade expectations

After a weekend and 2 closed days for the cash markets we’re gapping up into the upper end of our trading range we have been carving out in the SP500 for the past 4 trading sessions. My outlook has not changed, until we see a definitive break of this range (see levels below) expect the chop and 2 way action to continue. There has been no recent directional commitment and the more days we spend trading within this 1 and a half point range on the SPY the more energy we are building for the inevitable breakout or breakdown.

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$AAPL uncertainty out of the way – time to resolve this range?

overall market outlook, gap analysis, trade expectations

Overall yesterday we had some weak market price action. The opening prices were the highs and the market saw continued selling all the way back down to gap fill and once again bang against the 140.80 lows. We are still holding this recent critical zone of 140.8-141 but for how much longer? The more we come down and test this area the less likely we will find buyers when we arrive. We need to get out of this zone to get some directional certainty, below 140.8 or above 142. Until we do, expect continued chop back and fourth within this point and a half trading range. $AAPL reported yesterday and the street seems to be giving it a pass on the slight miss of Q3 numbers. Perhaps with that uncertainty out of the way markets can resolve out of this range over the next day or so.

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Bulls time to shine – I am not a believer

overall market outlook, gap analysis, trade expectations

Coming into today bulls are getting their chance to take the baton and run this market higher. We had a real negative looking close yesterday however the bulls case is such that we put in an intermediate term double bottom and it is time to see what kind of legs this bounce can get. I am real suspect of it and I believe this is a chance to sell some longs into strength or establish/add on to short positions.

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