Time To Strike

Not surprisingly equities have painted yet another swing to the downside overnight. Which presents us with a very delicious short term entry opportunity right here and right now. Time to strike.

This is the play: Long here while yesterday’s lows at 1871 remain in place. Put your stop below 1868 and then wait for the open. IF stopped out we may have to assess the momentum on the Zero. Assuming there is bearish momentum we wait for a quick retest which would be our opportunity to dip into short positions.

Whether or not we would reload on the long side will depend on what we’re seeing the Zero Lite today (you are a sub, right?). Clearly attempts are made to paint a support cluster but at this point it’s still early in the game and any longs are tantamount to lottery tickets. Keep that in mind and don’t get over exposed expecting a particular resolution, the odds still favor the bears right now.

UPDATE 8:58am

Stop has been touched and I’m now waiting for further instructions. It would be a bit haphazard to immediately flip for short positions and I will wait for the open and some candles on the Zero Lite before making an assessment on whether this was just a final FU stab to the downside or if we’re heading lower today.

As you recall I managed to grab a long position in the 30-year bonds on Wednesday but got stopped out yesterday night courtesy of a quick run to the downside. Which is a prime example for how you can be spot on making a call but still wind up failing in the execution.

Mental Deprogramming

So I have decided to make it this week’s exhibit for ‘mental deprogramming’. I am going to look at this chart repeatedly whilst letting any negative feelings pass right through me. The key to doing this is to reflect on the fact that you are emotionally tied to a stock chart. Remind yourself that there is no predicting the future and that your forward projection was incorrect. Use negative outcomes as a template for adjusting your trading approach.

Lesson Learned

In volatile market conditions advancing stops to the break/even point prematurely is inadvisable. In the future I will wait for at least 2R before advancing my ISL to break/even. However I also think it is possible to advance to let’s say -0.5R after reaching an MFE of 1.2R. I will try that moving forward.