Tuesday, October 25, 2011

Erasing the gains of the last 2 days

We started the day with a gap down and a quick panic move lower on the news that the Ecofin meeting tomorrow would be cancelled. Some bad economic data didn't help either. Consumer confidence was way below expectations (39.8 vs 46).
We stayed within the range, created in the first 10 minutes of the session, building a big triangle during the day. A successfull breakdown, 2 hours before the end of the session, brought us back near the lows of the day. That low broke in the last 15 minutes of trading (for S&P). For S&P and Dow, this brings us back at the breakout-level from 2 days ago. This might be a retest or a false breakout. No need to be a hero now.

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Gold and silver both went ballistic 45 minutes into the session. A big move higher on great volume. They both broke out and I expect higher prices soon.
Meanwhile, oil keeps rising after successfully breaking out yesterday.

Two trades today, both in TZA. The first was a trigger-happy, emotional trade. No wonder that one didn't work out. I got in after the first pullback, volume seemed to come back in. But no follow-through and less than half an hour later, my stop got hit.
The second trade was still a bit early, break of the yellow trendline (in @33.79). The pattern morphed sligthly into another, bigger triangle. I kept my position in case the bigger triangle would brake, which luckily it did. Out 1/3 @34.50 and raising my stop above breakeven (34.00). Holding 2/3 and looking for a gap up tomorrow morning.

5m-chart TZA hereunder. Please ignore the pink line (last entry) and the horizontal line @34 (SL).

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