Tuesday, November 15, 2011

Nice 'rally', low volume

Very volatile action in pre-market this night/morning. S&P-futures dropped about 20 points and bounced hard (about 10 points), still in pre-market. The move continued for the first half hour of the session. But the spike up reversed almost just as fast and a triangle started to form. We broke lower but soon reversed on good volume (= fake-out). A nice +1%-rally brought us back in the upperpart of the flag, visible on the daily chart.

Despite what looks like a powerful move, the volume today is far from impressive. And since we're close to resistance of the upper trendline of the triangle (on daily chart), be aware that we could easily go lower once we see 127 (= also Friday's highs). A rather weak close doesn't help either. But the profit-taking at the end of the session was logical after such a nice rally. Daytraders booking their gains.

You'll find the 5m-chart SPY in the trades-section.

Daily charts DIA, QQQ and SMH:

Gold, silver and copper moved kind of in sync with stocks (but they didn't rally as hard as stocks did). Oil did even better and is right back near the 100-level.
The euro lost it's correlation with stocks since the end of last month. Another proof of that was today, with the euro down 0.6% and the S&P-index up 0.9% at a certain moment intraday.

Only one trade today, and quite a successfull one, although I'm not completely happy with my exits. Price action and recent losses might have something to do with that. Confidence is not high at the moment, recent volatility (like the choppy opening today) also is a possible reason. Entry and exits on the 5m-chart SPY hereunder.

Long SPY 125.12, exits: 30% @125.35, another 50% (too much!) @125.57 and 20% @125.96.
I should have divided the exits more equal in position size (4 times 25% for example). And as long as the 13-EMA (purple line) on the 5m-charts isn't broken, it's better to hold on to the last part(s). The fact that the 13-EMA holds, suggests a powerful move. That would have made me exit the last part at 126.30.
Also, adding to a winner would have worked great, you don't get that many chances like today, although one or two adds early on is more than enough (buy high, sell higher, just don't buy too high...)

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