Thursday, May 27, 2010

5/27 Daily Commentary

Went short at SP 1098  cash mistaking the count as complete.  This would have been a false breakout from  a head-and-shoulders bottom (seen on the DJI chart).
Stop was DJI 10,257. Market got up to 10,263. Kept the short on. Futures SP high 1103. Anything over 1103.50 and I'm out. The stop at SP 1103.50 is key to preserving capital on this trade because the push to 10,263 confirmed the H&S breakout.  If SP futures are not below 1098 by 8pm then I am out of the trade.




The DJI 5-minute, 380-unit M/A +1.2% also requires 10 points slack in normal volatility.  It computes to 10,125 + 122 = 10,247 + 10 is how I got 10,257. 
Too close.
One of the cardinal rules is to never trade against I1.   Even though I know this is an extended upward correction I behave as if I have handcuffs.  I1 is going down so no longs.  Picking a short opportunity in a rising market may seem self-defeating but we'll know tomorrow morning.

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