Category Archives: Rage against the machines

The importance of Flag Day

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Today is June 14, 2012 and for this we celebrate Flag Day in the U.S.

More importantly to my wife however is the fact that this is the day we celebrate our Anniversary. This Flag Day is quite a bit more special though as it marks our 25th.

That’s right, the Big Two Five. My wife and I are on the 1/4 100 Roll.

We are in the midst of a 2 week celebration within our family as her parents are also celebrating their 50th Anniversary.

Or maybe we just like celebrating (leaning this way, lol). The festivities end on Saturday with a large family dinner where we all (hopefully) get along for one night to celebrate these accomplishments.

Here is to all you that celebrate your 25th, and 50th, Anniversary this year. To a job well done.

Love you Paige.

 

Monitoring a trade

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I am sure that each of you have your own system in place for how you manage an ongoing trade (long or short). For me, I typically use a 5 minute chart with a 3 day horizon – once I have entered the trade.

For an example of what I am watching in a trade, here is current chart on my screen of GS (Goldman Sachs Group Inc) in a 5 minute timeframe with the 20 Simple Moving Average applied:

You may notice the interesting volume pattern at the end of each day recently. Certainly worth noting (yellow TL drawn at the bottom). Although my trailing stop was tight and was taken out (good job Stop Hunters), I did manage to scale out several partials before the balance was hit.

Now bring on Thursday.

The RSI buy

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A simple strategy that anyone can use, and it goes like this. Put on a 5 minute chart – on a stock you like for the day, turn on the RSI and make sure that you have Volume showing as well. When you see the RSI breach 30 to the downside, get ready to buy. Here is an example from today on CPHD (Cepheid):

Note the massive RED volume bar on 6/29 and how the RSI reacted (waterfall down through 20 to touch 0) & then bounced. A great spot to go Long there (along with the machines).

Now look at today. A similar waterfall down through 30 to touch near 5 & a quick bounce. A great spot to go Long.

Rage against the machines.

Putting a Stop to it

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One of the important tools that I use in my trading execution strategy involves the use of stops. This week has provided me with several interesting situations where I noted stock behavior that was geared toward the “hunting” of stops by programmed trading systems.

I took a stop in my short of VMW from last week today, and although I am fine with the result, it bothered me that I was not able to avoid these Stop Hunters as I normally can. I saw a similar behavior with my MOS long position today as it pulled back from an intial move over the 77 level. The real test for me however came in my trade of CREE.

I went short on CREE a few weeks ago based on this chart:

Stream_aknoa8l

The stock had a poor earnings report and gapped down on 3/23. It attempted a small rally today and thus I moved my tr stop down to 45.25 and posted such on twitter.

As I watched the stock movement today, it seemed destined to get to that stop. I decided to remove the stop and put on a 5 minute chart to monitor it more closely. My experiment was to see how close it would get to the posted stop on twitter. It overshot by one nickel and then rolled over. One nickel !

Hmmmm.

I saw a great quote today in this post, and saw a few folks highlight the quote on StockTwits as well:

“Remember, this is the game you signed up for.”