Trading RM, LLC.

Dr. Brett Steenbarger's new book has been shipped!  The Daily Trading Coach, has something for every trader.  Regardless of your experience or what product you trade, this book can only help you become a better trader. 

I have had the privilege on many occasions to meet and chat with Dr. Brett.  Besides being a great thinker and trading coach, he is also a trader.  There are many "fly by night" seminars, and authors who write, but do not trade.  Dr. Brett truly understands what we are going through because he also trades.  Dr. Brett's website, http://www.traderfeed.blogspot.com/, is the most comprehensive and detailed trading site that I know of.  And everything on his website is FREE!  I visit his website on a regular basis and I always learning from his postings.  He spends countless hours writing on his blog and responding to comments.  Trading is his passion. 

In the book, Dr. Brett lists 101 challenges that traders' face. He then provides a game plan to tackle that challenge to help out your trading.  In addition, Dr. Brett interviewed eighteen successful and well-respected traders and included their insights/tips on becoming a better trader.   Larry Fisher, one of the the partner's at TradingRM, was one trader interviewed by Dr. Brett.  Dr. Brett is the only guy I know who can get eighteen highly successful traders' to open up for a book.  Congratulations to them all and congratulations to Dr. Brett on another great self-coaching tool. 

Remember that recession we had 2 weeks ago?  I am glad that is over.  So is this cat. 

The past 8-10 days I have been having trouble getting with the rallies.  I still have the 2008 mindset.  Today I did a slightly better job of recognizing the signs and listening to them.  Here is what I saw today:

1) My first short, CECO, did not work.  Education stocks, briefly showed their hand as weak out of the gates.  But they never made lows and were quite strong the rest of the day.

2) Upside news stories/takeover rumors kept going up.  Last year one could have shorted any sort of downgrade/bad earnings/negative story.  Recently we have seen these takeover stories have more upside room.  Some from today:

RHT - ORCL for RHT rumor
ILMN - takeover chatter
SWY -  Kr for SWY rumor
HNZ - takeover rumor

3) REIT setup later in day.  I like to look at the REITs as they have one foot in the financial/bank waters and one foot in the real estate/housing waters. 

Around 11:30 am cst I saw the following setup:  The S&P futures made a 10 point move down from 802 to approximately 792, then traded sideways for a bit. (top chart)

 Simultaneously, the IYR was making new highs.  (SLG/SPG/EQR etc... included).  I thought this was a decent time/way to get involved long today.  We saw IYR accelerate up into the close, along with many other sectors. (Bottom chart)






My GOALS for tomorrow:

• 1 good trade at a time


• Every trade upon review will have had good timing (not chasing)


• Every trade upon review will have had good selection (names in play)

I wanted to share some thoughts and notes I have been making to myself lately.  Specifically what has been working and what I am focusing on:

• For my trading I have been having better luck with names that are having "different" days as opposed to high beta names that are "crowded."




• special names lately: CEPH today, Education stocks, MCK & CAH last week
  
• high beta/crowded names that have been hard: AAPL, MET, GS, BAC, PRU, etc...


• Extra focus on timing - it has not been enough for me to trade the right names (above)...I have to have better than usual timing. 




• Getting long CEPH today or getting short education stocks yesterday only worked with great timing. 


• I have been focusing on $TICK.  I have been following Dr. Steenbarger's blog, specifically references to VWAP and $TICK.  The $TICK with a 10 period moving average is one decent indicator of the type of day we are having.  Notice in the picture below that the thin green line (the 10 period moving average) hovered around zero for most of the day - one indication of a range/slower market. 




• Again this emphasizes that I need to focus more on timing and name specific trades

• Lastly "chasing" has not worked.  For example on the open today the steel names and solars were very weak for the first few minutes.  After that it did not pay to pile in short to those sectors.  This morning I did not make a prediction they were not going lower.  But I did look at my notes and say that 1) chasing has not worked, 2) chasing early in day has not worked, and 3) timing is so important.  So I laid off these names only to reevaluate them later and decide they were not good shorts.  It did not seem like good odds to push my chips in.   I posted FSLR and the SLX (steel sector etf) charts below. 

Trading was very different than yesterday.  It is important to reset and get back to ground zero no matter how good or bad the previous day's trade was.  You just never know what the market will give you.   The low of the day, 691.25, was one of the support levels that TradingRM had on the morning worksheet. (You can register for free and print out the morning worksheets before the market open at www.tradingrm.com) At that low, the shorts were working really well, but it became prudent to ring the register on a few things at this level.  The market then rallied 19 handles from that low.  Below you can see the 691.25 level and the rally out of it.  I also drew a nice little triangle pattern, wedge, or whatever name you have for it.  Once the upper band of the triangle was breached, the rally ensued with basically no heat to the downside.  Today we had a 19 handle range on the S&P.  This is below the average for the last 5,50,100 days.  However, technicals can be important during sideways action.

1) Today I was reminded of how many times the SPX bounced off 800 in January before breaking through in February.  We saw our first test of 700 this afternoon.  It is hard to tell if there were serious buyers or we ran out of time.  I anticipate when/if we have a significant/lasting break through of 700 it will be after more than one test of the level and will occur overnight. 



2) Today our desk largely traded from the short side.  However it was not a home run day for me or others by any means.  It seems the majority of money was made shorting quickly after the open.  The weakest stocks did not follow through low in the afternoon.  Below are charts of AET and POT.  The thin gray line is the S&P future.  AET and POT were two of the weaker names to start, then did not make new lows as the SPX tested 700 later. 





3) This never ending news of the bailout/more bailout for AIG and C and others reminds me of a certain movie scene.  "That's as good as money...those are IOUs."