Another day, another giant gap. So be it. That’s just how the market is right now, and it has been since late-July. Those who haven’t grown used to it have paid the price, but for the rest of us, it’s simply a fact of life for now that we’re still somewhat likely to wake up to opening prices which vary greatly from last night’s closing levels.
Thankfully, I’m still in cash on an overnight basis. The charts simply have necessitated it. Try as I might to find appropriate setups for swing trades, they just haven’t been there. For August and September, it was all about making quick spurts higher followed by drastic selloffs, and the action had to be nauseating for anyone involved.
Since we faked a breakdown in early-October, it’s been a really strong market with brief dips getting bought and even some stretches of consolidation – something we just hadn’t seen since mid-summer. But even lately, the best patterns have been trend line breaks with support a considerable distance away, making for sizeable risk from entry to an appropriate stop. As a result, I’ve remained a day trader during this time.
I like to have my capital at work across multiple timeframes (day, swing, etc.). It’s one way that as a trader I can diversify (along with going long or short and trading a variety of setups). But my primary task as a trader is to survive to trade another day, and when risk isn’t assessed fairly, that’s far more difficult to honor.
The fact is that this market will at some point settle down. There will be continuation patterns to trade again, for moves lasting several days or weeks, and I’ll be there when they come along. But in the meantime, it’s still a day trader’s market and there has been ample opportunity intraday.
My intended trades from last night fall into two camps: those which look like they won’t trigger today (long candidates), and those which all gapped through (short candidates). However, watching the market and looking around for some setups will still likely prove fruitful today, so long as I’m patient and disciplined along the way. I hope it’s the same for you.
Jeff,
Really appreciate your comments. This is truly a difficult time and cash is king….at least overnight. Unfortunately, I don’t see things changing much in the near term. Violatile markets are with us until some of the fear is taken away. With the impending debt committee solution (or lack of one) I think there is more downside potiental than upside.
The situation in Greece is at a tipping point. I hope I am wrong but I think there is HUGE risk of contagion there and once Greece falls, so will several financial institutions…some of which may be US. There is just too much risk currently to do much than day trades.
I have had some good success trading the ETFs and following the trends. Unfortunately, most of the money is already made by the time the markets open. But, there is still some opportunty when the markets are moving.
Thanks again for your thoughts. I value them.
Hey Bill!
Thanks a bunch. I just can’t pretend it’s an easy tape to trade right now because it really is tricky. Putting it out there in the open helps me come to grips with it and hopefully helps some of you guys know it isn’t just you, that it really is a messy market at the moment.
I think the ETF’s are an excellent place to focus right now when hunting for intraday plays. You know they’ll participate in the moves, and the main ETF’s are highly liquid. Good call.
Hang in there and thank you for your comments. Have a great night!