Week 2 Trade Breakdown

This was quite a losing week for me...while I anticipated a weak market, I onto into trouble with a number of key areas which I will need to learn from so I don't have anymore weeks of lost trades.

The bright side is that my capital stayed intact pretty well considering 3 shitty trades in a row, and managed only a loss of $154.66, however this should not happen again, since these were easy mistakes to correct in the future.

My first trade was a fantastic set up, and would have been some great quick gains, however poor on the execution.  The stock was YRCW, here are the charts I had made earlier:

My biggest mistake was't my bad order of stop limit, it was buying back in to try and chase the stock after the market had presented a gift of an oppertunity.  Followed shortly thereafter by the fact that  I gave a shit about a fancy entry that may have gotten .02 better price for the stock on what turned out to be an awesome rip of a short cover.  Of course I had not Idea this was going to happen, but the idea for a set up is planning out all options, hoping for the best and getting ready for the worst.

Loss of $45.52

The next trade I took was PCYC.  This was a tale of a penny stock which just simply failed to develop into the opportunity I thought I saw.  The idea behind the trade was that PCYC showed some strong volume a few days ago into some strong gains, which had tailed off in a pretty orderly fashion.  The stock also had a high short interest, so I figured it was a multi day bull flag formation, and would be buying into a big short covering opportunity, similar to YRCW.

The big lesson here is to not trade something with such pitiful volume.  After taking on this trade I figured the ticks in the chart happened very infrequently, and that it could go even 45 minutes before a trade.  No more of this B.S.

Here's a chart of my entry and exit:

Loss of $41.00

Finally was my BGU buy on support attempt.  Here is a chart of the price action (keep in mind my post about buying on the breakout the day before this move where I went completely against my analysis here)

 

Tight stop upon the market making my entry a foolish one.  I realize that as far as risk to reward goes, an entry on support is pretty hard to beat.  That being said, however I did one major thing wrong, I didn't wait for the price action to set up a reversal in price before entering.  The previous supports took an hour to 2 to finally exhaust themselves and reverse...I should have recognized this and used the information to my advantage.  Also I should realize that due to SEC regulations, I cannot trade more than 4 round trades within a 5 day period or else I would be considered a day trader and need 25k for capital, so I don't want to restrict my acct by over trading it - this also means I need to trade breakouts from longer term trends, so the breaks have some conviction to them, and because I don't have the ability to try to buy support, have it break thru my stop and flip the position.

Loss of $68.11

This is one week to remember, and to make sure it doesn't happen again.

Bears and Bulls tug-o-war

The market for the past few days has been the battlegrounds for deciding the future direction of the S&P 500.  The upward trendline since the middle of July is currently intact, however may be on its last legs.  Technically, the formation of today's price action in the SPY was bullish, and formed a bit of a bullish hammer candlestick...although candles are not my strong spot so I may be wrong.  Point is the market tried to fall lower, and was soundly rejected shortly thereafter.  Carl Futia wrote in his blog today that the reversal was a very bullish move, and I definitely respect that decision.  I still think the market will correct a degree in the near future, however I am not sure when this will happen. 

This leaves me to wonder what will be in store for the resulting price action as the 3 day triangle comes to a close.  There are a few scenarios that I can think of: 

Bearish breakdown
Bullish breakout
Bear/bull trap in either direction then continue in the opposite direction. 

For a trade play, I think the conclusion of this triangle, because of such violent price action within the trendlines, will continue for a few days after the market chooses a direction.  I may end up trading after the breakout in either direction on BGU or BGZ, with a stop under the trendline, plus a trigger to flip the position to the opposite side in case of a trap.  The reason I am so concerned about a trap is that the triangle is so damn obvious, that I think its pretty likely.  I will update this with a chart, and my intentions for this order tomorrow am.

Tuition paid $45.52 9.29

Yesterday did not work out so well for me.  I was eyeballing a sweet setup on the 10 day 15 min chart for YRCW, which was about to break a multi day trend line.  My thought on the trade was to enter into the a bit above where I would be chopped out on a false breakout, and to ensure I wasn't ripped off in price with a market order, I placed a buy stop limit, both at 4.54.

The set up was good, and sure enough the short squeeze caught fire, however I was left in the dust as my stop was hit, but I was left with an open limit order for 1000 shares at 4.54, and no execution as the stock ripped past my target price.  This really frustrated me that I took the time, found an awesome setup, and because I wasn't willing to dive into the melee I missed out on some awesome gains.

The second half of my mistakes today added inslult to injury, as I, even against my better judgement (I tried hard not to look at the chart again since the train had already left the building on the set-up I was watching) I traded YRCW hoping that a bull flag was emerging, and not at a breakout point, within the consollidation range.

Lo and behold I was stopped out shortly thereafter as the price could not hold those levels after such a wild run-up...WTF was I thinking???  Chalk this one up to the first tuition paid to the market for this trader.  Lesson learned, when buying into a short squeeze make damn sure I am ready to place a market order and hold on for the ride.  And do NOT trade a chart again after the set-up I was waiting for has come and gone.

Trade Recap

Stock - YRCW
9.29  Buy 500 shares @ 4.81
9.29  Sell 500 shares @ 4.75

Stock - PCYC
9.29 Buy 500 shares  @ 2.01

Current watchlist

This week for short term quick momentum plays.  While I feel a bit embarrassed that the answer for today's lackluster volume was because of Yom Kippur (I should know the holiday's that affect volume a bit better) I am still not very confident in another longstanding run up, so I picked out a few setups that looked like they may be good.

LOCM, HEAT, CBAK, ACGY, NOG, RSO, and ZIOP are all on my radar.

Still waiting on favorable conditions to go long VXX or BGZ

A muted market

I didn't participate in the move at all today, the market made quite an impressive comeback from the 3 down days, and I was not quite ready for that type of move.  However the stocks that I was watching really didn't offer any good swing trade type entries, and I hated the volume on any bullish moves.

Where did all the volume go?

I have a feeling that we are pretty close to forming a short to mid term high soon, and that will be my bias until I see volume return to these bull days.  My understanding is that volume precedes price, and if today's lackluster volume continues we will see the market roll south once more.

However the relentless uptrend hasn't been bucket quite yet, and is the standing trend until proven otherwise.  Some stocks that I will be watching for swing entries in the next few days are BGZ (large cap bear 3x), VXX (VIX ETF), however I may play a quick trade on the bullish side since this run up hasn't exhausted itself completely...