Grade: B-
Goals: Be more selective and raise winning %
Reminders/Aphorisms:
- Don't fight the trend;
- Be patient, take good set-ups
- Respect at least 2:1 R/R
Overview: Yesterday we had a sell off at open down to around the previous day close then bounced around a while. Afterhours we had NFLX report great earnings and pop. The SPY/QQQ also followed as a result after hours. However in the premarket hours the SPY has been moving down significantly. We are opening right below the 371-372 level which was previously the top of that week of consolidation, and almost within the 367-368 zone we formed a bottom at yesterday. Yesterday we topped out around 375. I also note that we are back above the 200 EMA on the weekly, but unless we break 380, this is technically a lower high on both the weekly and daily charts. If we are to break this 371-372 zone the next target is the previous day high at 375, and from there the 380 level which will be a huge level of resistance. Potential scenarios:
1) We get some buying at open, retest 371-372 and then sell off the rest of the day. We would then continue down to the 367-368 zone we formed yesterday, with the next big level being at 355-356.
2) We bounce off this 367-368 level and get buying up to 371-372, where we could potentially see a move to the prior day high of 375. If the market is still showing strength it could make a stronger move to 380 where it will be met with strong resistance. We will require a lot of volume to break through that level.
Trade Analysis:
- Trade 1 was a continuation downtrend trade. I had missed the first 2 legs or entries on this and was presented with another chance and took it for a 50c move. I took my runner on the first green candle that showed up. Still need to develop a better strategy for my runners.
- Trade 2 was trend reversal short trade - this was somewhat of a boredom trade - my thought process was we had big resistance at 371.5 as well as previous day close, we had been stalling in the area. I took this with smaller size but it didn't work out for me.
- NOTES: Gray Arrow 1 - based on my premarket analysis I was looking at the 371 level as a potential area of resistance as the prior day close and with a zone there. I did not hold to my plan and did not get in - it didn't really offer another chance to get in either other than the 1 minute pullup at 9:39 which would have been a little riskier but would have worked also for $1+. This would have been a day making trade.
Lesson moving forward: Have confidence in my analysis and take the proper trade. You can always cut at risk.