Grade: C+
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: The SPY was incredibly difficult to trade yesterday as it had a tight consolidation between the 396-397 levels. We recently broke 400 in the premarket on PPI news and tested 403.54 before rejecting. We have been moving down since. After consolidating at around the 395-396 level all day, we finally broke down through that in the morning hours and are starting with a deceent gap down. We rejected the 200 EMA on the SPY which is at 401.44. The weekly chart is looking eerily similar to when we started another leg down in August. We are opening right in the 399-390 zone which is the highs from multiple days (9/21, 10/30, 11/1). Below that the next zone would be 385- which is not that strong of a zone. Potential scenarios:
1) We crash down through 390 and test the 385 zone. If we break down below 390 and then pull up to retest it, I will look for a short down to 385. This would be a fairly large move down fo rthe SPY.
2) We could bounce at 390 and retest the 395-396 zone. As shown previously there is a lot of support/resistance at this level and we could just consolidate around this level for a while. I will keep my eye on the price action and determine whether it would be a good short to take back down to the 390 levels. If we do break the next move would be up to test 400 which I do not believe we have enough momentum to break.
Trade Analysis:
- Trade 1 was a Trade to Hold trade which I took with smaller size (20 shares) looking for a bigger macro move. We have found support ont he 389-390 level like I said in my premarket analysis and was buying a pullback on the 5 minute. This ended up trend breaking and reversing for a loss. This would technically be a uptrend continuation trade. Looking back at it, the 1 minute did not look great and I likely should not have taken the trade where I did.
- Trade 2 was a downtrend continuation after a break short. We broke the 5m uptrend and had a small pull-up. This wasn't the best set-up as we were approaching the 389-390 zone which was serving as big time support. I was able to get close to 50c on the main trade and then took the runner later for less as it was moving up.
- NOTES: The market has not been providing opportunities lately and has been barely moving during market hours. The market is clearly undeceided and as such it's better to just not trade it. The trades I took today where not great trades and I am kind of forcing the issue. While it sucks sitting around for 2+ hours and not taking any trades - it's better than being red. The market does not always present opportunities. Be patient and capitalized when it does.
Lesson moving forward: Trade to risk or reward, stop letting emotions get you out of trades.