Monday, July 2, 2007

(Just Like) Starting Over

Imagine me crooning this song to the market, instead of John singing it to Yoko. That's how it is around here.

Scanning stocks today, on 15 minute and 30 minute charts, looking for setups was a little mind-dulling, but fun nonetheless. It wasn't stressful, that's for sure! So perhaps me and the market can rekindle the love we used to have for each other.

But I've been down this path before. I have a good day trying something new and then I fall back into old habits and get smoked. I will need a few days of watching stocks and seeing this stuff work before I get too excited.

Anyway, my P&L sheet looks as it should, one good winner and no bad losers and the rest of the trades more or less cancelling themselves out.

Here's what worked for me:

With the market up big, I was looking for longs. I found CMI had opened strong and then pulled back into a base from which it was slowly grinding upwards. 103 was acting as resistance all morning. When it broke above 103 and stayed above I looked to buy above the top of the morning range. At 11:55 I was filled at 103.32. The stock ran nicely and didn't really cause me any pain as it never dropped below 103 again.

I noticed that on Thursday of last week the stock made a little double-top around 105, so I expected resistance there. At a little after 2pm, it ran up to 105 but showed a bearish looking shadow on the candle so I sold 100 shares. I held the rest until 2:45, when it tried to run over 105 again and failed. Anyway, so with a 200 share trade, I net $286.

My second best trade today was a short on CROX in the morning.

I noticed that on Friday 43 was resistance. Also, on the daily you can see that Friday was a pretty weak bounce on anemic volume. So when the stock opened above 43 but struggled to move much higher, I watched for it to fail and break back below 43 which I assumed would be resistance again. Another thing making me bearish was the face that some firm came out and reiterated their "Strong Buy" on the stock but no one seemed to care. So, I short 100 shares at 42.95. Plus, their shoes are ridiculous looking...face it, Trading Goddess!

Anyway, I thought there'd be some support at 42 and decided to cover at 42.30. I didn't like being short with the market being so strong.

One thing about my position sizes this week. They're going to be extremely small. I'm working a new style of trading and it's a holiday week. So I'm just testing. Call it Dinosaur Beta. If I enter a trade that is with the market, like CMI, I'll throw in 200 or 300 shares. If I'm doing a counter-trend trade, as with CROX, I'm going to cut my size in half.

It's all about gaining confidence. Once I gain confidence trading like this I will up my position sizes accordingly.

There's one thing I still don't "get" about trading like this. Say if I'm long and then the market starts to break and go lower. Do I sell my winners (assuming I'm still long and in the money) or just move stops up to break-even points? It's this "managing positions" thing that I have to get straight. Last week I ran into trouble when the market reversed and I wasn't fast enough to cover my positions. I let winners turn into losers. The trick is managing the stops so I give them enough room to work out yet still keep my losses small enough. This is something I need to work on still.

Anyway, here's the stats:

P&L, $314
Best, CMI, $286
Worst, AGU, -$45

shares traded, 3200 (probably an all time low for me on a full day of work)
stocks traded, 8, 4 positive, 4 negative
total trades, 26


Trading Goddess said...

The thongs, I mean, errr, ummm... flip-flops are very nice looking!


Dinosaur Trader said...



Indeed, they are! But c'mon, making a new flip-flop now is like making a new ball, right?

Anyway, the stock has flashed some distribution lately. Still, with the 50-day only a couple of points away I'm pretty sure it will find support there.