Good morning Judy and all,
I am back after a three week vacation---and completed updating all my data files ealier this morning.
Am now trying to get a sense of potential opportunities--difficult to do after being away from the market for this long. So help me out and tell me where I can make some money to pay for my vacation.
As you know, I have been flat both the S&Ps and the bonds before I left the US. For anyone who is interested, my system would have generated a sell signal on the S&P futures at the 930 level during the recent decline after the three day rally--it is still short. On the bonds the system would have been long, after going short in between.
From a somewhat cursory look at the SPX chart, my sense is that the market is in the process of establishing a short term bottom which should be in place this week and possibly as early as today--more likely tomorrow. How tradeable a rally we'll get from this level must in part, depend on how the bonds behave--and will also demonstrate whether we are in the process of putting in a double top. I am looking at going long some OEX calls if the market comes under selling pressure today. The 900 level on the SPX should offer good support. I am also in the process of closing out the covered calls that I established.
On my vacation, I took a couple of books to read--one of which was market related and dealt in large measure with systems development for futures trading. Most of what I read was information that I was familiar with and although the book pertained to futures trading, much of it was just as relevant to stock trading as well. The most interesting revelation for me was that most traders over-emphasize proper entry strategy but give insufficient emphasis to proper exit strategies. The authors showed several simulations that demonstrated that entry using several popular methods for entry would each have caught most market moves in relation to several different markets --ranging from the stock indices to the bonds and the currencies to the grains---but it is how effectively one exits a trade that determines how profitable one is likely to be both in cutting losses and in taking profits. I have known for some time that although I do a pretty good job of exiting losing trades, my approach to taking profits is rather abysmal when it comes to trading stocks. We've had very little discussion on this thread--or most threads--regarding optimal exit strategies and perhaps it is something that we should address given the talent that we have on this thread.
Will be logging on and off during market hours; btw, getting away from the markets for a while is a great way to achieve some perspective --might even improve one trading skills:)
Take care, my dear |
