How did you handle the 400 point late day swing in the stock market yesterday?

After Wednesday’s late-day plunge from +250 to -150 the stock market is gaping up about 1/5th% this morning 90 min before the open.

Of note, a lot of green this morning mostly in line with the gap up in the index’. Metals are slightly off, the U.S. dollar about unchanged and TLT off about 1/3%

It looks like a mixed bias to me. In the short term, the markets are slightly oversold. In the medium term, we are still in a very bullish configuration.

I have mentioned this site before but if your an active investor you can do no better than

They put out a weekly newsletter discussing the markets along with other things. Its free and gives an excellent perspective on the markets for the upcoming week.

Its very difficult to find good reliable free info on the internet.  I read this site every week.

I presently have a mean reversion trade going in UPS. It was finally rebounding yesterday up about 2% unit the late day swoon. But we are still in it aways from an exit signal.

I also put on a bottom reversal trade in UNG.  We got the bottom reversal breakout on volume on the 60 min chart that triggered the trade. Since then we have consolidated over the 20 day MA which sits at 22.10.  A close below this number on the 60 min chart would trigger an exit.

On the 240 min chart we got the breakout over the 20 day MA but not on high volume. Ideally, you want to see this breakout confirm the 60 min.So far it has not.

So, the setup is a divergence in the long-term charts, either a daily or 240 min. If the bottom formation looks solid, and the divergence is obvious, you can take the signal off the 60 min chart. But then it is essential you monitor the stop which will move daily based on the 20 day MA.

This morning UNG is unchanged.

Let me also mention that if do get the confirmation on the 240 min chart you can then move over to the 240 min chart to manage the trade. Since that has not happened we are still using the 60 min chart.

Not much new on the political news front except for they gun hysteria enveloping our politicians. There are many models to choose from that are effective in curtailing school violence. But I doubt we will ever get to implementing them anytime soon.

This is just an extension of how broken our political system is. It’s quite remarkable how the markets have done considering the dysfunction. But, with a new fed head who feels the need to start “normalizing” rates, I suspect we are quickly going to start getting a headwind for the stock market.

This may well coincide with the sell in may crowd. We will see.

If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. Typically I talk about the overall day expected with the markets and also give some levels on the ES and NQ for failed breakout scalping.

It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)

Good Luck Today


RickJ’s Handicapping Picks

Skype: riccja

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