I have found through years of hit and miss that for me swing trading is the way to go in these markets. The buy and forget method while still viable requires a much different skill set along with an expertise in evaluating companies. While swing trading is more technical in nature. More methodical and you are able to limit risk by position sizing and stops.
So that is what I concentrate on. Both from the short and the long side of the stock market.
As I write this the stock market is off .62% a little over an hour before the open. This is what turned out to be a volatile but flat day yesterday. This consolidation was expected and now the only question is does it stay as a consolidation or develop into a pullback. Only time will tell but like sports betting you look for clues to give you ideas where the value might be. It’s really all about clues! That’s the best you can hope for as if your looking for certainty either in the markets or sports betting you will be very disappointed. And I might add you will not last long. Unrealistic expectations will sabotage you quicker than anything.
My view is we are looking at a slight pullback and then a push higher from here. The primary reason I feel this way is sentiment is still sour on this market. Until sentiment turns substantially positive it’s only then that the market will turn down. It’s going to happen but the shorts have been very stubborn this time. That has fueled the markets higher as slowly, little by little, they cover pushing the markets higher. The last thing most are expecting is another big push to the upside. So? Yes, thats right contrarian is the way to go. The more extreme the more contrary to be. It’s not easy but nothing worthwhile ever is.
In swing trading, I am short the DAX through EWG. Rarely in swing trading do I hit it exactly on the mark. But this trade has been a beauty so far. The first day an almost 2% gain and today are looking for at least a 1% gap down on the open. This trade has the potential for another 2% move to the downside today. Typically however in swing trading, you have to take a little heat. How much depends on your selection process and your position sizing. Myself I do not care to take much heat. However, there is a lesson about being too cautious.
As most of you know, I used to play Omaha 8 or better professionally. And those of you that play with me know that when my money goes in the middle 99% of the time it’s with a premium hand. But here is what can happen. When i stopped playing I was on quite a streak with AA23. That for those of you that do not know Omaha 8 or better is Hand #1 in all the hands you can hold in Omaha 8. And I was on an 8 hand losing streak with that holding. Now that is in a full ring game but still that’s really a big number. I may go back playing to see how long that streak can go:) But the lesson is even being selective does not get you away from the effects of variance. While I am on this subject the positive variance I had on limit Holdem was an 18 hand win streak with AA in a full ring game. That is even more astonishing. So a lot can happen whenever you place your money on EV situations.
The trick is as I have hammered home before many times is whatever you do, do not get taken out by variance! That should be rule 1. I cannot stress how important that rule is. It is an absolute. If you do not know what I mean then send me an email as you have no business putting your money at risk if you do not understand that concept. PERIOD!!!
Ok as you can tell I love to ramble. But hopefully, you can pick up a morsel out of this and use it. In any event today, I may take a stab at a quick swing long or two depending how the internals looks 5 to 15 min after the open. One chart I like to look at is the 1 min $ADD. That gives me a good idea after 15 min or so the probability of the day being a trend day. You do not want to fade trend days. You either trade with the trend day or not at all. That will save you a lot of money if you learn that rule.
If you wish to follow my trades follow my private twitter feed @rickjswings. It’s free for now and most likely will be for quite awhile. Handicapping is the portion of this site that is subscription based. Until I have the time to devote to the trading side what I do on the handicapping side it will stay free.
Good Luck Today
RickJ’s Handicapping Picks