I often wonder why the markets put so much emphasis on government reports on the economy from month to month. There are far more reliable statistics then what the government puts out. But it is what it is and so one has to consider what effect these government reports are going to have on the markets.
On thing that works best is to sell or buy the news. So if you get a rally into the report its a sell the news and if the market is tanking into a report its buy the news. It matters not in most instances what the news is except in the rarest of instances. This is a very reliable way to trade news events. But have your stop in mind when you place the trade as if you are wrong on the trade it has the potential to be a big wrong!!!
Another indicator is how the market reacts to good and bad news. Although determining what is good and bad is often very difficult. But for example, if we get clearly good news and the market tanks then at least for the very short term this would connote a negative bias for the markets. Bad news and the market ignores it and rallies bodes well for the markets short term.
Combine the above two and you have a very crude skeleton for a filter to use swing trading.
I know people say that it is a stock pickers market etc. But the reality is that if the market is tanking 90% of the stocks are going to typically tank with it. The best way to look at this is as having either a headwind or tailwind. For swing trading to the long side, you want an environment that is a tailwind. Otherwise your chances of getting whipsawed go up substantially.
One of the best ways I have found to figure out headwind or tailwind is monitoring the 1 minute $ADD. Anything over +1500 or -1500 means extreme headwind or extreme tailwind. Over +1000 to -1000 is a substantial head or tailwind. Over +400 and -400 headwind-tailwind. Between 0 and +-400 neutral.
In addition, a good rule is not to take any trades the first 5 minutes of trading. First spreads between bid and ask are much higher. Also, it takes at least that long for the $ADD to settle down.
So far today the market is up +.25% an hour before the open. The overnight market was much lower and is now positive.
The geopolitical news is about the same but the headlines that “Obama” is mulling airstrikes against Assad in Syria has the potential to have catastrophic effects on the market. Whether this is a strategic ploy or reality only time will tell. But rest assured the first airstrike the U.S. makes in Syria will not be market friendly. That is something to keep a very close watch on if your trading the markets.
Other than that it is just the typical simmering that goes on in the world that has the potential to develop into market moving news. I have reviewed it all before.
I happened to catch a great swing trade yesterday for a quick 3% gain. I have also placed several more swing trades that I held overnight. Today again I will be looking for more swing trade longs with the idea of taking profits rather than letting them run. But we are almost to the time when letting profits run turns into a better alternative. But not quite there yet.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. 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
RickJ’s Handicapping Picks
