Trading on the Edge

~ 2% increase in indices in one day. That is a significant move. 1% in one day is fairly significant, but 2% is way out. I think that has got to mean something more than a normal move up. As I see it, it is signaling the start of another leg up from here. Many of my shorts got closed at break even today. But surprisingly, more than half are still open. I will stay with BE stop with them, and see how they fare in this returning strength to the market. I should now look to go long at the next pullback in the market, which might start just tomorrow.

So we indeed got a bounce. My holdings did continue there slide down in general or at worst stumbled a bit. So lot of them are sitting with narrow range bars for today. Meaning there could possibly be a reversal if the market strength continues. I should not be influenced so much by one day’s action. I COULD just follow my standard trailing stop rules and let the market take its course. Most of the open positions would be mildly profitable with that. However, if it is a choppy day tomorrow, my positions will get just chopped out with the market only to move again in the direction of my entry. Recent analysis showed that had I let my positions open without stops, I would have made double the money with a flat stop after 20 days. Sooooo, I think I am going to let them move around a bit and just move stop to BE.

Mood towards market: A little apprehensive but not too worried as most of my positions are in the green. It all depends on the market going forward. If it goes into the green, taking out recent highs, I will have to cover all the shorts in a hurry.

So, I look at the market midday and it is going so-so. Nothing much just hanging around there lethargically. And what a shock I got when I saw it in the morning. It all came tumbling down. And alongwith it I got 18 open short positions on my hands. Shudder. Very high exposure to real estate sector. But, so it is and I am going to stick with it. Some of the superstars for today missed a fill on the IB paper trade account (CUZ, DFR, NEXC). In any case, lets see how it goes from here. All the indices were down. Do we see a bounce? Or some follow through? I don’t think the drop was that steep to warrant a relief bounce and we are likely to see some more downside action. At least I hope so for my ~20 short positions. LOL.

Mood towards market: Quite upbeat, since I got so many open positions with the shorts. Lets see how it fares if we get a bounce tomorrow. It will all suddenly change and take me to pensive

Last week I just took a look at the badly performing industries and surprise surprise there has been such a nice downside momentum around that its unbelievable. In the last 3-4 months I was so focused on longs in the bull market that I had lost sight that I do short trading too. In strongly uptrending market it made sense to look only at longs, but then in a faltering market close to being purely range bound, it does make sense to look at both sides of the market. Now I have so many shorts on my hands that I have no idea how to prune down the list. So, I am going to paper trade the whole load to generate trade statistics to be analyzed.

But then Nasdaq is diverging from the other indices that it might just throw a wrench in my downside momentum party. Let’s see how it goes, but I will go along with these shorts in paper trading until the market takes on strong upside momentum, which it is lacking at the moment.