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Tuesday, July 8, 2008

July 8, stock trading blog, stock market blog, NDX trading, QQQQ trading, Nq trading,

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9:42AM: with NDX at 1844.4 started scaling on short side.

10:02AM: NDX went down to 1832. I took 1/2 of position off with NDX at 1834. I will explain why later.

Here is some of the explanation: 1) Since market is green, and if it is to continue and end green the price should finish higher than the open price. Since the open price of NDX is at 1830, one should expect some strong buyer at that level. 2) with this profit taking, my cost basis on the remaining short position is now 1854 (1844+10). I can now do various things: a) I can try to re-enter even closer the high of yesterday with tight stops. b) I can fade a possible break of the previous day high because stops are typically set right above the previous high, and when stop gunning ends, the price can retreat fast. c) I simply can take previous position off in case of break out with no overall losses but rather with overall gains. It is a good risk management practice.

10:25AM: while typing the previous paragraph, NDX revisited the high of today. I could have re-entered but I missed it as I was busy typing (now you the reader is costing my money! just joking. It happens.)

11:08AM: NDX is in area of 1825. I have other work to get to. I will check it later today. I would be vigilant. Buyers I would trust (if they win) are in now in area of 1995. Price behavious during lunch time will tell whether and who has the appear hand (sellers or buyers). If buyers win, I would not be surprised if high of yesterday get taken towards the end of the day.

12:00PM: It is Official: this blog nailed the top of the morning.

1:13PM: I just got back to my laptop. I could see that I got stopped out a bit after 12:00PM in area of 1842 to 1844 on remainder of position. As I wrote earlier today this does not suprise me, but I am suprised that it happened early in the afternoon. I was expected that if it happens it would a bit later in the day.

Now let me get back to doing my analysis for this afternoon.

I just looked at it, and when I did it was coming down from 1850.
You would think that I would have said to myself that I would have wished to be there for that short, but I am not. For multiple reasons. If the current trend continues first buyers of NDX would be hiding in area a bit below 1840 as they calculate that by around 3:ish PM price will be there or higher, and if not it would be coming up in to that area.

Stronger buyers are now in the area of the open of today and the close of yesterday, which means a set of buyers feeling good in areas of 1825 to 1830.

Therefore the maximum analyzed reward is in the area of 20 NDX points. One may say that the risk in area of 1850 is low, but on the other hand we leave ourselves in a position to either close it today (no problem if it is a win, but not pleasant if price does not move) or leave it for tomorrow with the possibility of a gap up at open.

Overall, I do not like it either way. Long or short.

First current buyers are in area of 1825, and current stronger sellers are in area of 1855. So I will be on the side lines for the moment. Better keep my profits than to take risks at this stage.

My potential buying level is in area of 1805. Selling level in area of 1855 to 1860. Both under the assumption of failure of sellers in area 1805 to 1800, and failure of buyers in area of 1855 to 1860.

2:15PM: I have to attend to other things. Will be back later. Price is currently behaving as predicted this afternoon.

Good trading!


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