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Tuesday, July 1, 2008

Stock trading, Stock Market, NDX trading, QQQQ trading, Nq trading, July 1, 2008 (Update summary)

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Stock traders, investors, market followers and all traders,

1. There was a test this evening, and this blog was open to invitees only for around 75 minutes. Sorry for any inconvenience.
2. I have a private room that already filled. People were added on first come first serve basis. Google blogs have a capacity.
3. I have a list of around 100 people whom they sent us their request but we could not accomodate in that room. We are adding them to two new private rooms. You will receive an invitation email as soon as they are set up. Please be patient. We will add you soon. Same information will be posted to all private rooms.
4. We are also working on setting up a private blog outside of google blogs with no maximum. We have never done this before, so we am learning as we are working on it.



Here is a summary of what I did today in the stock market (I reported on the currencies previously):

1. NDX trading (Nasdaq-100 trading, QQQQ trading) : At 12:40PM, I determined that we were at a bottom of the day. I then went long, but covering the calls I sold yesterday (at a profit because calls lose value when price goes down and since I shorted them I bought them at a low price than I sold them for). My position after than moment became a short ITM put which profits when stock rises. I am now trying to upload a copy of my execution report, but for a reason the google blogging system keeps telling me that it could upload the image and ask me to send and an email to then. I might post it somewhere and provide a link later this evening

It turned out that was the area of the bottom or even the absolute bottom of the day.

2. You recall that I wrote yesterday that a short term rebound in XLF was imminent, and that if it gaps down I will add to the position of yesterday. It did gap down (but I was not at my screen until a little after 9:30AM and I could not catch it at the bottom. It was running as if someone was chasing it!).

What I did is what I wrote about in real-time in previous post: a little after 10AM I shorted XLF in my brokerage account. The fact that the retirement trade only by the hour is part of the reason I did what I dit, but there are some reasons that you may want to know about on how to profit by combining retirement accounts and brokerage accounts.

I will write a note on this, and would share it with the subscribers (If you did not subscribe yet, you better hurry). These reasons are closely held "secrets" on how to adopt a holystic approach to trading combining the strengths and weaknesses of retirement and non-retirement accounts, in conjuction with tax saving strategies and arbitrage. It would be too long to dwell on this here.

I shorted XLF at 20.36 around 10AM, and covered it when it was at back to 19.85, for a profit of .51 or 2.5%.

The position I started yesterday was in Fidelity Select Banking. I got the price of 4PM yesterday. With todays close it is up by 1.39%.

Therefore the overall result for XLF is close to 4% profit in just 6.5 hours of trading. I cannot complain, even if I feel I could have done much better, but buying the gap down, and possible later reload when it came back down.

I did not load more when it came back down towads the end of morning, as this was not consistent with original plans which was to add to it only at gap down because these gaps close with almost 100% certainty for the regime of price in which XLF was yesterday. There are gaps that do not close the same day but they are in a different context (which I call a regime). This is also hard to explain here. Those who know how gaps behave (and why) can make great money trading these gaps, but they occur less frequently. These gap techniques work mainly for indices (I would not extend things to single stocks, as this would be wrong and could lead to disasters).

I will analyze price and post elements from my analysis in the next post

I want to say that I was feeling bad for the general public as they would typically follow headline and jump out when it is too late, based only on financial press.

A well visited place was arguing yesterday for average Joe and retirees to short by buying index funds, and today in the morning made the big headline of "Bear market now". We have been in a bear market since last Fall!

What do you think typically Joe did: sold to stop the pain of losing, and probably even thing it would be intelligent to buy inverse funds and started loaded.

That typical average Joe must have now loss twice: on the way down, and now muts have exited when s/he realized that even shorting leads to losses (and fast).

Most likely such person who then take losses on the short position, and may even say to himself herself that s/he was right to be long the stocks. Then when they will get long again, the market would go down, then the cycle of agony continues.

Remember this friends: financial press are like the commentator of a TV sports game. S/he report the action, and does not predict the future action. What is worse they seem to make a prediction, but they get wrong.

I know that I would be hated to write what I wrote, but it is a fact.

I was also to re-iterate my point that financial markets are the opposite of a democracy. If a democracy the majority select those who govern. In a stock market the minority profits, and the majority pays for the profits.

If you have read about information theory and maximum entropy, you would know that in a system with N elements, N/5 determine the 4/5 of the information. It is the same for the stock market and any free market.

Take care, and I am now concluding with the call I made in the previous post/posts.


10:02PM: I started re-entering short side of EUR/USD. I am scaling in EUR/USD short side. First entry at 10:02PM, selling in are of 1.5812.


I urge you to send me an email to add your name on the list of a by invitation only blog, and also in my list of people to who I am writing to share "secrets".

My contact information is below. Just send an email (with or without a subject and/or body), but I would of course read and appreciate any comments and questions you have or simply an introduction about yourself in the area of trading and/or related topics.

Best regards and happy trading,

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Happy trading,


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