The Downside Of Stop On The Close Only

We were stopped out of our position in FINL today with a loss of just over 21%.

This is one of the downfalls of using a stop on the close only as from time to time the loss
you take may be larger than the protective stop that was set.

This type of action however is more the exception than the rule and it is why I still continue
to use the stop on the close technique. There are many more times that this technique has turned a losing position into a winner, but from time to time you will get stuck, as was the case with FINL.

This is simply one of the risks that you take when using this type of protective stop.

Obviously if this makes you uncomfortable then the best thing to do would be to set your stop a bit wider to compensate for intra-day fluctuation.

20% In 7 Days Account

NEW ADDITIONS TO THE 20% IN 7 DAYS TRADING ACCOUNT

Moving Up The BlogElites Rankings

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Equity Market Comment 12/27/2007

The action today was a bit more than I had anticipated, but it is about to either confirm or deny the intermediate term scenario.

There is a real possibility that the entire short term correction I was anticipating was either completed or almost completed. While there remains risk all the way down to 1468, there are some strong indications that the 1475 level should hold.

The market is going to let us know very shortly whether or not it wants to continue the rally off the 1436 low point. Seasonally we remain in a strong period and this should serve to put a floor under the market.

In a nutshell, while the market got hit with some selling today we still remain in a buy weakness mode.

PIVOT POINTS - AN IMPORTANT TOOL FOR INTERMEDIATE TERM TRADERS AS WELL

BELOW IS THE 1 MINUTE CHART OF THE PIVOT POINTS APPLIED TO THE S&P 500.

INTERMEDIATE TERM TRADERS WOULD BE LOOKING AT NOT JUST THE DAILY PIVOT POINTS BUT THE WEEKLY AND MONTHLY PIVOT POINTS AS WELL.

I WILL BE STARTING A SERIES ON PIVOT POINT TRADING FOR INTERMEDIATE AND LONGER TERM TRADERS.

THIS SERIES WILL REVIEW THE INTERMEDIATE TERM PIVOT POINTS EVERY FEW DAYS OR AS NEEDED.

PLEASE REMEMBER TO CLICK ON THE BLOGELITES ICON AND CAST YOUR VOTE!!

Equity Market Comment 12/26/2007

The premise of buying weakness seems to be working very well, especially on the day trading side. The early morning weakness led to a pretty good level to purchase long positions and then ride the market back to slightly positive.

Currently we may be fairly close to a short term high point although there still remains potential all the way up to 1515 to 1521 before a short term correction is put into place.

I will begin to take some of the short term profits off the table as we work our way towards the short term upside. The market remains in a positive seasonal pattern over the next two days so higher prices remain the highest probability. These prices however will come with more effort and not the sharp rally days we have seen recently.

These reductions I will be making in equities are for short term traders only. Intermediate term traders can use the potential corrective weakness as a platform to increase their exposure to equities.

The market on an intermediate term basis remains poised to have a very sizable rally for the month of January and part of February.

The wedge on the 5 minute chart will give us an indication as to the next short term move in prices. There is also a shorter term pattern forming as well and this is illustrated on the above chart.

Daily Equity Market Comment 12/25/07

While I do not anticipate the momentum of prices to continue as strongly as it has the last two days prices the trend over the short term is up.

The next 3 days have a very high probability of higher prices and if I am correct then the remaining days of the month should continue to rally. I also am looking for a very sharp upward January as well.

We have some good returns on the aggressive 20% in 7 days and some so-so numbers on the aggressive short term trading portfolio.

Equity Market Comment 12-23-2007

Friday had some very strong momentum and seems to add credence to the scenario of the intermediate term low being in place and a potential powerhouse rally underway.

The put/call ratio on Friday needs to be thrown out the window because of option expiration.

Momentum is in the early stages of turning up so there is some real confirmation of higher prices here. We also have the day before Christmas having an astounding probability of a rally day when the previous 2 days were up as well.

We remain in the buy weakness mode and will shortly be bumping our equity allocation up.

Take a look to the Aggressive Equity Account and the 20% in 7 Days account for some pretty good hits.

As a side not, I will be phasing out the commodity section of this blog and make it an equity only blog. I will be putting together a separate commodity oriented blog over the holidays.

I will not be day trading tomorrow, but I will be back at it on Dec. 26.

I wish everybody a VERY MERRY CHRISTMAS and remember that this is a time of reflection and change.

COTTON - STAY ON YOUR TOES

KEEP THE POWDER DRY AND BE PREPARED TO SELL COTTON SHORT.

THE CHART IS REALLY STARTING TO LOOK AS IF IT WANTS TO ROLL OVER AND UPON THIS ROLL THE SHORT POSITION WILL BE INITIATED.

IDEALLY I WOULD LIKE TO SEE THE PRICE LEVEL 66.63 OBTAINED BEFORE ROLLING OVER AND WE ARE NOT THAT FAR AWAY FROM THIS PRICE NOW.

THE NEXT LEG DOWN IN COTTON HAS THE POTENTIAL TO BE A DOOZEY AND WE WANT TO TRY AND GET ON BOARD FOR AT LEAST 2/3 OF THE MOVE, BUT CONFIRMATION AFTER THE ROLLING OVER IS A MUST.

SUGAR

SUGAR BROKE FROM THE TRIANGLE AND HAS PRODUCED A VERY NICE RALLY.

THE TARGET FOR THE MOVE BASED UPON THE MEASUREMENT OF THE TRIANGLE BRINGS THE PRICE TO 11.95.

BLOGELITES - CRACKED THE TOP TEN!!

WELL, THE BLOG CRACKED THE TOP 10 WITH A 9 RATING ON BLOGELITES.

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UP AND VOTE ONCE PER DAY EACH TIME YOU VISIT THE BLOG.

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Daily Equity Market Comment 12/20/2007

We have quite a few short term buy signals making their way across the models and I have attached a chart of the hourly chart with a bullish breakout.

There is some very heavy resistance in here with a tight pool from 1450-1472, so if we can break 1472 we might see some fireworks to the upside. That is about 12 points from where we are now.

This also is the third day since the end of the sell-off so if the market wants to turn lower it would be Friday that would be the most logical. However, there continue to be strong indications that the rally will continue.

I remain 35% allocated to equities in the trading account and 100% long in the Long Term account. As I have said before, the market still needs to show me more confirmation before I increase my exposure.

Also, take a look at the 20% in 7 days stocks, some of them are doing very well and there were some additions to this portfolio today.

So in a nutshell, the market remains in the buy weakness mode with a real potential to accelerate higher from here.

p.s. If you have not visited the day trading site then stop on by.

BLOGLINES

DON'T FORGET TO CLICK AND VOTE THE BLOGLINES ON THE RIGHT HAND SIDE OF THE BLOG! THANKS

NEW TRADES IN SHORT TERM AGGRESSIVE EQUITY ACCOUNT

New Positions - 12/19/2007

THREE NEW POSITIONS TAKEN ON TODAY IN THE

20% IN 7 DAYS PORTFOLIO

12/19/07

Daily Equity Market Comment 12/19/2007

Today saw once again a multiple of trend directions which at these price levels can be considered bullish.

The daily pattern of a mid ranged consolidation calls for higher prices and perhaps sharply so.

I still have yet to get the strong confirmation that I need to put the last low as an intermediate term low, but as a whole, the market remains on a fairly predictable course of higher prices to come.

I did a bit more buying today on the afternoon weakness and as of now I am 35% allocated in the trading account and 100% un-hedged and long in the long term equity account.

One positive I did like today was the amount of put buying that went on at the first sign of weakness. This is a start towards the majority of investors being nervous and a bullish indication.

Continue to use weakness to accumulate quality issues that have been beaten up, but for your trading account do not move over the 50% allocated level until we get stronger confirmation.

Long Ford January 7 1/2 Calls

We purchased the Ford January 7 1/2 calls today for .20

As you can see from the chart there is no real heavy duty resistance until the 7.72 area and some very strong resistance in the 8.20 to 8.40 area.

The volume tool that is on this chart is simply one of the best as far as determining at what price or prices there was heavy turnover in the stock and thus support or resistance.

I do anticipate Ford to rally at least to the 8.20 level by the end of January. A tall task I know, but one that the stock is capable of accomplishing.

BUY CALLS ON FORD

Here are some of the reasons that I will be buying Ford Call options, once the ultra short term correction has run its course.

Notice there are three fairly heavy positive divergences on the two stochastics and also on the MACD. The MACD divergence gets more weight than the stochastics.

On a closing basis the stock price is forming a diagonal triangle and trending down. Odds are for a quick sharp break to the upside with this pattern.

GM has some similar patterns, but Ford looks to be poised for a stronger rally on a percent return basis.

I will be purchasing the January 7.50 calls which are 20 cents ask, 15 cents bid.
Fair value is .1811, so we are not getting ripped off on the trade.

The reason I am going out of the money is that I am looking for a minimum rally to $8.20 which would bring the options value to .80/.85 or just over 400% on a R.O.I. basis.

I may put together a mix of the Jan $6 calls and the Jan 7.50 calls for a more conservative strategy, just in case my upward target is too optimistic.

New Trades - 12/18/07

Three new trades added to 20% in 7 Days Portfolio.