You Wrote This Post

I have a trading checklist, in writing, but as with any document, needs living updates. So, I’ve been researching the comments, to revise that document. In my laziness, I decided to let all the contributors to this blog construct this post. I intend to use this information to modify my checklist. Taking comments out of context is dangerous. I tried to do the best I could. I was not able to get before March 9, and there was a bunch of stuff I remember but haven't reread yet.

I wanted to lead off with Wolfstreet whose first comment sets the tone:

WolfStreet:
I think this blog has been one of the most important contributors to my trading progesses.

I find it hard to imagine a trading system that would enable you to trade in a context isolated from the global markets. At least not one that will consistently isolate you from all market setups. I have messed up trades in nearly any possible ways: selling my long near a short term bottom, covering my short near a top, getting out just before the break I was targeting started BIG time, or missing the entry by a few points. I'm okay with taking losses, as long as it's in tune with my risk management "plan". ie several small losses, for a (possibly smaller) number of big wins = profits. I try to monitor my ratios losses/wins and remain aware of when things may start to go wrong.

The 1312 line is the one I'm eyeing with interest. That line being taken back, plus having at least one down day on big volume, would certainly awake the wild sleeping bear in me.

…..But, as always with fundamentals, hard to time the impact on stocks. When trading individual stocks, I always include my predictions for the markets (mostly the SP500) as part of my trading system.

There's this particular trade you've opened, in which you place high hopes of success since your trading system shows all lights greens. Then comes a big move in the global markets, generally in the opposite direction from that trade, and your stock follows in their steps, and at some point you're out. But hey, in the end, it simply means you were wrong to begin with, doesn't it ?:p

Anonymous (ICan):
I did look at Su.nyse chart at Finviz.com and saw that it hadn't broken the major moving averages like 50dma. I like finviz better than stockcharts.

Bernanke = Greenspan. And now there are trying to spread the debt disease to Ems. Live life to the fullest and then default - is the name of the game.

Dastro:
I'm trying to optimize the use of time (work constrains) that I get, to study the markets as a whole first and then re-engage in my silly accuracy rate predictions in individual stocks. When I'll be able to pick stocks successfully without paying attention to the general market...well, that would be the moment that I can say to myself after years and years of efforts you did it dude, but I'm not there. In the meantime I need to get help from the general market and/or improved synaptic activity.

My original view back in September was that will move up at a good pace till April and then an important correction [Rock: dead on, just a little late….I wonder how he did it back in Sept?]

If I know the stocks (meaning a lot of time studying them)I become familiar with them and my prediction performance in this case hit around 70% right- 30% wrong. Narcissism it only clouds our judgement making us believe that we have something when in reality we got nothing but only hope.

Dss:
The primary problem of trading short term stock type things and not futures is that the market moves more overnight sometimes than it does during the day, so even if you have a stop you can get creamed. Sometimes I put on a little test position as it keeps me uber focused then on how it does. Even if I lose a little bit of money, it is giving me good information.

I am strictly a technician, fundamental analysis to me is a waste of time, and is often wildly inaccurate due to lies, fraud and mismanagement. I just don't spend a lot of time trying to figure out the "why" of something. I take note of sectors that are over or under performing, drill down to see if the whole sector is doing well or just a few large stocks, and extrapolate from there. Divergences from the overall trend give me information to form an opinion and then I use other technical indicators to confirm that opinion.

Tops are very hard to predict as there usually is a process going on that takes months, if not a year (2007-2008) to unfold. No one rings a bell at the top and no one rings a bell at the bottom. Things always look best at the top and worst at the bottom. Markets go further in both directions than anyone could have predicted. Let history and internals be your guide, rather than hysterical blog coverage and misleading media coverage.

The important indicators that I follow such as the McClellan Summation Index have been diverging since last November, which put in their third lower high, while prices have powered forward.

With regard to gaps up/down in the SPY the odds are that they will fill if they are less than 1.00, 132.10 minus 131.10, but if they are more than 1 point then the odds are they will not fill.

I keep a 7 day ma on the range of the S&P futures and it went from a high of 29.93 to a low yesterday of 10.29. Great example of the expansion/contraction principle. The last time the range contracted to this level was on 2/18/11. The concept of expansion and contraction that I follow is from Toby Crabel which is also where the NR4 and NR7 concepts come from: http://www.mypivots.com

I-man:
Focus on what you stand to lose, before you even think about what you may win. If you're on the right side of the tape, the gains will come. Small gains over time with good risk management will make ya rich. Being able to take small losses is one of the most important things you can learn. Its when folks cant admit they are wrong that problems arise.

"I'd rather be out wishing I was in, than in wishing I was out." I apply this same philosophy to taking gains in winning trades. I always protect gains with stops. I'd rather get clipped out with a profit, and look for a reentry with gains in hand, then sit and watch my gains retrace to evaporation.

When I pay all my debts, and start stacking a nest egg, it will all be in CDs. Or 90 day T-Bills...


Mannwich:
The Mannwich top is in folks. Lol. (April 12, 2011)

Remember, the economy isn't the market and vice versa.

I've previously been a fundamentals guy but that hasn't done me any favors, so I'm trying to use more of a combination approach and leaning more on technicals than I used to

Rock:
I love pullbacks. It's the only way we can identify the strongest stocks when the market trend is up. The time to invest is when the weekly, daily, and hourly stochastics of the SPX are at the 20% level. That's the time in your career that you will make the most money.

The S&P is constructed to advance when commodities go up in price. 17% of the S&P directly benefits: The Materials and Energy sectors. 48% is neutral to commodity prices: techs, financials, healthcare, and telecom. So about 2/3 of the S&P will advance (part by beta, part by direct benefit) if the commodity prices go up. Yes, we can continue the recovery, all we have to do is have inflation, where commodities go up up and away.

When I see a W on the chart, the stochs have to return to oversold, but here on SU we got just a little dip below overbought. If the stock is going up, and I want to momentum trade, I will wait until the stock is on the lower line of the upchannel, then go to a 15 minute chart, and look for a W with the right side higher, that must still be within the daily channel boundaries. If the daily channel is wide, I will take shares off at or near the top, then add them back when it returns to the bottom. I will never never short a stock in an upchannel. Don't short strength.

Volumes are extremely light, so the plunger team can be very effective right now, the window is still at 0%, and you can buy a lotta stock at 0% interest. The problem is the Fed's balance sheets are becoming more transparent, so the plungers gotta be careful.

The technicals look like a lower high. However, the fundamentals, the structurals, and the psychologicals just don't add up. Fundies: everything is up up and away. Profits never better. Structurals: the Fed's still buying. Bonds are in low-dom. Psychologicals: we're shrugging off everything: Lybia and middle east, ivory coast, Portugal and Ireland. So 3 of 4, up up and away. do you believe technicals? All by themsleves?

Thor:
Man look at gold, now that's one investment I made that turned out. I bought in at $850. That purchase was to diversify my investments FYI, wasn't trying to make a ton of money with it. I console myself by remembering that on the other side of that 230% profit is a pretty big loss. I'm definitely happier with 2 or 5% when it comes to my risk appetite! Two years on educating myself on the markets and investments and I still have the vast majority of my holdings in bonds and CD's!

I wonder if anyone has thought about doing some serious auditing work on the ratings companies. Who stands to benefit from a downgrade like [Portugal’s]? The big banks who will not only get more interest, but could this also force yet another bailout with favorable terms to the banks? Also wonder if TBTB are in the fight of their life here - it's one thing to have a small country no one ever talks about (Iceland) tell them banks to f*** off, it's another thing to have an EU country like Ireland or Portugal do the same thing. Would that maybe cause a domino affect? More and more countries deciding to follow in their footsteps? That would definitely NOT be to the banks benefit. One thing I do believe in, whatever the mechanism, is that this increased liquidity is finding it's way into the stock market. 1.7 trillion in QE in two Years is nothing to ignore .

We've talked about turning points - I'm learning quite a bit about my own biases lately. Watching so many of you turn bearish, some more so than other (cough, Manny, cough ;-). I'm struck by just how SLOW I am to change my outlook! I'm still clinging to "this correction is almost over". I don't know whether that's a good thing or a bad thing. One the one hand, I'm not quick to change my mind, on the other hand, that slowness could cost me if I'm not careful!

those tools will influence you to make bad decisions. I think this is key - too many people thinking the one or two systems they are wedded to are infallible. Best to get as much confirmation and as many different inputs into a trading decision as you can. Relying on one chart, or one system, I think, too often leads people to miss the forest for the trees

Rock:
I put Mutt last. Somebody had to be last, so I chose Mutt Mutt, the last shall be first.

Mutt:
But no matter what system is used, do you trust the numbers? Is our unemployed rate really falling, or are people being pushed out of the system, only to be left worse off then before, but no one cares because they no longer count as unemployed? As the dollar weakens and comodities spike can we really be having an economic upturn and if so how long can it last? Can the Toil Index give us a better number then GDP, Probably, but how long will it be before those numbers are manipulated?

I do not trust this market. Oh I do believe it will go up some more, but there is nothing to keep it up, how long it takes is any bodies guess. I think the market will continue higher only because it is being pumped with cheap dollars. But some day those cheap dollars will fail to make a difference and people will start to pull them out of the market, then the wheels to Ben's economic "plan" will start to truly come off.

I FINALLY have a fairly good handle on placing stops, of course it took loosing money to get the grasp of it, but like you have said several times, there is no reason to loose money and there is always another opportunity around the corner and well placed stops help both of those. I am not an “emotional” guy, I try and make decisions based on the facts, but being emotionally tied to the market has been my biggest downfall and perhaps one of the harder lessons to learn.

It seems a good trader also needs to be dynamic and able to change and even make choices they other wise would find distasteful.

Yes, Bernanke is my hero. Maybe the market insiders have itchy trigger fingers, because they know at a certain point they are on their own.