Wednesday, October 7, 2009

FAILGATE - Interest Rates and Market Perception


Worst trading day so far, it's hardly suprising that it comes off my biggest trade wins.

I have a habit of hubris and aggressive trading after some big gains, and I'm not sure it's a bad strategy, if I'm being aggressive in the right direction.

It is clear now that momentum strategy to the downside isn't apparent, even though it's the 4th time I've tried to short this market, it just doesn't seem to budge at all.

To be brutally honest to myself, I think I've been a real donkey today, trying to fade trades, when it's trending higher.

The main thesis behind my first trades on the index, were the divergences on the 5 minute charts, and basically I was stopped out.

The main trouble started when I decided to continue to try and short the market, when the market was actually breaking higher into new ranges;

I proceed to short (on no real macro basis, and no chart justification)
cba, anz, wbc, oil, ori, sp500 - all with no success, in fact, instant failure.

This lead to a quick loss of $260 before I decided to pull the plug on all my trades and live to fight another day.

Today was a day where my head really wasn't functioning rationally, and I will fix that before tommorrow's trades.

I have added a long position of 1200 TEL@ 2.1 as it looks technically good, and telcos is an industry which won't be affected so much cyclical as the other stocks.

I do believe the current interest rate rise liquidity wise is a huge negative, and this is one key thesis behind all my shorts, however, the market prices have proved me wrong today, and I'm sure it will prove me wrong many times before I finish this blog.

I'm still very bearish the financials, and I'll have another shot at it within the week, but only if the charts are giving me good risk/reward setups.