Thursday, September 3, 2009

Trade 77 - ASX200 another TINY gain, the WINNING week continues

Shorted 3 ASX @ 4441

1/ range bound day - don't expect the price to breakout above the intraday's high of 4448
2/ stops at 4451, target 4421 - 2 to 1 risk/reward
3/ MACD turning down, hitting uptrend line
4/ Market has been weak, given that most people expected a rebound from last night, quick quote -
"A few of the signs that pointed that today there was something different occurring:

Shorting stocks after the sell off to the morning lows paid. Over the past couple of weeks, these were extremely unforgiving
The VOLD (an indicator of breadth as well as direction) was flat -up 36k- as the market made its way to the morning highs, while falling below -600k on the sell off
The VIX printed its highest level since July 13th AND was able to hold this level and close near its high (closed at 29.15)... see chart below.
The same sectors that had been leading the charge up were weakest (Financials, Reits, Insurance)

Is this the beginning of a shift in sentiment? Only the market will tell. But I have taken note that today something different was occurring, and if this continues I will be ready to capitalize on the information being disseminated by the market. "

based on the above statement, I remember being burnt on the ASX200 2 weeks ago, thinking of a continuining downtrend day after a large down, but it was actually a rebound - the rebound didn't occer in the SP500 last night and remains below the key 1008 level.

Key risk in this trade, is that the china market is up over 2%, and the TICK is not as weak as I would like. However, price action remains the key, to the short term trade, and risk/reward is compelling.

I think after a few sessions of successful trading - a reasonable profit target given my trading limits at the moment would be 20 points of the asx per day.

Closed Position at 4436 for $18 profit - failing to reach target. The target was 4 points below, where the low was formed at end of day's trading.

Points to remember
- I reduced my stop loss level, when the trade started making money - a definite positive.
- My key exit was 20 points - but given that that price was just below the pivot for the day - I should've brought my target a little higher than the pivot price in range bout conditions - 4425. In trending conditions, I will try to stretch the exit price a little greater than the pivot/trendline exit levels, but in low volatility, range bound conditions, I should try to keep my exit levels more moderate.
- Key outside risks were the china market which was rising rapidly 4%, and SP overnights were rising - these two factors should've made me try to maximise my ticks on the trade, as opposed to gunning my targets.