If the market isn’t gapping up consistently every morning, then sure enough, it’s gapping down. Targeting a sector, or stock for trading the next day, has been difficult. A ten point gap occurs about every day in the Nasdaq it seems. Better trades will come. It’s best to keep your stock trading at a minimum when you feel like this, and that’s what I’ve done.

Today, I had the right idea with a day trade in SonoSite Inc - SONO. Unfortunately my stop was three pennies too tight. I bought SONO above the 3rd bar on the 15-minute candlestick chart. The stock spiked higher immediately. It also fell just as fast. I wasn’t able to sell half at 1R which was .30 higher than my fill at 28.45. I placed a stop below the low of the bar at 28.14. The low of 28.12 took out my trading stop. I will not move a stop lower after placing it. Never. You can see, SonoSite went on to reach 2R.

I’ll get the next trade. I know that if I keep my losers small, my winners will make up for them in the long run.

Momma always said, Don’t short a dull market. Well she’d also be correct in saying be cautious shorting a market that’s overbought. The overall market is getting toppy here. That doesn’t mean it won’t stop though. I’ve done nothing today so far, as the reward/risk just hasn’t been there for me. I see small gain potential with too large a risk. So when do you short?

I’ll look for shorts if the S&P 500 - SPX starts to break down under 1365.47 as shown on the 15-minute candlesticks.

The Proshares Ultrashort QQQ - QID, is one way to play the market short. You actually buy this ETF. I’ll look for the candlestick to hold over 55.88 on the 15-minute chart for entry.

A similar strategy using the Proshares MidCap 400 - MZZ can be executed. Again I’ll look for a candlestick to hold solid over 65.22 on the chart before buying.

Until signals such as these are confirmed though, it’s dangerous short selling a market that keeps going up.