Trading A Tricky Market

There’s been a definite sea change in the market. I’m not sure if it’s the hardest stock market to navigate, as Doug Kass writes,

“Arguably, this is the hardest market to navigate in years, and this is manifested in the likely closure of some sizable hedge funds. Those liquidations might be contributing to the recent spate of selling.“

Trading from February 2007 through October 2007 was easier. Buying dips was usually rewarded. This past week, when I’d try to pull more profits from a trade, the market would end up slapping me. I didn’t let that happen yesterday. I sold in partials, and stuck to my planned targets.

When 1420 SPX was breached, there wasn’t fast and extreme selling. This was a clue the area may hold. It’s easier to move a market around in thinner holiday trading. I’d expected that. We were also due for a bounce. Not that there was a 100% chance of that. Here’s a few notes I took yesterday while trading.

“No accelerated selling. Gotta keep ‘em fast.. Different than summer with patience. This market will chew you up and spit you out. You have to ask yourself… Is this the place to short? (When you’re down below support at 1417 SPX)…”

UWM placed a reversal bar near prior support on the 5-minute bar. I took it. I was also in some QLD from earlier in the morning, using the major pivot low as a stop. The 200ma on 5-minute charts was used as a target for both.

LULU caught my eye an hour after the opening bell. On the 5-minute chart, the first wide range red bar was retraced. LULU then pulled back, and was in a tight base. The buy signal, and high volume bar had me enter. In hindsight, this would have been a spectacular reward to risk trade with R= just .25. I chose a conservative 1R though. A stop was set under the day low. Again the 200ma was used as a target.