Thursday Trading

I sold my short positions in the first few minutes today and then looked to go long at some point later in the day.

200% Short Financials (SKF) bought 10/22 at $142 and sold on a stop limit of $153.5

200% Short Materials (SMN) bought 10/22 $85.5 and sold at market for about $92.5

I bought the following today -

Russia (RSX) stop buy at $14.15

200% Long Financials (UYG) stop buy at $8.25

200% Long Dow Jones Industrial Average (DDM) stop buy at $31.50

DDM was sold today on a stop loss at $32.75

I bought too early today. I had a stop in on DDM at $29.75 and raised it 3 times in the last hour today before stopping out for a decent profit.

I have been keying all of my trading activity off of the action of the Dow Jones Average. I have learned to do this, because it tends to lead all moves and temds be the most efficient in pricing these moves. Moreover, I believe that when the Fed ("The President's Working Group on the Markets" or "Plunge Protection Team") decides to accelerate the futures programs, they tend to focus their buying on the Dow Jones.

So if the Fed uses the Dow Jones to drive market action, then who am I to do otherwise with planning how to deploy my money...

Chart School 101

When entering a position, I use standard deviations away from the 260 period moving average on the 30 minute chart. I plot the 0.5, 1.0, 1.5, 2.0, 2.5 and 3.0 Bands above and below the 260 period EMA. These are referred to as Bollinger Bands for the guy who first created them.

Price is generally at extremes when it nears the +/- 3.0 Band. That is when you are looking for reversal patterns for a change in trend.

The last 2 days of trading have been stuck between the -1.0 Band (Pink Line) and the -1.5 Band (Purple Line). The Fibonnacci Lines and the uptrend line from the 10/10 low has also been in play.

Do you still think stocks are a "Random Walk"?

I will either be looking to sell a rally of the Dow into the 8,750 - 8,800 range, or I will get stopped out of holdings on selling tomorrow morning.

I would love to see the Dow hang around the 8,600 - 8,700 range for a few hours tomorrow and then break out or fail on big volume.

I am assuming a positive bias tomorrow. I just don't think the Fed wants the markets to fall hard on a Friday in October and set up the potential for a panic Crash on Monday. We'll see.