Trader’s Log

When I first created this Traders Log I had planned at some point to start adding new posts. Other time priorities, however, changed this expectation. I do not anticipate adding posts in the foreseeable future. I will leave the posts I originally provided in place. These posts relate to trades that motivated me sufficiently to write a comment to reinforce market lessons. They are notes that I wrote to myself. But I believe that most traders will find at least some of these comments helpful and quite possibly personally pertinent. The number of entries are far fewer than the relevant trades because, in most cases, I didn’t take time to write up the trade. Unless otherwise noted the charts were generated on the Thinkorswim platform on Ameritrade.

Jack Schwager

#9 August 18, 2011 ROUNDING PATTERN, FALSE BREAKOUT & DECLINE WITHOUT NEWS

Posted by on Aug 3, 2012 in blog, Uncategorized | 0 comments

I was long on weekly contrarian signal. Initially started working, but then after red circle ignored following negative indicators: Rounding top False breakout (red circle) No news—When market sold off late in day and into night session, checked for news item, but there was nothing. Market moves (especially, off hours) that occur in absence of news signal likely continuation of move. The market collapsed right after this combined pattern—the sharp downswing in above chart occurred in one-half day.  Lesson: Although, I had reason for...

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#8 AUGUST 1, 2011 FAILURE TO HOLD BULLISH RESPONSE TO BULLISH NEWS

Posted by on Aug 3, 2012 in blog | 0 comments

The impasse against raising the dept ceiling and risking the inability of US to pay all its bills was within days of the deadline (August 2). On Friday’s close, the Republicans and Democrats seemed as far apart as ever. Over the weekend a deal was negotiated, very sharply reducing the chance of a default. On Sunday’s opening the NQ index gapped about 30 points higher and consolidated (see oval on chart). By early Monday morning, rather than following through on upside, the market started to break down. This price response had potentially...

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#7 July 31, 2011 FAILURE TO HOLD BULLISH RESPONSE TO BULLISH NEWS

Posted by on Aug 3, 2012 in blog | 0 comments

On Sunday evening huge gap and rally after debt ceiling bill negotiated over the weekend with threat of default only days away and after at close on Friday two sides wide apart. The market surrendered much of its gain on Sunday night and started consolidating only moderately higher. This initial big response to surprise news and resolution into a muted response suggested failure. Short order I placed missed by 30 basis points. Ironically, my original selected point was 50 points lower, but then decided to push entry and exit points 50 points...

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#6 JULY 8, 2011 FLAG PATTERN NEAR TOP OF TRADING RANGE AS BUY SIGNAL

Posted by on Aug 3, 2012 in blog | 0 comments

A narrow flag pattern formed near top of trading range suggest potential for upside breakout. Added to dollar long in red oval area for this reason.

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#5 JULY 11, 2011 SCHWARTZ’S DICTUM: WHEN MARKET LETS YOU OFF THE HOOK TOO EASILY, DON’T GET OUT

Posted by on Aug 3, 2012 in blog | 0 comments

Marty Schwartz said that if you are really worried about a position and the market let’s you off the hook too easily, don’t get out. This market provided a perfect example. At the high in above chart, Nasdaq was close to the multiyear high. The big decline from this high was triggered by an extremely bearish employment report. The market, however, rebounded strongly on same day, recovering 75% of loss. The shrugging off of very bearish news and the strong close with price near high of move looked like extremely bullish price action (see...

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#4 July 11, 2011. MARKET SHRUGS OFF BEARISH NEWS

Posted by on Aug 3, 2012 in blog | 0 comments

Situation–NASDAQ had been in a sharp rally off the recent lows to near the highs of the entire long-term upmove, with the market making a high on a very strong up day (the recent high day on chart) on evidence suggesting the following day’s monthly unemployment report was likely to be bullish. The actual report released the next day (last day on chart) was extremely bearish basis expectations. The market gapped sharply lower on the opening in response to the report and continued to sell off to the lows of the day. Thereafter, the market...

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#3 JULY 7, 2011 FLAG PATTERN FORMED AFTER VERTICAL RALLY AS BULLISH SIGNAL

Posted by on Aug 3, 2012 in blog | 0 comments

A tight flag pattern formed after a near vertical move usually tends to result in a continuation of the move. In this case there were two successive flag patterns.  I was long XME puts and thought about buying copper as a hedge, but couldn’t bring myself to do the trade, even though I know this is a reliable pattern. The market immediately rallied. Have to pay more attention to this pattern in...

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#2 JULY 5, 2011 FALSE SIGNAL FLAG BREAKOUT

Posted by on Jul 31, 2012 in blog | 0 comments

  The market had a sharp downside breakout of a flag pattern (low day at beginning of July). The very next day the market more than recovered the entire loss rallying back to the top of the flag pattern. The false breakout of the flag, as confirmed by this rebound day, provided a bullish signal, as the market continued higher for the remainder of the week.  The illustrated failed signal proved to be a major turning point. The market subsequently skyrocketed, gaining nearly $400 in two...

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#1 March 11, 2011 REVERSAL OF PRICE ACTION AFTER NEWS

Posted by on Jul 31, 2012 in blog | 0 comments

#1 March 11, 2011 REVERSAL OF PRICE ACTION AFTER NEWS

Japanese yen daily Major earthquake hit at night. Initially yen went lower (red oval), but only a little bit. I was short and remember seeing this on TV at night and thinking I should get up and cover position. I didn’t. Market skyrocketed. There was repatriation explanation for strength after initial response reversed, but reversal of initial response is the key.   LESSON: Failure to respond after major news item and reversal of initial response is important...

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Welcome to my new website!

Posted by on Jul 30, 2012 in blog | Comments Off on Welcome to my new website!

This is a new website. There are no posts yet for this section, but I plan to begin to add posts soon.

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