Ouch

I originally put this on today's post but decided to separate it out.  BlueCollarTrader is as much diary as it is a 'Blog'... it's a web log of my thoughts and activities related to the markets and my interaction with them.  So, here it is:

6:36 pm:    I just got in from working out in the yard and switched on CNBC.  This is bad... I logged in to the brokerage account and find myself down a lot according to the futures... they're up 11 points in after hours.  It appears I've horribly miscalculated and it has put me down over $4,000 as of right now.  That really hurts... this is what I was thinking could happen but the odds were against it according to the charts.  But, as I wrote earlier, world events and The Federal Reserve were the wild cards.  And one of those cards has been played and has stung me.  $4,000 is about 3% of my account so it isn't a crushing blow if I take that sort of loss.  But, in contrast with my gains, it is a lot.  And the fact that I could REALLY use the money now.  In fact, we need trading to start paying us... providing an income.  And this is a long way from paying us.  In that context, it hurts a lot.  

So... on the bright side, I had a very good trade in the retirement account today. Nearly a $1000 gain on one trend move.  This is perhaps the worst part of this... I have the skills, the bankroll, and the will to be profitable.  What I don't have is the consistent SELF-DISCIPLINE to make those gains on a daily basis.  If I did, my current unrealized losses would represent a few days worth of winnings.  

I still believe that the charts indicate a pullback... but with Bernanke's 'dove-ish' comments, the markets are going to sail and if I sell, I'll be down thousands of dollars.  And the couple of times I've bailed out by "Throwing in the Towel," two or three days later the stock reverses and I would have been back to even or have made nice gains had I held.  

Do I have faith in my reading of the charts?  or, do I just "Throw in the Towel" and take a big loss in fear of even greater losses?  

I am truly shocked by this move, but when the TNA didn't break down today, my gut was telling me that something was not right.  But, I stuck to my thesis.  And here I am... 

July 10 ( $ 0 )

Mid day and still holding my TNA and TZA.  market is down slightly and still showing lots of demand on dips.

No shares added or reduced today in the trading account.

More evaluation of TNA:

The vertical distance between the 12-day moving average and the high of the day yesterday on the daily chart is the second largest since November of 2011.  (There were a number of instances of this prior in 2011 because of the deep drop in the overall markets during August that year and the resulting volatility).  The other instance was just two weeks ago on June 24th, just prior to this steep run!  In both of these, November 2011 and two weeks ago, a notable reversal soon followed.

The stochastics still register over 96 on the 0 - 100 scale so far today.

What does this mean put together with my other research notes from my prior blog post?  It means that there is a high liklihood of a winning trade as I have it presently constructed.  Is it a sure-winner?  No way.  Am I nervous about this much money on the line without a stop in place? ... I am.  My concern is that there will be earnings or Federal Reserve news that will cause the markets to soar before the pullback takes place.  I am uneasy because of the large number of shares that were traded between 10:10 and 10:30 am this morning... my concern being that this was buying as the price dropped.  There is not a lot of volume in the move back up since 11:25 am so that is favorable to my trade, I believe.

From the June 24th low of this trend to today's high, my TNA price is exactly at the Fibonacci 23.6 % reversal line, for those who watch Fib lines.

I occasionally watch the CNBC show Fast Money.  I tune out the blah blah blah that fills most of the show but tune in for the trader comments about their own moves.  Joe Terranova stated on last night's show that he had taken off an S&P long trade earlier in the day in anticipation of a pullback today related to an expected negative Chinese data release overnight.  he did say he wouldn't get short here though.  The data was not good as he expected.  The market is pulling back some today but not dramatically as I had hoped.

2:20 pm:   Not happy to see the FED Minutes release result in a market spike.  My unrealized losses are at the highest they've been.  Especially frustrating is the fact that at 11:30 am I could have exited my TZA portion of the trade at break-even.

2:40 pm:    TNA price now down to the center of the daily range... approximately $53.65 and the FED spike has abated.

2:55pm:     Price dropped aggressively to the 53.35 level where buying was equally aggressive, as it has been over the past day.   e.g. 2:45 pm, 12:25 pm, 12:00 pm, 11:00 through 11:25 am, 10:30 am today and  yesterday at 3:50 pm and 11:20 am
This is a critical level that must be broken for my trade to move toward profitability.  I am concerned how this level is providing strong support like $52.31 did on Monday afternoon.  It was a solid base and a springboard for both yesterday's and today's new highs.  I am surely hoping that $53.35 doesn't replicate that pattern.

3:25 pm:    TNA at the highs of the day.  This is not what I expected today, based on my interpretation of multi-day charts.  The odd thing is, the SPY is at the middle of its daily range.  This reminds me of how TNA behaved in relation to the general markets during the March and April/May move up.   It was unusually exuberant to the upside compared to SPY.

3:40 pm:    TNA holding its perch just under the HOD, presumably to make a jump.  My morning optimism has waned greatly, but the TNA and SPY daily charts still say the same things to me.  A pullback is imminent.  In fact, there is a doji on the SPY as I write this at 3:42pm.  It also retreated from $166 resistance earlier in the day.

4:04 pm:    TNA finished the day above both moving averages and in the top one-third of the daily range.  Not at all what I was  expecting.  SPY actually broke out of the doji formation and ended the day slightly green but certainly off its high of the day ( HOD ).


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I did add 2000 shares of TZA to the retirement account trade; 2000 shares at $27.64 in the 9:55 candle timeframe.  This brings my average cost of 3000 total shares to $27.78.
Sold these 3000 shares at $28.02 in the 11:25 am timeframe.  Gain of $960.  Nice entry on these 2000 shares and nearly a perfect exit.  I believe this is my largest single position gain ever.

July 9 ( $0 )

Down more as the markets climbed and TNA followed.  Sure that this extended run was going to break so I added to my TZA long trade.  Bought 1000 TZA at $27.79 and 1000 at $27.98.  Digging a hole to possibly drown in but my review of daily charts finds that the odds of a breakdown are increasing a great deal.  Not today however...
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Also took long trade in TZA in the retirement account and am holding it overnight; 1000 shares at $27.78

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More TNA chart research:

This 8-day run has one of the steepest climbs in the past few years; meaning very little pullback.

Two consecutive days of gap ups without filling.

Stochastic Oscillator on the daily historical chart using the 0 - 100 scale was over 98 in the pre-market and was at 96- 97 all day.  Only twice since 2010 has TNA not resulted in a downturn allowing for a winner within 90 days when that level was reached.  Most downturns gave opportunities for winners within two to four weeks.

Weekly charts shows two consecutive weeks of gap ups without filling.  I looked back a few years at the weeklies and discovered that two consecutive weeks gapping up hasn't happened.  And of the SINGLE weekly gap-ups that did happen, all but one have filled; including gaps in both up and down trends.  The run up since June 24th is very rare in terms of raw momentum.

If Monday's daily chart gap-up is filled and I choose to hold my current position until then, I'll have a decent net gain from TNA and TZA.

Monday July 8 ( $ 0 )

Found myself negative in the TNA trade from late Friday.  Did not buy to cover.
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Bought 500 TZA at $28.50