We might be there now

Posted by downtowntrader | 9/17/2008 09:17:00 PM | 0 comments »

Wow. That was a crazy day. It's almost like we had two separate trading sessions. I've mentioned how I've been running the Stocktickr / Trade Ideas Trading robot, and today was a crazy day for it. It typically takes 4-8 trades a day, and today it took 63. It was up over 20 R's by noon on mostly short signals, and by 1:00 they were all gone. It chopped around a bit just after lunch, and then in the afternoon it took off again on mostly long signals. It actually used up all the buying power in my account and missed some trades. It ended up gaining 21R's, which is it's all time best day. The sick part about it, is that I had an urge to close out the mornings trades manually, but let the system run on it's own. If I had managed to just salvage half of those R's I would of had 30R's. Baby Frankenstein is definitely alive.

Today had some real fear and panic in it, and it shows up in several charts. What I would typically dismiss as bad ticks on daily charts, are actual sustained trading periods on several charts. There were some crazy moves in the market, and aggressive traders had plenty of opportunities. I mentioned how I would probably stay away, but once I saw how Frankenstein was shaken out of all his short positions, I had a feeling that capitulation had occurred. I entered a few long plays and was rewarded almost immediately after entering the trades. It's important to note, that while I went in with the frame of mind that I would wait things out, the markets showed me enough to risk my capital in a favorable environment. This is why I usually prepare for two or three different scenarios, so that I have a plan in case anything happens.

We may of hit a real important low today. Is it the bottom. Who knows? We won't know until it's in the rear view mirror. However, there are plenty of signals that an important low is being formed. Fear is rampant right now, and not many people believe a rally will hold up. Like I mentioned last night, I expect some follow through on this rally attempt, but I am fairly sure we will be back to test these lows. We might stop short of the lows, and we might surpass the lows, but it's HIGHLY doubtful, that we just catipult higher without some choppiness or backing and filling.

Also, keep in mind that after todays historic move, we are not even back to where we started on Monday. For all the market gyrations, nothing has really happened, so as traders we need to be fully prepared for anything that might occur. And as unlikely as it seems tonight, there is still a chance we plunge even lower.

Trade Carefully,