The CommandTRADE Blog

Look at the six Majors for the currencies for the past two days of trading and you will quickly realize that we are in a transition phase, which means we are under an extreme choppy phase, where trends are being "worked" out.

This can last for a series of a couple of weeks.

Choose your strategies to reflect this.

2/27/2009

Nick Pirraglia

Call this a tip of the day..but if your running CNBC, Web news sources, Guru's message board sources, streaming news sources and watching hours upon hours of post market commentary across 5 different news channels every night..in an attempt to make any sense of this markets moves, I suggest you turn them all off and focus on the very basics of the program. In this environment, less is more. Stick to the charts and the stocks that will shine going forward, they will show their faces now and in the future!

Nick Pirraglia.

last week, on Monday and Tuesday 2/9 and 2/10, I ran a swing trade long strategy on 3 names. Genz, akam and azo. I based my share size on the underlying ATR. We ran this on WTV. the market has been going down since then , but I triggered a nice trade on genz. Two days later, I got stopped out for a $149.00 loss. This week I triggered a trade in AKAM and so far, it has worked, even in this ugly market. This morning, AZO ran up and triggered my trade too. I just hit my target  to bring my trail to life. If my calculations are correct, It should gap up tomorrow again, hopefully with the market.

My point is, trading long can and will work for you, when you are very specific about your stock pick and risk in this market. I ran these strategies and let them go for several days, and the strong stocks come back and give you the fresh cross, even though the market stinks. The strong stocks come back because the strong stocks catch good bids at natural support levels that the automation will pick up for you. I did this exact same method in the Trade Simulator for CT. My point again is, I did not need to really alter my trading style or plan for over a year, even in a bear market!

Go to the WTV shows on 2/9/09 and 2/10, at 1:00 central to 1:30 central and view the segment.

Nick Pirraglia / CT and CTFX Program Manager

So it took about two weeks to set this trade scenario up. The trade scenario began with a market rally and is ending with a market sell off to new trading levels, exactly what I looked for. Ultimately, the bids will show up for some cheap priced stocks. Remember, the stock market is forward looking, and for some reason, not sure why, many investors were hoping and praying the the economy was going to show signs of deceleration and bottoming? Why, I have no idea. Especially with all the lost jobs!

Anyhow, the market will trade at new levels that will be established for the next quarter. Range trading will be the best scenario using automated strategies that pin-point top and bottom support and resistance bands and trade in between these bands.

Momentum trading will only work periodically.

If your trading options, give yourself 90 day to the beginning of the expiration month. That is, use the first day of the month to the 90 day mark, and if you cant, go to the next available month. If the next available month is not trading yet, find another candidate.

Nick p.

Well..the signs were so obvious this time, I just had to track the symbols that pointed to the failure. And point out my posts all week on the Trap Door scenario in this market. The bottom line is the markets (equity) have no bids at all. All shorts are covered and there is absolutely NO interest in picking bottoms in any stocks by the big boys.

GLD and GOLD broke out as USO broke down!

The market wont bottom until the Bond bubble bursts in terms of interest rates. The problem with this is, if the bonds break down, that means interest rates go up. And under this environment, interest rate increasing as bond prices decrease is toxic for the economy.

Nick P.

I highly suggest that anything other than day trading strategies run for the entire week.

let the market point us in the direction NEXT week.

Nick P.

This week...1/9 through 1/13 will probably be the most important week in terms of direction of this market for the year! I plan on doing nothing all week. I liquidated all short term and swing trades in both stocks and options and will sit on the sidelines to let the extreme emotional chop smooth out.

The Tech sector led the rally last week, but a tech rally needs support form the financial, transports and manufacturing sectors to hold up. If those sectors get squeezed higher, then the market can explode up for a spring time rally!

My thoughts are..why try to predict what will happen, just let it happen and scope the week out and watch for those super strong green stocks.

Nick P.

Here is what we want to see to support a rally in the stock market:

1. Transport index need to break above a 5 day high.

2. Financial need to break above a 5 day high. look the ETF symbol (XLF)

3. RUT 2000 needs to stop going down!!!!

4. Technology has never lead a broad based market rally. Don't get fooled by a few top tier tech stocks getting short squeezed.

Anything else is a fluff rally. Again, its better to let the rally go and see how the leaders react afterward than to try to time the bottom..

Nick p.

What are we looking for when it comes to some real hard evidence that the stock market will test and possibly press through the November lows?

Look at the lights on the 30 DJI (Dow stocks) in your Overview screen. Very simple to do and this will keep you from standing in the way of a falling knife.

Is better to miss the bottom and not participate in a high risk stock picking trade based on price, than to let the stocks go up and form solid bases so you can look for those strong.... green stocks and create the risk / reward set up.

Nick P.