Position Trader (Canada)

3

3rdkick@thecan

I'm starting a journal to post my trades. I find this helps with my discipline and if anyone wants to trail me, has comments, or ideas about possible trade setups please feel free to add to the thread.

Before I start I'd like to give a little background. I've actively traded before in two previous failed attempts. Hence, my user name. The first time was trading options directionally, and the second time was daytrading index futures. This time I intend to trade stocks and ETF's positionally and hold for anywhere from a few days to a few weeks. The objective is to take chunks of the swings in the market. I have also studied technical analysis through books and basic level courses and also obtained a CFA charter in 2002.

My style is based on both technical and fundamental analysis. I use support and resistance in multiple time frames to judge entry and exit points as well as news flow to help determine direction. This is in addition to the traditional technical analysis basics of chart patterns, trend analysis, and the like. The fundamental analysis provides a framework for what the market is doing in its primary, secondary, and tertiary trends.

To give everybody an example of my trading style I will share the two position trades I made last week. Last Monday I went long shares of XFN (TSX), a financials ETF based on a double bottom pattern on a daily chart and my belief that the insurers had bottomed out - they were the reason for XFN retesting earlier lows as banks were still holding up. I entered at $11.83 and sold last Thursday at $13.95 based on a resistance level of approx. $14. The other trade I made was long HSU (TSX), an S&P 500 ETF, entering on Wednesday at $4.46 - corresponding index level was 717 - based on the belief there would be a continuation of the dead cat bounce of Tuesday's strong market performance. I sold on Thursday at $4.86 - corresponding index level 751. I originally set a target of selling at 740 resistance, but held the position and chose to sell into the strongest prices that are usually achieved between 3 and 3:45 on strong rally days. I maintained stops on both of these positions as a measure of risk management.

Tomorrow, I am considering the impact of no OPEC cuts to the oil market and the possibility of a decline. According to the daily charts at livecharts.co.uk the WTI contract has been trading in a range since mid-December 2008 with a resistance of $48-$50 and a support of $34-36. Since I am not trading futures I intend to buy HOD (TSX) at market open or soon after with a target of $42 on the WTI contract. I will post tomorrow whether I make this trade or not very soon after the market open.

I am also considering going long again on the S&P 500 as I believe the market has a bullish bias from the lack of profit taking on Friday and because the index is so close to 800-810 at which point I expect it to sell off. 800-810 represents the neckline of a double top formation on an all time chart, is 20% off the market low which is usually the halting point of bear rallies, and is the support of a trend channel the market was in from January to mid February before breaking to test November 2008 lows. However, I am prepared to go short in addition to long based on the next catalyst the market takes hold of on Monday morning. This could be potential lower oil prices, Bernanke's comments on 60 Minutes, or some unexpected news. We will wait and see. Cheers.
 
I haven't traded a market open in ages and was unsure if we'd get the typical high open and small retracement minutes later typical of gap up days or an off to the races from the start day. I placed orders on both HOD and HSU at a limit based on market depth making sure I'd get filled right away.

HOD was filled at $28.03 which corresponds to $44.77 or thereabouts on the WTI contract and $5.06 on HSU which is approx. 766 on the S&P 500. In hindsight I did a good price on HOD and got taken a bit on HSU along with the rest of the eager beaver crowd. I'm not too worried about that though because I'm position trading and not daytrading.

Targets are $42 on the WTI futures contract and 780 on the S&P 500 - the first significant resistance point I see on a daily chart. I may hold the S&P 500 longer if I believe the market has the legs to go to 800-810 so I'm flexible here even though there would probably be a bit of a sell off at 780. Stops are $45.25 on WTI corresponding to who knows what on HOD and 758 on the S&P 500 where I also have no idea where HSU would be priced.

I will also be keeping an eye on the market to see how it reacts to the week's upcoming economic and bellweather earnings reports and the anticipation thereof.
 
Moving up my stop on HOD to correspond with $48 on WTI. I don't want to be taken out of the trade by a tight stop. Maybe I'm undisciplined here, but $48 is a definite hard stop.
 
I have never traded oil before and chose $45.25 as a stop earlier because I saw there were two tests on the upside on a the intraday chart and thought it was a good resistance point. I wonder if there were a lot of stops there and stop hunting moved the price there. Still trying to get a feel here for this market and we'll see what happens.
 
Looks like you were finally able to post.

I'm finding this morning interesting to say the list, I definitely thought Oil would crater more than it has.

Keep in mind you will need to adjust your stops on a daily basis as the HOD/HOU etf's rebalance daily.
 
Looking at the oil daily chart I see $46 area was a solid support the last week or so. We'll see if it acts as a good resistance target now that the market seems to be going there to test it. In hindsight I should have watched this market before trying to trade it.
 
Quote from jazzsax:

Looks like you were finally able to post.

I'm finding this morning interesting to say the list, I definitely thought Oil would crater more than it has.

Keep in mind you will need to adjust your stops on a daily basis as the HOD/HOU etf's rebalance daily.
More...

Good to see you in here jazzsax. This is definitely a much different market than I'm used to - I'm assuming lots of intraday volatility. We'll see what happens, but at least I know I won't lose my shirt because I'm not leveraging with margin or using futures contracts.
 
It looks to me that oil is trading higher with the broader market based on a possible recovery in the economy, and hence better oil prices. I entered the trade assuming that oil went up last week with anticipation of cuts from OPEC and when that didn't materialize it would mean lower prices. I guess oil is more correlated to the broader market than I anticipated.

I'm a little discouraged I didn't take myself out at the initial stop point of $45.25 on WTI and remained disciplined. I will now be looking to exit this trade on retracement of the day's gains.

With regard to going long on the S&P 500 it's up higher than today's open, but that hasn't corresponded to HSU as the market makers did what they always do and take advantage of early momentum. Not sure where I go from here because CPI and housing starts come out tomorrow and I expect the market will take profits on negative news, but may rally further on good news.
 
So someone who knows oil much better than me commented somewhere else:

there was also some news about an attack on a nigerian refinery. i think that is playing more into the recovery today than anything else. Seems to be anytime there's an attack on a chevron facility, it freaks the market out that day.

We're talking at most an effect of about 11K barrels a day, which is next to nothing, but enough to spook the floor traders. They love that news!

****

This is the type of fundamental based info and rapid market altering news flow affecting markets that should keep me out of oil. I have no idea about this market except tea reading charts. At least with the broader market I have a good notion of what it's doing and why.
 
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