Watchlist: LO STP LVS WBS BCRX KNX AET
I pulled the trigger on just one trade and I didn’t get a fill on shorting WBS at $11.63. Sometimes, it’s a thin line between “hesi-trading” (staying on the sidelines based out of fear and in-decision – passing on good set-ups, etc.) versus starting down the path of over-trading for the day (chasing, entering on hunches, etc.) I was a little too conservative today likely. Here’s a screen shot below of my canceled order and the chart of WBS at 11am.
Soon, my schedule is going to slow down and I’m going to have more time to dedicate to trading. The class I’m teaching ends this week and softball season is going in playoff mode soon. For the last two months, I’ve had busy weeknights M-Tu-W; and its usually taken me to Monday to feel back to normal again in terms of sleep, catching up with work and making up family time. I have four weeks of trading before we go on a family vacation August 22nd – it would be very nice to have a little recovery in my trading going into vacation along with catching on my “to do” list and getting my schedule stabilized.
A new thing I’m starting to watch more closely while trading and will start journaling in the blog is tracking the market overall structure at open. I truly believe my trading took a step forward when I stopped watching the overall both during afterhours and intraday. This helped on two fronts: 1) I stopped having pre-conceived notions on market direction going into the day; I stopped having bullish and bearish biases at the opening bell. AND 2) I stopped trying to time reversals mid-day from the index or $TRIX charts – this tended to either spook me out of good positions or trick me into entering poor set-ups. Two of the traders that have helped to formulate my trading style have different takes on this. From what I remember, Muddy never really tracked the overall market beyond clues seen on the HOD/LOD list, while Scott of Fear & Greed Day Trader does use overall market sync to catch momo.
One reason I started trading gappers is they often playout independently of the over all market. However, I have noticed that the opening range set-ups behave differently depending on the overall market environment – this is because there rarely is a stock that is completely 100% autonomous.
My watchlist parameters is for gapping stocks up or down by 5% with relative volume of 2.0; I always filter for stocks over $5, average volume over 1 million and average day range over .50. Somedays, the results of this scan is very small, so I adjust the gapper gain/loss from 2% to 4%, or to 1.5 relative volume – to at least get a watchlist of around 10 stocks.
Obviously, I have found when the gapper watchlist produces a bunch stocks that are either up or down 5% or more on high volume – this should give me more confidence to play breakouts or breakdowns. And then when at like 10am, this direction is confirmed or denied with many of the stocks moving in the same direction, this is another sign that it’s what I am going to call a “bullish-open” or a “bearish-open”.
Choppy-Open: However, today there were no clear signals of the makings of a overall trend day. I had to adjust my gapper scan down to 2-3% change and to 1.5 relative volume. Then I eliminated a bunch of those stocks as they were caught within Friday’s price range, and got the seven listed above. I began to be suspicious of break outs / break downs, and thought that fades off tops and bounces off bottoms would be stronger plays; that entering shorts on the high of a stock’s range or longing on the low of the range would of been stronger plays than anticipating successful explosions outside of the opening range.
Hence, I was looking at shorting WBS, AES, and BCRX at the top of their ranges and what looked like would be failed or stalled breakouts – as of 11am, this strategy would of held up.
Anyway, I’m going to track the type of open (choppy, bullish or bearish) from the composition of my watchlist and how the number / synching of set-ups as a way to further formulate and confirm my strategy on the day. I think it will take a couple months to fine tune this. I am still not going to have an index chart or any market internal indicators open for monitoring the market – following tick by tick doesn’t work for me currently, I know that.
