Trading Psychology Archive

For those that have asked, the archived version of the trading psychology webinar I did recently is now available. You’ll have to register to view it and will more than likely receive some marketing material from Trade King. You can opt out of the emails at any time (I think I receive 1/month).

I’d appreciate any feedback you have for me regarding the topic covered and/or future subjects that hold your interest. Thanks again for all your support! Click on the image below to be taken to the webinar.

The “Event”

Wednesday is what I’m calling the “event” where the $SPY ripped higher and never looked back. Thursday brought about a nice follow-through day, albeit on lighter volume. I like to track volume and feel as though it holds merit in certain areas of my trading. However, if you are on the wrong side of a trade and hold it simply because of waning volume you are lying to yourself. Why? Does your equity draw down care that the volume was light? I think not.

Below is a chart of the SPY over the past two days and some interesting levels and comments.

1. The VPOC for the last two days is currently 108.20. This is the area of acceptance for both buyers and sellers since the event so it should hold as support.
2. The  VWAP (purple dashed line). This is the average price of a long since the event. Notice how the VWAP is above the VPOC and the 50 SMA (the 50-day simple moving average is the blue line).
3. The mid-point of the standard deviation channel since the event. The SPY managed to close above it which suggest, along with closing near the highs of the day, that traders weren’t nervous taking a long into the non-farm payrolls.
4. Finally the candle that really skews the event. Notice how there is very little volume here (on the profile) which suggests that not a lot of sentiment resides there. In other words, price could move right back through it very easily.

What will matter most to me tomorrow is how the market reacts to the jobs number and whether or not the trend for that day holds going into the close. I wouldn’t be surprised to see a dead market by 10:30. Have a good and long weekend!

New One Year Daily Highs

Wednesday’s action caught some by surprise and perhaps a bit of short covering ensued as a result.  I track the $SPX in many areas and one metric is new daily highs. Here are the names of the components that printed a new daily high Wednesday. Some of the names below have decent looking charts.

• Ameren Corp ($AEE)
• CMS Energy Corp ($CMS)
• CenterPoint Energy Inc ($CNP)
• Chubb Corp ($CB)
• Health Care REIT Inc ($HCN)
• McDonald’s Corp ($MCD)
• NiSource Inc ($NI)
• Northeast Utilities ($NU)
• PG&E Corp ($PCG)
• Pepco Holdings Inc ($POM)
• Pinnacle West Capital Corp ($PNW)
• Progress Energy Inc ($PGN)
• Qwest Communications International Inc ($Q)
• Red Hat Inc ($RHT)
• Salesforce.com Inc ($CRM)
• Wisconsin Energy Corp ($WEC)

Mixed Bag

September is here and that means the kids are back in school, pennant races tighten up and football gets into full swing (except for Roethlisberger). September also brings the expectation that full market participation is back. Let’s hope so because the Summer was nice and boring (perfect for premium selling).

Still fresh in the minds of many is September of 2009 when the $SPY took  a 10.8% hit and many sold positions and liquidated soon thereafter. September also reminds us of how fragile life really is and that we should make every day count.

Below you can see a chart that represents the last 15 years of September’s performance with the average return being  -0.65% Yes, September is a mixed bag when it comes to trying to gauge the end result. Keeping an eye on volatility can lend some insight but there are no guarantees. Place your bets!

ShrinkyLinks

As a premium seller I couldn’t have scripted a better week for the $SPX. So much economic data that the market almost seems confused as to which way to go. September is probably one of my favorite months to write premium. However, October can be a different story (2009). Have a great weekend and enjoy the links!

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