Today’s Trading Lesson…
You expend too much effort finding perfect entry signals and prices.
I know this without knowing you, because that’s what I did. We need to spend more time learning how to exit trades.
We enter expecting the trade to give us profits without much effort or planning. We enter and only see one side of the trade. Sure have a stop-loss in mind but we never expect to need it. Our belief is “I did the work, it’s going to make money…”
Once in the trade we sit back and count our coming P&L, or worse, act surprised when the trade moves against us.
Anyone can enter a trade, but one of the keys to success is learning when and how to exit. Should you scale out? Should you get out in full? Should you build a position? Should you day trade the position or swing trade?
If the position moves against you should you get out or scale out? This last trade exit gets it’s own line because it’s one of my favorite scenarios to discuss with new traders.
Thee concept of getting “stopped-out” solely on price is ludicrous. How many shares traded at your stop loss? Is the trade still valid?
I teach to exit “most of the shares.” Hold 100 shares and monitor your position. If it continues to move against you, but the trade idea remains valid, watch. Don’t abandon a good idea. You lowered your risk, you are ok.
If the trade begins to move positive, look to work the order again. We are risk managers working probabilities.
Never forget that.
On the Tape Today...
$FB 11-16-16 (Click to Enlarge)
$FB confirmed lower highs after earnings and inside day sets up a trend day today. Keep in mind this is a day trade strategy. An inside day breakout does not consider the trend in order flow. See two days ago on the chart for a similar chart pattern. (see chart)
$LB $71 topping tail and yesterday's bearish relative strength sets up a $68 sell stop for a swing trade with a target to cover in the $65 area.
$JPM inside day and strong momentum sets up an increase in volatility today. The obvious trade to the long side screams "buy me" but as I wrote below in the section on trading the $SPY, have strict parameters with the stock overbought like this.
$NKE doing it's best to hold the $50 support level but a confirmed down trend in order flow since August. A close below $50 on the daily chart sets up a swing trade short with targets to cover at $46 and $41.50
What to Write in Your Trading Journal During Market Hours
Dow on pace to slip after 4 record closing highs in a row
U.S. stock futures on Wednesday pointed to a dip at the open, setting the Dow Jones Industrial Average on track to catch its breath after the blue-chip gauge turned in a seventh winning session in a row and its fourth straight record close.
Investors are watching for signs of what’s coming down the pike from President-elect Donald Trump, as well as keeping an eye out for readings on the housing market, industrial production and producer prices.
Continue Reading on marketwatch.com
The decades-long bond bull market is done, says Bill Miller
The decades-long bull market in U.S. Treasurys has finally drawn to a close following Donald Trump’s surprise presidential election victory, according to mutual-fund manager Bill Miller.
“In my opinion, the 35-year-old bond bull market is over,” Miller said. “And so people are going to start losing in money in bonds, the over-investment in bonds is going to switch somewhere and its going to go into equities like it did in 2013.”
Stock Market Today: Heatmap of the S&P 500
Stock Trading Today 11-16-16 | $TGT Earnings
Stocks Rally As Oil Surges 5%; Nasdaq Gets Boost From Apple, Microsoft
Stocks remained near session highs Tuesday going into the last hour of trade, as oil prices surged and tech stocks including Apple (AAPL) and Microsoft (MSFT) bounced back.
Oil, gold miners and internet stocks spearheaded the advance in the stock market today. West Texas intermediate crude prices surged 5% to above $46 a barrel, as OPEC sought to save its deal to cut production.
Among blue chip winners, Microsoft and Verizon Communications (VZ) were up more than 2% each, followed by 1.5% or higher moves by Chevron (CVX) and Exxon Mobil (XOM).
- Home Depot (HD) was the Dow’s biggest loser, falling 4% to slide below its 50-day moving average in heavy volume.
- NetEase (NTES) leapt 5% after a buyback plan of up to $1 billion worth of its U.S. shares during the next 12 months.
- Stamps.com (STMP) scored a 5% gain as it pulls further away from a 100.42 buy point cleared Nov. 7 in brisk trade.
Continue Reading on investors.com
Tape Reading the SPY ETF
$SPY price action continues to close near the highs but things have changed. The daily volume numbers sloped lower as price approached the all-time highs. 86 millions shares gives us a respectable number, but we need a new catalyst to push through the historic level.
Today sets up to be an interesting day as we need to make a call on probability. This trade trumps many newbies. “Long but with caution.” isn’t a definitive strategy. It’s like telling someone to drive carefully.
If you need a more definitive structure here it is:
The stock market and many stocks are overbought and near resistance, continue to look for longs but the odds of a breakout trade following through decreases as price move higher.
The best trade for now remains a pull-back.
Better would be a pull-back when the last price is above the open price and above yesterday’s close.
Stocks in Play: $TGT research on finviz.com
$ TGT Target NEWS: Target Earnings: What to Watch
Target Corp. will report fiscal third-quarter results at 6:30 a.m. ET on Wednesday and host a conference call at 8 a.m. ET. Here’s what you need to know:
EARNINGS FORECAST: Analysts expect adjusted earnings of 83 cents a share, in the middle of the company’s target range of 75 cents and 95 cents, according to FactSet. Target had a profit from continuing operations of 86 cents a share a year earlier.
REVENUE FORECAST: Analysts expect the company to report quarterly revenue of $16.31 billion, down from $17.6 billion a year earlier, reflecting the sale of its pharmacy business to CVS Health Corp. last year.
FOOT TRAFFIC: Analysts forecast a 1.0% decrease in sales at stores open at least a year. Target warned that same-store sales in the quarter would be flat to down 2%. CEO Brian Cornell blamed a […]
Read More on WSJ.COM
Target earnings: Sales expected to be hurt by lower food prices
The food business and e-commerce competition with Walmart and Amazon are hurdles
Target Corp. is scheduled to report third-quarter results before the market opens on Wednesday.
Analysts believe Target TGT, -1.01% is making positive changes to the business, but still has problems ahead. whether it’s the struggling food business or uncertainty during the holiday season.
Analysts have an average hold rating on Target stock with a target price of $73.17, about 1.4% higher than the Monday closing price.
Continue Reading on marketwatch.com
Stocks to Trade 11-16-16 | Wednesday Edition
Short-Term Trading Momentum:
Positive the last 20 and 5 trading days | closed 2% higher from the open: NTNX, APA, DVN, BHI, SLB, NVDA, MCHP, CAR, TWX, IONS, NUE, GS, CLVS
Negative last 20 and 5 trading days | closed 2% lower from the open: eqr, teva, sbh
Quarterly Order Flow:
Bullish Stocks to Trade: UAL, BHI, NVDA, LRCX, MCHP, CVX, GS, VLO, PNC, MAR, CAT, PRU, UNH, JPM, BA, COF
Bearish Stocks to Trade: teva, htz, hcn, cvs, mck, vtr, fslr, amgn, nee, amt, cci, cern, tsla, wynn, twlo
2x Normal Volume: TEVA, V, HD, AGN, UAL, DKS, EOG, KNC, CERN, TRIP, STT
Inside days: fb, aapl, jpm, v, pypl, nvda, usb, atvi, qcom, pm, aig, tgt, mdt, sti, nwl, crm, pep, gs, dhr, mos, ma, mnst, mcd, axp, wdc, tsla, celg, kmx, coh,dltr, cost