January is over. I did OK because my profits broke the 3K mark, which is close to the goal (4k per month) I set for 2010. Nothing has changed about my trading except that my size was slightly bigger. This is just a start. Hopefully one day, I will be able to short/long 2000 shares of something like AAPL or GS without blinking an eye .
Speaking of trading super liquid stocks like AMZN, AAPL or RIMM, they are extremely hard to trade. Why? It is because there are just too many professionals in them. These guys put out big lines from time to time. When they need to get out of a stock, they do not want to crack it wide open. So liquidity is key for them.
Anyway, the market had some decent reactions near the end of Jan, which is not a bad thing. The market desperately needs to digest the wild bull run we had in 2009. Lets take a look at SP500 below. It indeed broke the trend line. This shows some weakness on the daily chart only. The weekly is still fine. So I do not see an imminent crash from here. But I would at least have 50% of my assets in cash. If you have a full line, hedge it properly.
Click on the charts to have a btter view
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The bulls might ask if they would buy into this dip just like dip 1, 2 ,3 showed on the chart above. I would say why not. A small long position is fine here. But caution should be exercised since the higher it goes, the more likely a dip becomes a bull trap.
Here are 2 double top set ups for shorts. It is too late to get in. But they are eye candies.
AMZN (Amazon.com, Inc) and IOC(InterOil Corporation)
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Congrats on a great month, Trader Mom!!
Posted on February 2nd, 2010 at 5:33 pm
Double top setups – May I have your opinion on short squeezes and how to manage them especially on overnight positions? Though some websites like shortsqueeze.com display info like short percent of float and days to cover, they don't really help to make any decision. E.g. – AMED has over 50% of float in shorts for a long time now, but the stock has been doing its thing.
Posted on February 3rd, 2010 at 7:29 pm
The info you get on shortsqueeze may form part of your decision making process. I used to check it too when I did swing trading. As least, you could know if your stock is hevaliy targeted by the shorts.
Overnight positions should be small to avoid possible risks caused by gaps. Large overnight positions should be hedged with puts.
I would not short AMED now regardless its short ratio. Short it when it shows weakness. Amzn and IOC showed weakness and a perfect pattern right? Key is if you have the courage of your convictions to engage them.
Posted on February 3rd, 2010 at 10:37 pm
You're fast becoming one of my favorite active traders.
Posted on February 4th, 2010 at 12:02 am
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