EDGE TRADER

Wednesday, August 09, 2006

Trading thoughts of the day

Looks as if Homebuilders have the potential for a downtrend day; I may enter short after the opening range sets and if there is any upwards retracement. My concern this morning is whether this open is a fake out oops open that ends up getting faded and we end up negative on the day.

A day like this is tough. With the preponderance of these gap up opens being traps, it is feels really risky to buy them. On the flip side, entering a short trade with almost all sectors gapping up makes you feel as if you are swimming upstream.

My expectations are low for the day - may stay flat or try one or two setups if something looks compelling.

In retrospect yesterdays trades would have been to go home short the homebuilders and long oil service, but things were too choppy to risk it.

Tuesday, August 08, 2006

Post Trade Wrap Up

Closed a short trade and a put in homebuilders today (RYL was my put and LEN was my short). I went flat at around 11. I liked the trades but I was really worried about today's policy announcement.

This feels like the Fed's transition from Greenspan to Bernanke. The markets got all riled up due to the uncertainty of what would happen with a new chairman. Now I see us getting very nervous as a trading community about the Fed's next move. Wouldn't be surprised to see more of the wildly unpredictable volatility we've been seeing lately.

I may put my homie shorts back on tomorrow or stay flat depending on how the opening range sets. I have some long candidates in my watch list, but none are looking oversold and I've seen stocks whose charts look great all of a sudding suffer a strange and dramatic drive by sell-off.