This A.M. let’s take a up a few lines critiquing our style.
#1 JJG
On 4/28/11 we were eyeballing the JJG for a trade.
What we wrote: The JJG shows some support right here at 53.05
We’d like to get long this ETF at 52.15 with a 25% position.
The one caveat in this trade is that we would like to see a weekly close over
53.32 to be comfortable staying long. ” That’s tomorrow’s close”
In hindsight it’s pretty obvious that we had a hard level for a stop just below 52 but
we were unwilling to start scaling into a full position against the dream level thereby missing a low risk
opportunity. We should have nibbled at the trade with a small piece waiting to add at our level rather
than missing the whole trade.
The second point I would like to send home is that our levels are macro #’s which rarely change.
These are not daily matrix #’s which is totally different than what we put out. That work is best left for pros like
Langer. Why am I going on about this? Short term #’s are generated off of price action and is a different subset of work.
However when the short term levels match up with longer time frame macro areas you can feel good about
trading the # set.
#2 Silver
On 4/27/11 we wrote:
Day traders..if the bottom drops out of the Silver 42.05-41.77 is still a great level
for a buy. If you attempt this trade use very tight risk controls. Take at least 50%
of your trade off on a 75 cent rally off the level to pay for your stop. If we see this level
it will seem like the Silver is in free fall.
These types of levels do not change and should always be monitored!
I.E. last nights early low in the Silver was within 14 cents of the level. So sorry, but that is close
enough on an $8 break in the Silver for any short term trader at his screen to play. These types of levels provide a short term
low risk buying opportunity the first time down.
TRADING TIGHT… STOPS/ENTRIES
We all can trade too tight sometimes waiting for the perfect entry. It’s a two edged sword that can
either keep you out of a lot of trouble by being patient for your # set or come within ticks of the #’s
leaving you to pine over a missed opportunity.
Every investor has to decide how he is going to trade and stick with the methodology. Scaling into a position with orders just above or below an area you view as low risk is a good idea as long as you stick to your stop.
LEMMING EFFECT trading 101 or as I like to say don’t fight the flow! Silver,Spu, particularly Gold and OXY Friday were all good examples of not fighting Monthly or Qtrly closing flows. Once the Pit closing bell rings it’s a new game. Silver reversed in dramatic fashion. You’re also seeing the spill over flow into the first day on the month in the equities. This too can change after the NYSE opens today.