ANOTHER DAY AT THE OFFICE

Above is the exit of my Short Sale in 10 Year Notes, yesterday near the close. The topic of the day relates to just executing trades by the rules and moving on. I got stopped out in my Russell trade for a loss, then got this nice win which eclipsed the losing amount, so net net a profit. I prefer to stay in trades longer than this but when I get 3 good quick days in my favor consecutively after entry often I will take profits. As to what is "3 good quick days", well I have to keep some things to myself. Here I wold have had my trailing stop had I stayed in above the prior days high and been picked off today, so this exit has already been validated. Even if it were not and we had continued downward, I followed my rules so time to move on.

There is actually a potential buy signal on the weekly chart in the Ten Year right about here, which is one of the main reasons I kept a pretty short leash on this one. You always have to keep in mind what is going on in higher time frames. In addition to this, there are sell signals in equities which is bullish for bonds, so I just did not want to get too carried away with this one. It was a good trade and I know if I can execute like this time and time again, life will be good. My own version of LG.

In terms of being critical of this, there is one thing I did not like about these 2 trades. I always like my wins to be more than double my losses, which provides me alot of wiggle room for periods of subpar win/loss ratios. That did not occur here. This win was about 1.25 times the loss in the Russell, so the 2 to 1 was not achieved here. You cannot force a trade to be something it is not, and I have in the past given back way too much giving things too much room. It still was better than 1 to 1 so better than a kick in the ass.

NOW WHAT?

We are damned if we do and damned if we don't now. Trends that just go straight up like this are so hard to trade. We do have short term sell signals, which in moves like this are not worth the paper I print them out on. Yet we also are so incredibly extended on a short term basis, that new longs are not good plays here. This is where you just have to have discipline and not be an ambulance chaser. When there are not good trading opportunities it is too easy to force something marginal and give a bunch of money away. DO NOT DO THAT.

I do not like watching this just sail along everyday either, but would feel even worse buying in and getting clipped quickly on the reversal that we know is coming. Anywhere between where we are now and 1229 could represent a major long term position short entry, so I am not going to expose new longs at these levels. Just sit back and admire the Picasso that has been painted by the PPT, it is one for the ages.

You can see on the following chart, the short term sell setup in place with the NAZ. The momentum oscillators are in downtrends, while price is climbing. We have a nice short term trend line that can be drawn in for a short entry. This is a trade I will play if it triggers today.

If it does not I will just sit on my hands and not force anything and I suggest you do the same.

Have a good trading day