QQQQ, AAPL, Gold: Ready for Action
Geez. I’m dyin’ here. The temp has dropped 40 degrees since lunch. My cat met me at the door and said “meow?,” which, translated, meant “Dude, WTF??“. Tonight I could really use a cup of warm apple cider with just about that much Jim Beam stirred in.
Ok, November’s over. EOM markups, if there were any left, are done. Let’s get ready for activity to pick back up.
Also, something I’ve neglected to point out thus far- the action in the VIX. I had a post back waaay back in January talking about the VIX Fade Trade. Well, you’ll note on the chart below that on Monday the VIX hit 12.33, or about 15% above its 10sma:
As usual, the rubber band has snapped back, and we’re back to a point in the middle of the median of the average, where the market can comfortably surge in either direction as far as Uncle Vix is concerned.
Apple is set up for a nice trade. Here’s a chart of the rangebound action of the last five days:
We could trade a break of this range in either direction. Me, I’d prefer down because as you know (or in case you didn’t know), it is my destiny to short AAPL. Long uptrends in Apple aren’t money-making opportunities for me; they’re pauses between short sales. It’s not logical, it can be downright crazy, but like the Queen and her Skoal, it’s my own little indulgence, with proper management it costs me virtually nothing (and one day will make me the King Of The World HA!), and I long ago stopped trying to make sense of it.
The dollar broke (weaker) from its little pullback I mentioned yesterday, and of course, so did gold. Unfortunately, gold and [insert name of your favorite gold stock here] gapped up and didn’t give us a clean entry:
What to do? If tomorrow opens inside today’s range (63.90-64.43), then walks through the top of it, I wouldn’t at all mind going long at 64.44 with an initial stop of 63.89, for an initial risk (tah-dah! “R“) of 55 cents per share, with a position size chosen accordingly, based on how much I’m comfortable losing.
To the Qs!
It’s been a while since I’ve followed an ongoing swing trade day- to- day. I forgot how much fun it is. All that sh*t that looks so clear and certain in hindsight can cause some butterflies as it’s unfolding, can’t it?
The Qs printed a little doji with (just barely) the narrowest range of the 3-day “up” move:
If I had no position, I’d see this as a prime trade setup:
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If it opens within today’s range and heads down through today’s low, I’d use it as a pullback- into- a- downtrend shorting opportunity, with a stop either at 1) the top of today’s bar if I were feeling aggressive (usually am) or 2) the top of the recent uptrend (44.86), with a correspondingly smaller position size based on risk (less aggressive, wider stops, looking for longer-term gains… the “sensible” alternative)
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If it opens within today’s range and heads up, I’d let it be. Wait for a break of 44.86, maybe a little thrust- and- pullback action, then get long.
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If it gaps in either direction, we’re in daytrade territory, with a possible swing trade entry to boot, depending on the action.
However, I do have a dog in this race and a horse in this fight. I’m short with a stop of 44.62. That stop will not move, as today’s low was a higher low, and I don’t move short stops on higher lows. Second basemen either.
What I will do is quite simple: 1) get stopped out or 2) add to my position on a break of today’s low with a simultaneous lowering of my stop for the overall trade to keep my risk constant. I fully expect to have this dilemma resolved within the next couple of days, most likely tomorrow.
Cheers. Where’s the blanket?
themarketspeculator said,
December 1, 2006 @ 1:49 am
Nice trade idea with regards to VIX. Surprisingly, Gold, AAPL and the Qs are all right on my radar as well. Tomorrow could be fun . . .
Will said,
December 1, 2006 @ 6:59 am
tms - absolutely… one thing about the recent market action- it seems to be taking place on a larger scale, which might lead into a longer trend, which may allow some of us (oh please, oh please let it be me) to get into some of those “swing trades-turned positions trades” that are so profitable!
john said,
December 1, 2006 @ 9:24 am
will: lol…this long uptrend on aapl is just a pause between shorting opportunities…gl
Fuzz said,
December 1, 2006 @ 10:27 pm
I’m new here but looking at todays numbers I see -.34 on GLD (because it hit your trigger but not your stop) and +.38 on the Qs unless you timed an immaculate cash out. That leaves +.04 minus 9.95 per trade. How many bucks you gotta put in the pot to win a bag of pork rinds and a sixer of Milwaukee’s Best?
I purposely leave AAPL out of the discussion because it looks like a buzz saw. Besides it’s pretty much you against all of CNBC on that one. Good luck.
Will said,
December 2, 2006 @ 9:20 am
Fuzz- thanks for the visit! You’re right- the GLD trade triggered, as did the add on the Qs. And GLD’s pop-and-drop action looks like a looming stop-out, which is fine. Neither of these entries was a daytrade entry, they’re both swing entries aimed at a multi-day gain, so the stop is wider, the position is smaller, and I am not at all concerned about how much money I made/didn’t make yesterday, just pleased that I got my entries. Will write more in the followup post (this evening after work, I hope).
A daytrade on the Qs would have entailed a short entry on the 0940 break of 44.00 on 5min bars, with a stop at about 44.10, a break of Thursday’s close and the 0935 bar high. That trade would have been stopped on the 1040 bar at the earliest. Risking say $100 with that “R” of 0.10 would mean a 1000-share position. On being stopped out at 1040 at 43.47 (break of the 1035 bar’s high), those 1000 shares would have gained 0.53, or $530, which stocks the fridge for the entire weekend, after commissions.
Yah, those CNBC folks are all pro-Apple. Contrarian indicator (any excuse to bolster my short fetish). Besides, I’ve had a longstanding crush on Liz Clayman (since years ago when she wore those mini-mini skirts and they were able to call her “Legs Clayman” on the air), and I know she’d understand.
Best wishes, drop by again sometime!
LP said,
December 2, 2006 @ 3:53 pm
Maria is sooooooooo much hotter
Ned said,
December 3, 2006 @ 3:46 pm
You ought to be rich because you sure are funny. I thought I was the only one in the world trying to fade Cramer’s pumping of Apple. Your blog on shorting apple had me laughing at my desk at work and folks thought I was having fun doing my job, which is also funny beyond belief. Anyway, I really like your style and wish you great success in all you do.
Best,
Ned
Will said,
December 3, 2006 @ 10:10 pm
LP - I only see them on TV, but after some years, Maria still strikes me as rather arrogant and hardly seems to listen to her guests; probably the kind of lady who knows all the proper high society moves, but goes home and kicks the dog or sneers at your illiterate great-aunt. Liz, classy and could rub elbows with the best of ‘em , but could be gracious going over to a friend’s house for burgers and dominos just as well.
not sure why that appeals to me. Of course, Sue was the original hottie back in the late 80s. Remember when She, Ron and Neil were the main trio?
Ned- thanks so much! If I ever wake up rich (that would be on a Thursday or Sunday after Powerball), I’ll be sure and announce it. For now, I’m just getting by, raising my girlz and having a blast pursuing my passion of trading when I can. I really do appreciate your kind words.