What Will Get Me to Buy?

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  • on June 16th, 2011

The trend for stocks is horrible, don’t need an $SPY chart to tell you that.  My scans have served me better than any indicator, first crossing over into more shortable stocks than buyable on May 16 and not relenting since.  As of last night, I have 10 “buyables” and 122 “shortables” incorporating my combination of trend and risk:reward characteristics .  So why am I looking for a chance to buy?

Because I’m as imperfect as the rest of the trading universe.  I didn’t stay short long enough, and despite the downtrend I’ve done more buying than shorting.  I’ve played tiny, and I’ve sold aggressively into the bounces so I’m still nimble and confident.  But my mind anchors on the long uptrend and says I can’t short ’em this far in the hole.  With a confluence of support factors lining up, the next set of purchases is likely to be more aggressive into the mattresses.

I liked the structure of Wednesday’s trading; gap down, extension, lunch panic, recovery.  What I didn’t like was that it came 1 DAY after a hopeful rally day on Tuesday…it’s possible to go from hope to fear in a day but the panic phase needs at least a couple days to set in.  If the scenario repeats itself coming off a down day, particularly by stretching the selling beyond lunch, I’ll buy $BGU or $TNA hand over fist.  I see it as unlikely with options expiration tomorrow, but it makes sense to prepare for all scenarios.  If I had to bet, I’d say more chop inside Wednesday’s range and an uneventful finish to the week which will frustrate all except those short June premium.

Why pay such close attention to the ups and downs of a single session?  Because EVERYONE is watching, from central bankers to investors to swing traders to scalpers.  Enough damage has been done to get everyone’s attention, and quite often a single day can reveal the entire landscape of emotions.  We know May 2, we know March 16, we know February 22, we know August 27, and so on.  The days in between were simply continuations of those signals, starting with the regret felt by those who got stopped out just before the turn.  If June 17(or any other day) is to be remembered it will contain the range of emotion of those days and we’ll be better served with big picture plans rather than scalps.  I’ll keep dabbling until it’s time to stick around.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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