1.28.08 – A whole lot of nothin’

The last few days have been a chopfest, but the skiing is really good

Today the S&P regained the 20 that it lost on Friday. I am 90% out of my 401k mutuals. My guess is that people sold on friday for fear of another French ‘Traitor’ coming into the market. Since that did not happen, the positions were bought on Monday. We may see another “buy the rumor” for a day or day in a half. Volume has lowered to about average, and I expect it to fall off even more on tuesday.
With the Fed announcing on Wednesday, I am looking for a sell the news reaction. Right now the market is buying stocks looking for a rate increase. Will it be .25 or .50? The bond market is pricing in a .50. What can the fed do to break this downtrend? As we bump against S&P 1378 I may place a very small bearish order. There are also significant resistance @ 1406 (61.8% & previous consolidation).
Let’s just say that I am not believing in this upmove for more than a trade. I have a number of positions on, but I am nearly delta neutral at this point. I would like to see SCHW bounce 2pts in the next day. But other than that I am mostly short. I will be ready to see what Wednesday brings. Even though I have been accurate with direction, I have not played it with any real size. In fact, I am sitting on the sidelines waiting for a great trade set up and/or more clarity on the Fed’s direction.
I didn’t trade today. The skiing was good, and it snowed all day long. Depending on the morning action, I may have to go ski the POW. I will be looking for some sideways trades in the morning.
And for the record, I am supportive of the Fed’s .75 rate cut. The thing to remember is that the Fed is doing this for a reason. They seem to know something… their previous application of their knowledge is suspect.
Here is Tom Gentile of Profit Strategies. He has a very good set of trading rules.
Here is a sample;

Discipline is vital to trading success. Imagine a person trying to become a pro athlete, who sleeps in every day, eats excessively, stays up late and parties every night. Now is someone with these habits going to become an elite athlete? The answer is no, and the reason is discipline. Discipline of the mind is like homework, only its homework that pays off in dollars in the trading industry. Here are a few rules that I use when it comes to practicing discipline in my life as a trader.
1. I train my mind every day to be disciplined and focused as good trading discipline is vital to my success.
2. Basic trading disciplines include completing my daily market homework, following through, and using stop losses.
3. I see myself everyday doing my market homework, following the signals and setting stops.
4. I track my system exactly as it dictates.
5. If my system gives me daily signals, I follow them every day.
6. If my system gives me intra-day signals, I follow them during the day.
7. I do not allow outside influences to affect my discipline.
8. I place all orders correctly, exactly as my system dictates, to increase my odds for success.
9. Having the discipline to follow through is one of my greatest allies.
10. A system without stop losses puts me in a position of unlimited or unknown loss. Hence, I understand that a major aspect of being disciplined is using stops.

As the spring approaches, I plan on finding a workout partner for option trading. 50% of my LTSS (LongTerm Savings) jar will be going work with a trading coach this summer. I am looking forward to make it a huge summer with a few of my current systems, and add some directional and delta neutral strategies to enhance my returns.
A ski video from Sunday:

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