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 January 13, 2004
Commentary-
Today was quite interesting. There was some
serious selling going on. Despite this, FDX managed to continue it's upward
journey. Until the 'second wave' of selling hit, it was right at its highs for
the day. All in all, though, it finished the day up $.81. Let's take a look at
the daily chart on FDX.
I haven't done anything yet with this one, as
far as starting to scale out of the position. Given the overall context of the
chart and the pattern, the move I am playing for hasn't fairly started yet.
That's not to say that what has happened so far isn't all FDX is going to do.
It may be. If so, I'll get taken out on the way down. But I'm going to wait for
a bit more before I do my first scale out on this one.
Let's take a
look at VTSS. The techs and the SOX got hit pretty hard today, and I scaled out
of a little bit more VTSS on the drop. Let's look at the daily on VTSS.
That's a nice outside bar with a fairly low
close. None of that makes much of a difference to me, though, since I have my
trailing stops/scaled exits plan in place. I'm just going to follow that and
let it play out as it does.
Let's move down to the 60-minute timeframe, and I'll
highlight the area where I scaled out of some of the position.
VTSS went down to the area of a .382 retracement from
where it started this power run up. This is a good area for the uptrend to
resume. If it breaks this area I may scale out of another piece of this one,
but I'll give the rest some breathing room.
Let's finish
with a look at FISV on a daily. I'll use the chart that shows the grouping and
the pattern.
Is this the pullback before the
grouping gets taken out, in favor of the weekly pattern? Or is this the move
down off the grouping that 'works out'? We won't know that for sure until after
it's all over. And I don't need to know in advance to trade this.
Take a look
on your own at FISV on a 60-minute chart. Look at the price action since the
spike move over the grouping. Were there opportunities to get short after that
spike move? I'd say so. Could this be played short, knowing the possible failed
grouping play that we are watching for? That would depend on your trading
plan.
From time to time I've said, and I didn't coin this expression,
that it is sometimes OK to play countertrend, as long as you know that you
are playing countertrend. Every short trade that I've taken lately on the
lower timeframes on the ES/NQ has been countertrend. The market has been going
up. I can still play countertrend because I am not trying to call the end of
the major trend when I do this.
I am playing the move to the area where I
would expect the counter-trend to end. If that is my context I can set the
trade up to play that. Those parameters would be different than the parameters
that I would use if I were playing the larger trend. That's what I mean when I
say it can sometimes be OK, as long as you know that you are doing
this.
That's because knowing what you are playing allows you to set the
parameters for the trade according to what it is that you are actually trying
to accomplish. The closer you set the trade up to what is actually likely to
happen, the better you will do, in my opinion.
And why bring all this up here?
Because I feel that a good short trade setup has been playing out in FISV.
But not a short trade off the pattern as though the pattern was a
stand-alone pattern in here. Does that make sense? If the trade was set up
like a countertrend move, and played for that, I think it was a viable
potential trade. I was trying to hint at this in some of the past
commentaries.
The overall context of the pattern had me on the alert for some
other possibilities in FISV. I didn't want to play this pattern on the daily
like I normally would. But I still expected something to happen at the
grouping. Now as I let that play out, I prepare for the possibility that a
failed grouping trade might trigger after this down move. Study the FISV charts
and see if you can follow what I am attempting to do here. And now, from this
point, I let FISV tell me what to do.
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