Long Side Volatility Won The Day And Swing Trades To Avoid

Welcome back, everyone! Let’s look at a couple of different topics. We’ll start with the day trading side then go to the swing trading and investment side.

I told you from last night’s videos, my bias was to the upside. Most of the markets were above the speed lines. The NASDAQ being the exception to that this morning. From a path of least resistance perspective, it’s easier to open up and go right above the speed lines. The Russell was already above the speed lines, which was very important to the process today. It’s easier to open up and be above the speed lines then have to push up through the accumulation bars. It’s a lot easier to go up then down and that’s why I was focused on longside trading in the Live Trading Room. Also, if you got caught up in the volatility this morning, when the market looked like it was going to heck in a handbasket, you would have gotten your clock cleaned. I warned people I was not a fan of that. We had positive divergences taking place and other things that I commented on in the Live Trading Room. Shortly after, the market turned around and went to the upside.

With that being said, the buy side was the best side from my perspective going into today. Going into tomorrow, I’m still going to look into that. If you’re familiar with my strategy that I’ve shared with you that if we’re above the speed lines, we’ll be focusing on long side trades and if they fall below the speed lines, I’ll be looking for short side trades.

Another thing to focus on will be where to take swing trades and when to avoid them. I’ve been talking about some of my recent nightly videos where I don’t like looking for trades when we’re in the channels. They’re 50/50 trades. Meanwhile, you’re sitting on dead money for a month or more. We want to keep that money working and more active. I’d rather focus on the church of what’s happening now. When that channel is sideways and we’re sitting in it like this, that’s a 50/50 trade. From my perspective, this is another great example of what not to go ahead and be trading.

Another example is on MYLAN. It looks like it’s starting to break out to the downside but the problem is, there’s a big fat accumulation bar in the back drop. The accumulation bar has held us. Every time we hit the top end of that accumulation bar, it pops back up. However, if you thought it was going up, it hits the top end of the channel, locks in a distribution bar and comes back down. Unless you’re using this for 24-48 hour scalping trades back and forth, this is not what you would be looking at from my perspective. You’re looking to get out of these ranges, pull back and show they’re support like positive momentum, positive triggers and stochastic spikes. Those are the kind of things you’d like to see if you want to get into a more active swing trade.

Another thing that would be positive to look at would be things like General Motors. Right now, you’re in the muck. We wouldn’t want to do anything with the trade right now. If you get above the $35 level, pull back, make it support and start to take back off. Here we have long-term rising support. You’re getting above more intermediate term support and you have some room to grow on this stock. Here is a stock you can put together a plan and have it in advance for an opportunity.

Those are just a couple of things I wanted to share on both the swing trading and day trading side. We’ll see you tomorrow in the Live Trading Room or in the nightly videos.

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