Observation and reflection for today

Market is having a strong rally from the Oct 6th low. The SPX index gained another 60points for this week. Every dip is bought. As it can be seen in the below chart, every touch of the lower trend is being bought. This really indicates a strong bullish environment. Hence the next dip must be a buy. Maybe around 50MA area.



I am amazed by the signal from the timing model. It looks me that it works very well in an volatile market. On last friday, the model gives the long signal. I admit that I was quite greedy at that moment. I wish to see a little more dip on this Monday to go long. But the market did not offer hesitator an entry. The market gapped up on Monday due to the Euro news and had a 3 percent run on Columbus day. I failed to trust the timing model again other than the Sep 16th signal. I guess one needs to trust a mechanical system once he fully understands the mechanics underneath. Yesterday, the buy signal from Vbbee system is striggered. But it looks so bad to go long before close yesterday. But people who trust the sytem is a winner today to get max 7 percent profit in TNA.

As a novice trader, I guess my shortcoming is common. I failed to let my winner run and late to cut loss. I made 13 trades from September. I am still break-even right now, even though there are 10 winners and 3 losers. My two big losses wiped out my other gains quickly. As a small fish with limited capital, I cannot do much day trading and cannot allocate capital to a lot of positions. I really need to plan the trade well and have good money management. Overtrade kills. If the condition is not too favored, do not enter position.

I feel a little frustated myself today. I sold 2 naked SPY OCT 116 put on Monday, but covered early on Tuesday. I completely missed today's run. And yesterday I entered TZA before close, which is now a losing position. The two puts could gave me additional 120 profit today, while the TZA gave me 250 down. That is a huge difference.

What about tomorrow? Clearly SPX is at resistance around 1220 zone and NDX is backtesting the old broken trendline and closed in red. Given the last 15 minutes sell off, I wish we could see some follow through sell off tomorrow. JPM release ER tomorrow morning. It should be a market mover event. I will not trade any earning until I fully understand PEAD.

I wish I could come back in my TZA trades.