A Trade A Day

Well, today I think we got a slight clue as to where the market might be headed. All kidding aside, I wasn’t surprised that the market headed downward, but the magnitude of the move was very surprising. In case you’re wondering, my longs were stopped, and I’m in cash.

The market in its extreme move has given us a unique opportunity. As a technical discretionary trader, I identify market patterns because to me they are a manifestation of all the supply, demand, hopes, and fears of all market participants. Now that the market is running scared, it’s time to take advantage.

Yesterday, I talked about bear traps. A potential trade I featured was AHM. AHM was running scared. For the past three sessions AHM was headed lower. Each session, was a bigger loss than the one previous. Today, I didn’t get the gap up I wanted, but AHM did give a nice setup and run.

Extremes in the market give you opportunity. I don’t know if tomorrow we’ll see more selling or a bounce. If we see a bounce, I’ll be looking for stocks that got caught in today’s sell off and are gapping, trapping the bears. If the market retraces gradually, I’ll be on the sidelines, looking for short setups for next week. If the market keeps dropping, I’ll be looking for shorts in the AM, but more than likely I’ll be on the sidelines.

The point is that now there is opportunity. I hope your methodology has you positioned to take advantage of this down move. If you’re out licking you wounds, don’t let it get to you. There will be more trades.

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