Wednesday, January 19, 2011

Another Spoke in the Wheel Broken - SP-500

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Today the advance decline ratio reached 89% and it was not a good day to begin a new trading strategy  :-)  The only reason my account actually showed a profit for today was due to my short the SP-500 via a futures contract (/ES) which has 50:1 leverage. I did however buy a couple of stocks and we will get to that in a minute.
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This is the daily chart of the SP-500 and with the excessive bullish sentiment carrying on yet another week, I have the feeling the upcoming correction is going to end rather badly for investors long in the market during the next few weeks.
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Also, the True Strength Index (TSI) indicator gave another trend line break sell signal with today's price action.  A third negative divergence (not highlighted on the chart) is now in the record books, as well.
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The two purchases I made today turned red with the rest of the stock market. The first was a purchase of Denison Mines (DNN) at $3.61 and its subsequent sale for a 6.6% loss at $3.37.  I still do not have the limit stop loss mechanism figured out and by the time I saw that the position's loss had exceeded my strategy, well, I just sold.


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The other 'market order on the open' buy was of Harmony Gold Mining Co (HMY) at $11.44. The white line tearing through the stock price action is a long term trend line that HMY is attempting to recapture.  Well, it didn't happen today but I am sure that eventually it will.
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My TSI Trading record has been updated.

2 comments:

  1. I've been waiting for this wheel to break for weeks now.... break break already! We will be able to get into gold stocks on the uber-cheap :)

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  2. Daniel K,

    If you happen to be reading, can you post your comment about the current market?

    ReplyDelete