Trading Journal #14
08:36 am: Futures red to start the day as the market has been fading every bounce. Breadth hitting the most oversold readings of the year, so it’s hard to short here but also hard to catch the falling knife. Risk management is key because oversold can remain oversold for longer, BUT I’m looking for bounces to clear oversold conditions.
08:37 am: Morning focus goes for any stock that gives clues if we can have a bounce to fill this morning gap or we fade lower before an oversold bounce. Will be looking at the first 5-15min and see if we can find a bid for a bounce into yesterday lows or not. Traders holding shorts should cover positions on the way. AAPL is right back into 155s biggest level so will keep on watch to see if it holds 155s and bounces to fill the 157+ gap.
Morning Trades: I started the day looking for that oversold bounce, so I took AMZN and AAPL calls for some nice cash flow, but the move stalled so I took gains and flipped into META Puts that also gave a nice cash flow. I tried some WMT both long and short, but it went nowhere, so I closed and finished. BYND saw some bull flow so I took it and closed for some cash flow. IWM rode it twice on bounce with bull flow on C182, so that worked well.
Losses review: I got some stops hit on IWM WMT NTNX but it’s part of trading, so I took the loss and moved into the next one.
Key Takeaways: Oversold, can remain oversold for longer even if oscillators hit the biggest downside levels ever, so traders need to stay flexible, open minded and take trades during volatile periods. Never hold the bags for too long.
Look Ahead: Some nice oversold bounce today after lunch, the big question is if it was that or we going to see more moves like META this week, for a big short squeeze up, so it would be wise shorts trim gains, imo. Staying flexible and open minded for what may come next.