Market Euphoric Rally Cooled down and My Trades Friday

S&P1,465.77+5.78+0.40% Nasdaq3,183.95+28.12+0.89% Dow13,593.37+53.51+0.40% Oil99.000.69+0.70% 10-Year Bond1.87+0.11+6.49% EUR/USD1.3128+0.0141+1.09%

Last Friday, U.S. market resumed fast upside move in the first trading hour from Thursday’s powerful rally on Fed stimulus announcement, but by 10:20 am EST., it reversed down and closed near its session low. Most stocks followed SPX move, but they also started showing buying exhaustion when they closed off their best levels of the day/year on heavy volume. SPY and AAPL both had shooting star candle bars at close, and they are often bearish warning signs. In addition, the widely used oscillator on SPX is above +50, indicating an overbought condition.

A few leading stocks continued their suspicious behavior after they retreated from all time highs, such as MLNX, EQIX, KORS, PCYC, FRAN, etc.

AAPL closed near its session low on Friday after attempting to reach its century mark $700 where is often considered the psychological level for profit taking. AAPL share holders who bought it near 700 could be easily stopped out if it swings 10-26 points daily. Next week is option expiration time, so I expect seesaw action in AAPL and many other stocks. HFT can also move stocks in lightning speed, requiring us to be focused and act upon. Being a trader, I am looking forward to their big swings as trading opportunities.

 As rotation keeps going during the market rally, some beaten down stocks bounced up madly including CLF, CAT JOY, FB, and SINA. I have been watching Chinese beaten down stocks like BIDU and SINA which kept moving toward opposite directions recently. On Thursday BIDU reversed and closed well. So on Friday I played BIDU long and got out around 115. BIDU should bounce up further with a potential bull flag formed from its oversold condition. After I sold BIDU, I kept watching AAPL price action for trading opportunities since I didn’t hold AAPL long position overnight.

I don’t like to chase a stock with massive upside move at the open, so I followed my 30-minute rule and watched signals to play it accordingly. Someone asked me how many trades I usually do during a day. I would say it depends, but I prefer to play as fewer trades as possible, and instead I try to catch a stock’s longest move for each trade if it allows. Like AAPL, I had some good days by catching 26 full points of its one-day move with only two trades.

(My 30-minute rule: When not knowing what to do at market open, I would wait for 30 minutes before entering the trades accordingly and before nice set ups present. Many experienced traders follow this rule during confusing time.)

Here is my AAPL intraday chart / daily chart as of last Friday with notes:

AAPL 691.28 Up8.30(1.22%) Sep 14, 4:00PM EDT

AAPL daily chart

This coming option expiration week could be wild and crazy, so get ready to trade safe. I may not tweet much but concentrate on my trading. Remember: Less noise, more profit; Be calm, be focused, and be objective!

Thanks for viewing and trade well!

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About Angela Zhou @z8angela on Twitter

I am a full-time swing/day trader trading stocks & options. I got into stock trading/investing since the internet bubble in 1998. I am optimistic in life and objective in trading. The purpose of this blog site is for me to share my trading experience and market view with others. I may write something about life experience and living, too. My motto is: A Great Mind Becomes a Great Fortune. I love people and life, and I appreciate beauty in everything. Thank you for viewing!
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