During the range bound market we experienced from 04-06 I learned how to fade stocks. Today I used that technique to make some good money in MS and JPM. As a trader you want as many arrows in your quiver as possible. This is one skill you should develop to become a well rounded trader. We can’t short the financials until after 10/2 but we can find excellent risk/reward areas to get long for short term trades. Admittedly it was tough to watch JPM, MS, and GS trade lower without the ability to participate. But I don’t work at the SEC so it’s not my job to figure out policy for the best trading rules. And as a trader complaining never made me a dime. So I figure out what I can do, how I can make money, and I trade. And today fading the financials on the Open was profitable.
When the XLF started to crack I stopped fading the financials. I do not fade stocks that are broken intraday. That is against my trading fundamentals. You can fade a stock that shows weakness but not one that is broken. I moved over and faded Gold. I caught a nice downmove in ABX from near its top. ABX failed a few times near 39.50 so I faded an upmove. 38 held well in ABX into the close.
Tomorrow should be an interesting day to trade oil, gold and the financials. The price action in GS and MS indicated that the market was not thrilled about their announcement to become a regular bank. Doing so will eliminate their opportunity to leverage at the levels that they have. They will face much stricter regulation. GS closing below 122 was a very bearish signal for the financials. Crude spiked into the close. Gold sold off into the Close. I will watching these sectors tomorrow.
Oh and one more thing: Jets 27 San Diego 24.