Panic VS Trading Dow 11,900 HOLDS AGAIN

  • Posted on: June 23, 2011

Once again, having a plan works.
I am still long my Stock index position. Thankfully, I had my sell stops in prior to the correction.
As the market broke, I wasn’t even watching. I had a ton of other stuff going on, but I knew my longs would be protected because I had already had sell stops loaded.

Quite honestly, I want to buy it here again.
We’ve had 10 days of risk off panic selling and volatility across the markets. Crude broke below 90 today for a brief moment, trading at 89.70. As of this writing, its bounced back up to 92. A lot of volatility, but I can imagine a lot of longs got stopped out with that print below 90. 90 is such an inviting happy, round number.

Ditto in the wheat and corn today. I had been looking to buy this break. CN broke 1.60 in ten days. Today it rallied 42 cents off its lows, just chopping people to death.
I am sure a lot of traders got fired up about selling the break under the long term trend line. Many of them if they initiated the short trade recently, looking for follow through selling, were sorely disappointed today. They got stopped out of their longs, then the market came back roaring higher.

I really really like stepping in here and buying cheap wheat calls. Today WN traded down to 6.06 but then rallied back to 6.50. That is a sign of a capitulation sell off if I’ve ever seen one.

Bottom line, there is always another trade if you are staying disciplined. Having a plan, for when you are wrong is the key.
Sitting and deciding what to do when the house is on fire is a plan for disaster.
Having a plan lets you address the damage and move on.

That is all. I like buying grains on this dip.

CER