Weekend Update

Good Morning!

Friday's action was essentially a continuation of what we saw all week. A complete beat down across the board. My position in ERX continues to get slaughtered, but as I've said before, I'm not going to exit until I get some sort of relief rally or maybe even a trend change. The problem with continued trends like this, whether bull or bear, is that if you get stuck there may not be any relief for quite some time. So I'll just wait. I currently do not have any orders pending, that is, with buy stops set. I missed the bearish trade, and it's too late to get in the game now. Which honestly doesn't make for exciting trading, but it preserves capital for when I want to jump in.

I want to add something that I realize I probably haven't discussed yet... My time frames for trading.

"Short Term" - These trades are signaled with 2 or 1 minute charts, and the trend usually lasts a day or two. I usually do not trade these except with options on rare occasions. They are very useful though to indicate longer term trades.

 "Intermediate Term" - These trades span over a period of about a week and sometimes a couple weeks. I will trade these, but they are not usually profitable enough to cover commissions in a small brokerage account.

"Long Term" - These are the trades I most frequently use. They occur over periods of a month or more, and are signaled by intermediate term trend changes.

I'll give an update on XLE, the energy sector.

The chart above is a 15 minute XLE. I had tweeted late in the trading day that there was a potential short term trend change to bounce to the 58.20 area. I still believe this will happen in the near term, however a move lower Monday morning could negate that. At some point there will be a bounce, and that will be the area I'm eyeing. The longer term chart is so damaged that right now I can't make an argument that we see a longer term trend change. We need some sort of bullish confirmation in the intermediate term, and even then the long term downtrend is intact.

The above chart is of SPY on 15 minute. Again we see a significant intermediate term downtrend. I'm still eyeing the 200 level for a bounce, but as of Friday's close there was no indication of when that would occur. The long term trend is bearish, but this is a funny situation. If we form and intermediate base here, we could see a longer term trend change. I'm definitely eyeing this as a potential trade.

The chart above is QQQ on 15 minute. I am most excited for the Q's from a bullish perspective. Even after the enormous beat down in late August the long term bull trend is still intact. An intermediate base here would signal an entry for a long term position that I will absolutely be playing. My best guess is that we bounce to the 110-ish level, then form a higher low. Then a break of that 110 would be my entry into a long term trade. Take that with a grain of salt as intermediate trends can continue in either direction for longer than you think. You need confirmation, and we haven't had it yet.

The chart above is the GLD on 15 minute. I like to occasionally include some of the other ETF's I look at. Last time it was the VNQ, this time its GLD. Gold is actually in a long term down trend. This said, it is making it's way toward an intermediate top, but it still has a long way to go. This intermediate trend will likely continue, but it is possible to reverse course. I think this is interesting as SPY and QQQ have reached what I would consider areas to watch for intermediate term trend change leading to long term trade opportunities, but GLD still has room to the upside - meaning the SPY and QQQ could continue lower and potentially into a bearish long term trend. Did that make sense? Hopefully. No trades are currently being looked at for GLD, but I keep an eye on it.

I hope you all enjoyed, and hit me with a follow if you'd like updates on the blog.

Have a great weekend!

TraderSchmo