Go Where the Market Takes You!

This morning was a tough read. Myself coming into today had a short bias thinking that we were going to test the lows of last Friday and possible break lower. We opened around 250 points below yesterdays close in the SPY near the lows of Friday, which gave me a bit more conviction to go short if SPY sell off further . But as you see in the first 30 – 45 min. we did not continue to sell off with any strong momentum. What also helped switch my thinking from the short side was the positive market reaction to the 10:00am economic data that came out. This prompt me to take a long position in Macy(M) above the 15 min. ORB (Open Range Break) but only as a momentum trade because it was opposite of my short bias game plan coming into the day. (which means lower share size, not adding to the position and exiting into momentum at the next resistant level).

As the market made its first pullback creating a swing high and me still wanting to short due to the large opening gap to the downside, I turned to Halliburton (HAL) for my short. I took the short below 24.60 which was its 15 min ORB to the downside. Wanting to hold short position longer than I should have I did create a small loss in this position as it traded back above into its 15 min open range.

But the afternoon price action was solely dedicated the long side and was lead by the Goldman Sach (GS) rally breaking above the 140.00 level. Now some might asks was the short covering or real buying, as we always say it does not matter; we are day trade and might and always trade what we see. As GS rallied and (now this is key) the VIX broke the lunch time range of 39.20 to the downside creating lower lows, the markets started to make new highs and close the morning gap; longs played out in a big way. As long as the VIX continued to make lows while the markets made new highs, this should have giving us a bit more conviction to hold our long position a little longer to try and get the most out of them.