I Went In And Got It Wrong

kimco 5 oct 2011

I was talking about Kimco Realty (KIM) a few posts ago. I mentioned that I entered a short position. You can read the post over here.

It was a trade that really went my way – the drop in price was big and I made decent profits. The swing trade lasted 5 days for me. The market was actually very very OVERSOLD already. I am expecting a rebound anytime.

Then 2 days ago (4 Oct), the market rebounded very fiercely in the last 20 minutes. I thought that was no hope for S&P already initially, it looked like it was going to break the crucial support and officially in bear market. The bulls fought back, all done in the last 20 minutes! I bet a lot of people’s stop loss will be hit by the sudden surge.

As you can see from the chart above, Kimco actually went from a huge bearish engulfing to a white candle stick in the last 20 minutes as well. Sensing the market will rebound, I entered a long position. It was still a small hammer when I went in.

However yesterday Kimco actually dived (see the last candle in the chart above) while a lot of counters was actually up yesterday! It hit my stop loss and I was out of the trade. At the end of the day, it formed a hammer again! Well, I got the timing wrong. I should wait for the confirmation before I enter a position. 2 hammers in a row… this counter should go up today. But the upside is not that good. The 20d MA is near to act as brick wall. Not worth to risk it.

spx 5 oct 2011

Anyway, I long S&P 500 index (SPX). The chart above is self explanatory. As I mentioned earlier, the market is very oversold and there will be a rebound. The market rebounded on the 4 Oct during the last 20 min and I went in. It was a small hammer when I entered. Became a big white candle when the day closed.

Those who long should be careful too. We are still against the trend. Set a tight stop loss, be quick to exit and take the profits.

2 replies
  1. novice
    novice says:

    Hi Alex,
    From the above I understand that you made money on th short trade, but gave back some of it to the market in your long trade. I am not a seasoned trader as am still trying to fine tune my trading based on Candlesticks and indicators, however, I would suggest that when the stock is in the downtrend there is no need to buy the counter while it rallys back to the dynamic resistance of 20MA. If we expect the market in general will rally then we should look for a counter which is in an upward trend and at pullback as this will give us a hiher probability of getting the rewards.
    just my thought….
    btw how do u scan for the potential setups. I am using TOS and still trying to learn same.

  2. Alex
    Alex says:

    Hey novice,

    Thanks for your input and suggestion! You are right, when the market is in a downtrend, we should not go long and instead wait for the opportunity to short when the market rally again. It’s just one of my “itchy fingers” trade. Haha.

    I am subscribed to stockcharts.com. I use their scanner and find counters that fulfil my criteria.

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