Time to Study

This has been the craziest week for markets. January has been the craziest month for markets. Personally my account had huge swings (see my last blog post) but I came out on top by the end of the month making about 15%. I’m continuing to refine my process.

Weekly charts on indices don’t look great for longs. This week saw big distribution days and volatility. Forget the hype on certain individual stocks, the rug can get pulled on them just as fast if not faster than they went up and given what some brokers have been doing I wouldn’t want to be stuck in them anyways. Those traders learned about short selling and short squeezes, soon they will learn about bag holding. This is about playing the long game. Having your account live to trade another day/year/decade.

$SPY closing below 50ma. Watching for more downside.

$QQQ breaking and closing below 20ma. 50ma most likely next.

$IWM breaking below 20ma. 5 distribution days on volume. 50ma most likely next.

Silver has been trending, that I can get behind ($SLV $EXK $AG $PAAS $MAG). $UVXY / VIX has been hot the past couple days. Bitcoin names are moving again ($RIOT $MARA $BTBT $GBTC). I’ll be more focused on those type plays this coming week as opposed to playing other individual names while the indices are weak. I’d honestly rather sit this week out and study charts than get into trades that will probably have a high probability of getting stopped out. Or I’ll play this week like I did on Friday which is scalp all day. This is the time to study, to refine your process, to not get chopped up in every other trade and give back gains.

Can I be wrong? Can the market turn around tomorrow and go right back up to highs by the end of the week? Absolutely it can happen. I want to see strength first. I’m not going to buy into the market hoping that that will happen, it needs to start happening that way first. There could be a day or two relief rally before going lower (bear flag), there could be a V shaped bounce back to highs, indices could continue the cascade lower… Consider all possibilities and make a plan for them that way you aren’t making rash decisions in the moment with this much volatility happening.

Tight stops. Smaller position size. Focus on sell side / VIX / BTC / GLD/SLV / sitting on the sidelines and studying….. this is my game plan for this week.

How to Mess Up 23% Gains (10 days work) in 1 Day

So far in 2021 my account is up 23%! Until yesterday. I can point to a few reasons why my account is now lower but really it comes down to one main reason which I’ll point out later. First let me go over how I got to 23% gains from January 1-14.

From January 1st to January 15th I’ve made around 225 trades. As of right now I would say I am a day/overnight trader. I’ll make trades where I get in a stock and out in the same day. I then buy into positions later in the day that are meant to be overnight holds that usually I sell the next day. I actually want to get better at holding longer, but for now it’s a hard for me to see gains and not take them. I realize bigger money is made holding and I absolutely could have made bigger returns if I would have held certain positions I was in for longer as opposed to jumping in and out of stocks like a degenerate. lol

My biggest winner this year so far is $BTBT. I made 33% on a day trade January 12th. I bought near the lows and began selling throughout the day and into the next day. Other winners for me this year have been $X, $GRWG, $VERU, $SPCE, $LMND, $JMIA, $XXII, $DGLY, $CEIX, $PLG, $MRO. My biggest loser I actually may be holding currently, I’m in a couple positions currently that are down a fair amount. Aside from what I’m holding my biggest loser so far is 4% on $SNOW. Other loses I had were many of my big winners mentioned that I initially got stopped out of once or twice.

OK so as I said, a few of my current holdings are down a fair amount. Way more than I should have allowed and the number one reason for this is I stopped using hard stops. For 2 days. Thus far they are the worst two days I could have stopped using hard stops. I’m in one position that is currently down 11%, and 3 others that are down 5%. I ‘want to be in these stocks’… you can say I’m mentally married to them for now. I do believe that they will be higher at some point. But right now they are not. My brain says they will be higher… the charts are not saying that currently. All of the charts have definite lines in the sand via moving averages that if they close under I will sell and I’ll have a no good very bad day. I’m hoping (hopium doesn’t work usually but is a helluva drug) that these lines in the sand are areas of support that hold, the stocks turn back around and I make a ton of money and buy an island somewhere. But you read that sentence and realize how ridiculous and juvenile it is and therein lies the problem. I’m thinking about what my gains can do for me as opposed to what loses could do. I have failed to follow rules and mitigate risk and now I have pain. Pain that if I sell everything now will cut my year to date gains in half or potentially worse. All because I didn’t put in hard stops. We’ll see what happens, maybe I’ll start practicing holding for longer and these bags will be full of cash (again…read the problem).

Hopefully I’m not the only one getting something out of this quick post (reflection/therapy). Use hard stops if you want to survive. Don’t ‘marry’ your stocks. Cut loses, you can always buy the stock back. Before this my average lose was under 1%. My hard stops were working in my favor. I had just started to get a good flow going based around my stops. I added to my capital this last week and while I was adjusting to that I stopped using hard stops and now I’m watching my newly added capital deteriorate as if I never added it.

Going forward I don’t think this is a market crash or even a heavy correction. $QQQ has support at $310 then $305 before it gets really nasty. $SPY looks much better and $IWM continues to lead. If anything this is a buying opportunity (I did start two new positions with great risk reward that are green and yes, hard stops are in!). Also, I could be totally wrong and the market goes to zero never to return. Always follow price action (and use hard stops!). Thanks for reading!

Stocks & Sectors Showing Strength

The market feels a little weird. We had massive euphoric runs in EV names ($NIO $TSLA), SPACs ($QS $SBE), alt energy / fuel cell ($FCEL $LAC), bitcoin names ($RIOT $MARA), and i’m sure others I missed. All while big names like $AMZN $NVDA $FB $NFLX $AAPL remained fairly quiet.

$IWM has been leading the indices. It feels like there has been a disconnect between the indices and individual stock names. There are days where the DOW can be down 100s of points but the stocks you are holding are up for the day. Or your stocks are all down on the day and the indices are putting in new highs. Mark Minervini often suggests to stop looking at the indexes and focus on your stocks (‘try it for a year’). The past few months I’m starting to get his point.

Right now many of the sectors that were hot a month ago or even two weeks ago are cooling off and new sectors/stocks are starting to setup and look good. I’ve noticed commodity names in particular are looking pretty good. Gas/Oil names, Gold and Silver, Department stores and Retail.

$EXK breaking out two sessions ago from a flag

$QEP putting in a sideways base after making a run. Pulling back to 20ma support (my favorite kind).

$SM another Oil/Gas name setting up. Putting in a sideways base after making a run. Pulling back to 20ma support.

$JNUG gold miners putting in higher lows. 5ma crossing up 10ma and riding up moving averages.

$TECK putting in a sideways base after a making a run. Pulling back to 20ma support.

$FCX putting in a sideways base after making a run. Pulling back to 20ma support. Breaking out two sessions ago.

$MIK pulling back to 20ma support and breaking out 3 sessions ago

$JWN putting in a sideways base after making a run. Pulling back to 20ma support.

One of the great things about going over hundreds of chart setups and breakouts is you begin to quickly see all the similarities. Look at each of these charts and notice what’s happening. Notice what happened just before they had previous breakouts. 20ma support, flag, range expansion combined with volume expansion…. Get to know the setups and you’ll build confidence when putting on positions. You’ll know when it’s working and more importantly when it is not.

Welcome!

Welcome to my site where I’ll be posting my thoughts on the market, charts, ideas, setups & breakouts, and anything else I feel like! I’m active on Twitter, my handle is @JPMorgains. There I post charts daily after the market closes. I will be writing an ABOUT page with a bio and will add frequent Q&A as it comes in. If you have questions or want to chat you can DM me on Twitter!