Matt and Steve, since interest rates are rising and non
profitable high PE stocks are being crushed, can you please provide
more short selling of these because they go down much faster, like
30-50% over a few months.
Another question that I have is why do analysts / banks upgrade
or downgrade stocks? Is it to get people to buy when they upgrade a
stock after they have already bought in and get people to sell when
they downgrade it so they can buy it cheaper?
e.g. DISCK one of your charts is upgraded today, same for BP, T
back in Dec when GS upgraded it, and TXN is downgraded today.
What is the strategy for trading a stock after the upgrade and
downgrade or on earnings? e.g recently I bought MU on gap up on
earnings (and kept trailing my stop and was stopped out today
because of the whole semi is going down). Would upgrade gap up
trade the same way?
Focus on the charts - you can incorporate such items into YOUR
STYLE as you see fit. Develop an approach that works for you
and stick with it - don't worry about others.
I agree 1000% with this. There is more money to be made on short
side because trades materialize much faster once they trigger. Also
reading the tape is very important. One thing I learnt is NEVER
PRESS SHORTS at market support levels and also at stock support
levels too. Lot of this is psychology driven. I love trading
weeklies with puts. ROI is incredible
as far as not pressing shorts, agree. I've discussed this
before, going long and shorting, they are different animals,
different emotions greed and fear.
stocks can run up and stay aloft for a long time, there's a
reason for the saying 'topping is a process'.
shorting on the other hand tends to be much more emotional and
over far more quickly -
it takes you longer to climb up the mountain than it does to
fall down that mountain off of a cliff. Swing longs can
be like a long road trip to FL when I was a kid, taking 2 days,
whereas the duration for most short trades is more like a 30 min or
1 or 2 hr car ride. Many swing longs can be held for long
periods of time whereas one can generally not hold shorts for long
periods of time. The fear on the sell off is stronger than the
greed that causes the slow steady uptrending price in an uptrend.
For shorts one could attempt to short a very overbought condition
in an uptrend, but if you end up catching a nice pullback, the best
action is to cover it quickly since the uptrend has not been lost.
Take profits quickly. The best shorts are then made after an
instrument has been going sideways, thus allowing the various MA's
to flatten out, and honestly it's best allow the trend to be broken
and then short oversold rallies that get overbought like on a 60
min time frame etc. short rallies vs shorting breakdowns.
Also, going back to emotion: for sell offs, the emotion is so
strong on the fear side, it tends to be over much faster and prices
can rally hard once an instrument get's washed out. Hence the 'rip
your face off rallies' that tend to occur there. Just like that
Feb/Mar 2020 correction, it was one month and you got one lower
high bounce on the daily in the middle of that as a good
opportunity to short. For shorts if I catch a down move like
that I'm much more liberal in taking profits and simply closing the
shorts out on a low vs waiting for a big reversal. Shorts are not
like longs most of the time where you can just leave them on. For
things like AAPL and MSFT and TSLA you can sometimes be long those
stocks for many months and ignore the little pullbacks/wiggles in
the uptrends. Shorts you can rarely hold for a long time like you
can for an uptrend. You can't simple take a mirror and
reverse the settings on the indicators that you use for longs and
use those settings for shorts. Trades for shorts tend to be much
faster over and done. You see this with my SPY systems and when I
developed and tested a lot of my short systems for the SPY, I had
to treat the shorts much much differently than I do for the longs
and it was far more difficult to find shorts that didn't get caught
and have bad trades.
I also prefer to short after a stock enters a bear trend but
rallies to 20ema, like ARKK down 12% in 4 days or other ARK funds.
Once a trade is entered and the direction is correct, trail the
stop. Or buy puts at the same 20ema mark. The previous leaders are
now crushed, like net, upst, crwd, aehr, asan, etc. they fell like
rocks.
I have entered TZA and IWM puts on Thursday, a bit early, but my
plan is to add to my TZA and puts to build a larger position if /
when IWM rallies up to 20ema, or if IWM trades sideways and let the
20ema catches up (similar to ARKK's recent move). There are 2
candles being rejected at 220 on IWM which is close to 20ema, but I
was asleep and could not enter the short at those price, will try
to set a bracket buy order instead. IWM weekly MACD does not look
good, but IWM is close to support.
I bought TNA when IWM reversed from Dec low and was thinking if
IWM can trade to 228, but it was rejected by its 50dma and
horizontal resistant in 2 spots in early Dec gapped down and my TNA
was stopped out. But Wednesday's drop was too quick and I was not
prepared to enter TZA.
I have also entered XRT puts on Thursday. I cannot find an
inverse XRT ETF.
Both IWM and XRT look similarly bad, but both are close to
horizontal support. I do see a weak support below on both once they
are broken, but after that, there is not much support.
One thing I have not tried is buying calls on inverse ETF such
as TZA, or puts on RETL (if it is there). I am not experienced with
options, only know the basics like buy 0.7 delta 30 - 60 DTE.
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Matt and Steve, since interest
Posted by sydney on 8th of Jan 2022 at 06:48 am
Matt and Steve, since interest rates are rising and non profitable high PE stocks are being crushed, can you please provide more short selling of these because they go down much faster, like 30-50% over a few months.
Another question that I have is why do analysts / banks upgrade or downgrade stocks? Is it to get people to buy when they upgrade a stock after they have already bought in and get people to sell when they downgrade it so they can buy it cheaper?
e.g. DISCK one of your charts is upgraded today, same for BP, T back in Dec when GS upgraded it, and TXN is downgraded today.
What is the strategy for trading a stock after the upgrade and downgrade or on earnings? e.g recently I bought MU on gap up on earnings (and kept trailing my stop and was stopped out today because of the whole semi is going down). Would upgrade gap up trade the same way?
Focus on the charts -
Posted by steve on 8th of Jan 2022 at 06:01 pm
Focus on the charts - you can incorporate such items into YOUR STYLE as you see fit. Develop an approach that works for you and stick with it - don't worry about others.
I agree 1000% with this.
Posted by arun on 8th of Jan 2022 at 08:41 am
I agree 1000% with this. There is more money to be made on short side because trades materialize much faster once they trigger. Also reading the tape is very important. One thing I learnt is NEVER PRESS SHORTS at market support levels and also at stock support levels too. Lot of this is psychology driven. I love trading weeklies with puts. ROI is incredible
as far as not pressing
Posted by matt on 8th of Jan 2022 at 01:59 pm
as far as not pressing shorts, agree. I've discussed this before, going long and shorting, they are different animals, different emotions greed and fear.
stocks can run up and stay aloft for a long time, there's a reason for the saying 'topping is a process'.
shorting on the other hand tends to be much more emotional and over far more quickly - it takes you longer to climb up the mountain than it does to fall down that mountain off of a cliff. Swing longs can be like a long road trip to FL when I was a kid, taking 2 days, whereas the duration for most short trades is more like a 30 min or 1 or 2 hr car ride. Many swing longs can be held for long periods of time whereas one can generally not hold shorts for long periods of time. The fear on the sell off is stronger than the greed that causes the slow steady uptrending price in an uptrend. For shorts one could attempt to short a very overbought condition in an uptrend, but if you end up catching a nice pullback, the best action is to cover it quickly since the uptrend has not been lost. Take profits quickly. The best shorts are then made after an instrument has been going sideways, thus allowing the various MA's to flatten out, and honestly it's best allow the trend to be broken and then short oversold rallies that get overbought like on a 60 min time frame etc. short rallies vs shorting breakdowns.
Also, going back to emotion: for sell offs, the emotion is so strong on the fear side, it tends to be over much faster and prices can rally hard once an instrument get's washed out. Hence the 'rip your face off rallies' that tend to occur there. Just like that Feb/Mar 2020 correction, it was one month and you got one lower high bounce on the daily in the middle of that as a good opportunity to short. For shorts if I catch a down move like that I'm much more liberal in taking profits and simply closing the shorts out on a low vs waiting for a big reversal. Shorts are not like longs most of the time where you can just leave them on. For things like AAPL and MSFT and TSLA you can sometimes be long those stocks for many months and ignore the little pullbacks/wiggles in the uptrends. Shorts you can rarely hold for a long time like you can for an uptrend. You can't simple take a mirror and reverse the settings on the indicators that you use for longs and use those settings for shorts. Trades for shorts tend to be much faster over and done. You see this with my SPY systems and when I developed and tested a lot of my short systems for the SPY, I had to treat the shorts much much differently than I do for the longs and it was far more difficult to find shorts that didn't get caught and have bad trades.
I also prefer to short
Posted by sydney on 8th of Jan 2022 at 04:15 pm
I also prefer to short after a stock enters a bear trend but rallies to 20ema, like ARKK down 12% in 4 days or other ARK funds. Once a trade is entered and the direction is correct, trail the stop. Or buy puts at the same 20ema mark. The previous leaders are now crushed, like net, upst, crwd, aehr, asan, etc. they fell like rocks.
I have entered TZA and IWM puts on Thursday, a bit early, but my plan is to add to my TZA and puts to build a larger position if / when IWM rallies up to 20ema, or if IWM trades sideways and let the 20ema catches up (similar to ARKK's recent move). There are 2 candles being rejected at 220 on IWM which is close to 20ema, but I was asleep and could not enter the short at those price, will try to set a bracket buy order instead. IWM weekly MACD does not look good, but IWM is close to support.
I bought TNA when IWM reversed from Dec low and was thinking if IWM can trade to 228, but it was rejected by its 50dma and horizontal resistant in 2 spots in early Dec gapped down and my TNA was stopped out. But Wednesday's drop was too quick and I was not prepared to enter TZA.
I have also entered XRT puts on Thursday. I cannot find an inverse XRT ETF.
Both IWM and XRT look similarly bad, but both are close to horizontal support. I do see a weak support below on both once they are broken, but after that, there is not much support.
One thing I have not tried is buying calls on inverse ETF such as TZA, or puts on RETL (if it is there). I am not experienced with options, only know the basics like buy 0.7 delta 30 - 60 DTE.