Week 01-05 March in Review

The reason I mentioned last Sunday for terminating some of our positions, has not gone away. The opposite happened. On Monday The VIX Index fell down to the monthly and three monthly average, which is a good sign.

Volatility is the enemy of Hedge Fund Managers and the best friend of traders.

While Fund Managers like the constant move upwards (LONG) or downwards (SHORT) to increase their earnings a trader only can make money when the market moves up and down in short term. This is called volatility, And the "JUMP TO ACTION" Threshold for me is 25% above the 3 Month Average, the yellow line, The green line is the monthly average, 20 day simple moving average. So if the green and the yellow line are entangled we are good! If the green line takes off the market becomes volatile and tends to go down since we are in a long time bullish market. It will not get steeper even though this could happen theoretically.

We saw the increased volatility last Thursday and then the holding pattern on Friday that made me think of deleting some of our positions. Bad positions will get worse and good positions might turn bad. Thus, you have to act. Whats the plan Dan?

I do not trade the first 30-45 minutes after the markets open due to the fact that Investment Banks and overnight orders flushing the markets and make it very volatile in ANY direction. By the time of 10 and 10:30 EST the markets cooled and we will see a direction and we can read the VIX.

The reason for closing our positions disappeared on Monday and Tuesday, and it came back into play on Wednesday and Thursday. I was waiting for the VIX to go through the Threshold and it didnt. But Volatility was up and our positions lost money! And then on Friday it collapsed. 

The SPX recovered slightly on Friday's last blue Candle. But still it runs below weekly on monthly average! 

The German DAX was down and so is Australian Dollar and Copper, signs of cooling off.

Best thing that could happen next week is the the SPX will hit 4,000 and the DJI 32,000 and GM $57.00 and TSM $142. Wishful thinking.

Hence we gained back some losses and I made a huge win on Chino's Hello Pal position. 

And what went wrong with entering the GM and TSM trades!

See next posts.