MakisSwingTrader: January 2014

Friday, January 31, 2014

TSLA, UNH, SPX WEEKEND REVIEW

NOT A GOOD WAY TO START THE YEAR:
I'm glad the week is done and even happier the month is over. It has been a crazy month for me. I was sitting back, relaxing and getting complacent waiting for a bullish move because all my chart setups (except a Rising Wedge which I didn't think was ready) were in agreement and pointing to a bullish leg. But that optimism changed very quickly to confusion as I tried to figure out what I missed, and scrambling to figure out what was next and how far the drop would go after all my chart setups were destroyed in an instant after a big gap down since I was caught unprepared for the drop.
This all started on Jan 22nd when China (the world's manufacturing house) flash PMI came in at 49.6 which was below the key 50 line/very significant psychological level separating expansion from contraction. It was also significant because it hadn't been <50 in a long time. So fears of a recession took center stage. As a result, there was a global sell-off causing a significant drop to the U.S futures. From that day we have seen wild volatility with most of the moves happening premarket with big gaps. I like wide range volatility, but this one was senseless because most of it happened before the open thereby consistently destroying my play setups.
The point is that events will always affect the market that are beyond the control of traders. As annoying as it is, it should be expected and accepted as part of the game. The good thing is that they don't happen often, so technical analysis goes back to normal quickly. The problem is when an event occurs over a prolonged period of days, weeks or months such as when the U.S Congress has to make fiscal policy decisions, thereby putting the market in uncertainty and creating technical mess on the charts (my nightmare).
Maybe some folks saw this drop coming. I just did not. I can only speak for myself. I'm not generalizing, projecting or making excuses. Just saying what happened to me and what the cause was. If you saw it coming then great for you. I have been wrong it the past and I will be wrong in the future. My opinion of the market lies it the charts I post. I'm trying hard to attain perfection. Let's see what February brings.

TSLA-15MIN