The markets again managed to surprise and pulled off a solid rally on decent volume. The S&P 500 had little trouble with the 1,570-1,575 area and closed around 1,580, up about 1%. Even more encouraging for the bulls was the action in the Russell 2000 which led the way and closed almost 1.6% higher.
Given today’s action, it is not unreasonable to expect the markets to continue grinding higher and retest the highs of the year. However, even if the S&P manages to punch through 1,600, I still maintain the market is closer to an intermediate top than another significant move higher and would be cautious in deploying new capital for those of you who are investors (or traders with a longer-term time horizon).
The reason I say this is primarily because the S&P remains overbought on longer term timeframes (weekly and monthly) and for the index to have a meaningful move higher it has to work off the overbought conditions first.
For us this felt like a sloppy trading day, yet we finished strong. Sloppy refers to how we traded CZR and BYD. Starting the day we were well positioned to extract really good profits from them, yet whiffed on both.
We got into CZR right off the open around 14.30, took two profitable pieces off, and then had the last piece stopped out at 14.20, right before CZR reversed and had a monster move all the way to 16(!) without giving another good entry setup. We managed to re-enter around 16.20 for a trade to 16.90 or so and then had a couple of smaller subsequent trades, but overall we grossed a little over +3.5% on a stock that made a +27% move.
On BYD, we also had a great initial entry around 8.75, but then the stock spent most of the day alternating between sideways consolidation and stalling, and we finally abandoned the trade only to see it make a move to 9.10 shortly thereafter.
On the other hand we had a good number of well executed trades, including KERX, AAPL (2 trades), CADX, RKUS, SCMP, and RVLT – 2nd trade, which more than made up for what we missed with CZR and BYD. The losing trades were KORS (2 trades), MNKD, RVLT – 1st trade, and TNA – thankfully all very small.
Finally, we had one of those extraordinarily rare dumb luck trades. Shortly after 12:40pm we noticed UVXY trying to move out of an intraday flag and took a position at 6.42. Less than 30 minutes later, due to some unconfirmed Twitter rumors, UVXY exploded to more than 7.50. We managed to sell our position a little under 7.20 for a gross gain of almost 12%. However, as nice as it is to have such a big quick gain in our portfolio, this profit was not the result of us trading and following our strategy and process. Therefore, I did not include it in the trading log and this trade will not count toward our performance. I mentioned it here just as an example of crazy and unpredictable things that can happen in trading.
- Gross % Return: +1.91%
- Net % Return: +1.62%
- Total points: +4.12
- Number of trades: 18
- Green trades: 11
- Biggest point winner: +2.22 (AAPL – 2nd trade)
- Biggest point loser: -0.40 (KORS – 2nd trade)
- Biggest % winner: +6.11% (RVLT – 2nd trade)
- Biggest % loser: -1.15% (RVLT – 1st trade)
For more detail about today’s trades, please see attached log.
NTApr23Log
Noanet Trader 