Seemed like an obvious down day today with more write downs in the news. WSJ is reporting inflation is at 17 year high. Boeing is also delaying their 787 delivery. So many bad news indeed.
Yet, the Dow decides to be up today. The futures gapped lower, but it was quickly closed to yesterday's close. I saw that one coming from the CCI and Stoch and was able to profit on the brief rally. It seemed obvious that the MM are positioning themselves for the big fall.
I exited the long and went short on very good timing. Then the market went on a free fall for an hour. I was holding 2 shorts of YM (one for long term entered at market top and another one for short term, which was added on an early consolidation). The paper profit amounted to almost \$1300 for that hour.
I found myself counting the profit and becoming ecstatic of the gain. This is when my discipline lost to my conviction. CCI and Stochastic were obviously turning upward. I originally intended the 2nd short position to be short term only. If I stuck to my strategy, I should have exited at least one position when the signals were staring at my face.
That was indeed the bottom for the day. The market recovered and actually went higher. This is due to the HB&B moving funds (gold, tech, oil, etc) back into the financials. They are in fact rotating funds out of each sector one at a time so that the indexes don't tank too fast.
While I was so smart to call the first rally a fakeout, I totally forgot the same could be done on the other end! It was a double trap!!! Fake rally, fake fall, then finally settle near prev close. This is because most "news" from today were already discounted in the previous few days' drop in DJIA. Buy on rumour, sell on the news!
I continued to trade after the big lost hoping to recover. I kept on going short near the top but the Dow kept breaking it. After a while, I finally dawned on me. I went long on the bottom and made a little bit back.
In the end, I was down about \$500 to \$600 on YM.
One thing I re-learned/realized is that the morning are amateurs' market. The afternoon are the pro's market. At least, it seems easier to trade because there seem to be less noise in the mornings for the past few days. My strategy seemed to have worked better in the morning too. I'll focus on the first hour or two of the market from now on and see if this hypothesis is true.