My first trade in CLF was based on recent weakness (we were below 37.90 longer term pivot) and on a weak market. CLF broke the previous day high but was having trouble holding it after the opening rush. It is a high beta stock and at the same time the market was topping out for the day at 142. I felt the weak SPY and the longer term downtrend in CLF was a good setup. I got short at 37.20 and had a stop just above the high set on the open above 27.30.
The market went my way but CLF did not follow. It broke down slightly but continued to stay much stronger than the market. I was wicked out on light volume and then CLF proceeded to make new highs. It finally failed and confirmed my earlier downward bias and followed the market lower. My mistkae on this one was that I treated the trade as a retracement to a previous level (Friday highs) but I went against the trend on the 15 minute chart. Typically I stay away from counter trend plays on the 15min. Overall I feel it was a good setup but maybe not one that I would always take given the uptrend that had been going on since Friday. I watched CLF but did not get a chance to short at the 37.90ish pivot and did not have a good entry when we fell below 37.30 again. I am happy with this trade and must keep in mind that sometimes a good idea simply does not have market participation.
My second trade of the day was in LLY. We failed to hold the longer term support/resistance level at 50.00, so I was bearish minded coming in. LLY drove lower on the open and put in a bottom at 48.90. It broke below that level after 10:30AM. I had a 48.40 target in mind since the stock has only a 1.17 ATR and had likely already seen its low of the day on the big downward volume spike. I found 40c to be a reasonable target on weakness and entered above 48.90 with my stop above 49.00.
The downward move missed my target by 3 or 4c, and I was determined to hold my position or until I was stopped out. This determination started to weaken hour after hour as this thing chopped around. It slowly built up on light volume and I was seconds away from caving in once it broke above 49.80, but it was only there for a few seconds before it dropped back down again. Finally it fell to my target and put in a low two cents below at 49.38 before a major turn around again ... phew! This was a trade where patience was key and a good lesson that I need to make it stop me out and stick with my original plan. If I would have covered above 80c for +8c profit I would have missed my target and ruined the r/r of the trade. This was a painful test of patience today but a good lesson learned.
Good luck with the close everyone.
Sean.
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