The Wrap 5/22/12….Know Your Pivots


The market took some profits today after yesterday’s nice pop. The market broke hard to the downside today at around 2:30 from a combination of news events. The first was a headline out of Greece and the second was from a rumor that Patriot Coal was announcing bankruptcy.  The latter was a rumor, but it was released later on, that they will be refinancing their debt. As a result, most of the coal stocks, including ACI (one of our stocks) were sold off hard. They all managed a rally though into the close. I don’t take stops on rumors, so I am still live on the ACI trade.

I had a very tight stop on UCO and a result of a very strong dollar today, I took the stop as crude reversed lower. If you are still long, you can move your stop down to the   32.15 level.

When the market sold off today it s easy to panic. I always use “Pivot” levels to guide me. Almost any of your trading platforms will have it. Anyway take a look at the 5 minute charts below of the QQQ and SPY today. After 2:30, the market came down and looked ugly. However if you use your pivot levels you can see where good support is. This is applicable to any stock or ETF. As you can see, the SPY & QQQ held their main pivot levels almost to the penny. This can be helpful in preventing you from being “shaken” out or “scared” out of a trade.

The QQQ rallied  about 45 cents off the pivot low and SPY rallied about 80 cents off the pivot low. Both had those big bounces only 10 minutes before the market closed. So if you had 1000 shares of each, you recovered about $ 1250 off the lows, it also helped you from making a bad sale and losing money.

It’s a good tool so try to use it.

QQQ 5 Minute Chart
QQQ 5 Minute Chart


SPY 5 Minute Chart
SPY 5 Minute Chart

I put some long side trades on Friday by way of TNA QLD SSO and JPM. There were some good opportunities to take some short term profits today and yesterday. TNA traded as high as +4.20 QLD traded as high as +2.40 today and SSO traded as high as +2.80 this morning since Friday’s recommendation. JPM traded lower but is now profitable. Sometimes I am not always able telegraph an exit, but I hope you are scaling out a little when price moves higher. Personally I am still long most of the positions.


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