Tomorrow’s Plan:

Nice pullback today day, and even though it was higher volume, most of that volume was in the morning. VIX made a bit of a reversal as well. I think the extent of this pullback will tell us a lot about how strong the bulls really are. Besides that, I am watching for something surprising to happen. The way I see it, the market is moved the most by people who are FORCED to do something. So in dull times like this, sometimes watching for a breakout of some kind indicates a relative strength or weakness of a certain sector. If you do not find these little gems, you can be stuck doing nothing as the market just churns. A likely candidate for this is gold, and I am watching to see if this breakdown has legs. I am keeping in mind though that many of the big gold miners, like ABX, GG, and NEM have earnings before the end of the month. Also, the dollar is going down as well at the same time, and if the market continues, then the big three will be all falling at the same time: odd conditions!

My Best Ideas:

•UAUA is my best long idea. It has low volume near its highs here on this pull back, and I am looking to go long this puppy on any and all opportunities when the market decides to kick it up.

•AKAM also looks great to the long side, but has earnings here soon. LVS had earnings and I will be watching it for any plays tomorrow that may present themselves.

•I continue to watch WDC as a short sell, and so far it has not wanted to go down. I would love to see this thing pop up to the 30 area, or maybe even slightly above it, and catch a wicked reversal. Otherwise, it is still setting up as a nice short.

•Other then that, it is slim pickings out there. I think if you don’t make money in the morning session, you should probably call it quits on the day. The chop has become very “summer-y.”

Best of Luck Tomorrow

Today’s Trades:

Today’s Lesson: None

Last Note

I felt pretty darn good today. Reason being? Well despite the loss, I really just did not care about much. I really started to recognize how much trading is just a business. I read something cool the other day called the 5% principle. Basically, most semi-professionals who do not bring home the bacon regularly fail because of 5% of their actions. 95% of the time, they are steadily chugging along, and making decent decisions in the now moment. Then 5% of the time, for whatever reason, they go on tilt, or fritz out, and stick around in a marginal situation for too long. I am finding that for me, it is often the marginal situations that lose me the most money. When the trade is obviously no good, there is no problem; the same applies to the other extreme. However when I am feeling like I need to do something, and there is nothing very obvious, I lose money.

Today was a good example where volume really waned in the afternoon, but there were some bullish set ups in some of my stocks. I was completely on the fence on whether to take them or not. On one hand, I knew volume was low and edges were scarce. On the other hand, I wanted to avoid the regret of missing a move that I correctly realized. I am not sure why, but for some reason, when I recognize an entry and a set up, I feel some entitlement to its results. If I do not get those results, I am regretful.

Anyways, back to the 5% deal. I find for myself, when I really push it in a marginal situation, I rack up losses that undermine the other times I am successful. I felt great today because I took a great loss in WFC, and then relaxed the rest of the day away knowing it was a low probability situation. Don Miller said it best about the phases you go through as a trader. At first, you are four steps forward, seven steps back, then you are four forward and four back, and finally four forward and none, or one back. That little thing in my head that says “you have to do something,” is what creates so much misery. Poker is helping me a lot in identifying those scenarios. When you have K-Q off suit, and everyone else pushes into the pot aggressively, it is just NOT worth sticking around because your hand is most likely dominated. Once in awhile, you will flop the nuts, or some other circumstances will dictate buying in, but a lot of times, those are the type of situations where you will go to the river, and lose. That feeling of “I am not quite sure, but I just want to be in because I am tired of sitting here,” will cost you so much money. The point you want to get to is asking yourself WHY you are tired of sitting here. That reason will be the million dollar reason.

Lucas