Finding Good Bullish Day Trades In A Weak Market – Trading From the Long Side

Posted 12:00 PM ET - Wrote my comments before the open but forgot to post - sorry. The market is in a flux. Since Friday we have had 35 point S&P moves each day. I still believe that the 100-day moving average needs to be challenged intraday before we see a meaningful rally. Traders want to see how strong the bid is at that level. The news is fairly insignificant until the FOMC next week. I am day trading and I will take my lead off of the first hour of trading. The early rally will falter and the downside will be tested. If support is established early, we are likely to grind higher. A rally above the first hour high would give me the confidence to trade from the long side the rest of the day. If the first hour low is breached, we are likely to test the 100-day moving average today. I have been finding excellent longs and I favor the upside. Yesterday I did not do one bearish trade all day. All of my day trades were from the long side and I made excellent money even though the market was slipping the entire day. I am able to find relative strength and these stocks wanted to run. When the market decline stalled, they took off. The news is not that dire. I believe that we will see a nice little bounce today. Once the 100-day moving average is challenged later this week, we will be able to evaluate that support level. Ideally we will see a deep low that runs its course briefly and reverses. That would be a sign that buyers are lining up. I would be inclined to take overnight long positions if I see that pattern. Longer term, if support at the 100-day moving average fails easily, we are likely to challenge the 200-day moving average. The Fed is not going to raise rates next week and I don't believe they will raise before the election. December is the earliest that they might act. Use the first hour range today as your guide. If we are above the high, trade from the long side. If we make a new low after the first hour, let the market challenge the 100-day moving average. Watch for signs support and late day buying if that happens. I am not overly bearish and I feel the downside is relatively contained. Consequently, I'm not going to be taking any overnight bearish positions. I will let this wave of selling play out and I will be more focused on the long side. . .

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