Bull Bear Plays 10-3-2017

What I’m Watching 

Bullish

$GM – BofA/Merrill upgraded from neutral to buy
$ECYT – Wedbush upgraded from neutral to outperform and increased PT from $2 to $7
$ASTE – Robert W. Baird upgraded from neutral to outperform and increased PT from $56 to $65
$EXAS – Canaccord Genuity increased price target from $45 to $60
$ZGNX – Mizuho increased priced target from $28 to $51

Bearish*

$REXX – RBC Capital Mrkts downgraded from outperform to sector perform & dropped PT $4 to $3
$TTS – CJS Securities & Telsey Advisory Group downgraded, latter dropped PT from $17 to $7
$BHVN – Needham decreased their price target from $43 to $36

*Note, a bearish outlook doesn’t necessarily mean I’m considering a short position, I may be looking for it to bottom out before going long.

Neutral – What I’m Trading

$ES_F – I remain neutral on this beast, because I trade it, sometimes several times per day. However, CFTC S&P 500 speculative net positions went from 101.3K last week, up to 119.7K, a sizable win for bulls, and a heartbreak for bears. However, the above noted CFTC bullish outlook can end up being moot, as in this trap ’em game, you don’t know what’s going to happen with $ES_F, but you should be ready for most set-ups the last 10 years or so have given us; including the changing of directions multiple times throughout the trading day. That’s what I’ve based my algo on.

$ES_F Pulled a Head Fake

Almost an 8 point range today. My algo made two trades today, both were long, but the first trade got caught in a head fake, and I took a small loss. However, the second trade caught about a 5 handle move up, which put me in a net win position today.

Over the past 10 years, my losing trade’s nearly exact set-up has happened several times, but far more often than not it isn’t a head fake, rather it is a near pivot ‘bull kill’ move that can drop 10 handles or more at the blink of an eye. It is much easier to re-enter a long trade that you exited too early than to wait and take a big loss. 

Take a look at the chart below. As someone on StockTwits noted, the first trade looked very similar to the second trade and he didn’t see why the second trade didn’t exit too. Well, there are several reasons why the second trade didn’t exit. The first and most critical reason is the closing price action was very different on the second trade vs the first trade. However, in my algo I don’t just enter or exit a trade for a single reason. I need at least two other confirmations. I won’t give everything away here, plus each trader has to determine for themselves by putting in work pouring over backtests (I’ve done exactly that for years), and see what level of risk they are willing to tolerate. All the data is at our fingertips, we just need to be motivated and determined enough to try many scenarios until we find a system that we are comfortable with. Here’s to an awesome and fruitful trading day tomorrow!

 

About Raffi Sosikian

Passion for the markets. Bores wife constantly with market talk. Long term value investor. Trader (algo) of only one instrument – Spoo (E-mini S&P 500 futures). Higher than a 78% win rate over the last 10 years of backtested data. Average win is 3.45 times the average loss. 20 years experience. Coder. MBA. Now offering private funds/qualified purchasers his $ES_F trading service based solely on his performance ($0 management fees). 

 

 

Leave a Reply