Trading Journal (05.25.20)

It is Memorial Day and although markets are closed the futures markets has been trading at its usual time. Money never sleeps. On Friday the indexes held up well even in the face of a draw down at the beginning of the trading session. The futures are currently over 1% in gains in both /ES and /NQ. Bulls are continuing to mount on riding prices to SPY at 300. There is not much stopping it now since so much bad news has come out. The pandemic is still effecting the world and we maybe slightly closer to a vaccine but unconfirmed. Tensions between US and China is heating up and not as if it was gone prior to the pandemic. Companies such as JC Penney and Hertz have failed bankruptcy recently and many more seeming holding on to dear life. Many companies have held off predicting future earnings reports due to Covid-19. Then we have the initial reopening of the US country and how each state has their own ways of opening that may or may not be conflicting one another.

Yet here we are seeing the indexes continue to rise and likely to cross over 300 soon. On a technical basis the 200 day moving average is above 300 and in the past down turns in 08/09 financial crisis and 2000 dot com boom both index prices were resistance at the 200 day moving average. So in the short term although I believe 300 will be reached it will be interesting to see what happens immediately afterwards.

How to Trade this?

Going into Friday's close I am long the index SPY and will continue to hold until it gets to 300. For those who are on the sidelines and want to go in on this I would recommend staying on the sidelines and see how all this unfolds. I do plan to sell most of the trade once 300 is hit as I got in on a decent entry of 293. Markets may likely gap up tomorrow and be closer to 297/298 and by then limited upside. Watch if 300 is immediately rejected and a decent short could be implemented.

In times like today where I have a sense of confidence in my price prediction I tend to lower my risk by trading smaller. If something is too obvious it likely is. I rode the up wave without taking heavy losses in most of May and I do not intend to give it back. Not going to go all in even though signs are we continue to rise as the future is still very uncertain. The central banks may be backing up the market but even they can only do so much. The US economy is still in a tail spin and have yet to bottom and its not very difficult to see when all I have to do is turn on the television news.