Energy Bull Trap

I mentioned that I have entered a small position in Energy and Health care on the 13th, I have exited both positions on 14th due to reversal.  Let's review if we could have prevent the trap.

We see that although the 15min charts showed bullishness on the 13th, however in the longer term chart, the 60min ones, it is actually still showing bearishness.

Sectors Leading the Markets Up:  Energy, Health Care, Utilities

Sectors Leading the Markets Down:  Financials, Consumer Staples, Industrials, Real Estate

Today's Trade

Today I entered short on RUT right near the climax inside the "Kiss of Death" target, I was stopped out during the "Fake-Out" move but quickily re-entered short at the nice climax.  Then I covered around 1:40pm and was not quick enough to short again.  My position was small but sizable since I used the TZA 3X ETF instrument.

Fake-Outs & "Kiss of Death" ...

All of the cases are bearish, and in most cases the 5-min MACD is either sloping negatively or it is below zero.  Often it is after a "Fake-Out", so should we have a wider stop-loss so that the "Fake-Out" does not fake us out?  It is probably not the best way, because it is not really predictable to know how far should the stop-loss be placed in ordered not to be a victim of the "Fake-Out".  What I might do is, let the regular stop-loss trigger if hit.  Then pay attention to see if the next move is back to the original direction and enter back if it is reversing down.

Russell 2000 Intraday Faked-Out

Today I was focusing on the RUT index which seems to be smoother than NDX and better in trending.  I use its 3 X leverage short ETF to trade, symbol TZA.  The 3 orange arrows denote the places I have entered my positions, 1/3 at each location.  Looks like my stop-loss was too tight to get "Faked-out" before the big move.  It was sad, but let's learn from mistakes.