My rolling five-day watchlist is my best barometer to measure the health of the market for short-term swing trades. My watchlist is everything, it tells me more than watching the indices ever will. As a matter of fact, I don’t even have the indices on my screen, I have no idea during the day what the market is doing. I encourage you to take the indices off your screen and allow your watchlist to do the talking.

Your watchlist is everything, it will tell you;

  • Are you looking at the right stocks?
  • Are you flagging them at the right time?
  • Are they moving immediately in your favor after the buy trigger is hit?
  • What sectors, industries, etc are in play.
  • It will tell you whether you should be aggressive or not.

The performance of your rolling five-day watchlists is also very telling.

  • It tells me whether or not gains are sticking.
  • It tells me if I should take profits sooner or hold a little longer for more significant gains.
  • Whether I should be aggressive or not.
This type of post analysis work will tell you all sorts of things about your trading, and at times it will have you second guess your approach. The key is to find a happy medium.
We flagged $JP on 9/28, the buy trigger was $12.41, the stock immediately started to move immediately,  the stock was up 20% two days later, enough gains in such a short period to lock in profits. However fast forward four days later and the stock is now up 40% since our trigger was hit. These type of situations always leave you second guessing, should hold onto a piece until the stock break the previous day low, and hold on to another piece until it closes below its 10-day moving average, etc.?

But then you come across a situation like $AVEO, technically the stock looks great, it hits our buy stop and immediately goes up 8% the same day. The next day it pauses beautifully, and then it takes off in the after hours on the back of some FDA trial news. The stock was up 30% from our buy stop in the after hours, I was counting the ka-chingas, we rang the register on a few shares but wanted to hold onto a bulk of it looking for a $JP type move. Well, that move did not come, the stock faded all day today trading back to our buy price. So on one trade left us with sellers remorse and the other bag holders remorse. Welcome to trading.

The point is to find a happy medium, your watchlists and trades will help you get there. If your entries are strong, maybe you can consider sizing up more than usual on your entries to take advantage of your good timing. If you see that stocks are moving longer than usual then maybe you start leaving a piece on until the stock breaks the previous day low or closes below its 10-day moving average.

Here’s how our rolling watchlists performed;

Some of these stocks triggered, some didn’t, some had gains initially and then faded. What you want to do is to look at the tracking dates of the names and see how the stocks looked technically that day, I can assure you that if you do that you will find some commonalities that you can reproduce yourself.

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at or 646-480-7463. 
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