A reader at my blog site asked me to do a review of the trading in the SPY ETF for today … I do these quite frequently, so I encourage readers here on Slope who struggle with intraday trading to spend some time at my site to help them in their battles with Mr. Market:

Today ended up being a Trend Day … once you recognize it as being a Trend Day the trading strategy is pretty simple.

1. Short all retracement moves into the 20 ema;
2. Then expect a retest of LOD's and probably a new low;
3. Then cover the short on a reversal signal/candle;
4. Then wait for retracement into the 20ema;
5. and then … rinse repeat.

It's really as simple as that … place your stop above the 50ema and keep assuming that the TREND DAY will continue until it proves to you that it is not going to.

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On January 6th, 2011 I posted a blog about volatility in the US equity markets (click to see that blog post).  The short version of that post was that volatility as indicated by the $VIX was cheap on a historical basis.  I suggested that readers get long volatility either through $VIX futures or the VXX ETF.  I know that the VXX is called a "widow-maker" by many and that deserves a separate conversation (I will summarize briefly at the end of this post).

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In reviewing some charts for the writing of my weekly newsletter (comes out early  Sunday evening) … I have been struck by the change in the relative performance of the small cap index (Russell 2000) and in particular, several individual small cap stocks.  The example I am going to illustrate for you in the blog tonight is the difference between FCX and SCCO.

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