In this video, Steve shares his thoughts on the recent price action and how to identify a short term market top.
View Video Transcripthey Steve Spencer partner at SMB capital
Partner New York City I wanted to
share with you a few minutes from our
morning meeting so what we’re trying to
do in the morning meeting is prepare
members of the trading desk in the
trading community to trade on a
particular particular day and what you
need to understand just her frame of
reference is the majority of the trading
that goes on on our – 70 to 80% PNL is
generated from intraday trading and but
I’m also speaking with respect to my
views on swing trading and there’s
obviously many creators on our desk got
long term accounts and they’re putting
on swing positions and so I wanted to
share today because the market has had a
significant bounce off the lows this is
an area we’ve been targeting for a
balance since the lows and kind of how a
short-term trader thinks once their
target area has been reached also
something to pay attention to is the
market is asymmetrical it isn’t the same
when it’s going down in terms of when
you’re looking for a balance versus
versus a top the market behaves
differently and we’re always going to be
more cautious on a short term top but
but nevertheless based on the notes you
can see from my morning game plan and in
kind of the levels that we were using
and my commentary we were looking for a
short term pop right after the open and
a pullback to kind of the levels that
we’ve highlighted in the game plan notes
and you want to find out more about our
process go to trading workshop comm
where I kind of review our our stock
selection process as well as three of
the top trading setups that we use on
our podcast
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as I put in the gameplay notes kind of
hit the buck the balance target off of
the low basically this area right here
so and just because we hit this target
so quickly and already doesn’t mean
we’re gonna immediately do a retest at
to 64 to 65 or something but it is time
to start thinking about right ahead you
off some of your risk if you your along
calls for the last week or something to
look at puts things like that I know the
more aggressive people that I’ve seen in
the last couple weeks were calling for I
think the most aggressive I saw was 285
I do have a tendency to be more
conservative booth on the way up in the
way down but kind of see were holding
above 273 now a little bit but that’s
like my thought process so if I have
like you know 285 calls for whatever we
put from you next month you know maybe I
maybe I can sell some to EDS against it
or something like that
since they’ve gone up in price a lot
recently to kind of head you off some of
the risk can look at if you want to pay
you for some puts you know pay for some
like 260 puts or something like that or
250 vibes you could sell some to 95 this
may be yeah that’s that make sense right
because that that might pay for a good
chunk of it you kind of want to sell up
in an area where you just don’t really
think the market can get to or if it
does you definitely want to be sure and
I would think any you know anywhere
close to 300 you definitely would want
to be sure and I think even here you
want to be sure more even already
talking about it the 270 is so you know
you don’t know how much where the bounce
will top out but but you want to start
to kind of shift now that we’re 25
percent off the low
so this is usually a you know you get
the move then you get some sort of
sideways in or not where you get some
sort of sideways pull back in or not and
so you never know how the patterns gonna
play out but well you know it’s pretty
much every time you get some big bounce
no matter what the reason for the down
move was no matter how bad things seem
for the world that’s the other thing I
would notice was on the way down we were
just getting a lot of gaps to the
downside then we would move sideways and
go a little bit lower this seems like
we’re getting the opposite so it wasn’t
like if you look at the down channel
like there’s a lot of green bees in
there like we bought it you know we gaps
from 247 when we gapped up and then like
the next day I’m like we got to 240
we’re moving sideways this was a big gap
here from – this was 295 – to CH $20 gap
there this gap here 275 to 265 so
there’s a $10 gap down a $20 gap down
the gaps on the way up haven’t been as
big I mean yesterday was 10 and today is
he but you get the idea so a lot of what
I’m basically saying is even though
there’s been money in truth like
yesterday and today we moved up a lot a
lot a lot of the up move is happening in
gaps just like in the first I don’t know
$40 a down 30 of the 40 was was in gaps
my thought is for today that we could
put in the high rate on the open or in
the first 30 minutes and get a decent
pull back on even though Europe’s very
strong yeah me neither people will start
to talk more bullish now and now there
were 50 dollars off the low or 62
whatever it is off of the Spy’s $55 off
the low looks like the bottoms in yeah
great thanks for told me the bottoms in
and you know that that should create a
short-term top should so certainly a
pullback at least a 270 would be
reasonable it’s a pre market London the
London open the low is 271 so even if we
like spiked up to 270 450 on the be open
and then pulled into 270
that would be a three and a half dollar
pullback here’s the uptrend from
yesterday it’s kind of working its way
up towards to 72
