Often intraday traders struggle understanding the difference between a Trade to Hold and a short term trade.  Most trades that we make are short term trades.  But every intraday trader needs Trades to Hold.  And you ought to have a list of these trades that are best FOR YOU.  Let me offer a suggestion of a Trade to Hold for you.

The market has been up over 22 percent recently.  Yesterday we were up 7 percent.  Yesterday Geithner unveiled his plan to help the banks purge their toxic assets.  The next logical step is for the Street to wonder whether this plan will work.  I am not a fundamental trader, but I think we need to acknowledge that a pullback is possible considering the above.   I remember when we first started our desk hearing guys from another firm complaining about their head trader.  They would scoff at the teaching of their head trader,”He always makes it sound so easy.”  To me these are signs of a good teacher and a bad student.  Trading is not that difficult.  We make it difficult.  We overvalue past events such that we fear executing on easy setups.  

The Close offered us one of these easy set ups.  So I am going to point out an easy set up with the fear that all of you reading are going to carp,”Bella if it only were that easy.”  Here goes.  Today the market started a downtrend.  Between 3-3:45 into the Close SPY traded between 81.20 and 81.50.  SPY leaked above 81.50 a few times.  But the lack of time SPY held above 81.50 told us the level was not broken.  And then near the end of the trading day SPY traded below 81.20 and held below.  I hadn’t seen that into the Close yet.  And now we were broken.

Now just like we need to wait for confirmation that the level above 81.50 is broken we need to confirm that 81.20 was violated.  Soon it was not difficult to conclude it was.  So for all of you out there looking for Trades to Hold here is one.  The trend is down, the level into the Close is violated, and we have a market that due to its past sudden rise has the chance to sell off sharply.  Start to develop short positions with SPY below 81.20.  Hold these positions until the downtrend is broken.I started a core short position in MS after SPY 81.20 was violated.  Chop!  You could have started a core short position in JPM.  That would have been a chop.  The financials have been in play of late so it makes sense to find a few to short into the Close.  WFC, JPM, GS, MS, V are worthy candidates.

OK so start firing off the emails to me, “Oh Bella it is not that easy.”  But sometimes it really is.   Do not overvalue past trades such that they shake your confidence starting a core position with a setup offered above.  Because these are the setups that you can crush.

Best of luck with your trading!