Just a brief note, we were stopped out at the end of the first hour yesterday on both our 50% Nasdaq 100 and 50% S&P 500 positions. We stopped out at 13035 and 3939, respectively. 

The market opened below our 5-day EMA stop point. As you will recall, our stop for the day session was an hourly close below the 5-day EMA. Since we opened below it, we took the closing price at the end of the first hour since the market could not punch back through the stop line. This is somewhat of a judgment call and depends on market conditions. In a fast market, we simply would have stopped out at the open – but conditions yesterday allowed us to wait until the end of the first hour. We made substantial profits in both positions.

When I first started trading, the gray hairs told me that to be a successful trader; you have to learn how to take and handle a loss. After these many years, I have concluded that to be a successful trader; you have to learn how to accept a stop and then watch the market take off without you. That is what happened yesterday afternoon.

I am not sure what anyone was expecting from the Fed, but the crowd was apparently short. After the announcement, the short-covering was something to behold, and the market spiked higher. However, the overnight crowd took the market right back to the pre-meeting levels this morning, so I don’t feel too bad. We will see what the day brings.

As before, I am traveling but would not be day trading until next week anyway. Today and tomorrow, many market-makers will be dealing with quadruple witching – a day that occurs each calendar quarter when stock index futures, stock index options, stock options, and single stock futures expire simultaneously. The cross-currents distort the normal market – and I have not found it worth trading.

At some point, I will discuss some techniques, such as pinning trades, that can be fun for derivative expiration days.

We will hold to our cash position, looking for another entry point, long or short, as circumstances dictate. Risks remain very high here, and I believe that financial stocks continue to hold the keys to the castle. Our friends over at Kimble Charting published this salient chart yesterday: