Going to do something a little different today. I saw an opportunity intra-day to play XBI which is the S&P Biotech sector. Full disclosure: I am long XBI for a swing trade at the moment and I am near my stop loss. This was a good opportunity to play a shorter time frame trade and minimize the damage if I do get stopped out of my swing position.
The key is not to add this trade to my swing trade if price had of gone against me. The two should remain separate and I don’t want to compound the problem by adding more shares to a losing trade (averaging down).
The setup for XBI is still dislocated and cheap and the daily chart has only gotten more oversold. Leaving XBI ripe for a good reversal intra-day. I call this a “Hit and Run” trade when you have two wide range bars with volume the selling pressure can’t continue in the short term and a playable intra-day reversal can be a very good play….
Another interesting day with some great learning to be had. Multiple news items came into play today. The 10:30 Crude inventories was a huge build but Oil had traded down into the announcement then rallied. The news was “priced in” and it was a good learning moment if you were watching it live.
Everybody knew that the number was going to be negative, Business news was talking about it all morning. It was a case of “sell the rumor and buy the news”.