Polishing Post Loss

Today's trade didn't go as expected. While I didn't blow my account, yesterday's gains were definitely lost today. I realized that there needs to be some polishing needed in my analysis, that means adding an additional layer of days to expiration (DTE) plus considering the trading volume once again.

Let's dive in.

From the above, we see that the discretionary sector (XLY) lead the day with a 1.8% return. While I've looked at Staples (XLP) as well, after analyzing. I concluded on XLY based on the return difference for each sector within the last 5 days.

Zooming in to XLY, I am considering $BKNG and $AMZN cautiously. Now, AMZN will be a cautionary trade as I performed analysis on volume vs daily change after spotting similar trends. After running my analysis, the trend seems to point out that there may be a fake uptrend bubbling up for tomorrow. See below:

As seen above, the trend between April 30 - May 4 showed how the trading volume was higher on the first day then continuous for the next two, the daily price change showed an uptrend after this. The same is observed in May 19 - May 21. However, we have a different case on May 12-May 14, where we find that the trading volume rose on May 13 but dropped the next day driving the price down from the previous day as well. Now, when we look at the last two days, the trading volume seems to be similar to that of May 12-13.

Let's move on to BKNG now.

While the above chart shows that BKNG has outperformed XLY in the last 5 days, and we see that it tested the resistance today, after analysis in volume, tomorrow may be a flat day for BKNG.

In the analysis above, if we look at the volume between April 16 - April 17, it paints a similar picture to May 27, where the volume has spiked up, but tomorrow may look a lot like April 20 and remain flat.

While I said I'd be cautious with AMZN, I realize that if it does in fact go down, we can position this as a put and not a call. As for BKNG, the price may remain flat, which means that either put or call would keep it flat and could harm me due to the theta decay, even if I don't hold overnight. Speaking of theta decay, I've decided that the best DTE for my trades is 7-9 days.

It's a full circle moment, a couple of months ago, I decided that I'd only keep my contract for 5-7 days, and now it's similar to that, except this time, it's not about keeping the contract, it's about the DTE allowed for an intra day trade.

Let's look at BKNG and AMZN tomorrow, let's see what this additional step brings our way.