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Tony Oz Market Update: Trading Strategy at Trader’s Narrative

Tony Oz Market Update: Trading Strategy

stock trader tony ozTony Oz is an accomplished trader and educator - a rare find in the trading community. He has not only demonstrated his unparalleled skill, over and over again, he has been extremely forthcoming and transparent in his methods as well.

Of his several books, “How I Make a Living Trading Stocks” is even an account of a short period of time in the post-2000 Tech bubble where he shows exactly what he traded and why in great detail. Even more amazing, during this intense bear market, he took mostly long trades. Tony’s methods are surprisingly simple. He relies on technical analysis, resistance, support as well as tape reading.

From time to time he provides general market comments but it has been a while since we last heard from him. His previous market call was in October 2008 when he caught a classic ‘falling knife’ for a quick trade. Recently, due to a family matter Tony took some time off from trading. I’m glad to hear that things have worked out well and Tony can direct his attention to the stock market once again.

Here is his most recent commentary:

The smart thing to do right now is to probably fade an extended upward swing move by identifying an intraday reversal pattern and selling the market short. If such a position is taken, it would be prudent to place a stop loss above the intraday high, this way a trader would not risk too many points. A target around S&P 920-930 should be realistic for a short position entered at 955-975.

It is always hard to call a top or a bottom no matter what the time frame a trader is looking at, so a trader should not try and do that. However, the S&P had a nice run from the 870’s to 950’s, and it may come back into the channel at some point in the near future. Consequently, going long right now may be painful if a trader’s time frame is longer than a few days. (Please note! If the market pulls back first and then it rallies the above short-sale strategy is invalid. This strategy is only valid for an “EXTENDED” upward swing, which means without a day off).

For the traders who are looking to buy a pullback from this run, a good strategy would be to use the 50% retracement rule from the low to the high.

An investor may ask, “Why is an entry here risky?” And the answer would be as so: Let’s say the S&P goes to 1020. This would be a 140+ points run from the lows we just made 7-10 days ago. A 50% retracement will take us back 70 points, which will put us back at 950, which is exactly where we are right now ;-)

Source: Tony Oz Newsletter

S&P 500 index tony oz newsletter update July 2009

Tony also mentions that soon he will be updating his classic book: “How I Make a Living Trading Stocks“. This is one of the most sought after books and since it has gone out of print, the prices are astronomical. I’ve read and re-read the book many times and can attest to its value. So keep an eye out for the updated edition coming out in October 2009.

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4 Responses to “Tony Oz Market Update: Trading Strategy”  

  1. 1 Jeffrey Todd Brown

    Every day after hours I watch stocks that made gains being drained by after hours traders and foreign markets. Likewise, Blue Chips that lost big are bought on the cheap after hours. This is an extreme advantage for the other exchanges and after hours traders who are using the Stock Market as an ATM Machine directly from my (our) 401(k)’s, i.e. Retirement savings. Does anyone else realize this is a problem. Our superior economy has a leak that is being capitalized upon unnatrually, and no one wants to see the elephant in the room, especially the traders who make their money off of this strategy.
    Wake up.

  2. 2 George Constatine

    What does the term “fade” mean? I hear this a lot but have not found a consistant definition.

  3. 3 Babak

    George, “fade” in trading parlance means taking the opposite side of someone’s trade or position. So if Cramer screams BUY!! BUY!! BUY!! [spraying spittle] on the camera, you would sell or sell short.

  4. 4 Pej

    Looking forward to updated versions of both the books you mention. Out of print should be made illegal or at least, forcing soft copy publication of books that are made unavailable in hard copy. I wouldn’t mind paying for soft copies when hard copies are unavailable…

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