Tuesday, September 30, 2008

Morning - 09/30/08

More consistent market action today relative to yesterday, and better liquidity.
Trade down to come close to closing the gap, and a nice bounce up.


I wonder what took so long?
Have you noticed how the politicians and financial intellectuals have been talking down to Main Street America with comments such as "Main Street simply is not intellectually sophisticated enough to understand our financial problems and its solution".
I think that one of the reasons that Main Street disapproves of the "Relief Plan" by a ratio of 100 to 1 is that they are sophisticated enough to know that the financial experts who are self-proclaimed financial intellectuals are also the same people who were stupid enough to get us into this financial mess in the first place.

Monday, September 29, 2008

Morning Market Symmetry - 09/29/08

Well, at the open of the US markets, traders saw no reason not to complete the symmetry of the overnight market.


Saturday, September 27, 2008

Price and Range Relationship on the Daily Chart

Recently, Dr. Brett Steenbarger showed the relationship between range expansions and lows in the market. The chart above shows another way to see this relationship. The blue and white lines in the indicator are 5,50 MACD of the ES Price (Blue Line) and its Range (White Line). Note the decreasing ranges at market tops and increasing ranges at market bottoms.

Friday Market Review - 09/26/08

Blue Line on $TICK chart is the 2-Period SMA of the $TICK Pivot ((H+L+C)/3).

Friday, September 26, 2008

Friday Morning Review - 09/26/08

The market this morning is a lot calmer than I anticipated. At the open, we had a nice 50% correction rally. However, after that, the market is trading between the open and the 50% mark.

Friday's Trading Potential - 09/26/08

I wouldn't bet on any particular market direction until our politicians decide on some type of plan. One comment from anyone in Washington, D. C. could create either a massive sell off or short covering of historical proportions. There is no way of knowing which way it will go. I may do some painting today.


09/25/08 Market Review

Key points:

  1. The previous day was a consolidation day with evidence that selling pressure was losing momentum.
  2. The previous day was a very narrow range day.
  3. The market was at a 62% correction on the longer frame charts (60 min chart).
  4. Congressional leaders were near an aggreement on the bailout plan.
  5. The $TICK on all charts was in a short term uptrend.
  6. The ES futures was making higher highs and lows all night.
  7. Markets worldwide were advancing.

This is as good as it gets for a signal for a nice uptrending day.


Thursday, September 25, 2008

FBI Lookout for Fraud

The FBI is investigating Fannie, Freddie and Wall Street's Investment Banks for fraud. Unfortunately, you will probably not see the FBI investigate the real cause of the fraud, which is the behind-the-scenes arm twisting by Congressional politicians on the mortgage banks to find any way possible to provide easy mortgage money to people who could not afford mortgages.


$TICK Analysis - 09/24/08

On both charts above ( 5 and 30 Minute Charts), the Blue Line on the $TICK Indicator is a 2-Period SMA of the $TICK Pivot ((H+L+C)/3), the Red/Green Line is the 20 Period EMA of the $TICK Pivot, and the White Line is the 38 Period EMA of the Pivot.
The Indicator is showing that on tests of the lows yesterday was a high probability long trade. The $TICK simply was not confirming new lows in the equity market. Selling momentum was quickly drying up in the underlying market.

Wednesday, September 24, 2008

PreMarket - 09/24/08

The S&P 500 Index has managed to stay above the 62% correction level so far. As of this post, the market is up 15 points on news that Berkshire Hathaway will invest in Goldman Sachs.

Asian Markets

European Markets

Interesting examples of $TICK and ES Price Divergences on the 5 Minute Chart. The blue line is the 2-period SMA of the $TICK Pivot ((H+L+C)/3).


Tuesday, September 23, 2008

Afternoon A-B-C Pattern - 09/23/08

The 620 tick Chart is best used to spot the patterns. The A - B line is also a Bull Flag.

The 1 minute chart is used for timing the entry. Today we got a good signal from an uptrending $TICK at the completion of the Bull Flag Pattern.

Place Not to be Short - 09/23/08

The time is just before 1400 ET, which is 30 minutes before the close of the energy market. Sometime the market will experience a reversal in that time period. Today we have a double bottom pattern with a rising $TICK. This is not a place to be short, and should consider a long trade.

Morning Divergence - 09/23/08

On the test of the morning low and in the last 30 minutes of European trading, we get a $TICK ES Divergence.

One Additional Morning Comment - 09/23/08

After the market was unable to trade to a new high, it broke a low pivot. This was followed by the usual correction to the upside (three green bars - three minute correction), and then a sizable move to the downside. This is a usual pattern for an intra-day trend reversal.


Mid-Morning Review - 09/23/08

Yesterday was a -45 point day, which typically helps the market with a technical bounce to the upside. So far, the market is stalling at the bottom of a resistance zone created yesterday, which is also the 38% correction point of yesterday's range. The market just is not strong enough to trade into this zone, thus far.

Notice the difference in the $TICK, which yesterday morning was in a downtrend , and this morning has a slight uptrend tendency.

At today's open, the market traded down to test the Globex lows and yesterday's 1600 ET close. We then got the technical bounce, which may have been helped by some political statements. After the bounce, some long opportunities existed as the market corrected to the 50% line. However, the market is just not able to complete market symmetry to the upside past a substantial resistance zone.

Monday, September 22, 2008

Morning Review - 09/22/08

Compared to recent activity, this morning's market was boring. The overall bias has been to the downside since 1335 ET on Friday. The market looked like it was trying to form a support base near Friday's low of 1237.50. However, the overall market bias won out as the European markets approached their close.

Friday, September 19, 2008

ESZ08 Data - 09/18/08


Analysis of Yesterday's Reversal

Looking at the ES 5-Minute Chart, notice that as the Futures was making a lower low on the 2 - 3 Impulse Wave, the $TICK was making higher lows relative to the day before. Also notice that the 2- 3 Impulse Wave is just about perfectly symmetrical to the initial Swing Wave.

Looking at the 2 - 3 Impulse Wave on the 620 tick Chart, we can see that it completed a 5-wave formation.

Looking at the 1-Minute Chart, we can see that at the completion of the Impulse Wave, the $TICK was making higher lows. Also as the Futures was consolidating below 1140, the 2-Period $TICK Pivot SMA (Blue Line) was continuing climbing. Then we got an upward SNAP move in the futures.


Thursday, September 18, 2008

High Volatility Day - 09/18/08

Statistics stated that the probability was high that today would close higher than yesterday's close. However, I was not expecting a +46 point close.

The afternoon presented a rather thin and volatile environment. After 1300 ET, the market jumped more than 16 points in 4 minutes. This type of volatility presents some interesting psychological problems. You do not want to be on the wrong side of this type of market, especially with any large volumes. Liquidity can be a problem.

I have made some changed to the 1 minute chart to help with this type of market. I have colored the ES bars to reflect the trend of the 2 period pivot ((H+L+C)/3) SMA of the $TICK indicator. When the pivot SMA is trending up, the ES bar is green, and red when the pivot SMA is trending down. This helps with timing in a fast market.

First I prefer to see a correction to either the 20 Period EMA or 38 period EMA on the 620 tick chart. Above is an example of some short trades.

For short trades, I then wait for the 2 Period Pivot SMA on the 1 minute $TICK chart to trend down to enter the trade.

The two charts above are examples of Long trades.
I find that this is helping to minimize risks and maximize rewards for short term intra-day trades.

Afternoon Thoughts - 09/17/08

Two major pivots for the afternoon were the previous day's low at 1167.25 (also the morning low at 1164.25), and the 0930 ET open at 1192.75. A test of the morning's low attracted more buyers than sellers, which then gave us a bounce back to the 0930 ET open. Evidence of this was the higher $TICK lows relative to the morning lows, and the higher $TICK Pivot MA (blue line).

The 0930 ET open then proved to be a point where more sellers were attracted to the market than buyers; hence, a move back to the day's lows.

Trading opportunities usually center around these key pivot points. Watch the market's reaction to these points.

Well, here we go again. Another greater than -50 day. This typically attracts short term buyers.

Wednesday, September 17, 2008

Morning Review - 09/17/08

Not a whole lot to say. After the completion of the short correction period at 1000 ET, the market is one directional - down. Just follow the direction dictated by market structure.
Let's see if the market reverses after the test of yesterday's low. If not, it's down, down, down.

Tuesday, September 16, 2008

Closing Above Yesterday's Close

Back on September 6, I mentioned that the data indicated that if the market closes below the previous day's close by greater than -20 points, then the next day has a high probability of closing higher than today's close. When the market has a -55 point day, it is hard to imagine that the market will have a positive day tomorrow. However, that is exactly what we got with the market closing higher by almost 16 points from yesterday's close.

Morning Review - 09/16/08

Traders simply do not want to be short this market ahead of the FOMC Announcement at 1415 ET, and AIG may receive some type of financial help. Otherwise, thin, volatile market, but mostly to the upside. Not a place to be short.


In the last post, I forgot to show that the VIX finally closed above 30.

Thoughts on Yesterday - 09/15/08

I'm not a constantly buying on Bid and selling at Ask type of trader, but I do try to capture the short term interday swings. I'm still playing with and modifying the moving averages on the $TICK. The white line is the 38 period EMA of the $TICK pivot ((H+L+C)/3), and the blue line is the 2 period SMA of the $TICK pivot. I'm finding that waiting for the up and down turns of the blue line is helping me with timing, especially with getting in too early.

Notice how the Financial Sector (XLF) was stronger than the sum of the eight Sectors early in the morning giving us an upward correction in the futures. The market then reversed in the afternoon.

The afternoon weakness was confirmed by a reversal in the Staples / Discretionary ratio.