Stock Market

Midday April fools day

1:05PM EDT 1 Apr 10

Here is a mid day on the E mini. The OR on the chart is the 10 AM Opening Range. I expect another up day today. The market opened and popped right up to the Fibonacci extension of the OR and promptly failed as usual. This dip went straight to the opposite (short) fib extension and bounced. Nothing new. Then we have a failure to make a new high, which ends wave 2 and begins wave 3 down. This is the setup worth waiting for because wave 3s tend to be twice the length of wave 2. So a Failed New High (FNH) produces a low risk, high reward potential and that is what it is all about.

After the standard 5 point gain this morning I am short again on this failure because in a three wave move the 3rd wave is usually much longer (I like twice the length of wave 2) and is likely to go to at least my first target. Matters not at this point as I have a daily profit on the first trade and am in the green with a stop in place so this trade will either produce a winner of wash out only paying the commissions. These things don’t always work out but if you can position where you can’t possibly lose why not ride it out and see what happens.

Right now the 5 min chart could go to the 150 SMA (dashed blue line) and still close up for the day. With the daily ranges so tight for the last week I would expect this to be the case no problem. This is a good example of indicators not telling the whole story. That dashboard was all green when I traded short, if I waited for it to change I would have not even had a trade. Notice the blue line on the CCI_3 indicator. It turned down as the price reached the OR top fib line. I had a sell order waiting at 1177.25. I call it one method of playing the Opening Range Breakout. I see this pattern time and time again and it is worth a try if other conditions are right.

2:40 PM EDT 1 Apr 10

Short Trade

This trade worked out well, I sold half the position, closed up the stop and will now just forget about it and watch some TV. click below to see chart.

Shortly after taking this snapshot the market took a dive down to 1066.25 and I exited the other half having gained another 5 points on the remainder of the position.  A simple 3 wave count works just fine without getting all involved with Elliott Waves which can get very confusing.  If you are an EW enthusiast with lots of experience, that's fine and easy for you but I see no need to worry much about the complicated 5 inside 5 wave counts.  If you can identify the last high or last low and consider that the completion of wave 3 and begin a new 3 wave count using some simple rules it works just as well without too much confusion.  I may get into how I count these waves but have found some can get confused even with this because sometimes wave 2 will turn into a wave 3.  See, told you it can be confusing.  

  I know you guys are looking at this stuff but I need some feed back.  should I waste my time putting this up or is it just drivel not worth printing?  Don't be shy make a comment or just check the opinion box so I have an idea if this is worthy of putting on the blog. This blog has been active 3 weeks now and it has visitors form 6 continents and 14 countries.  while typing this the SnP fell three more points, this stuff is fun.

March 30th
Here's the thing about this market.  It's got no volume and the Average True Range ATR is getting narrow.  For a trader that means less action during the day but it is what it is and it continues to go up so that's a good thing for now.  I spoke about a Key Reversal candle the other day and so far it appears as though nothing has come of it.  BUT these things take time to work out so take a look at the last one I have marked.  It was back on Feb 5th and it took 4-5 days to make a move so this is not just over.  That big set up produced a snapback up but nothing huge.  15 points on the ES is nothing to sneeze at but I was hoping for a more solid pop.  Now all those Stochs are wadding up at the top and may just cause a bit of a reversal I was talking about.  A pullback to the 20SMA which would keep us in that channel indicated by the dashed yellow lines.  I placed that channel from last August and this dip in Feb is the first real violation of that line since.

 The way these blogs work I need a way to make separate post on the pages which it does not allow and I don't want to mess with the other content on the main page so maybe I will start another blog just for the charts.  It would be easier to make daily or for that matter hourly post during the trading day.  Anyway the S&P futures closed yesterday above todays pivot which 9 times out of 10 indicates to me that tomorrow will close up.  Naturally that does not work all the time but for me is a good rule of thumb.  I got to stop giving away all my secrets. click on the chart to expand for better viewing.


For March 26th
Today produced what some would call a key reversal candle on the ES (S&P Futures).  We made a new high and there was not enough buyers to keep it up and we closed below yesterday's low.  This sets us up for a bit of a pull back.  I extended the 20 SMA line (yellow) as a target for the initial pull back.  The Snapback stochastics in the middle study is loading up for a snapback up at this point.  As long as the long term lines remain fairly in place the short term will have something to "snapback" to.  This indicator works sorta like a bow and arrow.  The short term lines get pulled back and load up to suddenly "snap" back to the long term lines.  This is a great indicator to use for planning entry.  Notice the failure back in Feb.  The market went up for a few days, loading up the "bow" and once it got loaded ..."Snap" back down producing about a 60 point short opportunity.  also notice the blue dashed line arrested the decent.  That is the 150 day simple moving average and all through this move I have used this for extremes very successfully. The correction in July and this last one just could not violate that MA.   Although we have the key reversal candle print I still don't have a short sell signal on the daily for swing trades.  This doesn't mean it won't pop up any hour now.  In fact, I have a buy signal on the hourly chart below out of 1158 for a short term trade.  Tomorrow may very well be a down day and a pull back to the 20 and then the 50 day MA would be no surprise.  I still view that as a re entry and stand by the 1234 call in the next month.  If this changes I will put it here. As usual standard disclaimer;  This is not recommendations and do your own due diligence and don't blame me I am frequently wrong, My trading system is still profitable with only 60% accuracy. No two traders are alike and trade rules are as varied as snowflakes.  Use what works for you and you will be fine.   

March 25th

I see nothing to keep the S&P Futures from 1234.00.  I like that number 1-2-3-4 This will put us in a 61.8% retrace of the big fall into March of last year.  This truly is a miracle market.  There seems to be not fundamental reason for this but I just use the charts and the charts don't lie.  From the buy signal back on Feb 12 its been a clean move up.  Oh Well  Gold is behaving nicely in its decent and I would expect to see 1082 at some point but that stuff is sure volatile, if you trade gold you have to stay awake at night.  I have noticed the Average True Range on gold contracts has been closing up a bit since the first of the year, whatever that means. 

I have to give it to the Bernanke and the boys at 1500 Pennsylvania Ave, they have not fallen off the tightrope yet and they are walking one.... balancing the markets and the US dollar. Understanding our currency as I do it really opens ones eyes to how worthless all the world's fiat currencies really are.  How much longer can all this last?  Well, in theory, forever but, any one of about a hundred things can send this house of cards tumbling so fast you will not be able to get the last loaf of bread at the market.  I guess we will all just pay for Greece, Spain and the others as we come to the problems.  It truly is magic.  
Here is the result of the analysis from below.  Had trouble with Google Chrome all day yesterday, finally reloaded it today.  Like the browser, it has some neat features but sure screws up a bunch.  Cant watch more that about 30 seconds of a youtube video before it just stops.  Glad I didn't delete IE7. 

I put up the 4hr chart from yesterday here to show the long from 1033-34 area has been a good move.  Today the S&P futures shot up right out of the box to move straight to 1048 and give us a double top from the previous high on January 11th.  

I have to figure a better way to put up these charts and comments in a more orderly fashion but, this will have to do for now.  

March 9th 2010
Time is 10PM EST for this analysis
Market guess:  For the time being sideways or up.  Frequently just before Expiration we will see some drop in these setups.  However I am long and prepared to get longer over the next few days.  The chart I put up today is the ES 4 hr. (S&P e-mini) 

Since that 184 low Thursday week, The volume began falling off and I was quite ready to short the market.  In fact I did and much to my chagrin it took me two day to get off the bad trade.In the chart below what I am seeing is the volume did drop off but has stabilized which gave us the sideways move Tuesday through Thursday of last week.  we have a Moving Average Break Out (MOBO)Which those of us that follow David Elliott's work call it.  Right where the blue up arrow appears, price finally cleared the 20 day SMA (yellow line) and the Bollinger Band (which is itself the MOBO)  and has stayed MOBO up (staying on top of the channel) until today.  The last 12 hours has produce a bit of a down move and caused the bands to constrict in what I call a "squeeze".  Something has to give in this condition and I am betting right now on a snapback up.  Stops are close in case it goes the other way which it very well may because the 20 SMA and the 50 SMA (blue line) are magnets for sure.  I am prepared to reverse with any strong move towards the 20 for a short which may last a day.  I still think it will bounce if it should hit the 20.  

The study named FWsnapback has a bunch of lines, all Stochastics of various lengths short to long term.  The Blue is the longest and what happens is the shorter term studies will oscillate in higher frequency and when the short terms go to the bottom leaving the long term at the top it sets up a condition for a snapback up.  It is just the opposite for a snapback down.  You can see here we had a SBU (snapback up)  that started last Thursday night and ran through Friday.  This was a very good long trade for the futures.  

The study on the bottom called Sides_4Shadow is my modified RSI (relative strength index) and that clearly has been in an up move and seems quite content to remain in the overbought territory.  That's the only thing which has me worried about being long here as it's ready for a two to three day correction down.  Nonetheless the trend is up and I always like to trade the direction of the trend.  This doesn't mean I won't short this puppy but it's just a little more comfortable going with the trend.  Anyway, here's the current 4hr chart with some notes.  Hope this made some sense to some of you.  

Click on Chart to Expand 

March 5th 2010

Being new at this blog thing I am trying to figure out how to change the page template to get rid of that side bar of links so I can get an entire chart.  I liked the template I was using but was having trouble widening it out so I changed the template.  For a larger view of the chart, simply left click on the chart and it will come up full size

This chart shows my 4Shadow indicator.  It is basically a RSI which I have modified length and other parameters to suit my purpose.  Anything outside the red area is an extreme.  Top is overbought and below the bottom is over sold.  On this S&P chart you can notice how the 4Shadow indicator sorta gives a heads up to a change in direction.  Once the line is at an extreme I watch for the line to re-enter the red area signifying a change in direction.  Notice the dive the market took in October just as the 4Shadow line starts down and again in November as the line starts back up off the bottom.  Again just after January 19 it started down. As I build up this blog I will add more pages and topics.  Please comment as I would like some feed back on appearance, content and such. There is much information on the above chart but it still remains rather simple.  I wiill get into this with more depth going forward.