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Tight Trading Range & Very Slow

Saturday, March 17th, 2012

This post is for Friday’s session March 17th, 2012 where we saw a very slow moving day with tight trading ranges.

Friday was the last day of expiration in the old index futures contract and Monday everyone who held long term positions will have to have moved it over into the June contracts.

The day’s trading range consisted of a whole 4 S&P points, high to low. That is about the smallest I can remember that did not take in a holiday. If this continues I may look at trading back to my T-1 trade screen which takes in smaller scalp targets and smaller losses.

In that model, one would trade for no less than a 1:1 ratio of gain to loss, but the percentages are higher. Trading for 2-3 ticks and risking 2-3 ticks can be done with a great deal of success. It is not glamorous in just settling for 3 ticks on the S&P emini’s but if that all the market is giving, you take it, get stopped out or don’t trade. It is one of the three. For many who don’t know how to trade in an environment like this, they are sunk. There ability to trade is limited to only one market condition.

With the ability to be able to trade in any market condition, very slow narrow ranges, swinging choppy markets, trending directional, or any thing else the market tends to throw at you, you have something to lean on with a versatile trading method.

The best time of the day to trade is where you have the highest degree of participation and that is after the open for at least the first 90 minutes. Many traders like to wait at least 15 minutes to let the market settle and that is OK too. You will have a lot of news released 30 minutes after the open and that often times will drive the market and give it fuel to keep it going for a while. In that, you will have your greatest opportunities for profit.

I often trade when I am ready on my schedule but I should be up and ready for that opportune time. Not doing so causes me to invest a lot more time into trading which I really don’t want to do.

Writing about it, does give me a moment to reflect and somewhat talk out-loud to myself about it which is the first sign I might want to change.

We will see, in this coming week how things continue as the market is up against some hard resistence yet again. The remedy is “time” and or a decline. We did retest again this week where I thought we would be taking that break, but now again I can see strong resistance overhead and a slowing of momentum seems to be taking place.

All that is in looking at the daily markets and does not really matter as far as daily price opportunities for scalping a few points out the emini’s.

I will end it here for today and post my trading results for Friday. Just three trades 2 positive and one loss for -2 ticks and an OK day considering the lack of movement. I did have to wait it all out a lot longer than I liked, but I did exercise good patients. Hopefully, next week things will pick up and offer a lot more opportunities. I wish you all the best and until next week, “Good Trading”. Vince

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Friday’s Trade Results

Sunday, March 4th, 2012

Today is March 4th , 2012 and will just be posting my trades for Friday here today. My next article will likely be in Monday’s post and I will pick up where I left off from my last article on “Positive Self Talk for Traders”.

Friday’s session started out with OK volume and there some pretty good trades, but by the New York lunch time, it did slow up. That is typical and did not expect much different. Some may find it easier to trade during that slow environment and some it may be more difficult because it just takes longer to develop. I myself do like a faster market, but if I ever decide to get up for the earlier trading, I could see myself being done much quicker and it would be easier overall. Ok, until tomorrows session; Good Trading to all. Vince


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Today’s First Hour Turning Points

Tuesday, November 29th, 2011

Today is November 29th, 2011 and I have today’s first hour turning points mapped out as shown below in the S&P emini futures.

The market had a little follow through from yesterdays huge run up in the opening hours of the session. Things settled down with some selling pressure coming in later in the day.

Tomorrow, I will do a bigger report on where the daily market may be headed and how much upside is left in this market, but for now will just post a screen shot of today’s first hour turning points as mentioned above.

Hope everyone had a great Thanksgiving, Vince

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Today’s Early Price Action

Wednesday, November 16th, 2011

Today is Wednesday November 16th, 2011 and we saw a nice smooth day with good action and a big hard sell off just before the close of the session.

I was long gone from today’s late sell off, as I only put in about 20 minutes into the market total and was in on the two trades I took for a total of 15 minutes.

Today, the market gave me what I saw was a quick easy point and took it to start things out, followed up with a several point advance to the top of the last contract sold in today’s action. Daily goal met.

The market had put in a large gap opening, hoovered around the bottom of that range and shot up to close the gap. I was not present for the first burst up, but wish I was as that was an easy powerful trade. The ones I took were not difficult but posed more risk than the first one coming off the bottom. It all worked out well and was satisfied to close up shop early. Yesterday I was able to make up for the previous day and so, am pretty much on track for the week.

Two days to go before we enter the Holiday week of Thanksgiving where things can become a bit slow in the later part of the session. The best action will usually come early on, so I hope I am up and ready for that then.

Late today, it seems that there was news out about the banks and how they may have troubles if Europe does not get there act together soon. The ratings agency will be having to downgrade the banks and that is bad news for Wall Street.

The market is reacting to every statement with today a perfect example. The thing is, the technical side of the market is still playing itself out and it can almost be said that the technicals are driving the news.

The market is at a tipping point and so, look for news to come out tomorrow that will boost the market to keep it alive within the context of this current rally. That is what I was just saying that the technicals could be seen as driving the news. It is a bit odd, but I think that is possible. Lets see tomorrow if some strong news comes out to bolster the market so it does not crack on its own weight as it is in that key area where support should come in if it is going to survive.

I think the market will survive and make one last push higher over its last high of S&P 1280, into 1308 or so. If that does take place, it would be a huge short squeeze and the towels will all have been thrown in, then the market may go down, again, we shall see.

The first thing is for the market to hold on and not make any significant new lows for the rest of the week.

That’s it for now, be back tomorrow for “the rest of the story”.

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Stock Market is Marking Time for Next Move

Monday, November 14th, 2011

Today is November 14th, 2011 and the market started its pull back as mentioned in yesterdays blog post, but did not reach the 1277 area as mentioned. The market had risen 10 S&P points in the Globex night session to 1271 and came up a little shy of the number mentioned. The main point is, after the pull back off the highs, the retracement is now in place. The key area’s to be aware of are the 1220 area for support and the 1277 area as resistance.  A break of either one of those numbers will be significant and we should see some strong follow through in either direction.

I do have a bullish bias going into this week, but a break of the 1220 area would bring in a lot more selling, so that number is key for the bulls to hold on. Wednesday or after, looking for a break up above 1277 area to 1308 as the next resistance, so we will see. I am and will be open minded to any changes, but this is just an overview of the daily market. The smaller moves within the day are the ones that we trade and the ones that count.

In today’s trading, I did not make my daily goal as I was not willing to wait out the market for fresh views. Other than Friday flat holiday session, this is my first daily loss in a long time. A small loss of around 2.50 points which is not really a big deal, but it happens. I had a nice first trade but did not see things as they were for the trades following. After a few bad trades, I decided to let it go and look for a fresh start Tuesday. My trades below.

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Market Awaits Europe’s Bank Deal

Tuesday, October 25th, 2011

Today is October 25th, 2011 and tomorrow is likely to filled with some additional trading anxiety as the world awaits on the banking decision in Europe.

No deal will likely have a chilling effect, but the opposite is what the market is expecting. Which way will it fly? My take is that they will put something together that will sound good and will only be a temporary fix, as all the other attempts have been, but this may sound good enough to keep everyone happy for a little while longer. Once the reality of the deal sets in, it will become clear that it will not be sustainable and the bottom will drop out. When and at what level will that be, no one really knows just yet, but it could easily be from higher levels.

Short term, I mentioned yesterday that the next level of resistance for the upside was at 1175-1180 area on the S&P. If we get there, we could expect more of pull back than we have seen recently, but it has to get there first. Currently, the market is taking in the resistance level that we just ran into at the 125o area previously called and has backed off. I see some support in this small pullback around the 1215 area and currently at 1230 in Globex night session. A bigger deeper drop below that will trigger a lot more selling, so I think that is a level to watch.

In today’s trading, I hit my daily goal in 30 minutes of trading, start to finish. I turned on the computer and turned it off for the trading part of my day, then I did a few training video’s of the mornings previous action, the current action and on to what to expect for the rest of the session. Let me post my trades below.

As traders we don’t really care which way the market goes, but that it goes. A drop usually happens fast than a rising market, but what ever the market throws at us, we will be able to take advantage of price action as it unfolds.

The rest of the week will be filled with increased volatility so if you are looking for big moves, we should see them one direction or another. What ever your trading method, wait for what looks like the “easy and obvious” and you will do much better than trying to grab every twist and turn.

Best to all my readers,  Vince

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Market Rises as Bulls Turn More Negative

Wednesday, September 7th, 2011

Today, Wednesday September 7th, we saw that market follow through that I thought we would get and in fact it ended the day exactly on the highs to a maximum level of 1200 and 1202 on in the after market.

That figure is what I was looking at as I came into the session late, just before the close. I only traded and followed the market for a few minutes towards the end of the day and with time running out, my first trade I forced and took a loss. It was a bigger loss than I normally take. The market did turn around and I re-entered where I should have the first time, and that did work out for about a 5 point point move right to the top of the session.

I am back showing the smaller time frame since that is the smaller chart I look to for scalp entries. The bigger chart I have showed in the past sessions, is a nice directional indication for me, in fact it is apart of the method as a whole, but I don’t usually talk much about that.

Here is a chart of the bulk of today’s moves with a strong trending bias all day long, starting just after the open. The acceleration of the days rise did start to get a little exponential towards the last hour and a good pull back was only short lived as the market was set on seeing that 1200 area filled.   The day below.

Knowing what is the dominant direction of the market can make things easier for you to take just one direction on your trades, until the longer term trend as shifted. Many traders have a hard time shifting from trading long to short as it poses a few psychological challenges.

When you have an even divided day, long and short, it can be easier to go both ways, but when the trend is established, it is best to trade in the direction of the trend until proven wrong. That would have been a good strategy today, as it may or may not be like that tomorrow. Knowing how to read the larger time frames, can increase your ability to trade in that dominant direction. It is all about knowing. If you know, then you can do it. Guessing, won’t really get you there.

One last note, the sentiment numbers came out today and the level of bullishness did drop by 2.2 percent to 38.7% of investment new letter writers that are bullish, just a few percent off from becoming an extreme, (35%).

I laid out a couple of scenario’s in yesterdays post, both of them were bearish, but both of them started with a rise from where we were before yesterdays close. This rally is right on cue and if we get the stall and retesting of the lower range in the days and week ahead, we may break the lows of a few weeks ago and look for a bottom. The other one was a continued rally up to the 1240 area and more time to pass before the pull back and then breakdown.

Both of those like I mentioned are first bullish then bearish, but with the bearish extreme  so close to the lower end and very close to signal extreme negativity and thus an unexpected rally. This is a tough one, because from where the daily chart stands, it appears to be marking time for a continuation to the downside.

One day at a time and we will know more.

Trade well and committed !

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Equity Markets are Moving

Tuesday, September 6th, 2011

A chart of the days turns in a “Larger” directional picture view.

Today is September 6th and many are coming back from vacation and or a long weekend at least. In my case the first, a good long break. I did not trade the regular session today, but just slipped in a after market trade for 1.5 points, nothing big, but getting my feet wet.

The market has really been moving, these past two weeks, with prices going from high to low ranges with huge point swings. The market is in a very unique spot right here. From the way it looks, we rally a little more and stall. revisit the today’s lows and then break them for new market lows.

That is one scenario I will be watching for. The momentum is to the downside and we are just holding and moving sideways.  The longer we hold up here, creates more room for the market to go down once it breaks. Here, time is a factor and a necessary ingredient for this to play out. If it were to break down now, it would have limited room to move down and be met with buyers, so as more time is allowed, more room for the break will be factored in.

The possibility does exist for one more rally just like the last two we saw on the daily charts over the last couple of weeks. If that happens, then as mentioned, more time will be allowed to pass and the new market high of say 1240, followed by a 200 point drop in the S&P’s would not or can not be ruled out.

The drop would be about the same magnitude as the one we just saw from the end of the July highs to early August lows. It is hard to say which one of those senario’s will play out, as both of them are very similar, but one waits for the market to build up more pressure before moving lower.

We are coming into September ,followed by October, which are the two worst months of the year. An important note about the market during this time in the calendar cycle. The last two years, the September/October months have been up months, bucking the long term track record for bearish performance during the said time frame. That I would add, would put the odds a little more in favor that this time around we will see the bearish scenario play out.

One thing I am looking at closely, is the market sentiment as noted in “Investors Intelligence” market survey. The last two weeks, we were hoovering close to a bullish reading, in the 40’s. A reading of 35 or lower, is a very bullish reading for stocks and has sparked countless rallies of very good size in previous decades, following this sentiment gauge. The readings will be out tomorrow and will lend a good deal of insight as to how the market will play itself out in the coming days and weeks. My first bearish scenario could be premature and we may get more of a rally pushing prices back up the upper range once again and then, that could ease the bearish sentiment, get the street more bullish and later be in that position to drop.

So, we shall see.  I am not making any formal predictions, but just sharing my thoughts right now. OK, that’s it for today, but will be back tomorrow for an update on the daily market and maybe more insight as things develop.

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What is Market Sentiment Saying?

Sunday, August 14th, 2011

What is the market sentiment saying in the face of this massive sell off the last three weeks?  It has barely moved, in fact it became more bullish this last week by a touch. Currently the Bulls are at 47.3% and the Bears are 23.7%.  The Bullish number is the one to watch in my opinion and over the last three weeks it has been 49.5, 46.3 and last weeks 47.3. In addition, the 23% bears is really a very small number who are outright bearish, sounds like a minority to me.

The market survey is from “Investors Intelligence and is a weekly poll from the top market newsletter writers in the country. These guys are wrong most of the time and are typically trend followers. By the time it is obvious to everyone else, they become bearish at the bottom, no big deal, but that is right when it is going to go the other way, a very big deal.

They typically get it wrong on a constant basis and with a bullish signal coming in at 35% or below, this move has a long way to go before it is done, that is if it goes to a market extreme.  Is it possible it stops here and recovers and so on, Yes?

The point does need to be made that the downside potential for this move is S&P 1020 to 940 before a sustained move of any magnitude might be made in the reverse direction. That is for the S&P futures not the cash market, but both will be pretty close.

It is interesting to note, that this week, consumer confidence is at its lowest level in more than 30 years. If the consumer is not up to the task of supporting this economy, then it is going to take a lot of government stimulus to do the job and I am not sure they are up for it, given all the bad press about the budget. Who knows, they might just pull out QE3 in “Stealth” and pump more liquidity in the system. In fact, the Fed said that they are committed to keeping rates low through 2013. That is about the most brazen  statement the Fed has made in the last three decades I have been following the markets. The Fed will barely tell its intentions a few months out and now they are saying what there policy is for the next two years out. Wow, unbelievable. It goes to show you how far we have come. They are basically out of bullets, with rates where they are today.

It is almost like an oxymoron or a dichotomy if you will, in that as S&P has raised there risk factor on Treasuries, a higher interest rate will be the likely response the market will ask for. More risk, the greater the return, but the Fed says that they are committed to keep rates low with no change in policy for the next two years?  The only way they can do that is for the Fed to continue to buy up all the available Treasury Bonds as they come due and keep on doing that to swallow up the supply.

I don’t know about you, but that sounds like terrible news. It will all get transferred over to the higher inflation eventually and that means a constant loss of buying power, wealth and can be called a hidden tax. You will see in the next 6-12 months, inflation really kicking up.

One more thing. The Fed has been paying interest to Bank Deposits, money the Banks gave to the Fed and that is the reason that we have not seen more inflation up to this point. They have huge sums of there money and no incentive to loan out the money to get the economy going. Does that not sound odd, for an economy that wants to get growth going again. Well, that is if that is there true intentions. Lots of problems and they are not so obvious to the lay person on the street, but all the signs are there that something is not right.

So, what are the markets intentions for the next three months. It may very well be a continuation to the downside to levels mentioned above. Maybe then the crowd will become bearish enough to get a big rally in the opposite direction and they will be wrong again.

Coming up on September and October which are the worst stock market months out of the year. We could see a counter trend rally for the next week or two, but be on guard for a continued move down to the above levels mentioned at a minimum.

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No trading for me on Friday, as I thought I might take the day off as I mentioned in Thursdays blog.  With the great week I had there was no need to push it. I made a few unwanted mistakes Thursday, even though I had the best single day of the year and saw that as a moment to pause. We will see what this week has in store.

Trade well, and committed !

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Market Under Stress

Tuesday, July 12th, 2011

The market is under a great deal of stress and still it managed to rally back from steep losses from the past few weeks to come just a touch short of new highs last week. We have seen a few days of selling, but today the Globex market saw much steeper losses, 15 S&P points that the regular session did not today. One could take that a few ways, bullish and yet bearish for Tuesdays session?  Which way will it turn. You can make the case for both scenario’s and the best course of action is to wait and see and trade accordingly.

As day traders that is always the only way to trade. You always need to hold your market opinions to a minimum and position yourself in front of the market as it moves.

I have not posted in a couple of days and will put up the last few trading sessions. Friday, no trading for Monday and Tuesday. I was able to post gains for Friday and more than double daily returns for Tuesday to make up for no trading on Monday, so I  am still on track. My timing today was a little off, and I post a few notes on the chart showing it, but overall a very good day.

Today’s Market with other turns identified

Friday’s Market

A few more comments about a few things we should be aware of in Washington and Wall Street. On August 2nd, the debt ceiling issue will be a pressing on. Currently, the market does not seem to be to worried about it, but there is a chance that things may not get settled. I commented a few months ago that I thought there was chance this time around that there would be trouble raising the limit again as it has gotten so common placed. The issue went away for a little while but seems to keep coming back like a bad dream.

There are many junior Congressmen that are taking a hard line on not raising it and forcing the issue of a balanced budget. Both sides don’t seem to be getting anywhere and it has the possibility for things to get very ugly. I have heard some suggest that if things get to the point that a shut down seems likely, the powers that be will trump Congress and take the matter into his own hands and raise it. They will site that it has been done before by Abraham Lincoln and that too will cause a great deal of unrest. Either way, there is going to be some kind of fall out as that day approaches, just be aware of it, August 2nd.

The next big deal is the EU debt issues that are pounding Europe right now. It seems that Italy is the new kid of the block, the 4th largest economy in Europe with debt issues that are getting worse. I heard that the current interest rates on the Greek bonds are in the low 30% range, with Ireland and Portugal around 18% and now Italy at 4% and rising fast. As sellers take there holdings to the market, it causes the rates to rise to help attract new buyers and reflecting a new level of market risk that new holders are compensated for, a risky game right now.

If that kind of fear is projected on the U.S. via a debt default or even a debt glitch of any sort, it will then reflect a new level of risk onto the U.S. Treasuries. That in-turn will cause the market rates up substantially. With the Fed out of the market and holding a huge pile of Treasury paper themselves, there is little they can do. There will be very few places for investors to put there money, but higher yeilds will attract several rounds of new buyers, thus taking money away from the stock market, and thus lower market prices.

Then there is the jobs issue that is weighing on many’s mind. I would like it to be true that we are turning a corner, but any turn will only be short lived if it shows up at all. The problems we faced in 2007/08 are all still there and then some. If I were to list them I would never finish this post. Just be aware that the market is by no means out of the woods and walking on egg shells.

Being a short term trader is great place to be, as each day stands on its own, no commitments. I wish you all the best.

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