Posts Tagged ‘market drop’

Looking For Big Move in the Markets

Tuesday, June 7th, 2011

Today is June 7th, 2011 and I am looking for a big move in the market coming up here in the next few days.

We are at a pivotal point in the all the market index’s as of today. We will either break down and push substansially lower from current levels or we will see the strength come back into the market to everyone’s amazement. Which will it be?

I can only tell you how I feel. I could be wrong here, but don’t think so. Make up your own mind, but considering the input of others is fine.

I just get the feeling that we will yet again see another rally off this critical area. It is not the convention wisdom as many of so called people in the know, think we will see a substantial market drop. Hey, they could be right, but I think until proven, the bulls still have the advantage, even though we have seen four weeks of selling. Technically, we have not broken down and are still within the realm of a retracement within an uptrend. It won’t last for ever, but until it breaks you have to stay with bulls and again, that is just my opinion.

If we see a substantial break from these levels, it is over for a while. If we can hold this area here and not give up any more ground, the bulls have a chance of hanging on. We will see soon enough how it all plays out.

In my own trading, I have been tied up with family matters still, but I did find a way to participate. I saw a nice trade in the night session and put it on. The first half was for two points and the second half I held it over through the night and closed it out just before today’s open. That was the best I could do and it made up for yesterday and today modestly with a 2 & 6 point gain. The screen shot chart of that is below. Hopefully, I will have time to get back into the action, but I will just have to take it one step at a time.

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Big Market Drop Today

Tuesday, May 4th, 2010

Today is Tuesday, May 4th and the markets dropped like a rock today.

That was the general theme for the day, down she goes. Yesterday I mentioned that I thought this drop was going to come on Wednesday, a day late, but did mention that we needed to watch 1182 on the S&P futures. If that got taken out, it was going to tell us a lot about the markets intentions, is what I said. I was also watching Fridays high, but that never came into the picture because the market drop started well into the night trading.

The 1182 got taken out and we saw for a session low today of 1164. Overall, the market was down 26 points at 2.36%. The Dow was off 225 and 2% with the NASDAQ coming in as the biggest looser at minus 3%.

Where do we go from here? Well, it does look like there can easily be more downside, so I would keep that as the likely directional play, but I would bet we will see some backing and filling also, giving opportunities on both sides for day traders. Traders should give the market a little time to let itself be revealed and the picture will become clear as to direction. I do see support in the daily charts coming in around S&P 1145 for rest of this week. I can’t say for sure that it is going to get there, but it very easily could. I will be watching that area if in-fact we do drop down to that level for a bounce at least short term.

I just took a few trades today and have them in a video below if you care to see, but for those short on time I scaled out of a couple of trades for a modest daily goal in the middle of the session. I do show some potential signals and trades in my T-2 trade model. I have stripped everything else off the screen but a couple of indicators, one above and one below. I don’t say what they are but they are a small piece of the total on how I see and trade the markets.

I am going to keep my post short today, but will have some trading idea’s and or lessons in the rest of my posts this week, so stay tuned and check it out.

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About Us

Thursday, February 25th, 2010

My name is Vince Tarantino and I am the originator of SniperDayTrading.com. Below is a little about myself and how I got started in the business.

I started following the markets in the early 1980’s. I was young and just getting started in raising a family, so my capital to trade or even invest was very limited or non-existent. This did not stop my interest in trading. I started to read a lot and observe what was happening in the financial markets. I remember in the early 80’s the Dow trading up to a new milestone of 1500. Many thought it would never last, but it just kept going higher from there.

The 1987 stock market crash did not surprise me. I saw the over exuberance and euphoria that I had learned about, but not personally experienced, until that time. Even back then I always looked at market psychology and how it relates to trading.

We were in October and the market was waving a big RED FLAG to me, saying sell, sell, sell. Within one week, the market sold off in a large way. I had a small put option position in Phillip Morris. It worked out well as the market dropped and I made a very nice return.

In the early 90’s, I saw the recession coming and the subsequent market drop from that. Market sentiment was so bullish it only told me another big drop was at hand. Within a week, the market broke support and the sell off was underway.

Just after the early 90’s recession, I was laid up with a back injury and had a lot of time on my hands. Thinking what to do for a new career. What better field than a stock broker, I thought. I found a small brokerage company who sponsored me and became a licensed stock broker passing the series 7 & 63 tests. This was something I thought I wanted, until I realized that I would have to be pushing stock to clients that might not be the very best for them in their situation. In that business, it happens. So I canned that idea, but never stopped learning and dreaming of the day that it would all come together.

What I regret most of all was missing the big move of 1995. I was not in a position to take advantage of the move of the century. My professional career had taken a different direction and I did not have the luxury to take advantage of that market action. I did still follow it, because that’s my passion. I saw all the “would be” day traders try their hand at making a lot of money in the markets and many of them did. The problem is, unless you are equipped to handle all of the other factors that I will be mentioning in this site, you will lose, plain and simple and most of them did.

These new hopeful traders only saw one side of the market – UP. They did not educate themselves on how to handle a dropping market. They had been hypnotized into thinking that there was only one direction. Many people, on paper, had become wealthy, but it did not take long to show them that they were not worthy to hold onto their newly found gains because of the attitude that “this is easy”. It’s never easy and not without sacrifice.

Let me tell you from personal experience. Most people who are very successful in day trading have gotten beat up pretty badly, almost without exception. Their pride gets in the way, with them saying, “I can do this.” It doesn’t take long for them and others to realize that it is not easy, especially without mentoring or some professional training.

The year was 1995 and market was trading sideways to slightly up, with a lot of resistance overhead, and then it happened. One of the most explosive moves in stock market history and I was only able to watch it go by without me. It lasted uninterrupted for roughly 5 years, with a big hiccup in 1998, but back to new highs through the year 2000.

During this time I started my own little business of trading commodities. This was the actual products. Buying and selling. I had partners who put up the money and did the shipping. It worked out well. This was at the high of the market in 2000. The dot com bubble had burst and the whole market was coming with it because it to had become so overvalued by historical standards.

Again, I saw this one coming from a mile away. It was waving flags in front of me, saying again, “sell, sell.” I tried to warn those who would listen. At least I did what I could. During this big market sell off I was trading high volatility stocks and was doing very nicely. I was able to put together a long string of winning days, over a month and half straight. Things were going well and I was content with my method and results, when I was rudely interrupted. I suffered some medical problems that made it impossible for me to continue. I never gave up on my dream, though, through many difficult times and set backs.

That day has finally come and I am very thankful to my family, who has been very supportive, and to God who was there with me through all my trials. As I continue to move forward in life, I will be sharing my trading ideas and experience with a select few who also have a desire and passion to succeed in this business.

I love to teach this stuff. I believe this is a time of abundance and blessing. Sharing and teaching is a way of giving back some of those blessings. It could not have come at a better time. The world financial situation is not getting any better. I will be keeping my readers abreast of the real economic situation on my daily blog.

Trading the market is not everything in life and I have come to know that. I have learned to see things differently as I have gotten older and that’s good. Knowing who you are as a person is so very important before you begin trading. I take time each day and thank God for my current good health, my family who loves me, friendships that I have built up over the years, and my involvement in my local community. This, I believe, is true wealth.

I live in a small town in Northern California. It is in a valley surrounded by mountains on all sides. Elevation is about 2,500 feet, so we get snow in the winter and I love it. I moved here from the San Francisco bay area after my two children were grown, over 3 years ago now. It was the best thing I could have done.

I live with my wife in a modest home and do enjoy a little gardening and my new Australian Shepard dog, “Buddy,” who has just been great. I always wanted a dog and now have the perfect place for one. He keeps me in shape. I do a lot of hiking, exploring, and some fishing with my free time. I live between two small towns of about 7oo people each, but have a bigger town of 7,000 just 20 minutes away. I and my wife Angela like to go to Ashland, Oregon just over the border for a variety of activities and cultural experiences.

It’s a different life, but I love it and again thank God for it. I am spiritually minded and it has served me well. It gives me hope in so much more than we are able to see in the world around us. I believe it is my destiny to help others and I feel God has given me a gift of giving. I need to be faithful and continue to pursue the gift He has given me so that I may be able to bless others in the coming days ahead. This site is a part of that. I pray that God will also bless you with what I write here and on my website to fulfill your dreams, and that you too will take the blessing and share with others your resources and talents. We can all do our part to make a difference.

May you be richly blessed all of your days,

Vince

For more information you can email me at vinnie@sniperdaytrading.com.

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Sentiment numbers stronger than expected

Sunday, March 8th, 2009

This is for Friday’s market March 6th, and the sentiment numbers are out.

I had talked about the investment newsletter writer’s poll out for this week, expecting them to be a bit weaker than last week was, adding to a more negative environment, which would set the stage for a bigger rally. It did not work out that way.

We may still get a rally but when is the big question? The numbers changed in the positive direction, which is a little bit of a surprise. They were 28.6 bullish last week and they moved up to 29.7 bullish this week. A reading below 35 is typically a bullish sign, with a rally potentially at hand. With this sell off, extremes are difficult to time and it can take longer for the signals to have their usual counter effect. The reading only went up by 1.1%.  That may help in prolonging the coming rally. We will have a rally, that is for sure, but we don’t know if it is going to be from 1,ooo dow points lower. These numbers are just something to watch and keep in the back of your mind.

Most people who write investment newsletters have their opinion taken each week and some of them became a little more bullish this last week as of  the Tuesday reading. The point is they are usually wrong when polled as a group. It is just like so many other investors, they follow the trend and as the trend continues in the initial direction for some time more and more of them become bullish or bearish, whichever the direction.

Basically, they are late to the party and become bullish at the top of the market, when it is only then apparent to them The herd mentality. The same is true during a market sell off, they then think it is going to continue down, since that is the direction of the current trend. Last week 45 percent of them thought the market was going down. This week only 44 percent had those same feelings. That lets up the pressure a bit for the market to continue down possibly, but I would say, not by much. It is not a science. I have posted and explained this before, but for the benefit of those who are not aware of it, there you have it.

There is another point to all of this. Learn how to read the markets for yourself and you won’t be victimized by other people’s opinions. There is a way to do that. It is kind of like a language. If you don’t know it, you will be lost, wandering from place to place, looking for your way. I am not the only person who knows how to read the markets, for sure.  But I would say, there are very few who can do it effectively and consistently. I will be talking more in the future about just reading the charts themselves, with no indicators at all, just the price action.

This is a great way to start understanding what is happening on the screen. There is a struggle going on, constantly. A change in ownership, from weak hands to strong hands. Those that want to sell to others who want to buy – but at what price. It is their price, the price that they are willing to pay. In the case of a sell off, it is people who cannot handle the heat (weak hands) who sell to those who can assume the risk and are at that moment strong (hands). It usually takes only a short while of seeing lower prices until those strong hands soon become the new weak hands and begin to offer their shares and/or contracts to other stronger hands, but at their price (the new strong hands). This is how a sell off is carried on and how we get continued lower prices.

There is always someone buying, all day long, but again at their price, which often times does not hold and then the selling continues. This process stops when there are no longer a majority of sellers left to sell to and the buyers are taking the upper hand, taking all of the available supply the market has to offer and the struggle continues. There is always someone selling and there is always someone buying – but at adjusted prices. That is how and why the price changes.

We step in now and then and help them out. We create liquidity for the market place. When a mutual fund manager is faced with selling a large portion of his portfolio to meet redemption requests, but feels the drop is only short term, he can sell futures contracts by the thousands and give himself the insurance that he needs from a large market drop. If he had to sell all of the shares in the open market, he may be pushing the market down with his large size and thus adding fuel to a down market. If the drop comes, he is protecting his portfolio ( a kind of insurance ) from a market decline. When the market comes back up, the original value comes back into his portfolio but he has made a big profit from the decline. If the market does not come back, his portfolio has taken a big loss in the drop in value, but he has large gains in selling the futures contracts so he has offset his portfolio and has not lost money for his clients. If there was no one to take the other side of the trade, when he wanted to sell thousands of contracts over time, he would not be able to do what he did in the example above.

Traders and yes, day-traders, provide an essential part to the process. We make it possible for so many to buy the insurance they need to protect themselves. The market would have so much more volatility to it if we traders were not there to help smooth out the process. So there is a purpose being served here.

It is the same for the farmer growing corn or the company selling orange juice or coffee beans. By them selling futures contracts in the future, they are agreeing on a price they can live with, a set price in the future. If at that time the current price is much higher, they do not get to enjoy that higher price. Their contract says they agreed on xyz price and that is the price they will get 2 or 3 months from now when the crop come to harvest. By same token, if the current price at the time of harvest is 20% lower, they will still get the agreed price of xyz at the day the contract was agreed on.

Traders take the other sides of those trades and speculate that the price will be higher or lower in the future. The farmer is guaranteed on his price and he is happy to get it. If he came to market in the future and received  30% lower than current price, he may get financially destroyed and he can’t afford to take on that risk. But others are able to.

Those are just a couple of examples in the financial and commodity markets of the functionality of the instruments that we trade and why. On a personal note, most traders trade for personnel profit and that is understandable. They are taking a risk, and for that risk they can be rewarded when they are right.

The trading day was good today, picking up 1 & 1/2 times daily goal. I have some of those trades in a small recording from the session. I think it may be helpful for some to see the market trade in a live environment. I have had technical problems in posting my equity chart so this is the next best thing and probably better for most. As soon as I can get it fixed, I will post them again.

http://www.screencast.com/t/m8FOo2HQwNj       some live trades from Friday’s session

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Daily goal met 20 minutes today

Tuesday, February 24th, 2009

Today is Tuesday February 24th, and I had a nice smooth day today.

The early market had some nice swings that I missed, but that is just fine. I came in at the top of a market run and picked a few points off here and there. Charts are posted below. If I have time later, I will post some additional information. Have a good day.

I have a little more time right now, to comment on today’s action. We did get the start of that bounce I was expecting in the overall market. There should be some additional follow through in the days to come as well. It is hard to say, but the retracement should take us up to 810 to 820  on the S&P. That would be a 10% move for the whole market. That is a lot, let me tell you, but it would represent the natural flow back to the middle, even if the market drops again after that. We don’t know if it will make it past that point, but we will just have to read market action as it happens to give us greater insight, we shall see. The Dow recovered all of yesterdays losses and then some with a gain of 236 points, a nice move.

Trading Lesson: 

Here, is a short trading lesson that you can build upon while trading. When you start out your day, you need to see yourself placing a trade and expecting that trade to work out with  positive results. So, what needs to happen is, you need to take the time to relax and see yourself identify the trend, identify in your mind everything lining up as the method calls for and placing the trade in a low risk area. With targets and stops already in place, you are set. When we get cold feet and become anxious about pulling the trigger, we begin to work against ourselves and create doubt. That doubt creates fear and when you have fear, you will inevitably do the wrong thing. That is why you need to build confidence in a method that is consistent over time and one that can adjust with changing market conditions. There are a lot of different ways to trade, that is for sure, but a trader who expects to come out on top on a regular basis needs to be exceptional in method and emotion. You need to control both and you can not have one without the other.

I came across a trader who says, ” I have a great deal of self control with my emotions and I can follow a trading plan to the letter, but my problem is that I have no method that seems to work with any regularity”. This is an interesting statement, because most people do not have either. A lot of times you may find that you have a good method but you can not execute it because you can not follow a trading plan. We all need to work on follow a trading plan, because this is what takes away the uncertainty and fear when placing a trade. Since we do not know the outcome of the trade, we have anxiety built up inside of us, again because of the unknown. How do we get past this so that we can keep moving forward? The answer is practice and practice some more. If you are able to get the desired results by seeing the expected move ahead of time, positioning yourself to capture a small piece of the move and get out, quickly. When you capture 1 point of profit in a few seconds and it’s over, the struggle is over as well. You do not have a lot of time to feel anxious about the trade, because you are no longer in it. If you are able to capture a few high probability trades and stop for the day, you built confidence in yourself and that is where it all begins.

Doing the same thing over and over again, entering the market in a low risk area and letting the natural flow and rhythm of the market to take you up and take you down, hitting your desired targets with the least amount of struggle. Then you get to do it again tomorrow, what a pleasure. It is not always like that and trading is very hard to learn, but once you have confidence in a trading method, you are on your way.

If you trade all day long, you are going to be feeling and dealing with a lot of emotions, that is for sure, because the market is going to be showing you so many different looks and reads, you will not know how to process all of that information. Knowing when to stay out of the market is very important and getting stopped out repeatedly will cause frustration and what I call, revenge trading. This is very destructive behavior and to keep all of this stuff to a minimum, you need to limit your trading to a smaller amount of time, so that your exposure to these dark events are kept to a minimum. Well, that’s it for now, more coming tomorrow.

Vince

http://www.screencast.com/t/qPLMj3VzouK         Today’s trades

http://www.screencast.com/t/muHvhyzv               Today’s equity chart

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Another Big Drop for Markets

Wednesday, October 8th, 2008

Yes, it was another big drop in the markets today. When is it going to end?  The answer to that is, no one really knows for sure.  As a trader, that answer is OK, because it is the truth.  Our job is not to anticipate market bottom or tops, but to read  the current action.

“To read” means to observe, identify, interpret, but it does not mean to guess, project, wish or hope. There is a big difference. This is one of the most important things to remember. Market phychology is also at the top of the list of importance. You may have a winning system but you must be able to follow it. That means after a little down turn in your account, you don’t swing for the fence and try and hit a home run. Many batters in baseball are content to hit singles and doubles with the occasional Home Run. 

Below is an equity chart of the trades I took today. I did not trade all day but most of the early morning. I hit my target for the day, which is really only 2 points net after commission in about the first 15 minutes of the day. Here it is with a little added commentary.

http://www.screencast.com/t/EQDJoG4Y

http://www.screencast.com/t/7v7HuwFZ6

Good Bye for now and see you Wednesday.

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Big drop in the market today

Tuesday, September 16th, 2008

Today we saw a 500 point decline in the Dow Industrials and 57 point drop in the S&P 500.  Yesterday afternoon the futures market opened up about 3 pm in the afternoon (that’s when it reopens after being closed for the weekend) and saw the S&P down 30 points in the first moments of trading.  Wow, that is a lot. 

This is one of the reasons I never hold positions over the weekend.  At 1:15 pm on Friday the futures markets close, and reopen at 3 pm Sunday.  During this time, anything can happen - economically, politically, and so on.  So if you had a position in the futures market, say in the S&P, and had a protective stop, say 1 or 2 points under the price you paid, your first moment of trading on Sunday afternoon you would have lost 30 points before your stop would have been activated.  Thats crazy.  Too much risk and it should never be done no matter what the situation. 

I do not hold a position over night, but with a certain strategy, it could be done.  You would close the position before 1:15 pm, then at 1:30 pm, 15 minutes later, you could reposition yourself with a new protective stop above or below your current position, depending if you went long or short (up or down).  At this point you have not left yourself unprotected from the unexpected.  Even in the 15 minute reopening period, a lot can happen.  Most of the time it reopens very close to the closing prices, but it only takes one time to get hurt.  Imagine being unprotected for over 2 days! “Not going to happen.” 

Back to the day’s action.  I didn’t start trading until 8:30 am today and need I say that I missed a lot of good market action. But the beautiful thing about my system is all I need is about 30 minutes or so to get my points for the day.  I say “points” because that is what I trade for, two points is all I need to make a living at this.  4 increments of movement make up one point, so 8 increments make up 2 points.  When trading 10 contracts (each contract equals $12.50 per increment movement) and targeting only 2 increments or ticks is the strategy, you would be profiting 10×12.50×2= $250 dollars per 2-tick move.  We need only do that four times to have our 2 points. 

Sometimes the market presents a better opportunity to catch 3 or 4 ticks per trade in which case we need only 2 or three trades to make our goal. Today, within the first hour of trading, I had over 30 trades of these 2-tick varieties and only a few losses, was up over $2,000 dollars, and was only trading between 2 and 4 contracts.  I will post some of these trades when I get my “web publisher” to find a way to show a few screen shots.  It is coming soon. 

It does not matter where the market goes - up or down - as long as it goes somewhere and it always does. That is why I don’t need to look for any other trading vehicle because it is all wrapped up in the EMINI’s. 

I have been pushing myself lately to see what mistakes I may make while under extreme market conditions, which can happen.  Many of the trading mistakes I made could have been avoided by not over trading.  I seem to be able to trade very well with about 85-90% winning trades for about 2 hours. After that I start to lose some concentration and slip up here and there, getting in too early or fighting a trend (going against it). Although with my target at only 2 ticks, it is very easy to achieve that if your timing is good and you follow the indicators. 

I may have mentioned in a earlier post that I have two other programs that I trade, when conditions are right.  One of the others is a split target with two exits usually set at 3 ticks and 4 ticks.  If the market is really flowing, I will move the second target to a high stop on the chart, say 6, 8, 10, or more, and hit that easily.  This puts me in a no lose situation when I hit the first target. Break even is the worst I can do.  The third is just a standard protective stop with no target.  This is for special situations where the market is making a nice consolidation pattern and is ready to break out big.  This lets me capture a large move, say 5 or 10 points, which can still happen in 5 or 10 minutes.  The morning is the best time to catch these big moves, but they can be had at any time of the day. 

That’s it for now, until tomorrow we post again.

Vince

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