Posts Tagged ‘Technical Analysis’

Day Trading and the Opening Gap

Wednesday, October 27th, 2010

Today is Wednesday, October 27 2010 as we saw the market bounce off of key support.

The stock market has moved sideways for 11 days now.  It has been consolidating and moving sideways while it gets into position for its next move.  Time is a key element when following the stock market.  It is a major component that propels prices in one direction or another.  The buildup of market pressure can only come with time as players position themselves above and below key levels.  Today we saw one of those levels and prices respected it, with support by reversing its direction back up.

In yesterday’s market we saw a gap opening lower, followed by a quick retracement back up, to close that gap.  Yesterday marked the second day in a row with opening gaps.  Today marks the third day in a row with an opening gap that again was almost filled near the end of the session.  We can look to tomorrow’s open to continue and close today’s gap.  The market momentum is to the up side and we should see prices follow through at least on the open.

The last three trading days have been a good time to get familiar with trading the opening gap.  I cannot remember a time recently where we saw three trading days with three large gap openings and seeing them filled within the same day.   Yesterday’s opening gap was filled quickly and depending on the size, that is fairly typical.  All traders need to be familiar with the market pressures behind these gap openings.  There are days wherein you will see a runaway gap and it never comes back.  Some traders look to market internals to better gauge if a market will keep running in the direction of the gap.  I basically use Technical Analysis, the study of price, to determine which way the market will continue in.  Technical Analysis takes into consideration all market news and events that may be taking place during the day.

Yesterday, I did not post anything but did have a nice quick easy day picking up my daily goal.  I was up for the open and had three trades.  The first trade was a loss for three ticks as I entered early.  The next two trades were both good with nice returns and that was it.  The total time trading was just 45 minutes, I would call that a good day. You can see in the chart below how the gap was filled in a time chart with night trading removed, to the tick. Having a chart up like this is a quick easy way to see what you are up against as the market opens up. In Trade Station, it is the contract symbol followed by a (.d) after it, that will remove any Globe-X session.

In today’s trading I had another good day and after it was over took 5 trades for the day with one loosing trade of only 1 tick, my first trade. I have a different view for you here, as on this chart it is the middle time frame view that I use which matches my smaller chart, as far as indicators that I show here.  This is a limited view, as I can’t show it all, but some is better than non. In this chart, below, I have some of the trades marked that could have been taken and or ones that I might have considered. They are identified by the matching signals below. I don’t follow the indicators as a trading method, but use it as a guide, to tell me if I am on track.  I don’t and would not take every signal as you see in the chart, because certain conditions are not met. So, passing on some signal trades is in order. The trade signals are a good indication if your timing is on or off. It is clear to see that the third trade identified as “Bad Trade” was just that. I did have a touch of fear creep in, which was fear of loss opportunity. I saw that big move coming and did not want to miss it, but  needed to trust my trade method as the next entry was clear as day the right entry and posed low risk. My notes on the screen will show you more.

The bottom line is, that was the trade and I did plan on giving it more room but didn’t think I would see it come so close to getting stopped out. I had smaller size so the draw down was less, but I don’t plan on doing that again any time soon. At large turning points, the market does and can get a little extra tricky. I tried to allow for that, but really didn’t need to. Tomorrow is a new day and a chance to do it all again.  Until then, good trading.  Vince

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Technical Analysis Video of Major Index’s

Thursday, November 5th, 2009

Today is Wednesday, November 4th and the major index’s could not hold on to the gains.

It was Federal Reserve announcement day today at 11:15 am West Coast time and the markets gave us a good show. The night trading in anticipation of some good news, speculators bid up the price of the futures and on the open, the cash S&P shot up to match the current futures prices. It pretty much continued higher for a while and started to level out at mid day. From 9 a.m. to 11 a.m. the price action basically stopped. If you were trying to trade in that stuff, it would be enough to make you go crazy. No Movement. Anyone trading the market should know about key announcements days and times.

I will give you all a link to a site that you should be looking at. You don’t have to use this one, there are other sites that do the same thing, but it lets you know about important news releases. I rarely hear what it is, that they say in the releases, but the point is to know what time key reports are going to be released.

If you don’t know whats going on, first, you are at a disadvantage. You may ask yourself, where did all the volume go, after you have tried to put on 2 or 3 trades and now have losses. Think about it, 2 hours and the range was basically 2 points high to low. Most people can not make money in a condition like that. Everyone else knew to stay out, did you?

After the news release, you almost always get a mixed bag of indecision. Some think the news was good, others see it as bad and the wild swings begin. The first 15 minutes or so after the release is really better to stay out. You won’t get good fills and the market can turn so fast, you will wish you waited.

After, the initial noise, if you see a good trade, it could be worth a shot. The reward can be “good and plenty”, but be on the right side of the fence.

So here is the site, www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm  .

On another note, I had promised to show you some price action in the major cash index’s and how they compare to each other.  I have the NASDQ, S&P 500 cash and the Dow.

I start out in a monthly chart, cover a few points of interest, where we were and where we will most likely go. I only have 5 minutes, so I go pretty fast, but still enough time to get an idea of what has happened, so you can gain insight into what may be coming.

I did not cover this, because of time and may touch on it tomorrow, but the bottom that we put in back in March, is not the same type of bottoms that we have put in before. With the type of bottom we put in bach in March, a substantial put back is likely.  It may only be back to the middle of its most recent range, but from where we have come from, that is a major shift and a substantial point value, several hundred S&P points lower. No-one likes to think about that, but we have some real big problems out their that are being covered up, with tons of Fed liquidity.

The Federal Reserve gave us an indication that they were going to keep an easy money policy for now and gave no clue on when it would end. In a general sence, that is good for the stock market, but there is so much more, and no room and time to cover it today.

Back to the price action: To me, the natural rhythm of the market says it goes lower over the next few months. This run up, was all of what I had been saying for literally 7 months. You can go back and read my older blogs from back then and see that I had been saying that, where we are today, is where we were eventually going to go. “WE ARE HERE”. Now, in tomorrows blog, I will continue where I left off today. There is more to show and discuss when we get to the daily’s. I do believe that we will continue to go slightly higher from here as a bounce back up to the middle of recent selloff. From there, well, that is where the real trouble could come in.

Tune in tomorrow to get “THE REST OF THE STORY”

To see the video in a larger screen, just click on the screen

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Technical Analysis: Video Trading Lesson Today

Thursday, June 4th, 2009

Today is Wednesday, June 3rd and we are starting to get a pull back in the markets.

Today the markets made a nice late rally to recover from a steeper sell off it was seeing earlier in the day. The Dow was only off around 65 points, not too bad. With a close up off the lows, it sets the tone for an early rally tomorrow, but we may not be done to the downside. I

have no predictions on where prices are going at this point. I will tell you that we did hit an upside objective with the 940 S&P number being hit and completed that I had called. We are still in an uptrend, there has not been any damage to the chart and until then, you have to give the benefit of the doubt to the bulls.

There is some heavy resistance at the 940-950 area so that is going to be a very critical area to watch. I previously had in my mind that we would see some kind of a pull back and a lot of people will think this is more of a correction than it really is and start shorting the market. That could be a mistake. A pull back would be normal from here, but everything about this market right now is not normal.

I do  think overall we will see higher prices over the summer, that I am pretty sure about, but be careful, I don’t think it is going to last. By this September and October, we are going to have problems holding on to any meaningful gains going into the end of the year. I am a bear long term and do think the lows on the S&P and Dow are going to get taken out in a very big way. For now enjoy the mini Bull and get some of that 401K money back.

I am a bit cynical about how things are run around the good old USA. I believe the powers that be know exactly what is going on and when any changes are taking place. If you ask yourself, did “THEY” know that the market was going to tank last year?  Here, let me answer that one for you, YES.  Did they know that it was going to turn and when?  I can’t help myself, let me answer that one too, YES.

Our leader came out on the airwaves three days before the bottom on the S&P at (interesting number, I did not pick it) 666. That would make him a pretty good market timer if you ask me. Just three days earlier everyone thought the very worst. After that third day people who took his advice have done really well. I don’t know if anyone knows that, but it’s true.

What if people put a lot of new money in the market and it did not work out? Mr. O would not be looking too good right now and he could not have that.  The reason he could come out and make a stock market call like he did was because, well, you make your own conclusions. We hear that things are getting better and I am all for that, Ya-Ya.  I always say to keep an open mind and think for yourself. This will be one of those times, even as I give my opinion. That is all it is, my opinion.

In today’s trading, I did well, had taken a few small trades early, some up and some down, but saw a very nice high probability trade to capture a big move to the downside. I put it on, took not one tick of heat and picked up 6 & 1/4 points on that trade. I held it for a while which was painful in and of itself. I am not usually in a trade for as long as I was, but I played it for the extended move out of a higher time frame and that is what it gave me. I got in just as the market told me and got out just as it said “get out”. I did give it a few extra ticks of room, just in case it was a fake out. I have a chart of it below.  All in all, 3 times my daily goal. A lot of early trades were split trades with different exits.

Trading Lesson: Below is a short video of how you can use support and resistance by plotting  parallel channels. I cover how you can use them in your trading to give you some possible insight on where prices can go before they get there. It is not a science but it is something that gets played out everyday. Take the insight that I give you here today and check it out on the markets. It may take some time to be able to spot these, but when up and down trends play out, you should be able to apply some of these ideas to give you an edge.

Technical analysis is the study of price movement through patterns, support and resistance, and general price fluctuations. You can draw conclusions as prices move from one area of support to another area of resistance and use that information to trade accordingly. Even if you spot these patterns, you still have to know how to play it, with low risk entries in mind.  Check back for more insight and ideas.   Anyone interested in learning more please feel free to email me. I will do my best to answer your questions.

http://www.screencast.com/t/LuSFBV59R Today’s equity chart

http://www.screencast.com/t/3bLxmtzYZI One of today’s trades

http://www.screencast.com/t/HMBxbNpJ7 Trading lesson, 5 minute video

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Called the Stock Market Bottom!

Friday, March 13th, 2009

Today is Friday, March 13th and the major indexes are closing at their highs again.

On Monday of this week, I posted a bold prediction that the market was going to rally big the next day and that we were going to close at the high of the day as opposed to what we have been doing, selling off at the end of the day. In fact my head line post was, “That’s it, tomorrow we Rally”. Yesterday I made a short 5 minute video showing exactly how I came up with that market call and what it was that I was looking at – days before that market bottom. If you go to yesterday’s post and look at the bottom, you will see the link. It may be helpful for some to see how the market seems to have a predictable pattern, in the midst of all the ups and downs.

Technical Analysis is the study of price movements and their patterns. You can take data from the past and come up with probabilities for the future. By studying these moves of the past, you can take a reasonable amount of risk, for an acceptable reward. That is what I try to do when I trade. You cannot expect to get them all right – losses are a part of it, but you will expect to get your fair share which should put you into the green.

This week, the futures contract month of June for symbolESM09 has started trading. I switched over to it today. The volume has been split in the old contract and the new contract and by next week it should all be rolled over to the new month. These contracts are set for 3 months and then a new contract will come out called the “FRONT MONTH”.

I had a little trouble with the low volume today, because I started trading during the slowest time of the day, in addition to split contract volume. It did throw me off a little, since I trade on tick charts, which are all tied to volume. As the time started to get closer to 11:00 am, though, I got my footing. That is when traders come back from their long lunches on the east coast and get back to business. It is hard to trade on light volume, but if that is all I had, I feel I could easily adjust my style, which really would not be much of an adjustment, to capture my few points per day. Short targets with short stops, would do the trick nicely.

I know a lot of traders always look for the home run. It’s nice when you get one, but during their quest for it, they strike out repeatedly, hurting their batting average.  They only have one game, “Home Run”. I feel you have to be diversified in your approach, but if I had to pick only one, I would choose the very short stuff, singles and an occasional double. Your batting average would increase, but you may not get the notoriety of a Barry Bonds. Ask yourself what it is that you want – to be famous, or consistently hit singles and doubles? 

The comparison is related to pulling out a few points per day and depending on how many contracts you trade, that can easily mean $500 to $1,000 dollars per day. Most people could comfortably live on that, but the key is “per day”.   With the occasional daily loss as an aberration, daily profits are the norm. That is what I strive for each day. I expect to come out posting solid gains each day and have been doing it now for going on 7 weeks straight without a losing day.

If my daily goal is $1,000, then my daily loss limit is $2,000.  It all depends on how many contracts you’re trading. When I am trading up to 5 contracts, my daily loss limit should not go over $1,000 dollars because my minimum daily goal is $ 500 dollars. Two points per day x $250 dollars per point when trading 5 contracts, (each point for a single contract is $50 dollars, so 5 contracts is $250 per point) which is $500. That is before commission so I always have in my mind to hit a little over the two point mark. During the past 7 weeks, I have averaged about 3 times daily goal (that is a rough estimate), so $1,500 per day. I may go back and add them up and divide by the number of trading days to see the actual numbers, but I think it’s close. 

In today’s trading, I hit 75% profitable trades for about $ 1,500 dollars profit and in fact have 3 contracts still working with 4 1/2 points of unrealized gains in that trade. I rarely hold a position over night, much less over the weekend, but I had a small glitch in my Internet connection. I had planned to get out just before the close, but now have to wait until Sunday afternoon to place my stop.

Since I am in it, I will place a stop and give it a little room to see if we get follow through on Monday. Since we closed near the high again today, there is a real good chance the market is going to run come the start of the week. I did say in yesterday’s video recap of the Dow and S&P that we were going to get to the outside trend line that I drew on the chart video, which is about another 20 points on the S&P.  That still holds and now it is more likely we will pull up to it, with today’s market action leaning bullish for Monday’s open, we shall see.

That all for today, I hope everyone has a great week end.  If anyone has questions, please feel free to email me at vinnie@sniperdaytrading.com

 

http://www.screencast.com/t/P3kAllia             Some of today’s trades 5 minute video

http://www.screencast.com/t/tTFIJnlTsGc     Today’s Equity Chart

http://www.screencast.com/t/j9ftesjC               Screen Shot of last trade

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Wall Street Rally – Mission accomplished

Tuesday, March 10th, 2009

It is Tuesday March 10th and boy did we get a rally.

It was nice to see the market rally today, because yesterday I stuck my neck out with a bold market call. I stated that the market should move up nicely off the low end support and rally up at least +185 points plus. When you see patterns and formations thousands of times, you can come to expect repeatable patterns when the conditions are right. That is what I saw in yesterday’ s close, a market that was ripe for a move up.

Technical Analysis is the study of price action patterns combined with support and resistance. It takes a lot of screen time to be able to spot those patterns so that they are second nature to your eyes. Meaning it does not take long to be able to identify whether a pattern is bullish or bearish and have the confidence to be able to place a trade in that direction.

I feel blessed to have the amount of screen time that I do, because it has made me a better trader overall. There are so few people who can process the amount of information you need quick enough to trade the short term swings and, as I said, I feel fortunate to be able to do so. As time goes on, I would expect that anyone who comes into my trading group would have the benefit of years of market knowledge available to them. It is not easy to be consistent, it takes work, and I feel, if you are going to cut down the time it takes to learn how to trade, you will definitely need a mentor. It does not have to be me, but it can be if you choose.

I did not have a mentor and learned how to trade by myself over many years. If I had the benefit of a mentor years ago, I could have learned a lot faster. One of the reasons I didn’t was I could not find anyone I could trust and who I thought really understood how the market flows. So, I worked through it all by myself.

You can see through my videos and postings and consistent trading that I do know how the market works and how to capture daily profit from it. I will soon be gathering up a group of traders who want to learn my method of trading and be able to pull good money out of the market each day. If you are one of them, send me an email message and I will get back to you with more details. I will write about this again in the coming days.

Today’ s trading went very well. I had 10 trades with 8 gains and 2 losses. I split some of the exits up for some increased profits again today and was still trading small, but had very good profit of around $ 1,200 plus for the session.

Again some of my trades below.

http://www.screencast.com/t/LnlvBx6z             Today’s equity chart

http://www.screencast.com/t/ZckxwreoV        Screen shot early trades

http://www.screencast.com/t/9kx1aNNQxfu    Live -some of todays trades

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