Yerk brought up the subject of bearish patterns during this rally. What I have noticed is that bearish patterns still “work”, however, they produce smaller results. For example, in the 2008, a rising wedge pattern would produce a very nasty plunge. But now, here in this rally, the same pattern will only produce a mild pull-back. So, you have to reduce your expectations.
Also, watching how bearish patterns play out gives you a good clue as to market character. If memory serves, I believe there were a couple of rising wedge patterns in January that produced only small drops. Those patterns showed that the market was done crashing for a while, and had shifted from bearish to mildly bullish – a condition that lasted until the top in February.
XLF red along w/GS
I really thought that the shorts would get cooked this morning given the futures.. but it seems that some people were running the futures up to paint an incredibly bullish open. If we lose 944 on the SPY.. then I think this uptrend will be over. Let’s see what happens.
There goes 944 on the SPY.. markets looking pretty bearish today. BTW.. doesn’t anyone see that this recent commodity rally (due largely to the weak US dollar) is going to choke off any potential for economic growth in this market? Consumers are already struggling and now they need to contend with higher prices for everything and anything that is shipped.. food, gas, clothing.. travel etc..
You would think
It’s not the longs or the shorts, its the “market” that is “cooked”. Are we back in the same situation we were with oil (and other commodity) prices skyrocketing? How will that play out with the consumer? $4.00 – $6.00 gas, 6+% mortgage rates, and 15 – 20% (real) unemployment (maybe higher?) and a national debt we can never hope to pay back without deeding over most of (bankrupt) America…
I was in an Apple store yesterday, busy as hell, alot of young people dazed by the colorful screens, playing computer games, surfing the net, rocking to their Ipods, like a d@mn carnival – and this is our future?
These are frightening times…indeed…
I know what you mean Randall.. the youth these days don’t seem to realize how bad things are as they continue to live on credit eating out at the cheesecake factory, talking on their iPhones and getting their tattoos.
Yeah, you have to love those tattoos. The process of the liquidation of American will take some time, but it is happening. And parents can only support their children for so long, when it is time for the Apple crowd to step up, we are doomed.
Charlie/Randall
Don’t get too down on the youth. When I was young everyone was expressing your sentiment about the hippies. We mostly got hair cuts and real jobs in time.
String
George
On a one minute time frame do you always wait till price is above the 36MA ?
String
Yeah Randall,
I’m terrified that our future is dependent on the iPhone wielding Apple crowd. Most are just living off their parents doing enough odd jobs just to pay for their cell phone bills. Sadly, most don’t know how to even cook, clean or even do their own laundry. What will this world turn into?
Back to trading.. looks like the SPY is going to be making a 9/36/15 cross soon.
i’m waiting to buy the low but yet to see confirmation in the technicals
Randall, RE: “Are we back in the same situation we were with oil (and other commodity) prices skyrocketing?”
Good point. I believe it is not supply/demand driven either.
Tops being tested intraday on inverse lower intraday.
Charlie,
How right you are about the current generation. I thought the same during the hippie days.
I also remember my grandparents asking how my generation was going to survive because we didn’t know how to churn butter, can green beans, make a cake from scratch, bake bread or cure a side of beef. :LOL:
Each generation grows lower on the horsesense brainpower and higher on the technical brainpower.
The problem is survival: If there ever comes a time survival skills, like growing veggies, food preservation and cooking are required, there’ll be a lot of hungry people.
George
When people get hungry the learning curve goes up rapidly.
String
Are you going to answer my question?
feels like that was low in SPY. TICK improved (above m.a. line) and leading stocks seem to have bottomed.
Stringm,
Sorry, I didn’t see your question.
No, I don’t hold on until price crosses 36MA.
Once I get into the trade, either a cross of price down through the 9MA *AND* MACD histogram goes negative, gets me out.
Then, if price goes to, or continues above 36MA, I sell most and let the remainder ride until price crosses the 36MA and MACD histogram goes negative.
Naturally, if I get into a trade and it immediately meets the conditions, I exit.
This really works well. Almost bullet proof when combined with market direction.
Revised sentence:
Once I get into the trade, “and price is below 36MA”, either a cross of price down through the 9MA *AND* MACD histogram goes negative, gets me out.
Also, there are variations to this. For example, in a volatile environment, I will take ANY of the MAs, like the 3, 9, 36 for a cross. Often, the 36 will be right above price after a sudden drop. Likewise, the 3MA, if “exposed”, i.e., it is right above price, will suffice.
But the basic method is as I described. In the last post.
George
THX
String
Note that the 3MA is the approximate of the middle of most candles. When using screens without candles or bars, substitute the 3MA cross as a price cross. That can also be used in automation I would guess.
To enhance performance, or getting used to this method, wait until stochastic bottoms below or near the 20 line on the time frame being traded. Otherwise, merely a turn up of a stochastic is sufficient.
If a time frame is in a nice uptrend, entry is made by waiting on a pull back, then price moves back up to, or slightly through, 9MA. These are very safe scalps. And you won’t get fooled if price drops, moves up, then drops again by waiting on price (or 3MA) to cross the 9MA.
One last thing.
Often, in a powerful move, when price on a lower time frame crosses the 36MA, I wait to see if it makes a backtest or continues moving up. If it does continue, then I switch to the next-higher time frame to manage the trade.
For example, SSO currently gave a buy on the 1min, moving up nicely, now I move to 5min to see whazzup. It is nearing its 5min 36MA so I am expecting a stopper there or will get out anyway. I don’t care if it continues to the moon, I’ll get it again when it takes off the next time.
I don’t know what price is going to do or where it is going, so I let it tell me.
Intraday chart today looks to me like a 5-3-5 with the first 5 and 3 already having played out, and current drop would be wave 1 of the last 5. Looking for the 2,3,4,5 waves of the last 5 to complete and then for the market to move up and break through overhead resistance.
Stringm,
I can see why that would be hard to program. So many variables. If there was a way to program it where you could have conditional statements that would help. Not just the “and” and “or” statements but “if this, then do that” type of statements. The way it is set up now is limiting from what I can tell. In fact, one or another condition will be met if there are too many, and if there are two few, some conditions will be missed.
Something to ponder…
SPY getting ready to make a move up?
George, I have it more likely to make a move down here, to new intraday lows, then have the move up. But then… what do I know?
Triple tops intraday.
JG,
You may be spot-on with the move directions. Those tops are looking like they are not going to hold on the inverse.
A waiting game right now.
The market should stop thrashing after the 10-year bond auction at 1pm.
BGZ got its 9/36/15 cross-up today.
will someone help me with my options addiction? haha
wnr call 10 option expiring next week.
say put 2.5 option expiring july
faz call 6 option expiring july
JG,
My statement was meaning “if the tops on the inverse don’t hold, then the market will go up”. Typing without thinking is dangerous.
Another government “good” intention with “bad” unintended consequences:
No bonuses? No problem.
http://tinyurl.com/m2mu7f
This is not a recommendation, but you might take a look at the action in FTK
today. The Fly has been recommending it.
JG… WTG!
Nice call.
And the prize goes to JG, good call.
String
The bond auction was a little dicey and the market obviously is not liking it.
Nice moves…
K, if this keeps up, your Sympathy Shares will double today. Not to mention my inverse core position.
Stringm,
Ditto, I’m trying now to find out were the lows are.
George
I don’t care if Matt does call me a dip, I might try to get some SSO bounce shares. If it will bounce.
String
Thanks guys!
Paula
Does the EW guy still have his job? Will the Treasury save this dip? When will the other Coors Light twin be back?
String
931.06 is the pivot
Stringm,
By all means, buy those SSO rebounds. Just wait on a set-up. I do that all of the time. It’s not ready yet, but soon it will make some good moves.
TNX +1.01. 40 basis points from a 4 handle.
George
I have S2 @ 26.85 on SSO, so maybe it will hold.
String
i’m waiting to buy the bounce also, but see no signs yet however that could change fast
if the pivot fails – below 928 is the h&s neckline break down with target to ~898
String,
Have not fired EW expert yet, but this could be
his last week. Julie will be back in a week
or two. She decided not to move to France.
We will stay close to Mom. Julie is looking
at land out West.
Hope all is well with you.
didn’t watch SRS for a few hrs.. and it seems like it went parabolic.
the one to play today has been X
Don’t have a clue as to how the day will
close. But so far the SPX took a run
at 951 and failed…its had a key reversal
…its had an outside day to the downside.
I went 200% short with Julie’s account.
She will either love me…or I should think
about moving.
still early…i’m waiting for the final hour shuffle
Paula
The ones on 5/7 and 5/20 proved to signal down, and the 5/26 signaled up. They do seem to be game changers. Wasn’t there an EOD rule Julie used?
String
String,
Julie has a rule about outside days and
weeks. For outside days, you trade the
direction at the end of the day….odds
are 70% that your’re right. For outside
weeks, you trade the direction that the
week closes in…odds are over 90% that
you are right.
I should have waited until 4 PM EDT. But
I jumped the gun because the run at 951
failed.
Paula
Here’s my current SSO trade:
http://www.freestockcharts.com?emailChartID=548e3f46-65a0-474f-a7fe-e0e8ae31632e
Stringm,
BBT 1,5,15min has bunches of spikes. Not good.
Inverse has two support, 5min 36MA and 15min 9MA. SPY approaching 5min 36MA resistance.
SPY just broke through resistance. May hold since we’ve been down all day.
George,
For short term moves of 3 to 5 days, I
suggest you consider buying SPY put/call
options….buy first in-the money option.
If the SPX moves 50 points, a 3XETF will
return around 30% on your investment.
A SPY option will return about 75% on
your investment. First in-the-money for
short term moves…first out of the money
for intermediate term moves. Exp. 6 weeks
out for short term moves…4 months out
for intermediate term moves.
When you have some time, take a look at it
….where you put your money is important.
Paula
May deficit over 6 times prior deficit.
Maybe Global Research has it right.
paula,
I’ve been looking at options for some time now. Matt mentioned them some time ago. I like the leverage, or whatever it’s called. I’ve been hesitant because of the other factors involved like the value of the option and the time-delay.
Both the FTSE and Dax closed with a nose-dive. Let’s see if the SPX follows suit.
watch the financials….they will control the close
George
I have no spikes in BBT. Do you have a chart open all the time for BBT, or do you click a symbol to get it brought up? I waited on SSO to cross the 36MA and come back to it. The first push where you entered didn’t give me a +DI cross, so I didn’t get in. I got in at 26.88 and left when we started approaching the 36MA on the 5.
String
Paula
Looks like EOD might be OK for your Julie trade!
String
String.
Julie should think about giving me a big
check for taking her in early and getting
extra profits. I will wait until tomorrow
before asking her for the big check. I
do have a stop placed where she will not
take a loss.
Paula
String,
When the SPX took a run at 951, I put in
a sell short order in 3 ticks below yesterday’s
close. And I started to breathe again when it
became an outside day to the downside.
Will keep O2 close by just in case.
Paula
SPX bucking the European model so far…
Stringm,
Yes, I keep my charts open.
That SSO trade is still going.
The market successfully tested the bottom of its trading range today, so another shot at the top is probably in the cards.
Futures only 1.5 points away from closing green…
SPY bumping up to the 15min 36MA. Dump time.
George
Change the symbol on the chart and then go back to BBt and see if you have the spikes.
String
String,
Julie will still speak to me. Got stopped out
for a small profit.
Paula
George
I see that on the SSO trade you moved up to the 5 and never lost the MACD so you stade in. I did want the risk and took the money and ran. Guess I need to be more attentive to the rules.
String
stade, now what kinda word is that?????
The XME is close to surpassing the XLF as the top sector since the rally began back in March. So, you should have it on your radar even if you don’t plan on trading it. At the moment, the XME is 0.01 away from making a 9/36/15 cross-up.
Will be a long night…watching GLOBEX.
paula, nice trade. I had to leave when the futures were up nicely but they couldn’t hold until the open. then spx falling much faster than dax … no lower low … futures did close above the 200ema for the 4th day in a row
to keep everyone guessing dax did close afterhours unchanged to the regular trading. Matt, I’ve noticed your referencing to dax/ftse close now more often. A pattern I’ve seenquite often is the unchanged close – but I have so far not found any reliable indicators to predict it.
George, as long as you keep options only for a short period of time, decay should not eat away your profits.
Stringm,
Correct. This one worked out well because it kept going. However, I got my biggest funds out on the inital move up and let only 1/4 ride. The initial was .10c gain, the remainder was ~.50c.
I should have gotten back in and bought more, but didn’t. I was busy chasing BBT.
Get the 1,5,15,30 and 60min charts up and you’ll see that the stochastic on all those time frames bottomed and began moving up simultaneously. First, the 1min, then the 5min….etc, started going positive.
That’s the alignment that really gives a good move. Could get stopped out at one of the higher time frame resistance areas, but the ride is nice.
Knowing the uppers are moving up, each stochastic dip and cross above the 9MA on, say, the 1min would work. Or, switching up to each time frame works because if a 1min dips below 36MA or something, that is only a red candle on the 5 min and doesn’t move it much.
The same rules are followed switching up to a higher time frame. But it is starting a fresh trade management. If price on this time frame crosses the 9MA and MACD histogram ticks below zero, exit.
I may add that not all of this is perfect. Often, there may be a teenincy tick below or above zero but all is well. I check the stochastic when I get an entry or exit to see if it is a buy or sell (positive or not) or has reached a bottom. This goes back to volatility where sometimes it will overrun the indicators.
Maybe use stops to help stay in? The logical place for stops is .05c below the stochastic bottom of initial entry, or each stochastic bottom after that. I would have gotten stopped out after entry if I used one too closely. But giving a little wiggle room helps.
I monitor each trade and when the rules are violated I get out. I don’t care what it does after that. I forget it, and wait for the next setup. I know cycles will continue to come along as well as I know the sun will rise each day.
Yerk,
If options can be used short-term, the way I trade, they woud be very beneficial.
I’d have options right now on the long side while riding the short side waves.
Thanks
George
Did you change the BBT chart to another symbol and then go back? Did it get rid of the spikes? I have a theory if it did.
String
George,
Yes, you can scalp options and trade them very quickly. Many, such as SPY options, are very liquid and trade with tight spreads. For a day-trade, as Yerk says, you don’t even need to think about time decay. In fact, you can think of them just like shares of a stock, only more volatile. You can also experiment with very small dollar amounts to see if you like it.
Matt
Yerk,
I’ve heard that the FTSE is a leading indicator for the US market. Also, I assume that the same giant banks and hedge funds are simultaneously trading on all the major US and European indexes, so they are likely to create the same patterns on all of them.
I’ve noticed that the US market will often close with the same pattern as the FTSE and/or Dax. It’s not a sure thing of course, but something to consider.
Matt
Stringm,
I just thought of this. I would rather lose $ following my rules than to lose not following them.
That SSO trade is a good example. Had I not followed my rules, when price dropped below my entry price I would have gotten out for a loss. I could and would have possibly re-entered when it started to turn back up because of my entry rules, too.
It’s difficult to watch those candles wiggle up and down. Each time they move opposite of our desired direction there’s a feeling that a mistake has been made. Even those violent candle moves cause the stochastic and MACD to move in the proper direction, albeit for shorter duration occassionally.
Staying the course is often difficult because of those reasons. Watching and following the indicators keeps us out of harms way. They give us the ‘edge’. And while not all may work out for whatever reason, overall, we will succeed to be profitable.
In my research, I’ve found that more profits can be made by being unprofitable at times. To put it another way, using some trading methods that have higher losses or drawdowns can produce more gains vs. one that has fewer losses and drawdowns.
As they say, “it’s in the numbers”.
Stringm,
Yes, spikes are gone. What that all about?
Matt,
Thanks, you all are making me salivate. I’m ordering option authorization forms from my broker.
George,
For day-trading, you can also think of options as volatile penny stocks. For example, this afternoon I bought some SPY call options. They cost me 19 cents each, and by the end of the day, the bid was 21 cents – a 10.5% jump.
Commissions are higher on options trades, and that can make a difference in scalping profits, so make sure to check that. You can probably also negotiate lower commissions since you are such a big cash cow for your broker.
Matt
I’m a Cash Cow for my broker for sure!
MOOoo
George
I think what happens is there is a communications block with other internet services. There is some conflict at times on what program gets the bandwidth on the internet. I have noticed that SD will just freeze at times and then pick back up. When it starts again there can be spikes in the charts. I don’t have the solution to stop it. I have figured out getting the chart to refresh will most times fix it though.
String
Stringm,
Silly question. Would that affect automation?
Nice to know it can be fixed on-the-fly.
George
I am not sure. I really am not trust worthy enough to set up a trade trigger and go vacuum. The problem is coding what one sees on the chart into a strategy. A teenie tiny bit below the zero line is kinda hard to code. You make decisions in real time on what you see, and the ingrained patterns you have developed. Coding that flexibilty is a trick. I am working on quantifying that teenie tiny thing. I have had this dilemma myself.
Everything that can be done as an alert or trade trigger can be done as a scan. I have 3 setups right now. I call them my hair lip strategies. If they pop up in my scan window, I take the trade, and I don’t care if it hair lips the Pope. That is why I am always quizing you so I can add another strategy to the hair lip list. That was fun today talking about the SSO trade as it happened. Thanks for the input.
String