Phileo's Picture Windows

Swing Trading blog

2011-10-07T07:20:00.001-07:00

Another adventure of sortsRead Full Post.....I've started a blog to capture my thoughts and strategies in swing trading.You can check it out here.Going forward, this blog will be used primarily for trading futures, and market analysis trading ideas of various futures markets.

Outlook for Turnaround Tuesday, Sep 20/11

2011-09-19T20:26:00.001-07:00

Capture some of my thoughts on S&P500 eMini futures for tomorrow's sessionRead Full Post.....Quantifiable Edges says that the week following OpEx in Sep is the weakest week of the year.I am also indirectly inferring from the Gap Guy that based on current patterns, tomorrow's session will have a downward bias, at least initially. FOMC rate announcement is not until Wednesday, so that leaves Tuesday as the perfect days for bears to be the aggressor.The current Asian session indicates that the day session battle between bears and bulls in the 1182-1195 range is still unresolved.I think that the range for ES for tomorrow (Tuesday's) day session will be 1195 - 1175Bias is down.

Samsung Galaxy Tab vs. Apple iPad (NASDAQ: AAPL) : Shootout at the OK Corral!

2010-12-20T21:18:00.000-08:00

Although the iPad has a 2 year first mover advantage, Steve Jobs should not be so non-chalantly critical of the competition, which is catching up fast. Very Fast.
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My company bought a Samsung Galaxy Tab for a project at work, and I was able to borrow it to use exclusively for the rest of this year.

"7-inch tablets are ... useless"
- Steve Jobs, Oct 18, 2010

"Competitors will likely offer less for more."
- Steve Jobs, Oct 18, 2010

At my local Bell Mobility dealer, the 7" Samsung Tab costs $649 + $35/mo for 5Gb data plan on an HSPA network. The Apple (NASDAQ:AAPL) 9.7" iPad w/ 3G data plan costs $679 + cost of data plan. So assuming an equivalent data plan, then for an extra $30, you get almost 40% more screen real estate. Ok, fair enough, pricing goes to Apple on this one.

"7-inch tablets are too big to compete with a smartphone and too small to compete with an iPad."

It was a dark and stormy night. My friend was holding a party. He had recently bought an Apple iPad. I was debating whether or not to bring my Galaxy Tab with me to the party. Heck, why not ?

I arrived at the party fashionably late. There were some people I had not seen for a while, so I engaged in the usual social chatter to get a "download" of their happenings while we ate takeout food. After dinner, the social chatter inevitably turned to tech, and then of course to tech toys. These people were talking about the new tablets, and naturally, I informed them that I had the Samsung Galaxy Tab. Naturally they wanted to see, and so naturally, I took mine out to show them. At this point my friend overheard our conversation. And so naturally, he said he had an iPad, and so naturally, we asked him to show it.

We sat down at opposite sides of the coffee table. I felt like Nolan Ryan staring down Mark McGuire. He showed off Multi-touch pinch zoom of maps on the iPad. Not a problem on the G-Tab. He showed off swiping to the next page of apps. "Check" on the G-Tab. He showed off an accelerometer game called Labyrinth. "yup" on the G-Tab. He clicked on a YouTube icon to show how he could view videos. Well, G-Tab can do that in the browser ! NY Times on the iPad? Ditto on the G-Tab, although I do admit the bigger screen real estate does make it easier to read more on the page.

At this point the conversation turned to other tech themes. Which suited me fine, since I was not really that familiar with using the G-Tab, as I had only just got my hands on it a couple days earlier. I had downloaded only a couple apps from the Android market. But later that night, I decided to explore the G-Tab, or Google's (NASDAQ:GOOG) Android OS really, a bit further.

"Having done extensive user testing on touch interfaces, we really understand this stuff. "

Here are some things that G-Tab can do, which I'm not sure iPad can do:
- video chat on Skype.
- scan business cards with the camera, convert to text and store into contacts list with 1 touch
- order Indian takeout food in Hindi
- 720x480 video recording
- 720x480 video recording while listening to grooveshark.com and downloading an app from the Android Market.

So, while the G-Tab comes with its own set of warts (eg. I can't connect over WiFi when using WEP encryption), it certainly is no slouch and can more than handle itself very well in a head to head battle with the iPad. I am actually looking forward to bringing the G-Tab to the next iPad party. So it really comes down to what kind of a user are you. Again, like I said, which is the lesser evil: being forced to follow a cult, or having the sanctity of your privacy be pillaged and exploited ?

Top 5 reasons to use Google Chrome

2010-11-24T10:05:00.000-08:00

The Chrome browser has come a long way in just under 2 years.

Not too long after Chrome came out, I posted a rant on why it sucked. Well, it's 1 year and 10 months later, and I think I need to re-visit that rant.

What has changed my mind? Well, Chrome has evolved, it's changed for the better, and it has addressed all the issues that I ranted about prior. Plus it is not going to go quietly into the night, so I thought I would switch over to using it. I am now using Chrome for all of my surfing needs, and only occasionally resort to FF3.6 or IE8 if there is a problem that I cannot solve in Chrome. Let's take a look at what I ranted about before, and see what has changed ......

1. Chrome UI has been polished up:
Just like when the Acura Integra first came out with its odd double circle headlights, all things GUI related require time to adjust. They've resolved their scrolling issues, and now have extensions to provide dropdown URL history, and switching to another search engine. Also they've provided a download progress bar too.

2. Flash support:
As I later found out, the Yahoo!Finance site does not properly work on Chrome because Yahoo refuses to recognize Chrome's user agent. So, installing an extension that spoofs any browser's UA string resolved this issue.

3. Browser extensions:
This is a potential game changer, as any feature set available on FireFox should also be doable in Chrome, just need someone to write the extension for it if it does not yet exist.

4. Resource allocation:
Before, I complained that Chrome would hog more memory to implement its novel multi-process browser model. However, now I am beginning to see the reason and purpose behind its need for more memory than FireFox. Simply put, FireFox aspires to be a good browser, but Google Chrome has bigger aspirations.

5. NO longer worse than Firefox:
FireFox is still the yardstick by which all browsers should be judged, but in the past 2 years, Chrome has made visible and tangible progress towards becoming pound for pound comparable to FireFox's feature set.

To sum up , Google has come a long way in the past two years, and if this is any indication, it has big aspirations, especially with its plans for the Chrome app web store. Just more reasons to consider using it now, as I can see the potential for it to dominate like how IE dominated netscape in winning the browser wars in the 90's.

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Results for Wednesday, July 14, 2010

2010-07-14T13:49:00.000-07:00

Overtraded, -2.5pts
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My system keeps giving out good signals, but I was not focused today, and was too late for the first 2 signals. My lack of focus also led me to miss out on the gap fill setup (long 1086.5 at 635am PST). Frustrated, I decided to take some trades outside of my system's signals, and lost.

I took my system's 4th (and 2nd to last) signal, and made back some of my losses.
Small consolation.

Results for Friday Jul 9

2010-07-09T13:59:00.000-07:00

3W, +2.5pts.
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My system gave 4 signals, and I found 2 discretionary setups.
Trade1(discretionary):
L1064.5, stop1062.5, T1=1066.5
I exited 1065.5

Trade2:
S1070.25, stop1072.25, T1=1068.25
Did not take this trade, although the correct entry was to wait for the spike right into 1071 reistance, and short there.

Trade3(discretionary):
S1068, stop1070, T1=1066
This one was a setup for a reversal of the pullback and trying to catch more downside.
As it turns out, there was no more downside, especially since right after I entered short, I got a long signal from my system, so it the correct decision to exit 1067.25

Trade4:
L1067.5, stop1065.5, T1=1069.5
passed on this trade, as it was hard to adjust to the long bias right after I had exited my short.
It actually never quite made it to its target, so probably would have gotten 1.5pts if I had actually taken it.

Trade5:
L1069.5, stop1067.5, t1=1073
This was a valid signal from my system, so I faithfully executed this according to plan. I was 1pt into the money when some ambush selling came out of nowhere, which scared me out breakeven. Had I had the courage to hold on (the pullback did not break the bullish structure of higher lows), I would have reached my target.

Trade6:
S1073.25, stop1075.25, t1=1071.25
I took this trade, as it was a fade of the tick extreme after 3pushes up. Exited too soon at 1072.5.

I traded like a timid small player today, but the most important thing was that I did not make any mistakes in execution. Trade management as always, could use more improvement. But the incremental improvement is encouraging.

Monday will be important, as I need to keep the momentum going of avoiding any mistakes, and staying out of trouble.

Organizing my system

2010-07-08T21:24:00.000-07:00

Just a note on how I will be organizing my system.
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I think the best way to organize my system is to post my signals onto Twitter, and the daily update and discussion/analysis of results onto this blog.

I have created a new account, @pTradeSystem to facilitate posting of my signals.
I can't guarantee that I will post every signal, but the ones I do post will be as close to real time as possible.

Results for Thursday, July 8, 2010

2010-07-08T14:28:00.000-07:00

1W 1L, +1.25pts
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My system generated 5 signals today (1 was discretionary, outside of the system), but I only took 2 trades:

Trade1:
S1064.5 stop1066.4 T1=1062.5

I passed on this trade, as it was right near the open

Trade2:
S1067 stop1069 T1=1065
I front ran my signal, and entered short too soon at 1066, and got stopped out 1067.5

lost -1.5pts

Trade3:
S1063.25 stop1065.25, T1=1061
I executed and managed this trade much better, exited 1060.5
+2.75 pts.

At this point, I stopped taking any more signals from my system and was done for the day as I had other things to attend to.

Trade4:
L1057.75 stop1055.75, T1=1059.75

Trade5:
L1055.75, stop 1053.75, T1=1057.75

Trade6:
L1055.5, stop 1053.5, T1=1058

Still need to work on following my system better, and not try to out guess or front run the signals. But overall, an improvement over yesterday, as I was patient enough not to take any boredom trades while I waited for a signal from my system.

Key is to be patient, as it always was the key, and always will be the key.

results for July 7, 2010

2010-07-07T13:10:00.000-07:00

2W, 2L, -2.5pts

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Trade1: L1028, stop1027, T1=1031
exited (too soon) at 1028.75

Trade2: S1035, stop 1037, T1=1033
passed, did not take trade

Trade3: S1039.5, stop1041.5, T1=1037.5
stopped out
This trade would have worked and target was realistic (above the 1036 support), but I needed a bigger stop because it was counter trend.

Trade4: L1038.75, stop 1036.75, T1=1041.75
did not take trade

Trade5(discretionary): L1040, stop 1038, T1=1042
exited 1041

Trade6: S1044.75, stop 1046.75, T1=1043.5
did not take trade

Trade7: S1050, stop 1052, T1=1049
did not take trade

disappointing today.
After getting stopped out, I stopped following my system. Eventually, I tried to fade the trend day, and wound up losing 2pts overall on the day.

Today's lesson is simple:
Follow the system!

Had I followed the system, I would not have lost 2pts.

exit signal1

2010-07-07T06:54:00.001-07:00

652am exited L1028 @1028.75
setup was reversal of pullback targetting new highs.
It was not a signal from my system.

+0.75 pts.

signal 1

2010-07-07T06:51:00.001-07:00

649am: long 1028

daily summary: Mon. Jul 6, 2010

2010-07-06T13:32:00.000-07:00

5W, 1L, +4 pts on the day.

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My new system gave me 8 signals (but I only traded 5 of them), I found 1 setup on my own, for a total of 6 trades as follows:

Trade 1:
L1029, Stop 1027, T1=1031
actually exited 1030, +1pt

Trade 2:
S1033, Stop 1035, initial T1=1031
exited 1032, +1pt
This was right on the money, but I screwed up the trade management and exited too soon (was impatient).

Trade 3:
S1036.5, Stop 1038.5, T1034.5
scratched.
I was trying to front run my short signal here, and paid for it dearly with a scratch trade. It was counter-trend again, so definitely needed to wait for the confirmation.
The signal was to short 1038, which turns out this was the HoD.

Trade 4:
L1033.5, Stop 1031.5, T1= 1035.5
stopped out 1032
lost -1.5pts
This was my own discretionary setup. Again, I entered too soon and should have been more patient in waiting first for confirmation of the reversal.

Trade 5:
L1025.5, Stop 1023.5, T1=1027.5
+1.0pt, +1.25 pts on 2nd contract
Much better waiting for the confirmation, a bit better on the trade mgmt.

Trade 6:
L1019.25, Stop 1017.25, T1=1021.25
+1.75pts, +0.25pts on 2nd contract
Good execution, good trade mgmt.

At that point, i was done for the day. My system gave me 3 more signals (L1019, S1020, L1015), but i did not take them.

So, the signals are golden. It was mainly lack of patience (entering too soon), and poor trade mgmt skills (exiting too soon) which prevented me from banking major coin today.
This is encouraging for me, I know what i need to do to improve, will try again tomorrow.

signal 6 final update

2010-07-06T11:08:00.001-07:00

1106am: out remaining contract 1019.5
+0.25pts

signal 6 update

2010-07-06T11:03:00.001-07:00

1101am: out 1 @1021, moving stop to 1018.25 for remaining contract

+1.75pts

signal 6

2010-07-06T10:58:00.001-07:00

1057am: long 1019.25

signal 5 final update

2010-07-06T10:12:00.001-07:00

1008am : exited remaining long @1026.75
+1.25pts.

trade management better this time, and timing also a little better this time, although I still entered a little too early (1025 was ideal long entry).

signal 5 update

2010-07-06T10:03:00.001-07:00

1002am: exited 1 @1026.5, moving stop up to b/e for remaining 1 contract

locked in +1pt thus far.

signal 5

2010-07-06T09:55:00.001-07:00

955am long 1025.5

exit signal 4

2010-07-06T08:27:00.001-07:00

826a out 1032
loss 1.5pts.

signal 4

2010-07-06T08:18:00.001-07:00

817am long 1033.5

exit signal3

2010-07-06T07:21:00.001-07:00

720am exited b/e. too close for comfort. entered too early again. will be more cautious of countertrend shorting

signal 3

2010-07-06T07:10:00.001-07:00

709am: short 1036.5 2/2 stop/T1

exit signal2

2010-07-06T06:58:00.001-07:00

657am covered short at 1032 ahead of 7am reversal time, too much strength and entered too early (didn't wait for the +ve TICK extreme first)

+1pt

signal 2

2010-07-06T06:53:00.001-07:00

653am short 1033, 2/2 stop/T1

exit signal1

2010-07-06T06:44:00.001-07:00

644am: exit 1030

+1.0 pts.

signal 1

2010-07-06T06:41:00.001-07:00

641am: went long 1029

Trying out New System

2010-07-02T11:43:00.000-07:00

trying a new approach.....
Read Full Post.....
To help address the issues in the previous post, i will be trying out a new mechanical indicator to help with my discretionary trading.
The mechanical indicator will work to supplement the discretionary trading of key Support/Resistance levels.
The purpose is to provide more discrete and rule based decision making so that I won't get frustrated at not taking valid signals.

I will post signals from this indicator for the next week into this blog, and also record the results of that signal. Then after 1 or 2 weeks, assess the result, make whatever tweaks are necessary, and then go live with this indicator.

Frustration

2010-06-04T20:26:00.000-07:00

Hanging out at MyPivots.com these days...
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For the second day in a row, I made the right call on the direction of the markets, but was unable to capitalize.
On Thursday, I called for a probe of 1105-1106 prior to the gap fill attempt (ie. drop down to 1097). The market action transpired exactly as I had expected: Rally to 1105.25, then dropped down to 1097.25 (before it retraced and then dropped further down to 1091).
Unfortunately, I went short 1101.75, and exited too early at 1099.75

On Friday, on the break of 1079-1078, I called for a drop down to 1070. However, I was unable (or maybe I was too scared?) to find an appropriate low risk entry point to ride the drop down.

If these were one-off problems, I would not be so self-critical. But I have noticed that they are starting to become a common pattern now. Both of these missed opportunities can be traced to the same problem of a fear of losing money. But is there a deeper root cause? Am I not confident enough in my ability to perform? These are questions that I will contemplate as I reread Mark Douglas's "Trading In the Zone" and Dr. Brett's "Enhancing Trader Performance" in search of an answer that makes sense.

Trade Update, May 18, 2010

2010-05-18T22:54:00.000-07:00

Summary
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Added to my Goldman Sachs Group, Inc. (NYSE: GS) position on the breakout above 140 as per plan. However, the sellers showed up later, and the broad based weakness led to Goldman Sachs selling off. I exited my full position at breakeven (140). Will probably need a couple days to determine whether there is any buy support at 136.6.

Started a 1/4 position in Berkshire Hathaway Inc. (NYSE: BRK.B) as per plan.
long 75.6, stop 73, target 80+

IBM (International Business Machines Corp., NYSE: IBM) has been acting the strongest during this OpEx selloff, along with MacDonald's. I will look to buy both names on weakness.

Another name has caught my eye, and that is American Capital Agency Corp. (NASDAQ: AGNC). This is a mortgage REIT that buys MBS's and CDO's and makes money on the interest rate spread. They pay a 21% dividend. They recently completed a secondary stock offering, which was priced at $25.75. I will monitor this stock to see if it can stay above 25.1 next Friday.

Deja Vu ?

2010-05-17T21:59:00.000-07:00

Summary
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Lately, there has been quite a lot of conflicting opinions about whether the market will go down or go up. When there is this much crosscurrent of opinions, I find it best to stop reading them, and concentrate on the chart and listen to the message of the market. I did notice something interesting about today's action.

Today's action looks surprisingly similar to the hammer reversal on Feb/10. I have described some parameters which, if we are indeed putting in a bottom, I think the market will conform to.
Will look for confirmation to short 1141-43 area, and buy 1124-26 area.

Baidu Inc (NASDAQ:BAIDU) did not bounce as strongly as the rest of the leadership stocks. Therefore, it is safer to watch for signs of buying strength at the gap fill 71-71.4

Goldman Sachs (NYSE: GS) looks interesting, especially if the overall market is in the process of bottoming out:

If GS dips below 140 again, I plan to buy my other half position. stop on full position will then be 138. If a rally materializes in the afternoon, then I may even hold my position.

I didn't have a chance to buy Berkshire Hathaway Inc. (NYSE:BRK.B) because I was too busy scalping BIDU today for a few dimes. But now that the market is potentially trying to carve out a bottom, I will pay attention to the oracle of omaha. Plan is unchanged for BRK.B tomorrow:
1/4 position long at 76
1/4 position long at 75
1/4 position long at 74.5
1/4 position long at 74
initial stop on all 73
target 80

Trade Update

2010-05-17T14:13:00.000-07:00

Goldman Sachs !!
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I only went long half of a position in Goldman Sachs (NYSE: GS) on the afternoon break above 140. I only took a half position because I believe there will be a re-test of the 138.5 lows. However, I recognize that I could be wrong, therefore, I needed to execute as per my previously described trade plan, but with reduced risk.
My stop is 139.5.
GS broke back above the 141.5 resistance level and even closed above that level, but is not out of the woods yet by any menas.
This week should tell us whether Goldman Sachs is trying to build a base at these levels (138-139).

As for my Visa Inc (NYSE: V) trade (bought 76.5, sold 78.9), I am glad the market offered me the opportunity to get out this morning. I timed my sell pretty near the Highs of the Day. That huge gap down indicates a big overhang of stuck longs, so there is no reason to look at swinging long Visa for the next few weeks until at least it can build a good base.

sold visa

2010-05-17T06:47:00.000-07:00

Summary

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sold Visa Inc. (NYSE: V) at 78.9.
Thought about waiting for a last gasp exhaustion break above 79, but was too busy watching Baidu, so I bailed 78.9 good enough...

Weekend Review, May 15, 2010

2010-05-15T23:58:00.000-07:00

S&P 500 review, along with some stocks, and update to my buy list.

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This pullback feels a bit different from the previous one that occurred in Jan-Feb/10. In the previous one, BPSPX bottomed out at 64.5 before resuming its march forward. This time, we are already below 64. So, there is a potential for a deeper correction down to 1090 or so. However, I am not expecting the Feb/10 lows of 1040 to be violated. Because of the ongoing European Debt crisis, we may be entering a period of sideways movement until Sep/10.

Moving my stop in Visa Inc. (NYSE: V) up to 76, still hopeful it can dead cat bounce up to 81-ish.

Eyeing the gap fill at 71-ish for Baidu Inc. (NASDAQ: BIDU). This stock is showing amazing strength given current market conditions. I will try to get in before the start of earnings run-up next month.

Will also be looking to buy IBM (NYSE:IBM) for an earnings run-up. Note that it is also above its pre-crash levels. Baidu and IBM are one of the few stocks that I have found so far that are above its pre-crash levels. Well, Google (NASDAQ: GOOG) is just barely above its pre-crash levels, but since it is similar to Baidu, I will swing Baidu instead of Google.

no action yet until I see how it behaves under 141.5. My original plan still applies:
Goldman Sachs (NYSE:GS):
wait for the dip below 140, and then buy the breakout back above 140
stop 135
target 150

Berkshire Hathaway Inc. (NYSE:BRK.B) is just barely above its pre-crash levels. Trading plan for this stock is a bit trickier. I think I will have to scale into this position.
1/4 position long at 76
1/4 position long at 75
1/4 position long at 74.5
1/4 position long at 74
initial stop on all 73
target 80

Plan for General Electric (NYSE:GE) slightly changed from original post :
buy any dip below 16.5
stop 14.0
target 21

All other plans for stocks that I mentioned previously are cancelled.

bought visa again

2010-05-14T12:42:00.000-07:00

Summary
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bought back visa at 76.5
stop 75.65
target 81-82

hold over the weekend unless i get stopped out

exited longs

2010-05-14T10:25:00.000-07:00

out Visa (NYSE: V) at 77, will wait for better entry on Visa to swing long
Still holding BIDU, raising sell stop to 72.5

Update:
Exited BIDU 73.35.

Currently no positions.

Was hoping for some buying strength into the close, I don't think that's going to happen.
Wait for next week to see if buyers show up.

Get Ready to Buy - Update part II

2010-05-14T09:35:00.000-07:00

bought BIDU, and V
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In my previous post, I discussed a list of stocks that I planned to buy on a correction. One stock in my previous post has triggered, and I bought another which I did not previously discuss.

Long Visa (NYSE:V) 76.67
stop 74.5
target 81-82

Long Baidu (NASDAQ:BIDU) 72.83
stop 70
target 79

Get Ready to Buy - Update

2010-05-08T10:02:00.001-07:00

Update on my shopping list

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Here's what I plan to do in my retirement account if the following stocks reach my levels:

General Electric (NYSE:GE) :
buy any dip below 16.5
stop 14.5
target 22.5

Goldman Sachs (NYSE:GS):
buy breakout above 140 if there is a dip below 140
stop 135
target 150

Visa (NYSE:V) (look at MA for confirmation)
buy 80-81
stop 77
target 88

Barclay's (NYSE:BCS):
buy breakout of 16.5
stop 15.5
target 19.5

McDonald's (NYSE:MCD):
buy 68.25
stop 67
target 72

MasterCard (NYSE:MA) (look at V for confirmation)
buy 220
stop 210
target 245

And no, I don't think it's a coincidence that they are all NYSE stocks.
If any of these trades trigger, I will make another update here.

One More Flush

2010-05-08T09:41:00.000-07:00

Setup for Mutual Fund Monday.....

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The action in 2007 is eeriely similar to what we are witnessing today:
- big 85+ pt drop
- hammer reversal
- low volatility run-up to new contract highs
- volatility expansion that leads to an even bigger drop
- 50d EMA rolling over, but 200SMA still rising.

Back in 2007, NYMO peaked first, and then put in a higher low (+ve divergence). That, along with a high volume white candlestick marked the short term bottom.
So, here's where we stand today:

- big 100pt drop
- hammer reversal
- low volatility run-up to new contract highs
- volatility expansion that leads to an even bigger drop
- 50d EMA rolling over, but 200SMA still rising.

However, NYMO has not yet put in a higher low. Also, on Friday we had a 40pt selloff, but no bullish response to it (couldn't close above 1122.75). So I don't think the short term bottom is in yet.

We could see new contract highs after this correction. My rationale is that the 200SMA is rising, and this is the very first time it has been tested.
However, my own analysis based on past corrections (Aug07, Jan10) suggest that we could see one more capitulative flush down before we march on to new highs. Certainly the current downtrend of lower highs and lower lows needs to be broken before any meaningful rally can take place.

As for Monday, well, I think we will conform yet again to Mutual Fund Monday (+88% chance of close > open). But I think it will be a dead cat bounce that does not affect current market structure.

Get Ready to Buy

2010-05-07T10:29:00.000-07:00

Buy when there is blood in the streets..... we're getting close

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My shopping list includes:

Goldman Sachs
McDonald's
Visa
MasterCard
Barclay's

Potential Short Term Top

2010-04-28T14:53:00.000-07:00

Greece, Portugal, and Spain credit downgrades may have put the brakes on this run-up.

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Today SPY attempted a reversal of yesterday's drop, as indicated by the white candlestick. However, it failed to close above the 20d EMA; that is the first warning sign. Also, price could not retrace even 50% of yesterday's drop.
ES needs to close above 1190 tomorrow to confirm the reversal. Failure to do so doesn't necesarily mean it will go down right away, but it would be another warning sign.
Also, Friday was when ES broke to new contract highs. However, the breakout has failed, as we have closed below Friday's RTH lows (1201.5) for the 2nd session now. I think this qualifies as the TraderVic 2B Top. There should be many sellers waiting at 1201.5

It is interesting to note that last week's drop (triggered by the Goldman Sachs (NYSE:GS) lawsuit) started at 1205 in ES. Yesterday's drop (triggered by Greece bond downgrade to junk status, and Portugal debt downgrade) also started at 1205.

Note how the NYA50R broke below a 7 week range. BPSPX is starting to rollover, but a close below 85 is needed to confirm the reversal.

Nasdaq has held up better, but it also looks like a break below the 7week range is imminent. BPCOMPQ also starting to rollover, a close below 70.5 will confirm.

Looking at the leaders, I see more and more of them closing below the 20d EMA (GS, GOOG, BAC, MA, AMZN, XLF). Without leadership, any market rally will be unsustainable. Unless Monday's high of 1216.75 is taken out within a week, all signs point to this as being the short term top.

Market Notes for April 9, 2010

2010-04-08T21:46:00.000-07:00

Summary

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Bears have something to work with now, as we've had 3 consecutive lower highs. Buyers are still buying dips. I think volatility will increase tomorrow, we could see a 16-20pt day.
For ES, the afternoon session needs to stay in 1183 area, or we could get some profit taking sequences.
Euro: yesterday's trade idea wasn't touched. Let's try again:
Short from 1.3410'ish area, target 1.3350

Market Notes for April 7, 2010

2010-04-06T22:45:00.001-07:00

Summary

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The market has made a good run in the past 3 or 4 days, so I will on the lookout for some profit taking sequences tomorrow. This week's weekly pivot 1170.75 hasn't been tagged either, though I'm not sure if it will be done tomorrow.

Euro: short 1.3440, target 1.3310

Market Notes, April 6, 2010

2010-04-05T22:59:00.001-07:00

Summary

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Current uptrend is well entrenched, and shows no warning signs thus far. Being overbought is fast becoming meaningless. Ascending triangle pattern resolved to the upside. Institutional money has rotated into Gold, Oil, and retail sectors in this phase of the uptrend. Classic Market Profile "P" pattern which indicates the market is accepting higher values. The unfilled gap 1173.5 and today's morning reversal at 1175 reinforces the bullish view. Lack of volatility thus far favours higher prices for later this week. Sellers will want to test today's breakout, so a re-visit of the scene of the crime (1175) is likely.
We could also see yet another bull-trap failed breakout pattern like last week. This has actually created the pre-requisite energy for buyers to take the market to new contract hights during this latest uptrend.
Alternatively, if we see a repeat of today's morning dip, I will look to buy just below the gap fill this time. I may also try to play the gap fade if things setup properly.

Euro: 1.3435 is current resistance, but long on a volume breakout above that level targetting 1.3475

Market Notes, April 5, 2010

2010-04-05T00:38:00.001-07:00

Summary

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76% of all Mondays since Jul/09 have closed above session open. 50% of the ones that didn't still closed up above previous close.

So, we have statistical evidence to look for an upside bias on Monday. For the past 2weeks, the Market has been forming an ascending triangle pattern, with the resistance line at 1176.5. Also, Thursday was an 8BNR day, indicating impending volatility expansion. Because of my modest profit targets, I think that even a false breakout could be actionable. Also, Thursday's VPOC > Wednesday's VAH(1169.5).
1.) I will be looking for evidence and confirmation to go long at 1170.5-ish or 1173-ish.

On the flip side, over 84% of all gaps since Jan/10 has been filled, so there's definitely potential for the market to at least have one sequence which attempts to fill at least half of the gap. Market accepted 1168-1169 area as value last week. I observed 7K contracts go long at 1167, which confirms 1168-1169 as value. On thursday, it tried to build value at the 1173 area.
2.) I will be looking for evidence and confirmation to go short at 1180, 1183, 1187.

The overnight session behaviour and 5IB will yield me good clues for the morning bias, and whether there is anything actionable in the first half hour.
If market response to NFP is bullish, I will be on the lookout for buyers to step in around the gap fill area 1173-ish.
If market response to NFP is bearish, I will be on the lookout for sellers to step in <= 1166.

Euro: areas to do business: 1.3475, 1.3485, 1.3515, 1.3535, 1.3565, 1.3585, 1.362

Market Notes, April 1, 2010

2010-03-31T21:50:00.000-07:00

Summary

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Fade the range 1170 - 1162.5 unless there are signs of a breakout/breakdown at those two levels.

Market Notes, Mar 31, 2010

2010-03-30T21:59:00.000-07:00

Summary

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All dips continue to be bought, and there is no follow through selling, that continues to be the theme for this month. A close below 1158 appears less likely, as price and value has been creeping up. Quarter end and month end window dressing and positioning should bring some volatility, but the daily uptrend should prevail.

Euro resistance: 1.3436, 1.348, 1.353

Market Notes for March 30, 2010

2010-03-29T20:59:00.000-07:00

Summary

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Market response to the 7am economic event will likely set the bias for the morning session. Today's VPOC(1168.75) > yesterday's VAH(1162) therefore, there should be some upside bias at 1167. Not as confident about this number because today's value area was so compressed.
Despite the fact that this market is overbought, all signs on the charts point towards more upside still. I will watch 1171-1172 for a (real or false) breakout to new HoY. This likely means 1.5pt - 2pt target initially, because it may be a false breakout. Price action will dictate final target.
A close below 1158 is still the criteria to confirm a short term top. I will watch 1165-1164 area for a potential breakdown (spike in sell volume).

Other areas to do business: 1155.5, 1158.5, 1160.5, 1163, 1176, 1179

Euro:
Euro Futures (6EM10) consolidated between 1.35 and 1.3440, which is above the area of the past 3 days. It has appeared to absorb 1.3490 resistance. Euro left an unfilled gap at 1.3410. That is the area I will watch for going long.

Other areas to do business: 1.3435, 1.356

Market Notes, Mar 29, 2010

2010-03-28T14:50:00.000-07:00

Summary

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I have a short bias, however, 75% of all Mondays since Jul/09 have closed +ve. That means there are still plenty of dip buyers despite the 3 days of distribution. Avg daily range since Quad Witching OpEx day is 13.6pts. Long 1160.5 if there is an opening gap up, and short 1167 in either case.

Euro put in a double bottom at 1.328. In the absence of any news, I will be looking for range bound consolidation. Long 1.331, Short 1.347.

Market Notes, Mar 26, 2010

2010-03-25T23:14:00.001-07:00

Summary

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Also looking to sell Euro 1.340 tomorrow

Market Notes, Mar 25, 2010

2010-03-24T23:18:00.000-07:00

Summary

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It's not clear whether tomorrow's opening gap will be filled or not. If my bearish scenario unfolds tomorrow, then the plan is to short either 1162 or 1159 (if it no longer becomes support), depending on price action.
Euro plan is simple, sell 1.3350, or a breakdown of 1.3280.

Market Notes, Mar 24, 2010

2010-03-23T23:45:00.000-07:00

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I am suspicious of this breakout in ES, but so far, sellers have not done anything of significance, and I must go with what i see, and that is an up trend. If there is going to be a selloff tomorrow, it certainly is not the message of the above chart. There is an economic report tomorrow at 7am PST, so that may or may not provide bears with some bullets, we'll just have to wait and see.

Euro is bearish. It did not have enough strength to retrace to 1.359, which was where I was looking to short. Resistance is now at 1.3565, 1.3530, and 1.3480. If Euro is still above 1.34 tomorrow morning, I will also consider shorting a breakdown of 1.34.

Market Notes, Mar 22, 2010

2010-03-22T21:56:00.000-07:00

Doing my Homework

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I observed correlations with Gold and Euro a few times through today's session, which indicates US dollar driven order flows.
Range and volatility has expanded for 2nd day in a row, and this is yet another sign of a potential short term topping action.
For tomorrow, I am biased to the downside, but am prepared with a plan for the upside, hence the wider range estimate. The attached chart above highlights 1149 FOMC breakout level, but Probably the key here is 1156 line in the sand. If 1156 support holds, that opens the door for a challenge of 1169-70. If 1156 support fails, then the 1149 buyers will be prone to give up on their position, ie. become sellers.

I will look to sell Euro 6EM10 resistance 1.359, 1.3625 on divergence or candle confirmation at those areas. If Euro acts strong still after rising to those levels, I will consider looking to enter on pullbacks.

Weekend Market Analysis, Mar 22, 2010

2010-03-21T10:53:00.000-07:00

Summary

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Euro is at a bit of a crossroads, so I probably won't plan any trades in Euro until it first shows its hand. I will be watching to see how the Euro opens for possible clues.
Levels I will be watching for a tell on the market:
GE 17.9 or 18.4
AAPL 226 or 220
IBM 129 or 126.5

Weekend Review, March 13, 2010

2010-03-13T23:24:00.000-08:00

Summary

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SPY broke above a potential double top pattern. At this point, the market can go either way, and there are arguments for both a continued march upwards (established trend, individual leadership stocks acting well) or a market pullback (sentiment indicators $NYA50R, $BPSPX, $NYMO, $CPCE are at levels where previous market reversals have occurred).
Bullish scenario (ESM10): one of the support levels 1134, 1137.5, 1142 finds more buyers, gap up and market closes above 1152.

Bearish scenario: any move above 1148 resistance is not sustained, gap down, and closes below 1134.

Euro broke out of a volatility squeeze, indicating that 1.345 may have been the bottom. The Euro breakout, along with a favorable economic report in Friday's pre-market led to a gap up in ES.

Resistance 1.381, 1.385
Support 1.3727, 1.368, 1.363

Market Notes, Feb 23, 2010

2010-02-23T06:04:00.000-08:00

Summary

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Euro sold off hard in the overnight session, will look to sell 1.3635, 1.36 resistance.

Market Notes, Feb 19, 2010

2010-02-19T06:27:00.000-08:00

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Market Notes, Feb 17, 2010

2010-02-17T06:28:00.000-08:00

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Euro has sold off quite a bit overnight. Prior support was 1.368, will monitor that area for buyers to step in.

Market Notes, Feb 16, 2010

2010-02-16T06:29:00.000-08:00

Summary

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Market Notes, Feb 11, 2010

2010-02-11T06:57:00.000-08:00

Summary

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Overnight bias was bearish, so it was appropriate to look for a short at least in the first half hour of RTH.

Resistance 1064, 1069.5, 1076
Support 1058, 1056, 1053, 1041

Euro fell heavily overnight, so that should act as a drag on the markets. Right now, that bounce at 1058 is bringing in a lot of buyers, so we shall see if it is time to go long, or just a big retrace.

Will post another update later this morning on what I am seeing.

Update:

Note how the Advance-Decline went from -1100 to +1200. NQ is acting even more bullish, rising from 1738 to 1775. This almost equals the +50pt drop in NQ from last week. ES 1064 was a point of contention for a while there, but now price has moved comfortably above it again. Now all we need is buy volume to come in to confirm follow through of Friday's hammer reversal.

I missed the move from 1062 to 1073 because I was not at my desk at the time. Will look to enter long on TICK < -800.

Market Notes, Feb 10, 2010

2010-02-10T06:49:00.000-08:00

Summary

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Brief post today, woke up later than usual.
ES is inside the move from 1058-1076, and also range bound 1064-1069.5 A break of this range will determine the direction for the day. I plan to enter on TICK pullbacks once that happens.

Euro ran to 1.381 before fading, and is now acting weak. Still looking for 1.371 to hold, otherwise I will look for shorting opps.

Choose Not to Fall

2010-02-09T17:41:00.000-08:00

"If You're afraid to fall, then you fall because you're afraid."
-- Daniel ILabaca

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found this video courtesy of @FuturesTrader71:

Fear of failure. This is an issue that occurs with many traders. The first time it happened to me, I took time off from trading. Now I think it is happening to me again.
To my knowledge, the recipe for dealing with such fears is to change my attitude. The primary concern should never be about being afraid to fail. As a trader, the primary concern should be about dedicating yourself to this craft, stalking the next setup, planning out your next trade, visualizing how you will perform when it really counts. The next losing trade is always going to be right around the corner, there is nothing that can be done to change that, therefore, there is also no purpose to be served in fearing it, or worrying about it. All paths towards the goal of consistency always goes through the facets of patience to wait for the right time and the right price to execute trades according to plan, and discipline to execute your plan in the same way, every time, day in, day out.
I think this is my interpretation of "living in the moment." Flush my mind of destructive thoughts, and replace them with constructive thoughts.
So it shall be with me, as I try to replace thoughts of fear of failure with thoughts of how I am going to plan and execute my next trade.

Market Notes, Feb 9, 2010

2010-02-09T06:02:00.000-08:00

Turnaround Tuesday.

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For the Euro, the Key levels to watch are:
1.368, 1.371

Market Notes, Feb 8, 2010

2010-02-08T06:03:00.000-08:00

Range contraction follows Range expansion. Not expecting any Monday meltdown.

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Looking to play the gap fill today, as it should be a small gap
potential scalp short 1067 (overnite highs, weekly lo from 2wks ago, weekly pp)
potential long 1050: VAL + LVN.

Euro might also present a potential scalp long if it breaks above 1.3685.

The path to consistency

2010-02-06T07:53:00.001-08:00

Consistency is the holy grail.

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Well, as this blog is my witness, i was unable to commit to 20days of posting the pre-market notes. As it turns out, there was a day where I could not find good trades, but I felt obligated to point out trades in my notes. So, the resolution to that conflict was to not write any notes.
However, once i stopped the first time, it was like undoing a good habit, which I do not want. So I will try a more modest goal, which is to produce daily pre-market notes for the remainder of this month. After that, I will re-evaluate.

Market Notes, Jan 12, 2010

2010-01-12T05:59:00.000-08:00

The journey is the destination

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Market Notes, Jan 11, 2010

2010-01-11T06:15:00.000-08:00

Summary

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Euro broke above and is consolidating above 1.4445 key resistance
Gold broke above and is consolidating above 1142 key resistance
NQ continues to act weaker than ES and will likely fill its gap up first.

Market Notes, Jan 8, 2010

2010-01-08T06:12:00.001-08:00

Summary

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Gold and the Euro have both responded quite positively to the NFP report
This could put an end to the run-up in the markets today, we shall see what happens in the regular session.

Market Notes, Jan 7, 2010

2010-01-07T06:03:00.001-08:00

Summary

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Gold => starting to turn bearish
Euro => bearish
Currently ES is sideways, but has yet to show any signs of weakness. Buyers are in control because the chart shows zero indication of sellers taking control - thus far. That said however, tech is already showing weakness; so, I will monitor XLF and XLE for signs of breaking down, and also as my signal to go short.

Market Notes, Jan 6, 2010

2010-01-06T06:03:00.001-08:00

In real estate it`s all about location location, location.
In trading, it`s all about discipline, discipline, discipline. And perhaps patience too.

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Gold continues to trend Up.
Euro is moving sideways neutral.

Market Notes, Jan 5, 2010

2010-01-05T06:23:00.001-08:00

Summary

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Gold: ran to new highs overnight, but has given most of it back => slight bearish
Euro: ran to resistance, failed breakout => bearish

Looking to sell resistance 1131
Buy support if I see signs of buyers stepping in.
Look at Opening 5min. to determine bias

Market Notes, Jan 4, 2010

2010-01-04T05:58:00.000-08:00

Summary

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Gold is above 1098 and 12/28 highs => bullish
Euro is above 1.4355 resistance, trying to break above 1.442 => bullish
NQ new contract highs => bullish

Unless I see some sell volume and/or failure at resistance, the mkt bias is up.

Weekend Market Analysis, Jan 03 2010

2010-01-03T10:56:00.000-08:00

3 Steps Towards Objective Observation:
- Ground your views in the market data; All views & market hypotheses must be derived from a complete review of market data
- ascertain the intraday market bias and sentiment trend
- Frame all trading ideas as a bearish and bullish "what-if scenarios"

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If overnight action is bearish, I plan to sell resistance
If overnight action is bullish, I plan to buy support.

The Strategy

2010-01-02T10:51:00.000-08:00

Successful speculation begins with Objective Observation
- Brian Shannon

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I am committed to taking the steps towards improved patience and discipline for 2010.

I have updated the morning setup portion of my Futures Trading Plan .
For the next 20 sessions, I will post a morning setup/note chart that encompasses the 5points highlighted in the plan. I will use it to provide the pre-requisite context to answer one and only one question: What is the market doing (going up, going down, don't know). Obviously if i don't know what the market is telling me, or if the market tells me that I have interpreted the charts incorrectly, there will be no trades, at least not until i have re-evaluated, and re-analyzed the chart.

Notes for FOMC Wed Dec 16/09

2009-12-15T20:13:00.000-08:00

Summary

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Volatility has dried up in the past few sessions, hopefully the FOMC decision tomorrow will bring back some volatility.

Range guesstimate: 1096 - 1116
I will look for confirmation to go long anywhere below 1099

Weekend Review, Dec 5/09

2009-12-05T22:40:00.000-08:00

"In trading, however, the person who can easily admit to being wrong is the one who walks away a winner. Besides trading, there is probably no other profession where you have to admit you’re wrong. In trading, you can’t hide your failures. The trader who tries to blame his losses on external events will never learn from his mistakes." - VICTOR SPERANDEO

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This is a SPY chart from Monday highlighting the sideways range for the past 3 weeks:

Here's what has happened since Monday Dec 1/09:

The chart can be interpreted two ways:
a) There is a complete lack of consensus amongst market participants as to market direction. Result would be more sideways consolidation
b) There are quite a lot of buyers at support still, and this is the process to make them give up control.

Sentiment has been neutral for the past couple of weeks:

Through most of the past 3 weeks of sideways consolidation, I have observed that when sellers take control, they could not follow through, but when buyers take control, they follow through. Friday's NFP selloff could be construed as follow thru from the Dubai selloff; however price is at much higher levels ever since the Dubai selloff, so the sellers have much more work to do if they want to take control.
That said, I think the odds are good for this coming week that the bottom of the range will be tested.

I will be looking for Resistance 1112

Daily Notes for NFP Friday, Dec 4/09

2009-12-03T22:35:00.000-08:00

Summary

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ES has been trading sideways since Nov 10/09, and above 1098 for past 3 days. There is a good chance we will test the bottom of the range, which is at 1086-1085.
Tomorrow is NFP Friday, which should produce more volatility.
Trapped longs and the tendency to book profits ahead of the weekend will put pressure on the bulls to defend support.
Resistance 1104, 1108, 1111, 1115
Support 1085, 1093

Gold broke a 4-day uptrend, and is showing cracks in the armour.
Resistance 1207.5, 1209, 1213.4, 1215.5

Notes for Tuesday, Nov 10, 2009

2009-11-09T21:50:00.001-08:00

"You might be a trader if you idolize a guy who goes bankrupt several times and commits suicide " -- @pipmaestro

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Notes for Monday, Nov 9, 2009

2009-11-08T20:40:00.001-08:00

"Most aspiring traders underestimate the time, work, and money required to become successful." -- Mark D. Cook
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Notes for Thurs Nov 5/09

2009-11-04T22:22:00.000-08:00

Anything is possible so long as you trust in your ability to perform.

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Sentiment indicators ($TICK, $NYSI, $BPSPX, $NYAD) have all been trending down, suggesting bearishness creeping into the market.

notes for monday, Nov 2/09

2009-11-01T16:48:00.000-08:00

Almost anybody can make up a list of rules that are 80% as good as what we taught. What they can't do is give (people) the confidence to stick to those rules even when things are going bad." -Richard Dennis

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Notes for Tuesday, Oct 28, 2009

2009-10-27T00:33:00.001-07:00

Not sure how long i can keep this up, but doing this sort of planning helps me to trade better.

Notes for Monday, Oct 26, 2009

2009-10-24T09:29:00.000-07:00

Summary

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It's always good to know about sentiment even when daytrading. BPCOMPQ has already indicated a top. Also, we are 32 weeks into this run-up, which is where the 1938 bear market rally topped out. After a couple weeks of low volatility, Volatility has increased this past week which could be indicative of a topping process. Selling resistance is starting to work again. However, a top won't be known unless ES closes below 1070. My guess is that Monday will be a "digestion" day.

Potential Euro Short Term Top ?

2009-09-10T04:21:00.000-07:00

Strange.....

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Yesterday, as I was watching the Euro, I started having this urge to sell it. I was looking only at the Euro chart and nothing else, and after staring at it for a while I wanted to sell it. I couldn't explain exactly why I wanted to sell it, only that I wanted to sell it. So I sold one contract @1.4565, just to test the waters. Price went against me shortly after I sold it. Strangely enough, I was reading "Reminiscences of a Stock Operator" at the time, and can compare it to this excerpt from the book:

I was looking-over the quotation board, noting the changes they were mostly advances until I came to Union Pacific. I got a feeling that I ought to sell it. I can't tell you more. I just felt like selling it. I asked myself why I should feel like that, and I couldn't find any reason whatever for going short of UP.

I stared at the last price on the board until I couldn't see any figures or any board or anything else, for that matter. All I knew was that I wanted to sell Union Pacific and I couldn't find out why I wanted to. I must have looked queer, for my friend, who was standing alongside of me, suddenly nudged me and asked, "Hey, what's the matter?"

"I don't know," I answered.

"Going to sleep?" he said.

"No," I said. "I am not going to sleep. What I am going to do is to sell that stock." I had always made money following my hunches. I walked over to a table where there were some blank order pads. My friend followed me. I wrote out an order to sell a thousand Union Pacific at the market and handed it to the manager. He was smiling when I wrote it and when he took it. But when he read the order he stopped smiling and looked at me.

"Is this right?" he asked me. But I just looked at him and he rushed it over to the operator.

"What are you doing?" asked my friend.

"I'm selling it!" I told him.

"Selling what?" he yelled at me. I f he was a bull how could I be a bear? Something was wrong.

"A thousand UP," I said.

"Why?" he asked me in great excitement.

I shook my head, meaning I had no reason. But he must have thought I'd got a tip, because he took me by the arm and led me outside into the hall, where we could be out of sight and hearing of the other customers and rubbering chairwarmers.

"What did you bear?" he asked me.

He was quite excited. UP. was one of his pets and he was bullish on it because of its earnings and its prospects. But he was willing to take a bear tip on it at second hand.

"Nothing!" I said.

"You didn't?" He was skeptical and showed it plainly.

"I didn't hear a thing."

"Then why in blazes are you selling?"

"I don't know," I told him. I spoke gospel truth.

"Oh, come across, Larry," he said.

He knew it was my habit to know why I traded. I had sold a thousand shares of Union Pacific. I must have a very good reason to sell that much stock in the face of the strong market.

"I don't know," I repeated. "I just feel that something is going to happen."

"What's going to happen?"

"I don't know. I can't give you any reason. All I know is that I want to sell that stock. And I'm going to let 'em have another thousand."

I walked back into the office and gave an order to sell a second thousand. If I was right in selling the first thousand I ought to have out a little more.

"What could possibly happen?" persisted my friend, who couldn't make up his mind to follow my lead. If I'd told him that I had heard UP. was going down he'd have sold it without asking me from whom I'd heard it or why.

"What could possibly happen?" he asked again.

"A million things could happen. But I can't promise you that any of them will. I can't give you any reasons and I can't tell fortunes," I told him.

"Then you're crazy," he said. "Stark crazy, selling that stock without rhyme or reason. You don't know why you want to sell it?"

"I don't know why I want to sell it. I only know I do want to," I said. "I want to, like everything."

The urge was so strong that I sold another thousand. That was too much for my friend. He grabbed me by the arm and said, "Here! Let's get out of this place before you sell the entire capital stock." I had sold as much as I needed to satisfy my feeling, so I followed him without waiting for a report on the last two thousand shares. It was a pretty good jag of stock for me to sell even with the best of reasons. It seemed more than enough to be short of without any reason whatever, particularly when the entire market was so strong and there was nothing in sight to make anybody think of the bear side. But I remembered that on previous occasions when I had the same urge to sell and didn't do it I always had reasons to regret it.

I have told some of these stories to friends, and some of them tell me it isn't a hunch but the subconscious mind, which is the creative mind, at work. That is the mind which makes artists do things without their knowing how they came to do them. Perhaps with me it was the cumulative effect of a lot of little things individually insignificant but collectively powerful. Possibly my friend's unintelligent bullishness aroused a spirit of contradiction and I picked on UP. because it had been touted so much. I can't tell you what the cause or motive for hunches may be. All I know is that I went out of the Atlantic City branch office of Harding Brothers short three thousand Union Pacific in a rising market, and I wasn't worried a bit. I wanted to know what price they'd got for my last two thousand shares. So after luncheon we walked up to the office. I had the pleasure of seeing that the general market was strong and Union Pacific higher.

"I see your finish," said my friend. You could see he was glad he hadn't sold any.

The next day the general market went up some more and I heard nothing but cheerful remarks from my friend. But I felt sure I had done right to sell UP, and I never get impatient when I feel I am right. What's the sense? That afternoon Union Pacific stopped climbing, and toward the end of the day it began to go off. Pretty soon it got down to a point below the level of the average of my three thousand shares. I felt more positive than ever that I was on the right side, and since I felt that way I naturally had to sell some more. So, toward the close, I sold an additional two thousand shares.

There I was, short five thousand shares of UP. On a hunch. That was as much as I could sell in Harding's office with the margin I had up. It was too much stock for me to be short of, on a vacation; so I gave up the vacation and returned to New York that very night. There was no telling what might happen and I thought I'd better be John ny-on-the-spot. There I could move quickly if I had to.

The next day we got the news of the San Francisco earthquake. It was an awful disaster. But the market opened down only a couple of points. The bull forces were at work, and the public never is independently responsive to news. You see that all the time. If there is a solid bull foundation, for instance, whether or not what the papers call bull manipulation is going on at the same time, certain news items fail to have the effect they would have if the Street was bearish. It is all in the state of sentiment at the time. In this case the Street did not appraise the extent of the catastrophe because it didn't wish to. Before the day was over prices came back. I was short five thousand shares. The blow had fallen, but my stock hadn't.

My hunch was of the first water, but my bank account wasn't growing; not even on paper. The friend who had been in Atlantic City with me when I put out my short line in UP. Was glad and sad about it. He told me: "That was some hunch, kid. But, say, when the talent and the money are all on the bull side what's the use of bucking against them? They are bound to win out."

"Give them time," I said. I meant prices. I wouldn't cover because I knew the damage was enormous and the Union Pacific would be one of the worst sufferers. But it was exasperating to see the blindness of the Street.

"Give 'em time and your skin will be where all the other bear hides are stretched out in the sun, drying," he assured me.

"What would you do?" I asked him. "Buy UP. On the strength of the millions of dollars of damage suffered by the Southern Pacific and other lines? Where are the earnings for dividends going to come from after they pay for all they've lost? The best you can say is that the trouble may not be as bad as it is painted. But is that a reason for buying the stocks of the roads chiefly affected? Answer me that."

But all my friend said was: "Yes, that listens fine. But I tell you, the market doesn't agree with you. The tape doesn't lie, does it?"

"It doesn't always tell the truth on the instant," I said.

"Listen. A man was talking to Jim Fisk a little before Black Friday, giving ten good reasons why gold ought to go down for keeps. He got so encouraged by his own words that he ended by telling Fisk that he was going to sell a few million. And Jim Fisk just looked at him and said, "Go ahead! Do! Sell it short and invite me to your funeral."'

"Yes," I said; "and if that chap had sold it short, look at the killing he would have made. l Sell some UP. yourself ?"

"Not I! I'm the kind that thrives best on not rowing against wind and tide."

On the following day, when fuller reports came in, the market began to slide off, but even then not as violently as it should. Knowing that nothing under the sun could stave off a substantial break I doubled up and sold five thousand shares. Oh, by that time it was plain to most people, and my brokers were willing enough. It wasn't reckless of them or of me, not the way I sized up the market. On the day following, the market began to go for fair. There was the dickens to pay. Of course I pushed my luck for all it was worth. I doubled up again and sold ten thousand shares more. It was the only play possible.

I wasn't thinking of anything except that I was right 100 per cent right and that this was a heaven-sent opportunity. It was up to me to take advantage of it. I sold more. Did I think that with such a big line of shorts out, it wouldn't take much of a rally to wipe out my paper profits and possibly my principal? I don't know whether I thought of that or not, but if I did it didn't carry much weight with me. I wasn't plunging recklessly. I was really playing conservatively. There was nothing that anybody could do to undo the earthquake, was there? They couldn't restore the crumpled buildings overnight, free, gratis, for nothing, could they? All the money in the world couldn't help much in the next few hours, could it? I was not betting blindly. I wasn't a crazy bear. I wasn't drunk with success or thinking that because Frisco was pretty well wiped off the map the entire country was headed for the scrap heap. No, indeed! I didn't look for a panic. Well, the next day I cleaned up. I made two hundred and fifty thousand dollars. It was my biggest winnings up to that time. It was all made in a few days. The Street paid no attention to the earthquake the first day or two. They'll tell you that it was because the first dispatches were not so alarm ring, but I think it was because it took so long to change the point of view of the public toward the securities markets. Even the professional traders for the most part were slow and shortsighted. I have no explanation to give you, either scientific or childish. I am telling you what I did, and why, and what came of it. I was much less concerned with the mystery of the hunch than with the fact that I got a quarter of a million out of it.

Ok, so maybe it wasn't as extreme as what Jesse Livermore did. Later, as I was reviewing the charts of the other currencies, I found out something to confirm my bearish hunch on the Euro:

Lower highs on the Loonie:

Broadening mega-phone top pattern in the Aussie:

Potential Triple Top in Cable:

As it turns out, my hunch on the Euro was correct:

Euro made a lower high, and a sustained move below 1.4510 will confirm the short term top in Euro.

UPDATE: covered my Euro short @1.4540, on the sidelines now waiting for new opportunities

US Dollar Devaluation Has Begun

2009-09-08T21:38:00.000-07:00

Some charts to show a different perspective on the USD$ breakdown.....

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When gold broke out of its volatility squeeze last week, I thought that was slightly interesting, but not a real significant event especially given that the USD$ stayed within its trading range.

However,

Sunday night was interesting. Gold persisted in staying comfortably above its breakout level, Oil broke back above 70, and Euro broke out to new highs of the year. This confirms that the gold breakout was not just some random coincidence. These 3 markets are accepting higher values because the US dollar is breaking down.
The implications here are that dips in these 3 markets will be bought. There are shorts that are stuck and need to get out of their positions. I cannot see anything to change this fundamental change in trend unless one of the markets experiences a persistent breakdown, much like what we saw with Gold last week.

Market Review, Sep 5/09

2009-09-05T08:31:00.000-07:00

Summary

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Gold rallied and is acting strong. US Dollar has been range bound. Both these factors likely contributed to neutralizing the bearish sentiment.
Unless we see a re-appearance of bearish sentiment in the form of renewed selling interest below 994, then I think the odds are good that the market will trend upwards to re-test prior resistance @1031-1032. If that is the case, then a dip below 1008 should be met with buyers, and that is what I will be looking for on Tuesday's session. If the market doesn't even make it down to 1008, I will interpret that as a bullish sign.
Will also look at the Shanghai Composite ($SSEC) and FDAX on Monday for further clues to market sentiment and bias for Tuesday.

Market Analysis, July 17/09

2009-07-18T17:19:00.000-07:00

Confluence is the theme for these past couple of weeks

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In the bullish scenario, the level to watch for gold is a close above 944. In the bearish case, the level to watch is a close below 905.

Volatility in the Euro has decreased on average for most of this month. The Euro sold off after the New York markets closed, which could be a tell for the open on Sunday afternoon. However, a close above 1.42 will maintain the bull case.

Deja vu? ES looks similar to the Euro and Gold charts. Furthermore, Gold and ES closed at virtually the same price point - 937. ES could confound buyers and sellers by continuing its march to new highs for 2009. Personally, I am looking for support in ES @900, that also implies that buyers should show up in the Euro @1.407 or 1.4000.
Failure of holding 900 in ES means a re-visit to the bottom of the range (875) and the Euro re-tests 1.388.

This is the bull and bear scenario to be aware of, the market will tell us which one gets played out in due time.

Performance stats for Euro Futures trading System

2009-07-01T09:40:00.000-07:00

1st month of testing my new Euro Futures Trading System has completed.

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As previously mentioned, I have been developing a semi-automated Euro Futures Trading System, and have been testing it in the month of June. Initial results look promising:

Total # of trades: 30
%winners: 22/30
%losers: 8/30

Avg. win: 61pips
Avg. loss: 90pips

Worst losing streak: 2

expectancy: 20.7pips

There's been a few times where I thought about following the system with real money. However, I always have this nagging feeling that as soon as I start using real money, the system will go on a real losing streak. Despite the real positive performance stats, I guess I still don't have complete confidence in this system. Pretty ironic, eh? I've developed a system and I'm fearful of going live with it. I will work on the psychological hurdle for the month of July. Probably the biggest hurdle to overcome is being completely accepting and at peace with the possibility of losing 90pips on a trade. The other possibility is to program a simple C# app to fire off the signals to bracketTrader. That helps psychologically to separate out the system to stand on its own and have its own identity.

There's also a few tweaks I can make to the system to decrease the # of losing trades. More to come.....

Short term Bullish US Dollar

2009-06-06T07:44:00.001-07:00

Summary

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Patterns repeat, and History rhymes, so chances are that USD$ will likely see a repeat of the Mar20 - Apr20/09 sequence before heading back down to test the lows.

Though it may seem redundant to look at Gold if I have already analyzed the likely scenarios for the USD$, I still thought it would be an informative exercise to see what would be the likely scenario for Gold. I think Gold needs to stay above 985 for at least a couple hours to have any chance of challenging the psychological 1K mark, and I just don't see that happening this coming week. In other words, my thesis is that the more probable scenario is a print below 944 before we see it challenge 1K.

Given that the USD$ is going to retrace up, and Gold will trend downwards (at least for the next few sessions), I see the Euro going down as well.

Set and Forget

2009-06-03T07:37:00.000-07:00

Summary

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As previously mentioned, I am testing out a set and forget system for the forex futures. 7 wins and 2 losses on paper thus far, maybe a couple more days of testing to build up my confidence in the system and I should be ready to post it daily to this blog. I'm a bit excited about this one, because it: a) looks very promising b) more and more I am loving the idea of set and forget c) frees up my time to do other things (trading and non-trading related).

I have gotten into a bad habit of adding to my losing positions in recent sessions. The fact that they turned out to be winning trades is a bit of a concern from a trading process perspective, as my bad habits are being rewarded, and consequently re-inforced. The trading rule of never adding to your losers is a time tested rule, and I must work harder to follow this rule.

Where do we stand

2009-05-31T08:38:00.000-07:00

Summary

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I've read more than a couple of traders that have been calling for a continuation of Friday's last minute short squeeze into a potential multi-day rally in the coming days. That could very well turn out to be a correct prediction.
However, we really haven't worked off the overbought conditions created by the 2month rally that started back in early Mar/09. Also, the $NYSI is still over 1000, another sign of overbought conditions. If we do rally from these levels, I will watch the $NYSI still to see how that all gets resolved, who knows, maybe it is not as reliable an indicator as I make it out to be.

..........

I've been following Don Miller's blog a lot lately. I've noticed that I don't blog about my losing trades as often. Part of the reason has to do with laziness on my part, and there are those times where I just don't have the desire to talk about my screwups. But slowly I am realizing that there are still many parts of the "process" that I need to work on in order to attain the goal of consistency. Don Miller's technique of grading his trading performance at the end of each session was something I was trying to do, but just did not have the capacity to keep it up after a while.
I've also been using Twitter more, and that took away from the time used to blog here.
The solution as I see it is to be more disciplined with my time. My trading session ends when I go to work, but now in order to everything that I want to do (and to write about it on this blog), I need to enforce a definitive end to the trading session, even if it means missing out on some trading opportunities, and especially if I just came off a losing trade.
There are two simple things that I want to do: grade my trading performance each day, and write about it (even if I don't feel like talking about it), and start documenting some "set and forget" trades. Simple tasks, but tasks which require a committment on my part, hence the need to organize my time by enforcing an end time to my trading session.

(Mis) adventure with the Yen

2009-05-20T07:22:00.000-07:00

Summary

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long 6JM9@0.010460, exited @0.010477

I changed my stop to 0.010405, and held the Yen overnight, and basically waited until the trade was profitable before exiting.

Despite this being a profitable trade, there were oh so many things that went wrong with how I managed the trade:
a) I didn't sell when it dropped below .010443, ie. I moved my original stop lower.
b) I didn't use bracket Trader
c) I got into a "hunkering down" mentality which prevented me from being objective about EURJPY, which meant I incorrectly passed up trading opportunities, esp. on the EUR side of things

Even though I was confident that the Yen was in an uptrend, I still should have taken the small loss and wait for the better entry. This shows that I still have trouble taking the punches from time to time, and must continue to work on that aspect of my trading if I am to deliver consistent results

Taking The Punch

2009-05-14T07:53:00.000-07:00

They say that to be a good boxer, you have to have the ability to take a good punch.

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I had just woken up to see that the Euro was on the upswing. The swing low during the overnight session was 1.3535, and in fact the Euro double bottomed at that price level. It looked like it wanted to challenge the overnight highs, so i got long @1.36.

No worries, the structure of the chart indicated that this was just a pull back. It was safely above VWAP, so I added to my position @1.3592 and again @1.3581. Then the test of my patience began.

I pre-calculated my breakeven point (91), and when I saw price recover to 1.3597, I thought well, good, just take out my worst entry (1.36), and I will be in a very comfortable position. Except that never happened. So I stubbornly held it while it drop back below my breakeven point.

Euro probed 1.3595, and when it failed to break above 1.36 again, I unloaded one position @1.3593. Then I sat and waited to salvage this trade. Then the triumvirate of fear, uncertainty, and doubt paid their visit yet again. Euro went sideways for a while, and as time wore on, I wanted more and more to get out of my position. As a result, I failed to observe that this sideways action stayed above 1.358 the whole time, and in fact there was a semblance of a mini-box pattern setting up. So when it broke out of the boxed range, I sold my remaining positions @1.3585 and @1.3594.
So, net profit out of the trade was around -$15. The frustrating part was that had I just stuck to my original plan of waiting for price action to take out my worst entry @1.36, I would have netted over +$200 profit. Instead, I had to eat a -$15 loss.

The only silver lining out of this fiasco was that I did not let my emotions go out of control. In the past, I probably would have went on tilt and try to revenge trade my way back to profit. Instead, I ate the frustration and loss, and stepped away from my station so that I can mentally recover from this trade.

In trading, like in boxing, success really comes from the ability to take these hits and recover.

It's The Mistake

2009-05-11T21:32:00.000-07:00

Summary

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Yesterday I had a pretty good read on the evening session. For example, I didn't get worried when JPY futures dropped below my entry point, as I could tell from the structure of the chart that it was just the Asian traders taking profits and closing out their positions. My CAD short was spot on. EUR short also worked out well.
In fact I was feeling on top of the world with a 100% win rate.

Then came the North American session. I made one trade in ES and it turned against me for a 1pt loss. I made that back with a EUR long. However, I started getting tired, and decided to take a small nap before waking up again to head out for work. I woke up from my nap to find that I was short the EUR @1.3583, and EUR was currently 1.3627 !! What the heck happened? Then i remembered that I left a open order to short EUR before I took my nap. Talk about your dumb mistakes. Then it got worse when I tried to make up for that lost mistake by shorting EUR @1.3628. It almost worked, but I wasn't patient enough to hold that short all the way back down to 1.3583. It wasn't the lost profits that I was frustrated with, it was more just the one momentary lapse in concentration which screwed up my performance.

Trade Mgmt was decent, and could have been better with more patience.
Entries were good.

Focus & Alertness: was pretty good until that one moment of sloppiness in my part
Patience: could have salvaged my loss if i had waited longer with my EUR short @1.3628
Discipline: stuck to my plan for most of the session
Staying Out of Trouble: was pretty good until that one moment of sloppiness.

Ridonkulous !

2009-05-09T06:55:00.001-07:00

Summary

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The McLellan Summation Index ($NYSI on stockCharts.com) has me convinced that Mar 9/09 was the low, and everyone is waiting for a pullback to see whether that was the low. However, this pullback refuses to materialize, as every reason to sell (eg. hitting resistance levels, bearish candlestick patterns, technical indicators flashing warning signs) has only been temporary, and resolved to the upside.

The bullish strength of this current market must be respected. For me, that means now is not the time to be agressive, but rather, it is more a time to sit and wait to see how this all gets resolved.

The Euro has been just as tricky. I was leaning towards a short bias as it approached significant resistance @1.35, but that was resolved to the upside. I'll need to do some more analysis of the Euro charts in different time frames to see if there is anything interesting enough to trade off of.

OutLook for week of Apr 27/09

2009-04-26T21:23:00.000-07:00

Summary

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ES:
BPSPX indicates overbought conditions, but so what, it's been overbought for weeks now. $NYSI has been so overbought, that it makes me wonder if the lows put in in mid-March was THE bottom of this bear market.
ES opened Sunday evening's session with a gap down, and never filled the gap. This is bearish. Will we see a repeat of last monday's selloff ? History does not always repeat, but it does have a way of rhyming, right ?
If ES makes it back above 858, I will be looking for a good place (and time) to short. Beyond that, there is plenty of support zones (mid 820's, mid 830's, mid 840's). In my opinion, the strength of the bulls will be measured by how much time ES spends above or below the mid 830's. Of course, we could also wind up with a directionless chopfest, in which case i will look for small scalps of 1 or 2pts.

As for the Euro, 1.315 should be an area of support, so I will monitor for an opportunity to go for a quick long trade.

Euro Upside Exhausted?

2009-04-26T21:06:00.000-07:00

Traded the EuroFx futures in the evening session.....

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Short E6M9 @1.3220, stop@1.3235, exited @1.3185

As mentioned in my Twitter tweet, I had a downside bias for the ES, and this also led me to a downside bias for the Euro as well. Euro opened Sunday Evening's session with a small gap down that was filled. But on the hourly chart, it looked like the odds were high of a continuation of the selloff that started near the end of Friday's session.
I watched the tape, and observed it spent more time in the mid 1.3225's rather than challenge the session high of 1.3241. So on the next time it made a new session low, I shorted. The retrace came as expected, but it was shallow, never exceeding 1.323, so my initial stop was safe!

Then I left my desk. I came back later to see it drop below 1.3190. My target was really 1.3155 (which is where it is currently trading as i type this post), but I covered my short @1.3185 for a couple of reasons:

1. I was not interested in holding thru a retrace that may go all the way back to 1.3220. As it turns out, the retrace never broke above 1.32, but who would have known that ahead of time?
2. If I had used the 9 or 20 EMA as my exit criteria, it would have gotten me out of the short at around the mid 1.3180's anyways.
3. I knew i would not have time to be at my desk to continue monitoring price action.

EuroFx futures (in general) does not move for more than 30pips without at least doing some kind of retrace, so I am learning to be at peace with hitting these small singles and doubles. I still long to hit those home run 100+ pip trades, but still have more mental preparation and tactical planning to do before I am ready.

UPDATE:
Euro is around 1.312 as I type. Yeah it sucks to have covered my short too soon. Kind of bittersweet irony to be talking about hitting a home run one of these days, and having a home run slip away right under my nose. But I knew I wasn't going to be at my desk, and I didn't want to scratch this trade, so I exited where I did. I suppose I still have some more learning to do in terms of finding the happy medium between not letting a profitable trade turn into a losing trade, and letting your winners run.

Weekend Notes

2009-04-12T08:14:00.000-07:00

notes for Monday, Apr 13/09

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Here's a chart of the SPDR S&P 500 (ETF) (Public, NYSE: SPY) from around this time last year:

Here's a chart of SPY for the past 6 months:

Is that deja vu or what? In the case of last year, SPY pulled back until mid-Apr/08, and the correction did not drop past the Mar 31/08 swing low; SPY went on to rally until mid-May. Will we see a similar behaviour?
NYSE McClellan Oscillator is in overbought territory, $BPSPX has surpassed Feb/09's levels, and the $SPXA50 is above 420. markets have been overbought for most of last week. The signs of a pullback are there, and that is how I plan to play it.

I will also be looking for confirmation of the continued correction in the Euro:

Playing Catch up

2009-04-11T11:58:00.000-07:00

Summary

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I periodically forget some of my rules, and this recent trade below which I posted on Twitter is a good example of the importance of waiting for confirmation before entering a trade:

TradeMgmt:
Entry: B+
Stop: B+
Exit: B+

Focus & Alertness: B+ (decreased thru the session)
Patience: D+
Discipline: C
Staying Out of Trouble: B+

The main things that I have been trying to work on improving is :
Patience: wait for confirmation before entering a trade, refrain from taking profits too soon/too fast.
Discipline: always analyze the chart before making trades, and only make trades that are based on prior chart analysis
Staying Out of Trouble: avoid temptation to overtrade, revenge trade, boredom trade.

Notes for tonight's session

2009-03-31T21:14:00.000-07:00

Summary

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Euro Futures should see range contraction until ECB's interest rate announcement early Thursday morning.

support @1.3180
resistance @1.3270

S&P500 Emini futures
That big selloff in the last 1/2 hr of today's session is my signal to sell resistance.

resistance @787, 805, 814
support @776

More Room for Improvement

2009-03-16T11:55:00.000-07:00

Traded SnP500 eMini Futures in the day session

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TradeMgmt:
Entry: B+
Stop: B
Exit: D-

Focus & Alertness: C+ (decreased thru the session)
Emotional Mgmt: C

Same old theme of leaving a lot of points on the table. I am beginning to sound like a broken record when i say that i need to work on improving my exits.