wshahan

417 7:51 AM CST The Globex session tied the April 11th low at 1359.25 and then rebounded to 1373.50, slightly below yesterday’s Globex high of 1375.50. The housing numbers to date have had no effect on price. While I see nothing to suggest we have reached a significant bottom, one has to respect the current strong price move from the Globex. My premarket play was to short the e-mini at 1372.50, stop at 1374. Thus we are risking 1.5 points with a possible potential of trading to 1360 during the session.. The probability of this trade is so-so, but the risk/reward is eight to one. This is a trade I will take every day. And if I get stopped out, that is the cost of trading.

MONDAY WRAP UP Today was another terrific trading day. We opened the US session with a sharp decline lasting an hour. It resulted in a retest of the Globex low at 1360.50, reaching within one tick of that low. This was followed by two and a half hours of consolidation between 1362 and 1367 (Friday’s range low was 1363.75) and included a retest of the low which failed at 1361.75 at 11:00 AM CST. From there we had a 90 minute rally to 1371.75 and failed. Prices then declined into the close, reaching a low at 3:05 CST of 1362.75. The bottom line was we had a rotation al of trading at the low end of Friday’s range. Value continued to migrate lower with the high volume node in the 1364 to 1367 area down from 1370.50 to 1373 on Friday. The settlement was 1364.90 versus 1365, virtually unchanged. Volume was marginally higher at 1,959,509 contracts. I made 5 trade recommendations today, 4 of which made money, and one lost half a point. The trades are detailed as to rationale in the posts; here is a summary of the results. They returned a total of 21.5 ES points to anyone who followed them. I made one trading mistake which I will discuss in some detail in the hope it might be helpful to others. Trades: Entry Time Long or Short Entry Price Exit Price Points gained or (lost) 1. 8:35 Short 1373.00 1364.00 11.0 2. 10:15 Short 1366.50 1363.00 3.5 3. 12:12 Short 1366.50 1367.00 (.5) 4. 12:35 Long 1367.00 1369.50 2.5 5. 1:35 Short 1369.50 1364.50 5.0 21.5 points profit. A very nice day! Three positive days, twenty-seven more to go. Only time will tell. My error was around trades 3 and 4. I was waiting for a break to new lower prices and I was focusing on the migration lower of volume. Thus I shorted for the second time at 1366.50. What I missed by focusing on volume was that we had a clear trend reversal pattern forming from 11.25 to 12:20 indicating prices were going higher. Had seen this, I would have gone long at 1363 or so instead of going short at 1366.50 only to have to reverse go long at 1367. Either way, I go short at 1369.50. What I did netted 2 points. Going long from 1363 would have netted 6.5 points, quite a difference. The principle is to not have a stake in an outcome. In this case I was focused on a new low rather than being open to what the market was telling me. Today’s lack of being open only cost me 4 points on a big win day. I was lucky. In the past this has been a very costly error for me. The trap was that by the time I figured out the problem, it had become very costly. Today I rarely get caught in this trap, and, like today, I don’t lose big money when I do. I share this with you in the hope that discussing situations that are difficult for me will help you become more conscious of them and possibly aid you in identifying them as problematic for you. Hope it was helpful, Spookywill

[COLOR="DarkRed"] MONDAY WRAP UP [/color] Today was another terrific trading day. Weopened the US session with a sharp decline lasting an hour. It resulted in a retest of the Globex low at 1360.50, reaching within one tick of that low. This was followed by two and a half hours of consolidation between 1362 and 1367 (Friday’s range low was 1363.75) and included a retest of the low which failed at 1361.75 at 11:00 AM CST. From there we had a 90 minute rally to 1371.75 and failed. Prices then declined into the close, reaching a low at 3:05 CST of 1362.75. The bottom line was we had a rotation al of trading at the low end of Friday’s range. Value continued to migrate lower with the high volume node in the 1364 to 1367 area down from 1370.50 to 1373 on Friday. The settlement was 1364.90 versus 1365, virtually unchanged. Volume was marginally higher at 1,959,509 contracts. I made 5 trade recommendations today, 4 of which made money, and one lost half a point. The trades are detailed as to rationale in the posts; here is a summary of the results. They returned a total of 21.5 ES points to anyone who followed them. I made one trading mistake which I will discuss in some detail in the hope it might be helpful to others. Trades: Entry Time Long or Short Entry Price Exit Price Points gained or (lost) 1. 8:35 Short 1373.00 1364.00 11.0 2. 10:15 Short 1366.50 1363.00 3.5 3. 12:12 Short 1366.50 1367.00 (.5) 4. 12:35 Long 1367.00 1369.50 2.5 5. 1:35 Short 1369.50 1364.50 5.0 21.5 points profit. A very nice day! Three positive days, twenty-seven more to go. Only time will tell. My error was around trades 3 and 4. I was waiting for a break to new lower prices and I was focusing on the migration lower of volume. Thus I shorted for the second time at 1366.50. What I missed by focusing on volume was that we had a clear trend reversal pattern forming from 11.25 to 12:20 indicating prices were going higher. Had seen this, I would have gone long at 1363 or so instead of going short at 1366.50 only to have to reverse go long at 1367. Either way, I go short at 1369.50. What I did netted 2 points. Going long from 1363 would have netted 6.5 points, quite a difference. The principle is to not have a stake in an outcome. In this case I was focused on a new low rather than being open to what the market was telling me. Today’s lack of being open only cost me 4 points on a big win day. I was lucky. In the past this has been a very costly error for me. The trap was that by the time I figured out the problem, it had become very costly. Today I rarely get caught in this trap, and, like today, I don’t lose big money when I do. I share this with you in the hope that discussing situations that are difficult for me will help you become more conscious of them and possibly aid you in identifying them as problematic for you. Hope it was helpful, Spookywill

Spookywill to steve46 One of the things I enjoy about you is your ability to maintain a viewpoint even in the face of obvious "divergent" or problematic data.... Apparently the move from 1371 down to 1363 area is a "scalp".... I think most folks would consider it a decent trade... One gets the impression you've had something to drink • Like One of the things I enjoy about you is that your comments are banal, externalized, and full of completely extraneous platitudes. As for your trade, I put it in the blind hog category, even a blind hog hits 1371, er 1370 every once in a while. Wow, a whole 8 points. Sounds like a big day for you. I notice you don’t mention the big trade of the day, the short from 1375 to 1360.75. 1370 was a bystander in that one. I also notice you completely avoided the key question I asked you, are you making Money?

Spookywill to steve46 Losing money is quite a motivator...everyone who trades gets a taste of that bitter drink....everything else aside, you are to be congratulated for finding a method that works for you. How true, how true! I appreciate the comment, Thanks. Spookywill

Spookywill reply to steve46: My guess is that you, Steve are not making money and hence are not a successful trader. I guess this for three reasons: 1. You are so defensive in your posts. 2. You depend on references to what other people are doing 3. You rely on so many external indicators that it would be impossible to have a system based on them that would work over a long period of time. Some of the indicators you describe I personally have experimented with a discarded. Your method of arriving at the 1370 number as you described it is inherently flawed, and there are much better ways to derive reference numbers. 1370 has clearly and obviously not been the best reference for the last three days as an example, and has only given you good trade position on very limited scalp positions like today. You missed all the big moves for the last three great trading days. So maybe you want to make a living scalping. I couldn’t do it I the S&P. But more importantly you are missing the big money based on what you have posted. So I stand by my original statement, “Even a blind hog finds an acorn every now and then.”

Spookywill reply to winstonsmith: What caught my eye though, is you said you've been trading for 28 years...and recently blew out an account as recent as 2008. When you nuked your account in '08 (not casting judgment, here either, torched one account myself before) were you using this same system you're now endorsing here? Or, were you you using a different system alltogether? Winston, blowing my account out in 2008 is what led me on the path to my current methodology. Good question.

Spookywill reply to onesmith: A spike is an extremely long tailed pinbar at a price extreme. A flag pole is an extremely strong trend with very little overlap between bars. Please correct these and add your understanding of any subtle nuances. • Like Onesmith, My use of the term spike, as detailed in my spike writeup, was clearly referenced to Jim Dalton and his special situations which is a Market Profile concept. My use was accurate in that context. As I stated in the write up that I posted yesterday and which apparently you haven't read, the spike probability for today was rotational trade within the spike area which is exactly what we got. In particular, the late afternoon short occurred from three ticks off the spike top. Part of what I hope to do is encourage people to stretch a bit and to develop a methodology which is internalized and requires the use of the brain with no additional indicators etc. This concept of a spike fits into that criteria. Hope this was helpful, Spookywill

3.07 CST Update. I have an order in to close my short at 1364.50 which just got executed. As this is a day trading exercise, close now at 1364.50 or better for a 5 point profit. Prices now got to 1362.75 so hopefully you got a better price than I did!

1:43 Update. I played the intra day trend change poorly, and I will discuss it after the close. I was too focused on volume and simply missed the price action/pattern development. Right now we have volume dry up 1369.75, and we have a the potential for an exhaustion failure. Prices will move from here, it could go either way. Conservative traders should stay out. I am going to favor the short side here and I have entered short at 1369.50, stop at 1372.00 This is a highly aggressive trade, but it has a great risk/reward potential. Only time will tell.

12:46, For some reason, this update did not post. What we have is the intra day trend change to the upside that I warned about. Do not attempt to fade it at this time, I will update. 12:12 PM CST Update 5 ________________________________________ Could you please post a screenshot for us. It would help with clarity in trying to understand your previous posts. Thank you. My objective is for you to learn and “own” what I am doing. This means you need to have your own chats. I am using a standard o-h-l-c 30 minute bar chart with a volume histogram (volume at time) at the bottom. I also have a volume histogram on my dome for volume at price. I am using the Open E Cry data feed if that helps. If you create my chart and post it, I will be happy to comment on it. 12:30 Update. Prices are attempting to go higher. We now have a three print buying ledge at 1367, so we should get higher prices in the immediate term. You can go long at 1367 or lower.

12:12 PM CST Update 5 ________________________________________ Could you please post a screenshot for us. It would help with clarity in trying to understand your previous posts. Thank you. My objective is for you to learn and “own” what I am doing. This means you need to have your own chats. I am using a standard o-h-l-c 30 minute bar chart with a volume histogram (volume at time) at the bottom. I also have a volume histogram on my dome for volume at price. I am using the Open E Cry data feed if that helps. If you create my chart and post it, I will be happy to comment on it. 12:30 Update. Prices are attempting to go higher. We now have a three print buying tail, so we should get higher prices in the immediate term.

12:12 PM CST Update 4 If you took a profit on the short, here is another opportunity to reenter short at 1366.or better, stop at 1368.25. Prices could go either way from here, but volume favors shorts. Spookywill

11:38 am CST Update 3 We made a low at 1361.25, barely taking out the 3 print shelf at 1362.25. If this low holds, and it just was retested, close the shorts and monitor for a possible intra day trend change.

11:01 am CST Update 3 We have a three print selling shelf at 1362.25. This gives us a high probability for lower prices in the session.

10:47 AM CST Update 2 There was a retracement and another opportunity to go short at my price or better. (1366.50) We got a quick 4 points on the short fast. We now have a double bottom on the 30 min chart at 1362.50. True day traders can take a quick 3 points here (1363.50 or better..) As I said before, prices could sit here for a while, but we continue to build volume lower. Personally, I m going to wait for a retest of 1362.25. Then we will see if prices don’t go lower. Spookywill

10 AM CST We got a retest of the Globex low, and so far it has held. Prices dropped from our sell point at 1374 to 1360.75, one tick off the Globex low. Day traders either met their profit targets and closed their positions or took a partial profit. 10 points in the ES is generally a good point to take at least a partial profit. I took my profit and am observing. See below regarding rotation. Also see the post on spikes. Our highest probability for today was rotational trade within the spike area, and so far that is what we have gotten. Volume and value continue to build at or just below Friday’s low, so we may get lower prices later in the session. We also could, one more time, get rotation back up towards the original high volume mode, 1369 to 1374. I think the most likely case from a trader’s stand point is for another short to develop. This would be negated by taking out this mornings high. Only time will tell. The original was to go long for a retest of Friday’s high with a recommendation to reverse if 1374 held. It did, so I reversed at 1373 and covered at 1362 when the Globex low held. We now have 1366.50 as our high volume point. This level looks like it is going to fail, if it does, I will go short again for a run at the Globex low. The stop should be at 1368.

8:45 AM CST We have an upside failure at the 1374 level. Go short for a retest of the Friday lows and possibly the Globex low. The bottom of Friday's high volume node is 1369-1370, this is a support area. Penetrating here would lead to lower prices.

8:25 AM CST Pre opening comment The Globex session double bottomed at 1360.50, and prices have rotated up through Friday’s high volume node and have reached Friday’s over/under price of 1374 which also is above Friday’s spike high. If prices remain above 1372, we will enter long. If they fail at 1374, we would expect rotation back towards Friday’s low. At this juncture, we missed the trade off the Globex low; however, we have traded up through Friday’s high volume area, so look for a possible retest of Friday’s high.

Spookywill to steve46: Reply from Spookywill to steve46 ________________________________________ I'm sure this is just coincidence. My "understanding" is after all, very limited....but in the attached chart you can see price trying to take out 1370, closing above it briefly, then failing... I agree with your entire statement above Steve. In the larger picture, my comment to you is: “Even a blind hog will find an acorn every now and then.” You missed the double bottom at approximately1361 and now the breakout at 1371. Prices managed to cross 1370 in both directions, so coincidence could be considered appropriate.

Reply from Spookywill to steve46 ... as price hits a specific high or low of a distribution....The trademark of automated execution is the quick response as price tests a distribution extreme.. ... ... a test of a distribution extreme usually results in a low risk entry and a profitable trade...those of us who actually do this for a living call this a "layup"... Steve, I agree with both of these statements. I don’t use standard deviations in my trading. And specifically l don’t use Daltons Value area concept which is approximately one standard deviation from the high volume point. If you can find the reference, I will address it. Will

Spookywill to BluHorseshoe Why would you anticipate a test of a distribution extreme to occur at a specific time of the trading day? It depends on the day type. If you don’t a dominate early trend move (15-20 points in the ES), there are generally three intra day moves in the ES. The move on April 10 is an example of a one time frame day as was April 12. You don’t attempt to fade these moves, you buy or sell (go with the trend) whatever reversal opportunities present themselves. The first move is early and in the direction of that day’s trend (not to be confused with the daily trend. The first thrust will, most of the time, contain one extreme or the other and that enables you to make a projection of the day’s range. The second trend can be weak and hard to play like Friday. It generally includes lunch and has low volume and range, That leaves the last 2 hours as a chance to get a good trade. Generally, but not always, the third move is in the morning direction, the half hour bar pattern usually will have some directional clues. Also, you will have volume dry up or dramatically increase as a clue. An example was Friday when the volume dried up at 1374 and triggered our short. I guess the short answer is that there are certain patterns that can be expected to show up each day in a recognizable form. The question is a complex one that is outside the parameters of the Traders Lab. I hope these thoughts have been helpful. Try checking each day and see if you see the same patterns reoccurring on a 30 minute bar chart.

Reply from Spookywill to steve46 and original post by blueshoe: I agree that it is impossible to keep fcused on the charts all day, and I agree that there are certain time periods one can more logically expect price movement than others. I have different methods to determine effective points to look for trade activity. I deal with the chart fatigue issue in 2 ways: 1. Use 30 minute charts as my primary trading tool. I may go down to a ten minute chart for entries. It is much easier, for me more relaxing, and vastly less noise to watch a longer time frame chart. I also find that the patterns developed in the 30 minute charts offer much better trading.opportunities and bigger moves then shorter ones. 2. I generally don’t trade between approximately 11:00 to 12:30 CST. This is when most of your program traders and big institutional guys are at lunch. Early on I got chopped to pieces trying to trade these hours, I would be in a trade and all of a sudden there would be no volume and no range development. And ole Spookywill would get stopped out. Lesson learned. Steve46, you said regarding a specific support price on Friday ….it was 1370…check it out for yourself. My over/under point (as posted in the thread) on Friday was 1374, which was certainly more effective than 1370, check that out for yourself. Also if you waited to go short until 1370 after the opening, you missed most of a very nice trade. I think there are much more effective ways to determine your reference points than what you describe. I have internalized many patterns and this is a key part of my trading methodology. I am not familiar with Mark Fisher’s book so I can’t comment on it. If it works for you, great. I am a great believer in the value of pattern recognition.

Reply from Spookywill to gosu: Your comment is accurate. I am referring to Spikes as defined by Dalton in his book and I referenced the pages in my post. Part of the task here is to figure out the meat of what I am saying as I expect the people who will truly benefit from my tread to work, and “own” the material, not just observe and memorize it. Only by “owning it” do you internalize it and have it available without conscious effort. In other words, it is available on a timely basis for making trade decisions. Dalton has a much different definition and meaning than the one associated with “algo” trading and long wicks. Dalton’s definition is only common to Profile users and I expected it would create some confusion. But I did give its prime characteristics as Dalton uses it and the book reference. And the utility of it to traders may be interesting or not. I personally find it useful as a reference for the spike extreme inside the previous day’s range. It is a no brainer to figure out what to do with the new low we are getting in the Globex Asian session now (8:00 PM CST.) The situation becomes more interesting it we trade back up into Friday’s range in tomorrow’s US session. The opening selling conviction (auction market jargon would be vertical development) off the Globex double top was a gift from the trading Gods. It also was not retraced. Many different words for both the beginning and ending phenomena. I hope you enjoyed it as did the thread readers. Thanks for your comment, and I hope my reply was helpful. Spookywill

Reply from Spookywill to steve46 The Rules for Trading Spikes Your comments sound about Spikes display complete ignorance about Dalton’s concept of “Spikes” and their utility in trading. Your verbiage regarding “Automated execution” sounds sage, but in actuality is simplistic and conveys no real knowledge of the actual processes involved, just a superficial observation of some of the effects, and some of the normal phenomenon around intra day extremes. You sound like you are trying to be “one of the boys.” Much of Dalton’s work is no used by successful professional traders, it is referred to as “legacy concepts”, and as I said in my post I am an auction market trader, but I like to keep an eye on the profiles. Most auction market traders and institutional traders I know use o-h-l-c bar charts rather than candlesticks, but I guess the colors are easier for those with less skill. They certainly make it harder to track migration of value which I consider vital to successful trading. I would assume that you are aware that Steidlmayer even refers to his own early profile concepts as not very helpful today. The difference in the spikes I am referring to and your definition are in time, volume, magnitude, and duration. Hopefully you possess the skill to be able to figure out the differentiations. From the trader’s point of view, the placement of trade, be it institutional paper, locals or whatever in relation to the previous session’s reference points is vital. And Dalton’s spikes are very useful in this regard. I am glad you are enjoying my comedy, I certainly enjoyed yours!