WHY?

The weakness shown yesterday blew out south today on 10-19. Once thing to remember about Taylor system is that in his day they didn't have the pre market hours trading ...etc. I am sure that if they would have had it back then his system would have taken that into account. A shorting of around 1549 a little before the market close yesterday (I picked 1549.50 as one of the intraday highs off the low area of 1542 yesterday) and holding overnight would have paid off well today. If there is any adaptation to Taylor original system I would say it should be in this area. Taylor called yesterday 10-18 a SS day and today 10-19 would be a buy day. On a buy day if high is made first you short it early in the session. Then you look to cover the same day on the decline and reverse and go long IF the low was made say within first 2 hours of the session. Anyway by 10:30 this morning 10-19 one would have been out of their short position in the 1525 area and already reversed for a long position with a stoploss around 1516. A rapid sell off like this once the market opens makes for quick plays.

If prices retrace today off the lows intraday today I see the stopping points at aprox 1546 (1st), 1548 (2nd), 1549.50 (3rd). That is, if it retraces to 1st and goes past it I would look at the next level. If it breaks thru 2nd I would look at the 3rd level as the probable stopping point for the day on a retracement. These could act as intraday shorting points if not made too late in the session. I would watch price action around these points and if there is a little trading here and then it goes dull I might would look at putting out a short. If it goes past all three levels then I would recalculate. On the low end. My software kicks out 3 prices to me. 1539.82 (1st), and 1537.50 (2nd) and an average low price of aprox 1553 If I wanted an intraday long I would watch price at these first two levels. Again a little trading here then a dull spot I would look to go long. If it sailed on thru 1st I would wait for second. If it blew thru the second I would recalculate my figures for the next stopping points. It is trading below its average low. We can only attempt to anticpate buit we have to trade on the actual action. From a one day time frame my software still show it very bearish in most areas. However, sometimes that shows up when market is getting ready to turn up. So, only time will tell the tale. On a 2 to 7 day time frame it is still bearish in terms of overbought/oversold. However, on the one day time frame (today) at this point it is turning bullish on overbought/oversold. So, while the intraday off the 1542 area is turning a bit bullish for the moment it still shows overall weakness.

Dogpile not sure how you determine the days. I come up with different calculations than you do. My software would have indicated to me to sell any longs on any penetration of 1555. Or if shorting - short anywhere near that. The actual number my software produced on 10-17 for 10-18 was 1555.20. At this moment the actual high made was 1555. I still show the market as being weak and at this point of the day it hasn't yet turned the corner and shown any strenght. I would be very careful going long today. If I did I would bail out on any rally that gave me fair to decent profit. Today may well end up a failure to penetrate day. And the general trend is still down. IN such an environment the strategy, as I understand Taylor, would be to short on the buy days on highs made first, and go long on the BV (buying day violations) if made early in the session and sell those long at or near the previous days low. Of course, if the market were to change to strenght then of course ones strategies must then change too. However, at the moment it is weak.

Getting out was the best call. The slide down continues. Any other longs will probably get stopped out. Best to now stand aside a wait. Already made a violation of yesterdays low. Could make a BV on 10-18 also best to wait and see before taking any more positions.

Cross currents

The opportunity was there to short today early in the session just under 1562. In the 1558 to 1560 area. Then cover around 1553 area and then reverse and go long around 1551 or 1552, already, all, before noon. Since the move up off 1551 is a bit weak I wouldnt hold this long very much unless market conditions change. This is probably a case where I would grab me a few points on the long and get out today instead of waiting to get out on 10-18. On the other hand, if it picks up I would keep my long and look to get on 10-18 especially if it looks like it will close high today. At this moment, the market appears a little weak even though some strenght has come back in. But since the decline has been in bits and pieces best to cover any shorts. Typical Taylor BUY day. High made first that gives a shorting opportunity and then a lower move early in the session that allows one to cover, reverse and a long postion. If not already long I wouldn't go long in the afternnoon as that could carry the risk of a low close. Or it could close up which would be good. However, a low close today indicates more weakness for tomm and a possible BV on 10-18 (Buying day Violation). A BV would be the better play for a long position tomm since the trend is still down. From the market action at this moment I would get out of my long on any little rally that gives me a profit. Unless I see some definite strenght come back in. Should that happen I would keep my long position but as the day progresses, so does the risk. It is a discretionary call.

10-16 was short-sell action all the way except it was short-sell with a failure to penetrate. It never made its target or rather the point I would have looked at shorting at. However, if one is so inclined they could have shorted the failure to penetrate and would have come out ok...this time at least. The weak close on 10-16 indicates further weakness. It remains to be seen if enough support came in to day to stop the decline. According to Taylor tomm 10-17 is a buy day. One has an opportunity to short and to also go long. My first strategy would be to short tomm if shortly after the open the market indicates weakness. However, I would be ready to cover once the decline stops. If the decline is slow and in bits and pieces well.... I wouldn't hold on for much profit but would cover sooner. I wouldn't wait too long because anytime now some strenght could come back in. We have 3 or 4 days down now and the market might start reversing. So, if market looks weak early in the session then I would short on a failure to penetrate. That is, if weak then the shorting target probably wouldn't be thru the high of 10-16. One would have to short before 1562. Cover on any decent decline and look to go long at the same time, or near the same time, especially, if you are able to take a long position below the low of 10-16. Once long if market still looks weak then sell any longs at or near the low of 10-16 i.e. 1545.20 on any rally that you can ride up. However, once long if some strenght starts coming in hold off to sell on 10-18-07

LOL funny indeed. Not knocking pinball but I would have no idea where to start.

It would be interesting to see how one sees the price action that took place today in the ES within the context of Taylor concepts. I have my view on it as expressed in previous posts I made but now that the day has ended we can reflect upon what happened. Anybody familiar with Taylor want to give it a shot? So far just dogpile and myself are doing most of the posting on the thread. Maybe not many have studied Taylor? Granted, he is a hard to understand writer and ones give up many times before finally understanding his concepts.

I don't know about option spreads but I have made many many trades in pennies using the strategies above. Granted anything over 10,000 shares is harder to do but there are days it can be done easily even 20,000 shares ..on days a penny spikes. However, normally 5000 shares seems to be a good amount to buy and to be able to sell. Even pennies trading at 60,000 shares it is not that hard to get rid of 5000. IF you only are intent on capturing a slice of the range. IF on the other hand you try to capture the full range it is harder. Don't trade any penny stock that has under .03 average daily range. Try to capture just .01 or .02 cents of that range. If the stock has an average of .05 try to capture .03. There are many stocks that trade 100,000 to 300,000 shares day. It is not that hard. If you just make two a day capturing just .02 each trade day on 5000 shares that is 180.00 per day net after commisions depending on the broker. The big problem with penny stocks is again..trying to capture too much of the range, second...dealing in too many shares, third dealing in pennies under 100,000 shares vol daily (although I have done it successfully many times), volatility....you must wait and see what happens right after the open before you do anything, holding on too long ...just capture that slice..get in out out preferably the SAME day, and occasionally getting hit with one that goes out of business.

Another point I would make is that IF 10-16-07 is a SS day then 10-15 was a sell day and it also was a BV. That means it's low sold under the low of the previous session 10-12 (which was a buy day). So, a BV and a low close on 10-15 indicates a probable failure to penetrate the target price on 10-16. The target price would be the shorting point and it must be made early in the session. One could short the failure to penetrate IF it is made early in the session but would be risky to do so (because the decline could be arrested)and Taylor didn't recommend it. He would say wait to short on the next buy day on a high made first. The point is that the decline is likely to be arrested today 10-16. The day may end with a high close. If so, that would point to a high open on 10-17 (a new buy day) and be the better shorting opportunity. So, even though 10-16 is a SS day IF it doesn't pan out right it would be best to stand aside and not short so as to not get caught in the cross current. If however, the decline continues and the close is on or near the low on 10-16 then we have an established downtrend and it could continue on down for more days causing more failures to penetrate the target prices. In such a case shorting would be limited to shorting on buy days only (even on failure to penetrate) and one would go long on the succesive BV's being made and selling out the longs at any pentration of the buy day lows instead of waiting for penetrations of the normal target price, which is the buy day high.

Yes, I know it is however, it must make the high earlier in the session or I'll pass. I know with the low close it appears the low might be made first but you never know. I won't short it if it makes the target price in afternoon. It has to make it early in the session. BY noon at the very latest and preferably within 1.5 hours of the open. Not exactly sure what you mean by this but I think alot of it depends on how each of us interprets Taylor. Taylor never had the pinball approach. However, if it is an adaptation to Taylor that enhances his methodology I see nothing wrong with that. While that is the ideal sometimes the pattern doesn't pan out. When it doesn't Taylor had rules in place to deal with the problem. Taylor for the most part didn't believe in changing the book up. He taught to always keep it in the same order B, S, SS days. Page 15 The Taylor Trading Technique "The book is always kept in this order, never change the continuity". ON page 41 he discusses shorting a stock on a SS day. "We try to make all short sales on the high made first on penetrations of -selling day highs-This is the most favorable action for your play-we would not "put out" a short sale where the stock or future opened down and declined further, without a rally, for this action would carry the implications that rally, should it start later in the session, may cause the closing price to be up near the high of the day and this would make the high last on a short sale day, indicating a future rally." Three things can be deduced from this Taylor quote: 1) Not all short sell days trade up first. Some trade down first. 2) The ideal short sell day trades up first and is the most favorable play for shorting. 3) Do not short a high made last on a short sell day. Because that high made last indicates the trend as up I see tommorrow as a short sell day. However, if it doesn't act like a short sell day, I pass. If it does then I know what I am looking for in terms of taking a trade. Taylor didn't allow taking a long position on an SS day. While I admit it looks like a good place to take a long position (with low close and trend heading up tomm) one might get away with it, this time, but the the next time get hammered. Taylor was about finding the one main trend and not riding the many cross-trends. I believe you have to watch the tape to determine your exact entry points. It is mechanical but it is also discretionary. I also find correlating volume with price useful in Taylors methodlogy. For instance, VSA can be useful in correlation with Taylor. I think you have done the some correlation in your pinball effect. Interesting!

I know this sounds crazy and risky and goes against the grain of what many traders think but: Alot of money can be made daytrading and swing trading penny stocks. Many penny stocks have an average daily trading range of .03 to .06. All you need to do is catch a slice of that range. Look at it this way -10,000 shares of a stock that costs .30 per share is a 3000.00 investment. If you capture .03 you make 300.00 minus commissions.Your rate of return is 300 divided by 3000 = 10%. Another example. You buy 5000 shares of a penny stock that is .10 per share so you have invested 500.00. You immediateley place an order to sell all 5000 shares for .13. You were able to sell out at .13. So you made $150.00 profit (5000 x.03). To invest $500.00 and make $150.00 in a few hours is a very good rate of return on your money (30%). Try to make 30% on your capitol in one day with GM. Alot harder to do and alot more capitol. Do this 4 or 5 times a day with a penny stock and you can be into some fairly good money. The advantage in buying penny stocks is you can get a higher rate of return on your money invested. The disadvantage of penny stocks is they tend to be more volatile. They can shoot up real quick in price and drop real quick. In one sense that is good as you need movement to make money but it can be bad if the movement is in the wrong direction. The secret is to ONLY attempt to capture a portion of the expected range. This enables you to get out QUICKLY with a profit. You are only borrowing the stock for a few minutes or at the most 1 to 3 days. Remember, you will be trading for quick, small, and sure profits. Trade only penny stocks this way that have at least 100,000 vol each day. Wait for a few minutes after the open to see what happens (no gap openings..etc) before taking a position. There may be times in a fast moving stock that you will try to capture the full expected range but most of the time it is best to settle for a portion of the range. The other downside to trading pennies is once in while you might get hit with a bankruptcy before you can sell the stock. That is why it is necessary to get in, grab your slice, and get out. Best not to ever carry a penny stock over 3 days. I have bought and sold the same penny stock several times in the same day. A third disadvantage is most brokers will not let you short a penny. So, you are stuck with taking only long positions.

Buen dicho! Me gusta! Good saying. I like it. I use price, volume, pivot points

Thanks for your post to keep this thread alive. I am not sure how you calculate what day it is (B, S, SS). I have a couple of ways I do it. One is strickly Taylor. The other is when there is an abberation in the market it "may" cause the day to change. I can't get into the details of it but what I have found interesting is that you end up on 10-15-07 calling for 10-16-07 to be a buy day. I ran both my calculations and I come up with both calculations saying it will be a short sell day on 10-16-07. My strategy for tomm would be to short. I would try to short near 1574 to 1576 or higher if market trades higher. I would be watching the tape for the entry point. However, I would only short it if that high is made within 2 hours of the open. I would then cover the same day on any decent decline. I would not go long tomm if tomm is an SS day.

well i guess the thread kicked the bucket.

Would I be a real pain to this thread to ask that when you post a chart you also post the same chart as a simple bar chart with open, high, low, close and volume?? That is what I use and candlesticks make it confusing to me. If this could be done without being too big of a hinderance I would greatly appreciate it. Thanks!

I couldnt agree more. Except that anticipating correctly does matter to the pocket book! But for our purpose here right or wrong doesn't matter at all. We are learning. The term smart money gets tossed around alot. Like you say it is impossible to know who they all are. They only leave signs they been there. Ravin I think you hit the nail on the head. Buying and selling pressures are what we need to be thinking about. However, I thought that is what VSA did or helps us do???? It helps us to spot the signs of buying selling/pressure. Am I wrong there? we don't have the benefit of seeing all the orders come in. Nor do we know where all the stops are at. A specialist on a stock "sees" much more than we are priviledged to see. He may see a large buy order sitting on the books. However, that order is getting executed in small sizes to keep the price down. He has the benefit of seeing where the buying pressure is and can position himself accordingly to trade himself. On the other hand we are trying to discover where the buying/selling pressures are. VSA is one tool in our toolbox to help us accomplish that task. I suppose that is why he says if a market appears to be strong but doesn't act strong then it is really weak. Thanks for the analysis of the chart. I will have to think through what you are saying.

Could you post the same chart with bar charts. Thanks. Also whichbar is your note refering to that indicated bearish? I didnt see an arrow to any particular bar.

This would go along with George Douglas Taylors beliefs...Tom Williams...and many others. The months and months to unload means they have to manipulate the markets to do this. They have to set themselves up to accumulate and distribute and all this takes time. My thoughts on the discretionary traders place in the future: There will always be a place for him. Adaptation will be required but his place is secure. Think of all the automated processes NASA has in place for the space shuttle. Yet every flight must have, and needs human decision making and input. Will we ever fight our wars with robots? Perhaps, to some degree but never completely. Our ego would not allow that. Neither will it for trading. As long as there are markets there will be humans involved in making trades directly. My .02 worth! We will figure out how to beat the machines!:boxing:

The Taylor Trading Technique. One of the best books ever written on trading if you can understand it.

I made the above quote. Here on this chart is what happened. How does the market appear now after this last bar. What is it telling us for the next session? This last bar is an up bar, closed high, below average range, low to average volume. What does that mean? Be glad for some input. It doesn't matter of we are wrong or right lets just try to figure it out. What is the market saying to us?

You are welcome. Perhaps I can contribute a little along. Taylor is an interesting character and his system is unique.

While I am waiting on the chart I would like to make a few comments. If Friday was a buy day as you have suggested then Taylor would have been flat by the end of the day. He would not have carried any longs over to Monday (the sell day). Allow me to quote from his book the reason why. (The Taylor Trading Technique p 33) "On a buying day when the stock rallies from the low and the gain is sufficiently large, we sell out the same day." "The reason we sell out on the same day, is that the stock may open down and often does from a run up of this kind or it may open at the previous close on the selling day and spend the whole selling day and not reach the selling day objective - the buying day high." So if friday was a buy day on the chart then monday simply would not have hurt Taylor. He would have been flat on Friday - per his rules.

Where is the 2 minute chart?