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james_gsx

YM, ES and DJIA Analysis

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I think a more interesting level for me is the 1490 on the cash index. Note how it was a strong support area in the spring, broke it to form an inverted H&S and now can't seem to close below it, tho seems like it's trying with a lower high. If that 1490 on cash 1500/futs does get violated on volume...we've got a steep road to fall down all the way to 1380/1400.

 

tos_charts___thinkorswim__build_987_-20071104-072149.jpg

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My candle analysis is in its infancy so bear with me on this one. What I see here is a candle that was heading south towards some support but never quite touched it. It looks to me like a hammer formation with some strong volume which to me shows there there is plenty of interest from the bulls.

There is overhead resistance at the 13700 mark from the previous large up move on the 18th of September. Could be worth taking the trade as you're risking 50 points for a 100 or possibly more point move.

sc2.png.dbe3f73dd56fc145280704a2bddf87f0.png

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Sounds good to me. Now, what I do is wait for the next bar because I'm not aggressive. If the next bar is up then there obviously was buying in that bar. If that strong bar is followed by low volume up bars, though...it's time to really be careful. Low volume on narrow spreads would be deadly to it. As of this writing, ES futs are down 12 bucks so it's looking like waiting for confirmation is good in this case.

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Wow, what a day! I seriously considered buying ES around 1500 but since I got really sick over the weekend I knew my head wasn't clear and I didn't want to take the chance. Oh well, it happens.

 

I know the markets haven't closed, but I want to ask a "what-if" question. On the ES we had a bullish candle on Friday with stronger volume. Today if we were to close right now we would get a hammer with lower volume. How should I go about analyzing that? Would I assume the pros were buying yesterday, then today was a test back to 1500 where buying increased again?

 

Would I be correct in saying this is a bullish setup?

 

esdailynov4vaol4.jpg

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James,

We got another bullish hammer today. You'll note that the low of our buy hammer was retested and while it actually ticked below this hammer, proper stop placement (as I mentioned earlier) should have kept us in this trade.

 

Now, today was not an overwhelming great feeling on this trade. Depending on the entry technique being used, we are either long at some point, or still waiting for the high to be broken.

 

Through quote.com, the volume today was actually higher than yesterday:

 

attachment.php?attachmentid=3876&stc=1&d=1194325034

 

 

That may be incorrect, but it's quick and easy for me to pull that up.

 

Currently we are feeling good about this long, but would feel better to get a bullish day here Tue or Wed. You'll note that we had similar price action in this post. Mainly multiple high volume hammers. So once again we have some serious buying/selling taking place here. Someone, somewhere is loading on longs and someone, somewhere is loading up on shorts. Our analysis here is saying the bullish stance is the correct one, but time will tell.

5aa70e1b7d0ed_tles.png.3df507c96031437e004dae246d963d0b.png

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What I notice on the ES chart is that the hammer closed just below the 100 MA. If you're a late to the party Charlie, then a good entry point would be a limit order at the 100 MA which is within the body of the first bullish hammer 10 periods ago.

5aa70e1bcb8b7_ES5112007.png.058b0acdb749d7ffe480eadceecf2367.png

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The volume on the up move today was also very strong and significantly higher than previous days which shows a healthy level of bullish activity. I wouldn't be surprised if we blast through the 40 mark.

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What a bearish day today! The bears were in full effect!

 

attachment.php?attachmentid=3947&stc=1&d=1194498029

 

 

Just in case anyone traded this blindly, all longs should be exited by now!

 

This one just didn't have it and this was a very convincing close below the 1500 level, which is a major psychological level.

 

You could also view this inverted hammer as a reason to short. I gotta get to bed here, but the idea being that you have a close below our new resistance (old support that the long was based on) AND we are below the 1500 psychological level. I'd have to see where a realistic profit target would be to see if this is worthwhile or not, but there could be an aggressive setup here.

 

Side note - days like today are why I really enjoy the day-trading part of this business. Today was just a great day to be grabbing points all over and while I knew the drop was not good for our long here, it was a great money maker on an intra-day chart.

5aa70e1d77eb6_tles.png.979749bd829938d80371e2902a88be54.png

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Brown how would you interpret this candle? It has a very long buying tail yet closes very close to its open. The volume on the candle is also very high. I notice that we closed below the 200 MA.

 

As for going short, there seems to be visible support but its quite a while down to levels reached a few months back.

 

Was there any economic news recently in the US that made this move happen?

5aa70e1dcb89a_ES8112007.PNG.051e3e1fc44c0815b2322ebc969ddf45.PNG

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We just came out of a multi day balance area ,weakest dollar ever and record oil and the 4.3 trillion owed to china probably helped to.Good thing plung protection doesnt want you to know how scary things really are.

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Nick,

 

Here's what I see:

 

attachment.php?attachmentid=3960&stc=1&d=1194586354

 

 

Bullish looking hammer/spinning top on nice volume.

 

I don't really see any strong support that the low touched or came close to. I would like to see an attempt to run at 1440 or so.

 

To go long here would require very close monitoring at the 1500 level (note large, thick line representing STRONG resistance). There's so much that could happen at the 1500 level. We've seen it try to bust through and get rejected and then we saw strong push right through it.

 

In summary, a long here is aggressive. If trading multiple lots, this could be a 'put your toe in the water' type trade, ie do not bet the house on this one. Assuming we get in around 1480, we'd be looking for about a 20 pt move. You are going to have to risk more than 20 however to get there. Not the risk/reward I am looking for.

 

As for why we've seen some bearish movement, who knows. We can all sit here and speculate, but the bottom line is that no one knows for sure. More than likely a combo of events. I recall reading something here today or yesterday about the Chinese possibly dumping their dollars... not good. Who knows. Sometimes the market just wants something, anything, to move. As a trader, I don't care why it's moving just as long as it is moving.

5aa70e1dd979d_tles.png.163e96e21bd10dd71bacc433f944e6c6.png

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If the Chinese dump their currency from its already low levels the WTO will eat them for breakfast!

 

Thanks for the analysis Brown :)

 

I picked that support as well and at the moment I'm inclined to agree that going long now would be pretty risky as the Risk/Reward is not to pretty.

If the price does inch bakc to 1500 then it will be interesting to see how the volume plays along. A rise up on weak volume is sure to spell disaster. If it does get to 1500 then it will be interesting to look at the L2 to see if the Ask is overloaded with punters wanting to get in at a great price. Might be a great day to play on the intraday charts there hehe.

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As I had posted on my credit spreads thread, this is a large area of congestion that SPX has entered into (ES, too). There is a lot of money that changed hands and people have a bit invested at these levels for sure. I love looking at areas of resistance rather than one simple price level. You can think of it as a value area. If price were to break down that 1440 and stabilize under there, that's the time to really worry. Right now, I'm semi-bullish on the patterns yesterday and where are on the chart.

 

I think that if price were to test the lows (which it looks like it could based on premarket) and get rejected and today happens on lower volume...that'd be good for the near term.

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Taking a look at the recent action, I see a potential short here:

 

attachment.php?attachmentid=4023&stc=1&d=1195099002

 

My previous post said:

I don't really see any strong support that the low touched or came close to. I would like to see an attempt to run at 1440 or so.

 

While price heavily respected that area, there was no reason to go long on the daily. It's too bad b/c that area was and remains strong resistance as illustrated above.

 

This short should have a target of taking some/all profits at the 1440. That level remains strong until broken so you could plan to exit before that level is approached as a conservative play or you can hold as it approaches looking for a break.

5aa70e1fe9c23_tles.png.264205fb5fb4cb43afebcbc50ec8cee3.png

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Hew brown, nice analysis. This whole thing played out perfect for me, all the e-minis found support and resistance where I thought they would, it was almost text book. Sorry I haven't been posting, there was a death in the family this week so I have been fairly busy with that. I think someone needs to finally try doing some of these swing trades and see how it affects the equity curve :)

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James,

Hope all is well there! We're all thinking about you.

 

As for today's action, it worked nicely for our short:

 

attachment.php?attachmentid=4077&stc=1&d=1195188868

 

 

 

Here's the possibilities on this this trade:

 

ENTER AT MARKET ON 11/15 SHORT

ENTRY: 1478.00

STOP: 1497.00 (RISK OF 19 PTS)

TARGET: 1440.00 (GAIN OF 38 PTS = RISK/REWARD OF 1 TO 2)

CURRENT PRICE: 1455.75 (UNREALIZED GAIN OF 22.25 PTS)

 

ENTER ON THE BREAK OF THE LOW

ENTRY: 1469.75

STOP: 1497.00 (RISK OF 27.25 PTS)

TARGET: 1440.00 (GAIN OF 29.75 PTS = R/R OF 1 TO 1)

CURRENT PRICE: 1455.75 (UNREALIZED GAIN OF 14 PTS)

 

Obviously a few things stand out here:

1) The more aggressive entry (enter at market) provides smaller risk and bigger gain. The R/R is very nice at 1 to 2. The catch here is that if today would have been an up day, you could have easily been stopped out the same day. Not a big deal, but it sucks when that happens.

2) The more conservative entry leads you to a 1 to 1 R/R, which is fine but obviously 1 to 2 is preferred.

 

One note here - take a look if you just exit right now on the first scenario - +22.25 pts = $1112.50 PER CONTRACT. Do the math on how many you could comfortably swing trade. ;)

 

James is right, the money is there and we've got some good analysis here but I wonder if anyone is making any money with it. I'm still stuck in my daytrading mode and since it's been doing well lately, hard for me to change right now. Maybe during the next cold streak. :\

5aa70e221edaa_tles.png.49d3aecc351aeb56b34e09194fd9de8d.png

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One last note - I'm not a fan of holding a futures position trade over the weekend. Overnight is hard enough for me. :roll eyes: So, if it were me, I would probably look to exit some/all of my position sometime Friday. I might even consider just closing it out now and say thank you for my 20+ pts in ONE day. :thumbs up:

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Brownsfan, Congratulations! for shorting wave "4" (or "C") of "C". the "NO ZONE" for my entry for short was 1493.21. A 30 min candle closing in there was a reason to cover. I am also hoping for 1440 break because then I will have confidence in all in *long* at 1413.72. We hope wallstreet bulls will let shorts think we will break 1400 so we can have a great covering rally up to 1540. PLZ Wallsteet! NO sideways volatility for 4th Q/07 b4 we buy dips for the bull rally (5 of 3) up to 16000+ DOW

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attachment.php?attachmentid=4141&stc=1&d=1195406766

 

 

UPDATE:

 

1) Short that is working.

 

2) Concern for still holding this short. If that spinning top occurred closer to the 1440 level, I would go long quickly. The market doesn't always go exactly where we want it to go however. :roll eyes:

 

At this point our options on this short are:

 

1) We exited Thu night / Fri morning / Fri at the close. A few reasons for the exit as I mentioned earlier.

 

2) Exit Sun night / Mon morning based on this possible long signal.

 

3) Exit IF the spinning top confirms, which for me would be price breaking through the high of the spinning top.

 

Each exit has its merits. #1 and #2 are more conservative. More of the 'take the money and run'. #3 is saying that we still like this short and are not overly concerned about Fri's price action. If the market drops good on Mon or Tue, the short will generate even more profits. If we get taken out at the high of the spinning top, you will 'give back' some money.

 

To each his own.

5aa70e2363517_tles.png.65cf3d67264e596dcad3f5e28348c8a7.png

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Has anyone considered using VBCs and seeing how they correlate with the daily chart? I was looking at the 59049vbc chart on the YM (I use multiples of 3 for my VBCs thats how I came up with that number).

 

Overall I found that at first it seems like more noise, but you are able to ride the 2-3 day trends for considerably longer compared to the daily chart. Sometimes on the daily chart your confirmation would be a wide body, and if you missed a good entry then you basically miss the big move. Whereas the shorter VBCs the entry signal is formed much earlier. I also found that price tends to move with my moving averages better than the daily.

 

Of course it all comes down to preference and I certainly like the look of the daily more, but I think scaling down to a large VBC could be useful for entries/exits on a swing play.

 

I attached some charts that aren't annotated, but so you could see the difference.

 

attachment.php?attachmentid=4151&stc=1&d=1195449697

 

attachment.php?attachmentid=4152&stc=1&d=1195449697

 

attachment.php?attachmentid=4153&stc=1&d=1195449697

5aa70e23a8d96_59049vbcaug20-nov15.thumb.jpg.fccd5ad0819eb634e264693e88821927.jpg

5aa70e23b1c1f_59049vbcmay25-aug21.thumb.jpg.75324cfec4a8e4bdc80d8d635bd30b66.jpg

5aa70e23b83e4_dailychart.thumb.jpg.ccbf83bd29433676d4f5fb61609f6a48.jpg

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Has anyone considered using VBCs and seeing how they correlate with the daily chart? I was looking at the 59049vbc chart on the YM (I use multiples of 3 for my VBCs thats how I came up with that number).

 

James,

In this thread at et, proflogic does discuss going to a high setting on a VBC for swing trade purposes. I think the logic holds and may prove to be more useful depending on how you trade.

 

The only question is how/when would you take on a position.

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1440 level being tested here today.

 

If you held your short over the weekend, you are being rewarded handsomely (as of 1:35pm EST).

 

So many ways to trade the exact same setup - do you exit on the first day, do you exit on Friday b/c of the hammer type candle or do you take a few pills and hold over the weekend? ;)

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