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ES for 9/11/07 + rest of Week

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Thread for discussing ES for the rest of the week.

 

This morning the futures auctioned down and ran out of gas. This resulted in a mid-day 'b' profile -- signalling the market having trouble going down - the likely result of patient buying that is offsetting new shorts and long liquidation.

 

We formed a higher low and auctioned back up towards the high of the day. This resulted in a selling tail that formed BELOW the earlier high of the day. Volume was generally weak.

 

The profile shape ended up fat and messy.

 

In my view, the market appears to be in a trading range and has shown no real conviction in the current 'downside auction'. Given that the Taylor bias is going to flip tomorrow, I will be looking long -- but the current technical structure is messy. A higher low is my current thinking. As always, I will have to see how Europe acts and what kind of conviction the market shows in the morning session.

 

would love to collaborate with others with some discussion on what they see in this current messy structure.

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I see a potential H&S pattern that tested the neckline and failed. It's easier to see in the YM, but the more I stare at the chart the more it comes clear to me. We are definitely in a trading range and I wouldn't be too surprised to see the lower range fail.

 

I also noticed that the 200 SMA proved to be resistance.

 

That's my 2 cents :)

spxdailysep10.jpg.74ff13a0855840158b3dc51a2bc216b0.jpg

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good to have Traders Lab back up.

 

quick review and then outlook for tomorrow.

 

I had a bullish bias coming into today due to the taylor buy day as mentioned in original post. The market gapped up and ran to yesterdays high where it congested and broke to upside. Volume looked decent on this initial push -- it was stronger than previous day but not super-strong. The market then did a A-B-C correction down on low volume before coiling/balancing and breaking to the upside.

 

The first chart is what the market looked like at mid-day. Note the even balance here (symmetric volume distribution). This shows higher prices are being accepted (value migrating higher). as jperl would point out, we also had the PVP lying exactly on the VWAP. you can draw a triangle and the market has lost volatility. I would call this a state of balance from which the market can trend.

 

We also had a key LBR pattern I like to follow - the 15-min First Cross buy. I will discuss this very important indicator sometime in the Technical Trading forum.

 

The market then broke to upside and trended up, reaching my objective that I have discussed in a thread here in the Market Profile section of Traders Laboratory (VWAP + 10 pts). This was the day in a nutshell. Volume ended up very weak after a decent start.

 

Somehow, I managed to completely bungle my trading today. My first entry was almost perfect -- but I got greedy and made only a few points on it. The second entry was ok but I essentially stopped out 'to the tick'. This would have been ok except I then froze on the 3rd entry which would have been a home run and proceeded directly to my price objective. I am going to workout after this, drink an extra drink tonight and try to forget about this day -- it was truly a case of 'what might have been'....

5aa70dff44a3a_ESsep11Balance-Coil.thumb.png.fae37d3504ac633db4e411e22a948b4a.png

5aa70dff4ae6c_Sep11SPentries.thumb.png.0d553c62fd58a36f9006607610739420.png

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outlook:

 

tomorrow is an 'in-between' day as far as I am concerned. today was a buy day -- but the 'upside auction' was on weak volume and the profile shape does not suggest necessary continuation. Taylor would call tomorrow a 'sell day' which is notably different than a 'sell short' day. The 'sell short day' comes the day after tomorrow. Remember, this is only an initial guideline -- let the market tell you if it is following this rhythm or not.

 

The dominant pattern I see is a 'rising wedge' -- this is an unstable pattern -- especially on low volume. it is also very difficult to trade. the market tends to creep up and then do violent flushes down -- those looking for good momentum are kept off balance by the creep up nature. those looking for downside follow-thru are kept off balance cause of stop-running on the higher highs. I tend to reduce trading when a wedge develops. The market could continue to creep up tomorrow or it could trade 'high to low'. will look for others comments.

 

one other thing. look at the action of financial stocks. a new healthy advance should probably see these stocks act better than they have. we could be making a higher low -- but the jury is out and the stocks were underperformers today. even Goldman Sachs (GS) -- shows only a 'ABC up' pattern so far on the daily chart --- and it is the darling of the group. MER/BSC/XBD all are dead in the water. If MER or XLF were to make a '20-day high' -- that might confirm that a good low is in. as of now, they aren't close (although GS is).

5aa70dff50e90_Sep11Outlook.thumb.png.c837c63dc2e24e7ba3eb6b9d30d75a7c.png

5aa70dff581e0_sep11GS.thumb.png.918cb9c8db1a073264ddfa5283cd797f.png

5aa70dff5ee96_Sep11XLF.thumb.png.ff5a50e1d1c959152bb752294492e357.png

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<<What exactly is the taylor buy day?>>

 

George Taylor was a grains trader who developed a 2-4 day rhythm for trading. He wrote a book but its a pretty brutal read -- some of the worst writing I have ever endured. The better read is 'Street Smarts' by Linda Rashke. This is the best trading book ever written, in my opinion. Specifically, read chapters 7 & 8 for the basics on trading the Taylor technique.

 

I have tried my best to completely ignore longer-term charts and focus on this Taylor rhythm as a core principle of my trading. There is a lot that goes with it cause trading isn't easy -- but its pretty sweet for a nice choppy market like the S&P futures.

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Dog,

Well this ES chart is just not that pretty right now for a candle trader. I did a YM analysis here and the ES is pretty much the same.

 

 

attachment.php?attachmentid=2811&stc=1&d=1189566078

 

 

So, the candle short I mentioned provided some profit, but nothing to get excited about. While in this tighter range, we have to accept these smaller moves or wait for a break in one direction.

5aa70dffbd5c9_esdaily.png.53d60fc2917ca257b98671b0201eb32b.png

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I agree Brownsfan, I am seeing pretty much the same thing. There are better markets to trade right now, but I will keep this to the ES discussion.

 

I would like to see the ES hit the 50SMA before entering a short position on a swing trade. Better yet, a close above or below the trading range.

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I agree Brownsfan, I am seeing pretty much the same thing. There are better markets to trade right now, but I will keep this to the ES discussion.

 

I would like to see the ES hit the 50SMA before entering a short position on a swing trade. Better yet, a close above or below the trading range.

 

I agree - it will need to break this zone to get some momentum going again. However, as we wait, there are possible trades available. The 80 pt move on the YM wasn't much, but I'll take $400/contract while I 'wait' for the momentum to appear again. ;)

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I wanted to mention something in case there's a question or two on the chart I posted.

 

Looking closer at the recent action:

 

attachment.php?attachmentid=2819&stc=1&d=1189600374

 

 

#1 and #2 provided trading opportunities in our zone here.

 

I would have preferred though if #1 at least made it back to the 50 SMA or even the upper yellow line. I was hoping we would see that but since the day before #1 was a bearish day, it would have taken a lot to get that #1 trade up to the SMA.

 

I would have liked to see #2 get to the low of our zone (lower yellow line). Again, it did not this time.

 

So the question anyone trading this would have to ask is did these entries meet YOUR criteria. I'm not excited about them, but there was potential profit there as well. On this new long, I'd like to see it test the 50 SMA and/or upper yellow zone (see a pattern?).

 

;)

 

And the flip side to this is if you can find the well established zones, you could anticipate that and place resting orders to buy or sell based on those levels. This is a tad more tricky and requires some finesse in my opinion as you have to be willing to buy into an down move and sell into an up move. And stop placement is critical as well. Just an idea to toss out there.

5aa70dffef2d4_tles.png.6642968a16d16d5c68b49919acd0105f.png

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if you look as ES.D instead of ES --- you can see the very significant 'bull trap' that occured the day after the 50-day SMA test -- there was a sharp gap down there. That gap is a crucial spot as it represents an 'excess high' and the end to that up auction and the beginning of a down auction. Now since then, we gapped down again off the employment report, another sign of 'excess'. the resulting down auction that came however was on low volume and had 'fat' profile shapes... so the downside ran out of gas. we formed a buying tail (hammer/hanging man type of thing) and auctioned up yesterday -- again on weak volume and a 'fat' profile shape. So we ended yesterday pressed up into the employment report gap (the second of the 2 gaps down). But importantly, price has not yet been accepted above that gap. Thus, we seem stuck in a range between the gaps above and the buying tail below.

5aa70e0001431_Sep11DailyES.thumb.png.5d9afb35eef523050e63ccbb2701d69b.png

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outlook for tomorrow:

 

I mentioned that today was an 'in-between' day in the Taylor rhythm and that Thursday would likely be a 'sell-short' day. Todays action was consistent with that -- we had a day that built higher value on low volume.

 

More importantly, the day tested the previous excess high and this level was rejected.

 

The previous excess high was the 9/6 closing price -- this represented the close before the employment report gap. Price traded above 1480 today but value did not migrate there. Value migrating above 1480 would nullify 1480 as a key pivot. For now, I am treating this as a potentially bearish test of 1480. (this is based on September ES futures -- which are set to rollover this week -- december S&P's closed 1492.75 on Sep 6 2007).

 

Moreover, it lines up nicely with 2 up days and therefore tomorrow qualifies as a Taylor sell-short day. I will be looking to sell short tomorrow -- particularly on a test of todays high (best test would be a lower high). See attached chart for simple Taylor signal. After 2 up days -- a choppy market might reverse. We are essentially pinned up right underneath key resistance.

5aa70e00ab96d_sep122-roc.thumb.png.8618d688a217ad905c9d7f66ea485549.png

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nobody here it seems so guess I will just talk to myself?

 

symmetric distribution today

closed in balance

weak volume

head & shoulder formation intraday (afternoon low)

3 consecutive up days with a weak afternoon session

looks like a short but pending retail sales date at 8:30am tomorrow

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