An Institutional "Look" at the S&P Futures

[Ants88 10]

Thanks Steve46 for your insight to the significance of the weekly ES open, 9:30 est.

 

Think the chart explains a lot:

 

Weekly Open 1331.00, Weekly 50% 1330.75, Friday's push down to the Weekly Open.

[steve46 12]

Thanks Steve46 for your insight to the significance of the weekly ES open, 9:30 est.

 

Think the chart explains a lot:

 

Weekly Open 1331.00, Weekly 50% 1330.75, Friday's push down to the Weekly Open.

 

Ants88

 

Appreciate the comment...this may help you to put things in perspective...first, your chart stands on its own..what I am interested in....and what I will direct your attention to is Friday's trade...notice how price tested 1330 and the reaction back up was excellent...a nice 10 point move...however they could not hold the gains and at the end of the day, electronic execution came in and took it back down from 1340 all the way back to 1327 area....This is not uncommon..and what I would suggest is that you watch the Globex open on Sunday (If you can). See if it opens gap up or gap down...that will give you a "tell" about where we are going from here...

 

Best Regards

Steve

[Ants88 10]

Ants88

 

...and what I will direct your attention to is Friday's trade...notice how price tested 1330 and the reaction back up was excellent...a nice 10 point move...however they could not hold the gains and at the end of the day, electronic execution came in and took it back down from 1340 all the way back to 1327 area....This is not uncommon..

 

Yes, I was watching the Friday's action closely since you said, the open (weekly, monthly, quarterly) becomes more significant towards the end of it's period. The movement was almost magnetic towards 1331.00.

 

Now, can I assume the weekly open 1331.00, was important to the Buyers on Monday since the price rose to 1341.25 by 11:00est off the open and, retraced to 1331.00 from the weekly low of 1316.00?

 

Or is the weekly open just a price pivot to be aware of throughout the week?

 

Thanks for your time.

[steve46 12]

Yes, I was watching the Friday's action closely since you said, the open (weekly, monthly, quarterly) becomes more significant towards the end of it's period. The movement was almost magnetic towards 1331.00.

 

Now, can I assume the weekly open 1331.00, was important to the Buyers on Monday since the price rose to 1341.25 by 11:00est off the open and, retraced to 1331.00 from the weekly low of 1316.00?

 

Or is the weekly open just a price pivot to be aware of throughout the week?

 

Thanks for your time.

 

Well there are a multitude of ways to use "time-based pivots"...I will just comment on the way that I handle it...I monitor all the pivots, HOWEVER I look at the nearby time frame first...so on Monday, for me the most important time based pivot is the previous day (open high low)..I still keep an eye on the other pivots, but the previous day is more important at that time...

 

As we draw closer to the end of the week, naturally I am looking more closely at the weekly time based pivot...

 

Also, on a test of the pivot I tell my students to take the trade only on the FIRST TEST...after that the pivot is less important...

 

Finally although I was taught that other professionals are looking to defend it, you can see that the S&P futures are very noisy and there are folks who want to drive it down as well...Look at what happened at the end of the day on Friday...From my point of view, if I am trading my own account, I don't care which way they take it because I am also reading the tape, and it is pretty easy to see which way it is going to break...As I said before in an up market, I will tend to trade the first test looking for a long entry...after that I rely on my tape skills (and my experience)...If you would have seen Friday's class you would have smiled as we tried to guide folks through the first and second tests of that price point...it was pretty neat actually....

 

Hope this helps

Steve

[looks 10]

Thank you steve on these time-based pivot S&P futures guidance, I have been quietly following and was able to get quite a bit of alternative thinking into my chart reading. I hope you don't mind me asking: in your experience, do currency futures exhibit similar behaviour?

[steve46 12]

Thank you steve on these time-based pivot S&P futures guidance, I have been quietly following and was able to get quite a bit of alternative thinking into my chart reading. I hope you don't mind me asking: in your experience, do currency futures exhibit similar behaviour?

 

Yes they do, however please take note that Time-Based Pivots are just one part of the system I use. What "works" (in my opinion) is the concept of supply/demand, time based pivots and learning to identify a standard distribution...its all part of one unified solution. Once I learned to put it together I've never looked elsewhere.

 

I wish you the best of luck

 

Steve

[Praveensuri 10]

Steve

I stumbled upon this thread recently and have been reading all the posts. I have not absorbed all of it as yet. Thank you for sharing your thoughts..it is wonderful. In one of your post you talk about the yearly/ monthly / weekly opens as benchmarks and the institutiosn wanting to defend those pivots. Today is a Friday 17th June 2011. I am looking Russell emini(TF). Week open was 778.8, Year open was 789.8 .High of the week was 792.9 and low of the week was 768.4. When the market opened today it opened at 785.9 and there was immediate selling by Paper( who are the institutions) and the local were buying and the price initially came down to 781.9 and then went up to 787 at 1.20 pm eastern it is trading at 777.10

so my question is;

why will the institutions not the price up at the open beyond the year and the week open, if it is there motivation is to close higher than open. Second when the prices came down, why did they not step in to defend the week open at 778.8 and let the price drift down.

The market ihas 3 more hours to go..

do the institutions only step in afternnong and move towrds the open

Please advise

[steve46 12]

Steve

I stumbled upon this thread recently and have been reading all the posts. I have not absorbed all of it as yet. Thank you for sharing your thoughts..it is wonderful. In one of your post you talk about the yearly/ monthly / weekly opens as benchmarks and the institutiosn wanting to defend those pivots. Today is a Friday 17th June 2011. I am looking Russell emini(TF). Week open was 778.8, Year open was 789.8 .High of the week was 792.9 and low of the week was 768.4. When the market opened today it opened at 785.9 and there was immediate selling by Paper( who are the institutions) and the local were buying and the price initially came down to 781.9 and then went up to 787 at 1.20 pm eastern it is trading at 777.10

so my question is;

why will the institutions not the price up at the open beyond the year and the week open, if it is there motivation is to close higher than open. Second when the prices came down, why did they not step in to defend the week open at 778.8 and let the price drift down.

The market ihas 3 more hours to go..

do the institutions only step in afternnong and move towrds the open

Please advise

 

Hello Praveensuri

 

Thanks for your kind words and your thoughtful questions

 

First let me say that each time period becomes critically important (more so than other time periods) as it comes to a close. Therefore at the close of a week, the weekly time based pivots (particularly the open) becomes quite important. Having said that, please also realize that today is options expiry (quad options expiration) and that causes dislocations in the markets because there are participants who are interested in the short term advantages that can be gotten by moving price up or down so that they can A.) "get paid" for the options positions they hold or conversely B.) protect the options positions they have sold (for credit positions that they may hold hoping they expire "out of the money"). For this and other reasons, the normal effects of time based pivots are skewed somewhat. The "short" answer is that the closer we get to the end of a time period, the more likely it is that institutions will step in, although it can happen at any time....

 

Over in the thread "Trading the Extremes" I have commented on the fact that on my ES chart, my supply/demand nodes worked very nicely. If you look at my last post there, you will see that price tested down to a node (to the tick) and then bounced off it to the upside for a nice profit. My point is that my system (which I talk about in this thread) is composed of several elements, including time based pivots AND supply/demand analysis. While you can use them separately if you wish, I prefer to use them together, because when they coincide, that "confluence" produces a higher probability entry...I realize it is not part of your question to me, but I wanted to make it clear, hoping it helps you with your trading.

 

Best Regards

Steve

Edited June 17, 2011 by steve46

[Praveensuri 10]

Steve,

Thank you very much for your prompt response. I really appreciate your giving personal time to educate people like me. For that I am grateful.

Going back to the TF chart of today Friday, 17th June, here are some more points I noticed , based on which I am trying to draw some conclusions for Monday trading.

Fisrt I noticed in the globex session before Friday RTH open, TF high was 789, 5 ticks short of yearly open. This price got rejected in the globex session and would be considered an area of supply.

Second during the RTH demand came in at 774.2 at 3.15 pm eastern and the market closed at 777.79 4.15 pm close) , a point short of weekly open

So this is what I expect:

Globex open on Sunday evening the market may gap up and test the last week open at 778.8. The first supply level is 778.2. It may then probe down to test the area of demand at 774.2. If it does not find any sellers it will go up to the next area of supply which according to me is at 781.4

 

Depending on how the overnight session pans out, Professionals will position themselves for a buy or a sell below value area low at 775.6 or above value area high at 784.7. Since 784.7 is a long way to go from where it closed on Friday( assuming there is no overnight market changing news), it is likely that we may see the prices traing around 778 at open

Am I thinking correctly? I will appreciate your comments and insights.

Many Thanks

[steve46 12]

Steve,

Thank you very much for your prompt response. I really appreciate your giving personal time to educate people like me. For that I am grateful.

Going back to the TF chart of today Friday, 17th June, here are some more points I noticed , based on which I am trying to draw some conclusions for Monday trading.

Fisrt I noticed in the globex session before Friday RTH open, TF high was 789, 5 ticks short of yearly open. This price got rejected in the globex session and would be considered an area of supply.

Second during the RTH demand came in at 774.2 at 3.15 pm eastern and the market closed at 777.79 4.15 pm close) , a point short of weekly open

So this is what I expect:

Globex open on Sunday evening the market may gap up and test the last week open at 778.8. The first supply level is 778.2. It may then probe down to test the area of demand at 774.2. If it does not find any sellers it will go up to the next area of supply which according to me is at 781.4

 

Depending on how the overnight session pans out, Professionals will position themselves for a buy or a sell below value area low at 775.6 or above value area high at 784.7. Since 784.7 is a long way to go from where it closed on Friday( assuming there is no overnight market changing news), it is likely that we may see the prices traing around 778 at open

Am I thinking correctly? I will appreciate your comments and insights.

Many Thanks

 

Your thinking is correct, except that skilled participants will want to buy below value and sell above. Generally speaking you will get another opportunity to enter "at" the number however be aware that others are looking at these areas and there is a lot of front running.

 

Good luck

Steve

[Praveensuri 10]

Steve,

I have benefited a lot from your posts here. I hope you can help me in what I am going to ask you next. Before I ask my question, I will like to say that I have read various posts around the question I am going to ask, but have not read a satisfactory response in practical terms. So here goes:

 

Background;

 

I am a retail trader and have been trading for 3.5 years, I am currently at a stage where I have progressed from losses to breakeven. I day trade everyday, Russel 2000 futures

 

My propensity to loose money on one contract is not more than $200. So essentially I am looking at a 2 point stop

 

I can read the candlestick charts reasonably well in terms of various patterns at support and resistance

 

My Struugle;

 

I struggle to make a proper entry i.e I am unable to get a trade location. This is not to say that I am not able to determine the support and resistance areas...on the contrary I am able to find these zones with a fair bit of accuracy.

 

However when the prices reaches this area I am only dependent on candlestick patterns to make an entry. I look at a 2 minute chart to find the right candlestick pattern so that I can get a good entry within my stop loss tolerance level.

 

My Seup

 

When the day opens I look at a 15 minute chart to assess in which direction the opening move will be. In other words if the the candles between 9 to 9.30 are indicating bearish set up, and are not yet at 15 minute support, I expect the prices to go down at the open.

 

Next if the prices reaches my previously determined support zone, I will look for a buy entry, once the correct candlestick pattern forms on 2 minute

I then look to exit the trade at the next resistance level on a 5 or a 15 minute chart.

 

somewhere I read that you should have 3 time frame chartss( in my case I have 2/5 and 15 minutes) and if the candles in all three are pointing in the same direction then take the trade in that direction. My problem is if I wait for the 15 minute candle to complete the price has already moved away on the 2 min and 5 minute.

 

I am struggling to find out what is the best way to enter a trade, in consonance with larger time frame and within my risk limits of 2 points

 

can you ecmmend the proper trade set up

Thanks for your help

[Praveensuri 10]

I would like to add one more point to my earlier question regarding the setup. I have drawn support and resistance lines based on a 30 minute and a 5 minute chart from the prior swing which is counter to the current swing that is currently in progress. This is similar to the zones you have shown in one of your posts which you make prior to the next week trading. The problem is there are so many lines that ultimately come on the chart, that I hesistate to pull the trigger at a pre determined support and resistance zone, if above or below that is another support or resistance which is couple of points away. In other words let's say my buy zone is at 811 and the right candlestick pattern has been formed on the 2 minute chart., I will hesistate to take the trade if there is a reistance just 2 points away, lets say in this example at 813. Logic being why bother for 2 points and incur an equal amunt of risk. Obviously sometimes the price goes through this zone with a wide range bar and other times it fails and comes back to test the low, when I start sweating.

 

So in this context I miss out and that is why right entry location at right price level within risk tolerencae is critical

Many Thanks in advance for your help.

[steve46 12]

Sir or Madam

 

Well I don't really have all the time necessary in this venue to respond properly...Here are a few ideas that might help you since you seem to want to do this "on your own"

 

First, your idea of how to find an entry does not correspond to mine....I would not be using your method....I look at many other details that are part of my pre-market analysis. Unfortunately since I am teaching a class I cannot go into the details in a public venue.

 

One thing I CAN say that may help is this....if you do as I do, and put all your supply and demand nodes in place, as you progress in time you will see that your charts become cluttered

 

I remove nodes wherever price shows that it has "taken them out" (crossed them without hesitation, closing above or below on the upside or on the downside)...those are removed

 

If you take a moment to remove those additional nodes, I think you will see that your chart is easier to read and cleaner.....

 

Finally I remove all nodes on Friday and re-place them over the weekend. I hold additional classes on the weekend so that I can teach my student how it is done.

 

I hope this has been of some help to you

 

Best Regards

Steve

[steve46 12]

Folks

 

Very shortly in the next day or two I am going to stop posting. I have a class in session and I find that I have very little time to answer questions. Also the folks I am trying to help deserve a little respect. So I will be stopping for about 18 months (the duration of the class)...

 

I hope this thread provide some help to those who are not succeeding with more traditional approaches.

 

Best of luck to all

Steve

[Chouca 10]

Thanks a lot for your effort and your insights from "the other side". For me it has been very valuable and gives more pieces to the puzzle!'

 

:applaud:

[CYP 10]

Steve - great posts (as many others have already stated). I've learned quite a bit. I wish I could have been part of your class. I know you have more knowledge to offer and I hope to see your return sooner than 18 months.

 

-CYP

[CYP 10]

Well I can only talk about the way I was trained....The open is considered THE most important price within specific time periods....those time periods are called "time-based pivots" as I wrote in my thread on institutional trading. For each time period the open is the most important price. So the hierarchy is simple, for the year the opening price in January is the most important. For the quarter, that open is most important, for the month, the opening price on the first trading day is "it".......and so on....as each time period comes to a close, that opening price takes on more significance. Its really pretty simple.

 

 

Good luck in the markets

Steve

 

Edit...sorry...to answer your question. For me the weekly open is Monday at 6:30am PST

 

 

Hi Steve,

 

Speaking of the importance of the Open, I remember you saying something regarding the Institutional Traders' tendency to work their trades to ensure they are making progress in the levels they look at.

 

Specifically, you mentioned the idea of working towards the year-end bonus for institutional traders. So from a year-long perspective, that would entail a trading year from January until around October/early November where the institutions are trying to keep the prices above the January price. Then the slow unwind into the holiday season and then it all begins again in January.

 

So, to bring it to the monthly and weekly timeframes, the institutions are looking to justify and support their openings, whether monthly, weekly, or daily. All the fluctuations are used towards the year end results.

 

That's what I understood and remembered from your Institutional posting. Well, that, and the addition of the nightly market sessions and their affect on the next days open. I remember one of the guys trying to start a fight with you regarding DAX open times and things like that.

 

Anyway, am I somewhat correct in my assessment? I'm trying to grasp all this information without being too over-loaded.

 

Thanks again for all your posts.

 

Regards,

 

CYP (from San Diego)

Edited January 23, 2012 by TheNegotiator
User asked to move from emini thread