Day Trading the E-mini Futures

[Predictor 11]

Nice work... if you can get it. made back the loss and well exceeded my profit target.. dfd

 

Next good entry.. is off the 42's... unlikely to take

[Predictor 11]

Based on price action.. I'd say Fed is serious and is doing more then expected.. could trend all day

[goodoboy 10]

market is going up. Well, I missed the first move, so just waiting and watching.

 

Thanks Fed for QE3.

[Predictor 11]

Bias is short but market is abnormal.. high risk for short

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Short with low risk trade.... target 50ish but likely pull sooner

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Buyers back in control....

Edited September 13, 2012 by Predictor

[TheNegotiator 13]

The market was certainly given a Fed adrenaline shot yesterday! Just shows that there's really not much point trying to predict what the outcome of an event or eco release will be, just have a number of plans to account for various different possibilities.

 

The move yesterday was pretty big. So given that and what Fridays have been like recently, I suspect that we won't see fireworks today. If we did, I'll be watching to see how the market reacts to some of the volume developments below from yesterday. Above I would be ultimately looking for a test of 1479.00 with 62, 68.50, 73 as other possible tests from the profile.

 

Here's the chart anyway:-

 

[TheNegotiator 13]

One way action so far:-

 

[Predictor 11]

Market looks to be possibly basing... staging another run

[Predictor 11]

65ish is in play... bias is long... some warning signs

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Lage sellers off the 62...anticipate they pull soon... they need to pull

[Predictor 11]

Computers still selling... was looking for a base but we can drive much lower.. I'm dfd... with a loss

---

 

Sell bot was exhausted.. uncertain at this stage.. could drive higher

Edited September 14, 2012 by Predictor

[ForexTraderX 10]

The market was certainly given a Fed adrenaline shot yesterday! Just shows that there's really not much point trying to predict what the outcome of an event or eco release will be, just have a number of plans to account for various different possibilities.

 

The move yesterday was pretty big. So given that and what Fridays have been like recently, I suspect that we won't see fireworks today. If we did, I'll be watching to see how the market reacts to some of the volume developments below from yesterday. Above I would be ultimately looking for a test of 1479.00 with 62, 68.50, 73 as other possible tests from the profile.

 

Here's the chart anyway:-

 

 

Well, i'm thinking we hit 1500 this week. We basically just broke an upward sloping trendline on some of the most significant news since greece freaked the world out with their non-election. QE3, combined with the strong (and more unified than usual) draghi "bottomless well of bond cash" speak, and now the german courts giving the thumbs up to a legal proceeding (as if it would go any other way. FWIW, it's greece holding the loaded gun to germany now, NOT the other way around).

 

Risk hasn't been this in style all year. But really, seems this is just the tip of the iceburg.

 

IN SPITE of the QE3, U.S. 10 year bond futures closed near their absolute low of the week. This is so damn telling IMO. Watch for a market to do something that it SHOULDN'T do... and I mean really shouldn't do... if it does such a surprising thing.... trust price. Not your feelings or opinions, and not other peoples feeling or other peoples opinions... and throw fundamentals out the F'ing window for the moment. Because as I see it, it's one of those rare times that the market doesn't care how "sweet of a deal" the fundamental story is telling, it doesn't care, it's being sold off anyway. When price action starts to ignore the most basic fundamental gears that move the markets, it almost always is signalling a significant, long, strong move exactly as price is saying it will.

 

last time I saw this was in the GBP/USD. It was the first week in august (if I remember correctly) that they annoucned their GDP dropped. That's pretty serious. A surprise GDP number, a surprise employment number, a surprise interest rate change, and a QE. Those are about the top 4 factors that will move a currency, hands down. So, british GDP came out negative, signaling an almost sure return to a recession. Yet within 24 hours, the market had a strong bull day. within 3 days, it traded higher than the high established on bad GDP day, and had not made a new low. 3 more days, and it closed above the high of the bad GDP day. 8 more days, it broke out. It is now up 700 pips from the low of the bad GDP day. it just never made a lower low after that following bullish day.

 

I could literally give a couple dozen examples of this type of situation in currency markets over the past couple years. Anyone remember the day the S&P downgraded U.S. credit ratings a year or so ago? ironically, the bond market had a stunning rally. In fact, since that day, we have not traded below it in the 10 year bond futures.

 

bottom line... we devalue our currency, making old debt issues intrinsically more valuable, and the debt market sells off hard on the week. I'm not a really big "on the record" type guy, but i'll say here, now, I have a great deal of conviction that we'll see 129'000 in the 10 year bond futures (dec contract) before we retest 132'275. I think we'll sell off for several weeks, if not several months, and a touch of 127'250 may end up being a conservative call. that we will reach before 2013.

 

And where do I think that money will go? ya. probably into risk assets, like stocks.

 

speaking of stocks, the greek stock market is up over 25% off of it's lows just weeks ago, german bond yields are going up (the euro has been over 85% correlated to the 10 year german bund for YEARS now.), and whats more, bond yields in the weaker southern euro nations is decreasing, which adds a "double whammy" of debt market confluence to reasons that will support the euro.

 

And with book values of some U.S. stocks being so undervalued (many were recently trading at or UNDER their cash value!) the lingering euro fears were all that was keeping an irrational market scared.

 

Because when you want to invest in negative interest swiss and german bonds and have a guaranteed LOSS, rather than invest in a fortune 500 company that is trading under book value which would give you a profit on the liquidiation of assets alone (nevermind if the company actually makes a penny or 2)... something is seriously wrong. It's just too darn much fear. For a problem that is no longer a surprise...hell, at this point, it's a BORE. And one that is not worse, but better, than it was 3 years ago, or 2 years ago, or 1 year ago.

 

Combine all this with the technical signals in the ES (noteworthy period of tight consolidation, following a big volume bull breakout, a tight flag, no retracement to the breakout point, and then further more up), and I think this is stage 1 of a brave new market environment.

 

I think the BEST trade is short the U.S. 10 year bond futures, followed closely by a long in the stock indexs (including of course the ES), and very close behind that is a long in the EUR/JPY.

 

So ya. 105 in the EUR/JPY by wed or thurs of this week. Say 129'175 in the ZN futures by the end of this month, and then even 127'000 by the end of the year, and the ES touches 1500 before it even blinks.

 

I believe last week the market looked up, only to see the sky was not falling at all. And considering fear was so strong that investors would pay money to get a guaranteed fixed income loss, rather than invest money in a company that has more cash in the bank than their stock value is worth... we are going to see a squeeze on positions in equities, bonds, and EUR/XXX currency markets the likes we haven't seen since the euro started this decline around august 2011.

 

ES futures at 1500 this week, and there may not be so much as a speed bump on the way their. I just don't see many other possibilities. I haven't had this much conviction since I decided on getting short german bund yields hit 1.17% at the beginning of summer (they are now at 1.70+ and the german bund is dropping like a rock)

 

Would love to hear what the rest of you are thinking though, if for no other reason than to see if someone knows something that i've just completely overlooked.

[bakrob99 11]

I have 1480 as a possible short term top before a significant pull back and then I noticed that Mr. Neg's composite profile shows a Volume Node at 1479. So I'll be watching that area for signs of sellers and consider trying to hold a short from there.

 

I don't see complete confluence in NQ however. NQ's potential resistance is higher than I expect NQ to be at when 1479 - 1480 is hit on ES - so NQ would have to be pulling back a little before it's expected resistance area.

 

In the meantime, I'll take my 2-3 point ES trades and watch to see how rollover volume works itself thru the open interest.

[ForexTraderX 10]

I have 1480 as a possible short term top before a significant pull back and then I noticed that Mr. Neg's composite profile shows a Volume Node at 1479. So I'll be watching that area for signs of sellers and consider trying to hold a short from there.

 

I don't see complete confluence in NQ however. NQ's potential resistance is higher than I expect NQ to be at when 1479 - 1480 is hit on ES - so NQ would have to be pulling back a little before it's expected resistance area.

 

In the meantime, I'll take my 2-3 point ES trades and watch to see how rollover volume works itself thru the open interest.

 

I agree with 1479-80, but not so much with the significant pullback. feels more light consolidation day. Of course we could have a bit of a pullback, but I still believe 1500 is likely by week end.

 

More importantly, I have a great deal of conviction we'll see this market move up to retest high 1500's until we see much chance of a reall pullback. As it stands on my chart, the next place we have both a possible intersection of a diagonal and horizontal SR level is around 1560+. I just think the momentum and the catalysts involved in contributing to this are much greater than a lot of folks are realizing. Was thinking about why I felt this way in fact, and I think it best has something to do with both technical price action and market sentiment.

 

Around the internet and on bloomberg and other news sources, the amount of people bearish on risk markets over all even just 2-3 weeks ago was significant. Nearly everyone in the world seemed to me to be slinging around words like "hopium" and "sucker rally" and "anyone buying the euro/S&P/risk-assets is a moron!".... things like this. Mostly about the euro, but that's been really what it's all about. If the euro union looked "strong like bull", i'd see little if any reason for fear in the marketplace. But yet, those markets started moving up. Just when a day would come when they looked like they would drop, they would keep moving up.

 

Now, I see less conviction in the tone of news articles and other traders regarding the short side of the euro. I see a more measured commentary. But the market is exploding upwards really. Significant trendlines are breaking. Of course many less experienced players are still thinking short risk rally in general, and they MAY be correct... but it seems the more thoughtful are much more neutral, or starting to become more bullish. I see this as a natural cycle. at the bottom of a market cycle, nearly everyone is bearish. At the top, bullish. Right now, i'm seeing a definiate change in the tone and mood of financial news and commentary compared to a few weeks ago, but not nearly enough to say "yes, the good majority are bullish". It's still a minority, but growing.

 

I think this is really what's shifting. we've had price fluctuations and such before, particularly in other risk markets, and then they drop off. A few get bullish, but not many, and not for long. But the last few weeks, it's felt different. a real change in market participant tone and sentiment. You can see it in the news articles and such coming out. Read a dozen from the last 48 hours. Then, go back 3 weeks and do the same. It's really a different feel to them. combine this shift in sentiment with the furious price action move we are seeing in risk markets (particularly euro related risk markets), plus the underlying fundamental value in many of them, and the fundamental overpricing in the world bond markets... and I think this little move up here for the S&P, euro, risk, etc, is a something more this time.

 

P.S. Plus, copper just broke out of a base 2 weeks ago, and has now broken a TL. Copper being an industrial metal (probably THE industrial metal), i've very rarely seen a rally in the stock market that wasn't accompanied by a rally in copper. ANd boy is it ever moving up.

[ForexTraderX 10]

Here's an article that I saw posted over at oanda today.

 

Week in FX EUROPE Sept 9-14: EUR Bulls Squeeze Retail | OANDA Forex Blog

 

this is exactly the type of thing i'm talking about. this article is genuinely bullish! in fact, it couldn't be much more bullish. That leads me to believe it may be biased more than most other articles... but that's just the point. Such a bullish tone was non-existant 3 weeks ago. Heck, for the last 8 or 9 months i haven't seen such optimism. But, it's based in underlying fundamentals, and risk is at a great value overall by nearly any fundamental yardstick.

 

I know a lot of the discussion here is focused just on the next major level or whatnot, but I find a good deal of value in a medium/longer term view on the markets as well, and I think the S&P is quickly heading to retest the highs of a few years ago.

[goodoboy 10]

The market was certainly given a Fed adrenaline shot yesterday! Just shows that there's really not much point trying to predict what the outcome of an event or eco release will be, just have a number of plans to account for various different possibilities.

 

The move yesterday was pretty big. So given that and what Fridays have been like recently, I suspect that we won't see fireworks today. If we did, I'll be watching to see how the market reacts to some of the volume developments below from yesterday. Above I would be ultimately looking for a test of 1479.00 with 62, 68.50, 73 as other possible tests from the profile.

 

Here's the chart anyway:-

 

 

Thank you for sharing your profile and analysis.

[TheNegotiator 13]

Just a few points:-

 

IN SPITE of the QE3, U.S. 10 year bond futures closed near their absolute low of the week.

 

No, because of QE3. As the dollar is diluted, money becomes less valuable and the further down the curve you go, the more this is felt. So QE3 = bad for bond prices.

 

Anyone remember the day the S&P downgraded U.S. credit ratings a year or so ago? ironically, the bond market had a stunning rally. In fact, since that day, we have not traded below it in the 10 year bond futures.

 

When something bad happens, there is a "flight to safety/quality". Typically the dollar and bonds. Therefore especially US treasuries (and the short end moves more relatively).

 

bottom line... we devalue our currency, making old debt issues intrinsically more valuable, and the debt market sells off hard on the week.

 

Again, this isn't strictly accurate. If something isn't seen as inflationary and interest rates are cut (i.e. money supply is increased) then yes, old issues are more valuable because their 'coupon' rate is higher (attached interest rate) than new issues will be. In terms of pumping money into the economy, the dollar is still the dollar and old as well as new issues are priced in the same currency. Inflation = bad for long end bonds priced in that currency = bond prices go down. Plus the fact is that bond yields were dropping (prices rising) due to perceived risk in the economy which, the Fed is moving to mitigate via QE. So if risk goes down, bond prices should fall.

 

(the euro has been over 85% correlated to the 10 year german bund for YEARS now.)

 

Do you mean inversely or you mean bund yields? As Euro fx goes up, bund generally goes down - this is a risk thing too. Similar if not the same reason as why ES goes up as DX goes down.

 

[TheNegotiator 13]

Anyone remember the day the S&P downgraded U.S. credit ratings a year or so ago? ironically, the bond market had a stunning rally. In fact, since that day, we have not traded below it in the 10 year bond futures.

When something bad happens, there is a "flight to safety/quality". Typically the dollar and bonds. Therefore especially US treasuries (and the short end moves more relatively).

 

 

 

Re-reading this, I know it sounds a little odd. I can't remember exactly what the markets did at the time and I'm not going to go back and look. However, what I do remember is that there was a bit of derision of S&P at the time and nobody felt there was any increased default risk. If anything, it was taken as the US economy isn't brilliant. Treasuries were still seen as rock solid, hence flight to safety.

[TheNegotiator 13]

Slow, slow day so far:-

 

[TheNegotiator 13]

Re-reading this, I know it sounds a little odd. I can't remember exactly what the markets did at the time and I'm not going to go back and look. However, what I do remember is that there was a bit of derision of S&P at the time and nobody felt there was any increased default risk. If anything, it was taken as the US economy isn't brilliant. Treasuries were still seen as rock solid, hence flight to safety.

 

I did look. On the day itself it looks like the 10yr was down for the day (8/5/11 I believe) then on the following Monday it resumed its move higher. I seem to remember them announcing it after the pit close @3pm ET but can't be sure.

 

S&P downgrades U.S. credit rating for first time - The Washington Post

 

Anyway, same argument applies really.

[ForexTraderX 10]

Just a few points:-

 

 

 

No, because of QE3. As the dollar is diluted, money becomes less valuable and the further down the curve you go, the more this is felt. So QE3 = bad for bond prices.

 

AH yes, your correct. not sure why I typed that exactly..

 

 

When something bad happens, there is a "flight to safety/quality". Typically the dollar and bonds. Therefore especially US treasuries (and the short end moves more relatively).

 

 

 

Again, this isn't strictly accurate. If something isn't seen as inflationary and interest rates are cut (i.e. money supply is increased) then yes, old issues are more valuable because their 'coupon' rate is higher (attached interest rate) than new issues will be. In terms of pumping money into the economy, the dollar is still the dollar and old as well as new issues are priced in the same currency. Inflation = bad for long end bonds priced in that currency = bond prices go down. Plus the fact is that bond yields were dropping (prices rising) due to perceived risk in the economy which, the Fed is moving to mitigate via QE. So if risk goes down, bond prices should fall.

 

 

 

Do you mean inversely or you mean bund yields? As Euro fx goes up, bund generally goes down - this is a risk thing too. Similar if not the same reason as why ES goes up as DX goes down.

 

 

Ok, you raise some good points. one could debate the classical economic effect of change vs the more recent emergence of the "safety/risky" sentiment swing that has trumped some of the more classical economic effects. However, I think the overall situation that has emerged over the past few weeks is one that primarily supports equities, the euro, the gbp, (not the franc, but the euro peg messes this up right now), and it'll be bearish for bonds, the dollar, and the yen.

 

Technically, these are markets are also very strongly signaling a reversal in longer term trends as well.

 

I should proofread such long posts a bitmore, and clarify. The first point you mention I was 100% wrong, what I meant was that in spite of the general fear in the markets, the QE will boost risk assets and hurt bonds. The reason this is important now, is because in spite of previous QE's and such, the bond market has continued to climb upwards overall, but I believe the "top" of this several year trend is near the end (or very close to it)

 

As far as the last point, yes, I did mean bund yields, not bund market.

[TheNegotiator 13]

AH yes, your correct. not sure why I typed that exactly..

 

 

 

Ok, you raise some good points. one could debate the classical economic effect of change vs the more recent emergence of the "safety/risky" sentiment swing that has trumped some of the more classical economic effects. However, I think the overall situation that has emerged over the past few weeks is one that primarily supports equities, the euro, the gbp, (not the franc, but the euro peg messes this up right now), and it'll be bearish for bonds, the dollar, and the yen.

 

Technically, these are markets are also very strongly signaling a reversal in longer term trends as well.

 

I should proofread such long posts a bitmore, and clarify. The first point you mention I was 100% wrong, what I meant was that in spite of the general fear in the markets, the QE will boost risk assets and hurt bonds. The reason this is important now, is because in spite of previous QE's and such, the bond market has continued to climb upwards overall, but I believe the "top" of this several year trend is near the end (or very close to it)

 

As far as the last point, yes, I did mean bund yields, not bund market.

 

It does feel as if it 'should' promote stronger equity markets and decrease the appetite for what is viewed as 'safe'.

[ForexTraderX 10]

I did look. On the day itself it looks like the 10yr was down for the day (8/5/11 I believe) then on the following Monday it resumed its move higher. I seem to remember them announcing it after the pit close @3pm ET but can't be sure.

 

S&P downgrades U.S. credit rating for first time - The Washington Post

 

Anyway, same argument applies really.

 

Yes, this IS essentially why it did what it did. But one could argue somewhat persuasively that when an entities credit rating is downgraded, it should increase bond yields and hurt the bond markets. There are reasons why it did not, but those reasons are somewhat similar to why the negative impact a disappointing GDP announcement by the UK recently was quickly reversed in the GBP/USD currency markets as the GBP gained against the USD. The reason is that the GBP movement has been more tied the past few years to overall events in europe as a whole, and against the USD more by what expectations are of inflationary/deflationary policy decisions like what various stimulus packages are introduced, etc. These are currently bigger and more influential than the UK GDP on the GBP/USD recently

 

But that's kind of my point. When something that typically should have a signifcant influencing factor in a market comes out, and yet, the market moves the other way quickly afterward, it shows that there are even larger, more pressing reasons at play, and to ignore the typical "what should happen" and respect price.

 

SOrry I didn't word it all better though, It was kind of a peacemeal idea that came up as I was typing... thus the multiple posts and poor proofreading.

[ForexTraderX 10]

Slow, slow day so far:-

 

 

I thought about trading the ES today for about 3 minutes a few hours ago, but given the lack of break downward yet in the bond market, the price action in the ES, and the lack of move up in the bullish risk on trade in european currencies, i've decided to abstain from trading it today. I'm sure there will be better opportunities later in the week.

[TheNegotiator 13]

So how does everyone see the current market behavior?

 

[ForexTraderX 10]

Looks a bit slow today, more consolidation so far... but I wouldn't want to be short for the most part. I'd look to get long between 1447-1450 possibly. some intersecting trendlines with some support levels, and profile on my screen shows value to be above those price points, so possibly long, but overall, I don't see anything right not to convince me strong one way or the other.

 

1440 or lower, i get long like crazy.

[TheNegotiator 13]

Looks a bit slow today, more consolidation so far... but I wouldn't want to be short for the most part. I'd look to get long between 1447-1450 possibly. some intersecting trendlines with some support levels, and profile on my screen shows value to be above those price points, so possibly long, but overall, I don't see anything right not to convince me strong one way or the other.

 

1435 or lower, i get long like crazy.

 

I'm looking at the idea that any temp consolidation high is in at 68.00. The low possibly in at 50.50 although I am also looking at the possibility of just above 45.00. Just one possibility.