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Well...it's really seeming to find support here... but, it's friday. i don't like friday. we're not low enough for me to be really interested... think i'll be happier starting my weekend now.

 

GOod luck all... if u all know what it's gonna do, that's better than I can today.

 

FTX

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Well...we just hit 1436.75, and we're probably near the low of the day. i'd be surprised if we touched below 1434. tick seems to have bottomed out with a pretty extreme reading. I'm not gonna say we will move up a whole lot...but 1436.75-1434ish is probably a short term low, or possibly low for the day.

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This GOOGLE earnings miss points to a MUCH lower NQ down to 2664. Not necessarily today. I don't mean its going straight there ... but there NQ is showing signs of needing to go lower to find more buying interest.

 

Looks like the 2664 target might be hit faster than expected. Just 20 pts away and down 70 pts from when I projected it. Maybe staying in overnight might have made sense after being up so much.

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Well so far, it's certainly has been a one-move day! :rofl:

 

Ya know... when the first support level started to look like it would fail, I took a look at other correlated markets, NQ, YM, and currencies as well... as well as the TICK and TRIN...and it seemed weakness was in the cards...

 

however... I think we'ev seen the low TICK for the day. And that generally means we've seen the bottom. The market is oversold in the short term, and just touched off of some significant support around 1434ish...

 

I think this is probably the bottom for today. I think we'll see more upward action in the coming days... however, we could bounce around a bit, but for today...i think we're good actually.

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well...that's what I get for coming back to the office instead of staying in the TV room!

 

i'm gonna give this about 4ish points total for a stop... but then, i'm just gonna have to take it. down about 3 points now... probably gonna lose. Always sucks to end with a loser for the week... at least I did well in other areas.

 

Anyway... here's to hoping, lol

 

FTX

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If I can get a pip or 2 here... say, 1435.50-1436ish.. I'll take it. For now, stop is 2 pips elow the low of the day. May bring that up more if the market moves more my way...but probably will just leave it unless it or target is hit.

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You see this happening when a day like this occurs. People want to fade it. But the very best way to prevent getting stuffed in an ES trend day is by evidence based analysis. I'm not trying to make out that I never get it wrong or anything like that. Just that it's important to monitor certain things because fading a market like this before it's put in an extreme is gonna wipe out a good few days and just occasionally, it could wipe out much much more.

 

So what's the evidence?

 

1 - The Open

 

An Open-Drive or Open-Test-Drive can really give you an early hint as to what might be on the cards. I did point this out earlier. Given the location and the macro context, this open was a big hint.

 

attachment.php?attachmentid=32194&stc=1&d=1350664663

 

2 - The Cumulative Delta

 

When OTF aka "the big boys" take the market in one direction, the delta (at bid - at ask volume per bar) has to move too. Today it did and even after the initial move it didn't really recover.

 

3 - IB Extension

 

If OTF are there and haven't done 30 points pre-IB close, the likelihood is that you'll see a substantial IB extension of more than at least 38.2%. This is representing the fact that these guys come into the market early and there is a persistence of activity.

 

attachment.php?attachmentid=32195&stc=1&d=1350664964

 

4 - One-Timeframing

 

An MP term. Means simply on a 30-min chart the high in a downtrend or the low in an uptrend is no more than 1 tick beyond the last 30-min bar. Simple but works. Sometimes the easiest and clearest technicals work when markets are really moving.

 

attachment.php?attachmentid=32196&stc=1&d=1350665328

 

5 - Shallow Counter Rotations

 

If the market is potentially going to turn, there are a few things I don't want to see. One is shallow counter-rotations. Today the largest has so far been 3 points. That isn't even worth getting out of bed for a bull.

 

attachment.php?attachmentid=32197&stc=1&d=1350665679

 

6 - Lack of Counter Delta Conviction

 

In a counter-rotation I would want to see a strong delta push against the trend. This means there are some big players aggressively competing for what they see as unfair prices. i.e. the move has gone too far at least temporarily.

 

attachment.php?attachmentid=32198&stc=1&d=1350666089

 

7 - Any Rejection

 

As with the counter-rotations and the delta, until I see in the price action a really decent rejection at a good price, do I really believe it's worth taking a punt that the OTF have gone home?

 

8 - Range Estimation

 

Looking at the current volume, we're currently running at getting on for 150% of recent volume by this time of day. Even without this, clearly it's a big day. Big days recently have been in the region of 25+ points. So to me that means at least 20 points. So far we're at 19.50 but my point is that I have been looking at targets upwards of 20 points. That's why I posted the remark about possible levels below.

 

Anyway, having some sort of framework so you don't get shafted on this kind of day is imperative to imho. Otherwise it can set you back days or weeks in capital and emotions.

 

DON'T FADE AN ES TREND, PLEASE!

 

(and if you did, please just see this post as a way to help avoid it in the future and nothing more :))

5aa71161ec5d2_2012-10-19OpenDrive.thumb.jpg.badd46a929b695553ffd258c3a2d14da.jpg

5aa711620111f_2012-10-19IBExtension.thumb.jpg.ac6fa8497c3d9eb32bbbfdb53deb6191.jpg

5aa7116207b1d_2012-10-19One-Timeframing.thumb.jpg.66ed20361f492e2a3d01afa9ff67c790.jpg

5aa711620fc72_2012-10-19Counterrotations.thumb.jpg.4df33cb0185edfa5e5e95de4efcad08a.jpg

5aa7116218461_2012-10-19Cumulativedelta.thumb.jpg.e937beed1597102fa99ba9635c378e75.jpg

Edited by TheNegotiator

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Nice summary of points. Part of the problem recently I think is that we have been living in such low volatility and range bounce days that trend trending has slipped to the back of the trader's mindset. Time to dust it off and stick with the shorts until they fail.

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Anyway, I hope it helps someone. It does seem to be a perpetual problem we come across though, which is why I thought I'd post a summary.

 

I would point out that what is basically a trend day can end up turning into a normal variation if it gets so far and opposite activity steps in closing the market far closer to the centre of the range. Closing towards the extreme (not necessarily at) helps to define it as a trend day.

 

Also worth pointing out is that the market behaves as a trend day until the point when it stops trending. This is a really big issue for guys who get run over by the trend in the first place. They're too slow to identify the trend and too slow to identify it's stopped.

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Thanks for the explanations and the charts.

 

The biggest problem I have with a day like this is, even though intraday trend and something like the $TICK remained thoroughly negative after the first hour of trading, I never seem to be able to take a second or a third or a fourth short (and I closed my first short with only a 3.5 point profit). My only consolation (and something I used to do with haBITUAL REGULARITY), I did not try any longs.

 

What was there that could have pointed to a BIG, persistent trend style slide?

 

and how far?

 

I don't know, suggest something I might time to research it this weekend.

 

I keep a measure that calcs 5 day average range and then also calcs a .618 expansion of that range (doesn't get there very often but when it does it is often a barrier to additional expansion (I don't know why).

 

That .618 expansion of the ave 5 day range calculated to 19.50 points. Take today's H minus 19.50 = 1430.75. So far, that's been the LOD to the tick. (markets are manipulated? Option Call writers certainly relished today's decline)

Big deal. WHat does it mean going forward?

 

I've gone back to look at the last time there was an RTH range expansion to the downside equal to or greater than the .618 expansion ... last occurred Sept 25, 2012.

 

Sept 25 ( a Tuesday) not only hit the .618 expansion level, it went down further by the end of the day.

next day Wed Sep 26) saw lethargic lift and then a retest of the sept25 LOD (came within 2.5 points of the Sep 25 Low) before Thursday's (Sep 27) REBOUND.

 

What was there that could have suggested an extended move lower today?

 

 

 

 

Anyone care to share anything that might have suggested an extended move down today?

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Anyway, I hope it helps someone. It does seem to be a perpetual problem we come across though, which is why I thought I'd post a summary.

 

I would point out that what is basically a trend day can end up turning into a normal variation if it gets so far and opposite activity steps in closing the market far closer to the centre of the range. Closing towards the extreme (not necessarily at) helps to define it as a trend day.

 

Also worth pointing out is that the market behaves as a trend day until the point when it stops trending. This is a really big issue for guys who get run over by the trend in the first place. They're too slow to identify the trend and too slow to identify it's stopped.

 

Yea... all good points. I just stopped out for 4.5 pt loss.. and that is it for today., considering i'm just closing the charts up now.

 

The weakness at this point has me both surprised, and a bit concerned about the longer term implications. Monthly chart of the ES is looking topped out... and though I am (and have been) quite bullish over all on the EUR/USD... it seems many "risk" markets are toppping out... longer term charts for many of them look bearish at this point...

 

So, I'm not quite sure what to expect myself here in the stock market.

 

I primarily trade currencies and crude... so I have a much better idea for them, but even now... the euro is at a bifurcation of sorts, and if it breaks up this is encouraging for the ES...if not, well, they could both get hurt.

 

Last but not least, the ES hasn't moved or consolidated in such a way that would clearly indicate it was ready for "the drop" should that be setting up at all... so that has me wondering just how likely it is without at least 1 more push to the upside... but, of course it could go either way.

 

I guess one thing is clear. I'm really not sure 1 way or the other about the ES.

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Vertigo,

 

We don't all have to be great at all market types. I think not getting flattened by this sort of day is almost enough in itself. Just because the market moves like this doesn't mean it's a great opportunity for everyone and in fact it clearly spells danger to many. The indicator fo such a move was probably Google and then what the market did. I didn't think it was necessarily going to do this but I had it as an option.

 

FTX,

 

I don't know yet what to expect. In the scheme of things this could just be a minor blip, a long liquidation day down to the lower part of the distribution. Given the election and earnings and Europe and the fact that we're pretty high already and that Google is a behemoth of a company I don't think that it's surprising that some positions are being squared up. If next week we power through the balance lows and drop below 1400 for a protracted period and can't retake it, that could spell something different. But I'm not too sure how far we might go anyway. In fairness even something below 1400 might just be a pretty temporary correction. Remember that we're backstopped by the Fed right now too. Anyway, one last point is that the same guys who get caught on a day like this also get caught on the rebound. I am NOT saying it WILL rebound, but you should have a plan for if it does and know what you're looking for before you trade.

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Looks like the 2664 target might be hit faster than expected. Just 20 pts away and down 70 pts from when I projected it. Maybe staying in overnight might have made sense after being up so much.

 

 

 

Okay just a little pat on the back here ... Low of the Day in NQ 2664.00

 

Wow !

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Very nice! Did you hold any to 64's?

 

No. That certainly is a problem I have relating my trading intraday trading targets to line up or use my projections of a possible path of price. In fact while I was mostly short during the "fall" it didn't stop me from taking some long scalps.

 

And to really take advantage of it I think you'd have had to hold overnight which I don't do on stock index futures. I think it also has to do with certainty - it's one thing to have a reasonable idea of what might unfold - and another to put your money on the line and watch it occur. I think we can all relate to that.

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From "bigger picture thread" :-

 

Looking at the chart, although we sold off on friday, we did stay within the balance (low on 9/10 @ 1418.75). I've expanded it to illustrate the void down to around 1409.00 (low of 1403.75) from 9/6. The singles start below the 18.75. Although there are a couple of overlapping points, mostly the zone is thin. Above, I'd want to see a retest of 28.00, 31.25 or 33.75 hold (and reject) if I were holding a short imho.

 

attachment.php?attachmentid=32267&stc=1&d=1350911567

 

I think that although we sold off pretty hard on friday it still could just be a case of long liquidation. How much remains to be seen though. But the interesting point is that we finished right towards the low of the balance and that actually there was no rejection as such so we don't yet know if the low is in for the minute. The schedule for today is sparse and often trading after a big day leads to muted ranges. However, if the market is still weak people might not care. CAT reported and beat, YHOO is after the close.

 

The overnight profile doesn't show a great deal of consensus on value although test below low of fri is a clear area of low vol and the high is low vol from friday and the high of the last attempt higher before selling off into close.

 

An ETH chart reveals that there's possibly a case for support down to 15.50 area but that remains to be seen. Would like to see what happens on first test up and first test down.

 

attachment.php?attachmentid=32268&stc=1&d=1350912470

 

attachment.php?attachmentid=32269&stc=1&d=1350912472

2012-10-22_2.thumb.jpg.caf075655a8269db955264383f3aec48.jpg

2012-10-22_3.thumb.jpg.e1d33772d9cb488b6e97ac5131d27122.jpg

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