PLAY THE RANGE, PLAY THE SHIFT, PLAY THE PULLBACK FOR CONFIDENCE 11/15/13

PART 3 in the recent series is Play the Pullback for Confidence.  We had a range, we had the market shift.  Next is a move by the market for confidence to prior support in a bull trend, resistance in a bear trend.

Euro Zone look:   [03:33] <CM> resist at 91  see if es will pb to test support  from the over bought area  t1 87 t2 84-82

Market was over bought from the FED news and likely to PB to a confidence level.  Those levels were Target 1 (1787) and T2 in the 84-82 area.  You can not watch the market 24/5.

 If it moves while away, play again on another day.

  If the fundamentals are unchanged when you return, get ready to take your turn!

And the decision was: market is unchanged look for the trade.

[08:01] <CM> the 2 point bar chart shows the T1 T2 that has developed  (chart removed)
[08:02] <CM> play safe in the street!

the market hit 1788 and drifted back to the 91 resistance area.  Reason(s) to enter, reason(s) to go away from  a multi-chart look.

THE MARKET SHIFT 11/14/13

In our last post we stated "Play the range until we see a market shift".  Well, it did not take long for that to play.  Range bound range runs with a BO-5 and then the shift.

This is a 2 point bar chart and you can see the play inside the range and the SB Break out to support.  This was a BO-5 area.  When PA holds at the BO-5 we expect a return to the range.

This occurred, and we see the range run for the opposite break out.  Note on this BO we did not see the selling pressure (red arrows) when PA was trapping inside the range.

PLAY THE RANGE UNTIL MARKET SHIFTS 11/12/13

HAPPY 111213. One more to go at 12/13/14.

10:20 AM EST

The strong range is the game until PA breaks.  The range in question is the 1763-1768.  US was sluggish this AM as the market was watching the FED  while the professionals took the sheep up toward the range top and descended faster than the Tower of Terror.

Multiply looks showing some weakness, pull the trigger when you know the upside risk  for a short, downside risk for a long.

5 minute, 1024 Tick and the 2 point range bar

and the quick exit at moving support, and to get out of the way from potential chop in a range bound opening.

PM NOTE

PA continued to range run for the day and broke to the BO-5 area and returned into range.  Also note the two major 50CB's and the test patterns that developed.

The first 50CB was tested and had a FBO, suggesting more selling in the range.  We also see a gap to the upper part of the range, another weakness signal.  After the BO-5 run, PA rose to test the second major 50CB

SELLING BREAKS SHORT BUT MARKET STILL IN BALANCE 11/7/13

PA broke the SB (Short BOT) and ran to the prior support area.  Nice trading day, and gurus  will be flocking to be the first to write off the market.  But. at a closer look, we pushed roughly +4 above the upper range (LB) then ran the range for a SBBO to approximately +4 below the prior support.

Essentially, a balance performance +4 to -4 in a range that has been developing.  The char is the 30M to help you see the range.

While near our upper target for the year, this market is still long bias.  The daily is off the 20EMA and above prior resistance turned major support in the 1720 area.  It would be nice to see money foaming at the mouth and jubilation in every mom & pop investment group. At least it would seem to help to get a clear top in.

TIME: A CRITICAL FACTOR TO A TRADE 11/5/13

Here are two examples of a similar trade.  One a short move and the other a long move.  In both cases, the market was telling a story of moving in the opposite direction.  One critical difference?  The time element involved.

The first was an overnight selling where PA is lethargic, slow to develop.  The long, a reversal for a one leg that moved quickly, and followed by another push leg after the pullback exit.

You read a trade, you execute, and wait on time, a precious commodity in trading.

Now, a break.  The best time of all...

PLAYING THE BIAS WITH SUPPORT & BREAK OUTS 11/1/13

Everyone has a bias, thus the bulls versus the bears battle continues and briefly will find an equilibrium point.  Last evening Support was developing and the market bias was still bullish.  The evaluation/ go with the bounce from support.  By the US Open, we had a wedge (ascending triangle type) showing favor for the bull, but certainly on the lookout for a bear surprise.

[21:12] <CM> back to the 63-53  thinking we still have another move for the bulls.  from the 10/3 blog  " A settlement will occur, and buyers will have their better price for the Q4 run into the 1700's.  We still stand by the 1734 area and now see a possibility of 1768".  we are there, and the 60-80 area is seen as the high.  a fed easing in jan + another debt show down would be good for bear season..  (chart deleted)

[21:23] <CM> 54.5 buyers will look for 57.5 to break # of ma's  would open door for 61 test

[00:06] <CM> 60m chart
[00:14] <CM> L 51.75 see what happens...

[07:43] <CM> bullish channel albeit not as strong as some would prefer.  still looking for the 57 test  (chart deleted)
[07:49] <CM> the 34m wedge with the bear fbo watch  could happen, but still have bull bias  (chart below)


Upper 50CB target, with a resistance noted around 57

Letting the opening stream work the trade...

10:15 AM EST UPDATE

50CB hit...

Now, time for the weekend.  Play safe in the street!

THE COUNTER TREND BUY 10/31/13

Fundamentally, there is nothing wrong with a counter trend trade.  It, like any trade, has a purpose for the trader.  The trade needs the same judgement as any other trade:  what is the risk, what is your exit strategy, and what support do you have to take the trade.

Yesterday it was the 73 sellers, last evening it was the 53 buyers.

[21:09] <CM> 21-34-55 min charts sellers at 73  for the short selling today  (chart deleted)

[21:15] <CM> 53.25 buyers prior support

[07:22] <CM> holding the 53.25 from support  resist at 56.75 59.5  (chart deleted)
[07:43] <CM> from last evening sellers at 73 buyers 53 approx  next longer term target the 55m 50cb  (chart deleted)   target for us mkt
[07:46] <CM> will let stop follow  win-win  (chart deleted)

The longer term target was the giude, as the longer term chart was the basis for the entry.  Havving more than one trading chart is nothing new.  All time frames have reasonable trade set ups.  The general guideline is to see a set up om a longer term chart ( the belief that the trade will develop over time; work) and find a shorter horizon PB to trigger your entry at a better price.

A short time horizon trade will be quicker to execute and complete.  Thus why scalpers like 1 minute to 3 minutes, day traders like the 5 minutes, and institutions like day and weekly charts.  Your trade style and purpose will require the appropriate tools.

PM

[21:12] <CM> back to the 63-53  thinking we still have another move for the bulls.  from the 10/3 blog  " A settlement will occur, and buyers will have their better price for the Q4 run into the 1700's.  We still stand by the 1734 area and now see a possibility of 1768".  we are there, and the 60-80 area is seen as the high.  a fed easing in jan + another debt show down would be good for bear season..

PULL BACK FROM THE HIGH 10/30/13

The market was appearing to be in a overbought  range, or at least up against resistance and needing a PB to gather new momentum.  Whatever reason you may use, it was a short opportunity this A.M.


SHORT:  5m-tick-range bars shown

DON'T FIGHT THE TREND 10/29/13

The trend is your friend,  OK, it may be cheesy but it is a valuable position to consider for most traders.  Can counter trend pay/work? Yes.  But like all trading thoughts found in books, Internet, and traveling caravans, what works for one does not necessarily transfer to another..  Well, not as fast as the "pay for this" transfers...

Counter trend has a role as does any trading strategy.  But the one strategy that will keep you in the game long enough to turn the corner is to focus upon the trend.

Today we had three attempts ( a W) to break long in a bullish market.  What was the difference between a breakout and a range bound day?  The SB gaps developing.  Note the gap to the SB (red line) and the bullish TL that developed.

The market walks, talks.  Sometimes it sings. 

AFTER HOURS SLOW, BUT FUNDAMENTALS ARE THE SAME 10/28/13

The after hour period will often be slow, requiring patience in letting a trade develop.  On the flip side, you are not likely to get burned to the degree you would see in an active market.

A control bar developed last evening, and a PB test of the 50CB was expected.

[20:03] <CM> test of 50cb likely  & see if we get push 2 to upper resist

The  downside was determined, and a long was entered for a possible second expansion.  The options are:  enter and wait, or wait for the 50CB and enter.  The range was narrow so the net effect was a judgement call.

PA did test the 50CB and bounce, pushing higher to test the upper range resistance.  A FBO at this point would suggest an extended selling  and a target below 1757.

[21:58] <CM> TL fbo  see if we get some selling back to 57 area

Albeit, it was slow and steady, the target developed.  In the 2 point bar chart, it looked like this:

 

Resistance at the upper range followed by an extended sell off back to the 20EMA support.  Multiple chart, multiple reasons to take a trade that was expected to develop.

AT THE OPEN

PA was rising inside our range then returned to the lower end and a support TL.  This was a long entry heading into lunch.  The TL held into the close.

ANOTHER EXPANSION FROM THE SUPPORT RANGE 10/25/13

Another expansion day above the recent support range.  On an expanded look, the bullish trend is obvious.  The issue is how to enter at the open,which is notorious for whip to take traders out.  The first 1/2  hour to hour is professional feasting time and should be carefully evaluated prior to establishing a trade.

The Stock Club was meeting this morning , and I used some time to talk about the moment of the bars, and to show a trade.

• The trend is bullish
• The important range (for several days) is below us and support.
• The MA support is below us
• PA was in a second leg off the 20 EMA (blue)
• As it turned out, sellers trapped on bar 2 and again on 4 helped to fuel additional bull pushes.

When you build the why, your trade has a better change to work in your favor.  The "building the case" will give you the confidence to stay with the trend, and ride though bars 2 and 4.

Yesterday it was a reversal bar play.  Other days it's a break of a BoT.  You have a choice:  waiting all day for the only setup you have, or trade a variety and get in and out.

This morning we were looking at the 3 minute, 5 minute, and the 34.  You have the reasons discussed for trading the 5m, but note the support on the 34m.  PA in a bullish trend and held the bears at the 20 EMA.

TREND CONTINUED 10/24/13 AM

Buy trend continued into Euro Zone.

 After the DT play, price was attractive for another bullish run.  Price will always find a better point for long entry or short entry.  It is likely to occur when the sentiment of the herd is moving in the opposite direction. 

PM LOOK:

PA played with the range and finally broke long as the averages fell to buying pressure.

Reversal off the bottom of the range seen as a long to the EMA as a minimum with the upper range target likely.

Exit and top of range hit at B11, where PA returned to test lower support and developed a bullish channel off reversal B4.  This compressed area for the MA's was a flipping point for the market.

On a 55 minute chart,  the compressed area was a breaking of the 20EMA off a reversal at bar #2.  Multi-chart looks will provide valuable information for the trader and should be a part of the decision process.

A standard procedure is the see a trade on a higher time frame, and switch to a lower time frame to pick the entry.  You would look for a PB in the trend (lower time frame), and a  break of the PB TL.  This is a better entry in the prevailing trend which resumes after the PB.

Once in the trade, switch back to the longer term chart, where you saw the trade setup, and use it to determine the exit point.

In this case, the exit was the test of the 50CB of B23 just prior to the sell off. ( 1748 area).

THE OUTLOOK FOR "DT" SELLERS ARRIVED 10/23/13

From yesterday's blog (AM post).

The obvious outlook to be aware of?  A second selling later in the market back to the original static levels around the 50CB.  This would fulfill a "DT" strategy.

The Dick Tracy sellers did arrive, and PA push down to the 50CB and continued into the after hours.

The DT pattern is the green arrows.  It is patterned after the 40's hats seen on our her, Dick Tracy.

PA

PA runs higher and retraces to support followed by another run higher.  The problem?   The catalyst has expired and the professionals dump into the "let's join the bandwagon" traders.  PA pushes down below the origin creating a longer PB run.








The good news:  support was seen as buyer again entered in a staggered HL pattern.  Outlook?  With a better enter price, market is likely to continue in bullish pattern.  




 

1768 still part of the plan, and nothing wrong with a 1784.....

NEWS, EARNINGS, AND BUY BIAS: THE OPEN BO 10/22/13

PA developed a nice 50CB with employment news.  That informations was used to create the 50CB and the 50CB TL.  we had a rising (ascending triangle) bottom showing gaps to the TL.  This can be the aggressive entry looking for the Breakout.  You have downside measured, and the risk seems reasonable.

The alternative is to wait for the actual BO.  In this scenario, PA will 1.)  break or 2.) drift long/short around the resistance.  Once the market has created leverage against the opposite position, a BO will occur and help  fuel the run above the resistance or below the support.

The "wait" was triggered around BO+1.

The entry itself became a 50CB BO bar.  Our target is to work with the market for the BO-5 level and keep the stop at prior support levels.

We are in a leg 2 push hitting a +10 from the 50CB and extended past BO-5  around 1750-51.  Got point to look for a PB from initial longs selling into later buyers joining the party.

Breakout exits to the herd, and market is fueled for a PB tho the 50CB TL and the 50CB.  The test failed to break lower, and was the next optimal long positioning.

The obvious outlook to be aware of?  A second selling later in the market back to the original static levels around the 50CB.  This would fulfill a "DT" strategy.

Play the market, but be prepared for the surprise....

OPEN SUPPORT RUNS FOR BO-10`

The pre open range was narrow and PA broken bullish prior to the US Open.  Pa crossed our slower MA's at the LB.  A H&S  two-bottom support test was the US clue to the continued buying.

B1 and B13 area testing above the LB and created a nice bull trend on the backside.

50CB BREAKOUT AFTER TEMPORARY SETTLEMENT 10/17/13

Nice day to return from a trip. 

PA in a narrow pre open range and riding the LB and SB.  The 8:55 AM bear 50CB has limited follow through, and a buy signal hits above the Short BoT.

By B2 we have a 50CB BO at the Long BoT and PA crossing our averages.  DING!  BO-15 run.  By the afternoon were at the 50CB TL and the 20EMA support, yielding a second push by the bulls.

GREAT TIME TO BE IN THE MARKET 10/3/13

AS the government plays hand grenade toss, money is salivating over the market opportunities.  The "Better Price" Theory discussed is coming into play.  A settlement will occur, and buyers will have their better price for the Q4 run into the 1700's.  We still stand by the 1734 area and now see a possibility of 1768.

Today was a classic expanded BOT run.  A sell signal in a narrow range was important, and so was the LB failure.  Continued strong 50CB's and the PA gap to the EMA were strong sell supporters as well, and the 50CB's help define a trading range for the day. (blue bars).  Another strong point, as PA ran for BO-20, was the breaking of the 55-89-233 period MA's.  all fib values we deem as important, but rarely displayed.

Outlook:  a strong 70-100 point rally for the year end.

READING THE RANGE AND 50CB'S 9/27/13

There is as many ways to trade as there are traders.  It is impossible to sort through all the nuances and variations that occur.  So, what does the trader, new or seasoned, do?

Start with something simple, something you can replicate.  Most important, something you can understand.  Traders will use indicators and EMA's, bars, candles and so on.  Read (the free stuff) online trading literature and search the finance/investments section of the public library.  The more you read, the more you see.  The charts will seem to come alive for you as your understanding grows.  Take time to learn all you can.  Trading is not an overnight deal, unless your not planning to stay very long.


BOTs and 50CB's

The Break Out Targets are a calculation of the strength of the market within a given range.  We have a bull break point- the LB or Long Break Out, and we have a bear called the SB, or Short Break Out.  So BOT's gets shortened to LB or SB and represents the area where one side seems to have the ability to dominate.

The 50CB is  a Control Bar, or a bar that represents the dominate trade in a micro sense, but is believed to have an impact beyond the micro when we add the 50CB Trend line (50CB TL).

When we have the levels and capture the 50CB and it's TL, we have a trading system to help direct the trades.  What is expected to develop remains the focus and will help keep a trade open when PA fluctuates.

This is for illustration, but the bias or perceived strong position is showed for each pair:  the 50CB, the 50CB bull TL, the 50CB bear TL, and the LB and SB.



A LOOK AT TODAY:

Those in the Trading Room see the discussions and trade snapshots.  The trades are omitted in the blog, but look at the tools discussed and see where you thing a trade was taken and which side-bull or bear.

WATCHING THE RANGE & 50CB'S 9/26/13

The market was in a bull climb prior to the US open, which provided a 50CB and a break out of the LB (Long BOT).  PA failed to reach the BO-5, a gap developed, and a H&S type reversal followed to run the range to the low of the day.  A bull channel  developed, and the bear had a second push to the low.

FBO IN A CHANNEL & A BREAK OF A 50CB TL 9/25/13

PA traded inside the range from early  in the Euro Zone trading.  By the US open we were looking at gaping to the BO-5, which created a range run to the LB inside a bullish channel.

Narrow trading, not running away from the LB, came back to break the 50CB TL creating a shorting opportunity

[12:02] <CM> short es 50cb tl break
[12:03] <CM> also the lb

PA ran and the stop was in profit.  The target was set for the SB.

12:27] <CM> buy stop on short  target is the SB  (link deleted)
[12:28] <CM> 88.25 area

CHANNEL RUNS DAY 2 9/24/13

Yesterday we had channel runs added to our key BOT levels.  Repeat for day 2.  PA was still in the BO-5 to BO-10 when it hit the reversal back to the high T2 from yesterday.

Yesterday:  [10:19] <CM> t1 98  t2 1701


A hold at a key level is expected to run to a prior.  A break "in" at the SB or LB is expected to run the range,  Rules worked well today.

CHANNEL RUNS FROM KEY LEVELS 9/23/13

Channels:  you look them or hate them.  Just when you see a break out, it fails.  Next time it continues the break.  The PA thrashing will keep most traders on the side, waiting for less, narrow-range volatility trading and looking for the preferred expansion-run volatility.

TODAY:


PA was selling after a range run off the the LB FBO.  Buyers entered around 96-96.5 and  five points later around 1691.  1698 was the expected target, with another target, albeit less likely with a near BO-10 day, at the LB.

[10:18] <CM> buyers at 96-96.5
[10:19] <CM> t1 98  t2 1701

[10:57] <CM> 92.75 long

T1 hits as PA reversed back to the prior level (the SB) after a gap to the BO-10.

[11:38] <CM> t1 94.75  t2 98.5

The return to a prior level is significant and will always be a trade alert.

[12:39] <CM> 98 is the 50cb to test  a bo long  fbo  short

PA found 98.25, failed and started the upper TL in a bear channel.

SELL BIAS CONTINUES AS RANGE BREAKS SHORT 9/20/13

Yesterday we noted that PA was likely to pull back to find a lower support after the extended bull run.  Price will find a lower support before another move higher.  This also servers as a "better" price for the institutions to entry for the next move.

from yesterday P.M.

[15:27] <CM> then buyers at 14  in a channel 14-16  bias was/is long since we were bouncing off the bo5 in the 14.75 area  expect pa to run back to sb at 19.75   

PA worked back to 1719.5 at the U.S. open, and bar 1 sold.  By bar 6 were were breaking the SB and had a FR (failed reversal) at bar 15. Off to the bear races as price pushed to lower selling BO points. 

SELL BIAS AFTER BIG MOVE 9/19/13

AFTER  a big move, we will look for some sign of PA PB to test the support level.

[09:47] <CM> 19.5 is a 50cb test  will look for break below  mkt over shoot on news  should test a prior support
[09:49] <CM> 1708 downside support

The break down started, and had a +5 move as a minimum target.  A reversal stop was added should the market bull wake and run PA higher.  The bull yielded to the bear and the continuation sell was the play.

[10:04] <CM> sell continuation  sh 22
[10:07] <CM> the setup  fbo's sb and lb  a reversal entry long at 23.75 if mkt breaks recent high  target 1 1718  but likely will move stop and target for +5 min move

Out on a stop but the sell bias was still in play.  A secondary entry was entered after a FBO at a 50CB.

[10:11] <CM> still think we see +5  which is around 17.25-17.5
[10:12] <CM> +5 from high  a +5 for the sbbo would be 14.75

[10:14] <CM> 19 sh
[10:14] <CM> failed 50cb of b8
[10:17] <CM> 17.5 t1

Market continued to sell and found support at the SBBO5.  When the BO5 failed, PA was anticipated to run back to the SB around 19.75.  Last trades of the day were longs off the BO-5 bounce.

LB BO WITH NEWS 9/18/13

Nothing helps a BO more than a positive on news, and if the positive comes when the market was looking for a negative.

A massive 50CB BO with PA staying positive (buy) for the day.

RANGE BOUND TO NEAR PERFECTION 9/12/13

PA hit a near perfect range bound pattern today as we wait for the next FED round.

resistance at the top, but the twin gap at the low to support is interesting.  Bulls still in control.  1734 still in play for the year, but swings for "better price" will keep it from being a straight line.  Look for PB's for value entries.

BULL CONTINUATION BO OFF THE SUPPORT 9/11/13

PA stayed positive (+) to the support level (the gap) as it broke above the LB and the open high creating a 50CB bar.  PA pushed to the BO-5.

Pa stayed above the lower TL and found the BO-5 to be a support as it moved to the BO-10 from the second 50CB.

BREAK OUT CONTINUATION: THE BULLS PLAY 9/10/13

YESTERDAY the BOT's were identifying a low with a bull reversal potential.  As we saw, the bear did not wake up to play.  Mr. Bear stayed in hibernation today as well.

PA continued to break BO levels, and we had a 50CB bar launch at the BO-15 level,  PA played with the base and the TL, pushing to the BO-20 level in the US pre-open.

For the US market we had an interesting bullish note in two gaps.  The first gap was PA to the 50CB base and the second was the gap still lower to the prior BO Level.  This was the the lower risk buy:  a known support (in this case two) below.

A second gap in the late morning session (around bar 27) was a second entry point.

NEAR PERFECT 50CB BO FOR A BO10 RUN 9/9/13

THIS A.M. we we looking at the tick chart for some guidance going into the US open.  We had an ascending triangle with a buy (bull) break out at 1660 and a sell watch at 1654.The bear did not wake up today.

[07:38] <CM> 60 and 54 remain open for 50cb test and considered bo  plays long/short   tick view  you should see the ascending triangle  created by the 50cb TL and approx 1659  (link deleted)


TICK  VIEW (AM)

5 MINUTE

Nearly perfect 50CB open that stayed positive to the CB trend line for a BO-10