RANGE RUNS AFTER FBO'S 5/31/13

When we have a channel (running trend) it has three options:  1. Continues to run high to low; 2.  It breaks out; and/or 3.  We have a failed break out.  Today we had a bull channel begin around 6 AM EST in the Euro Zone period and run into the US pre open.  (A)

At the open, we were holding at the dominant range (1651-1645.5) and the Short BOT (SB) at 1647.  We quickly ran the range to the Long BOT (LB) at 1652.  This is where we saw PA stall for a FBO of the bull channel and the LB.  A FBO of a BOT level is expected to run to the opposite target.  We had that (bull) from the open to bar 3, and the bear b5 to b8.  (B)

Support at the SB held and we run the range again for the bull still inside the channel.  The EMA holds for the PB and we run to the BO-5  (B) around bar 22.  Again, a FBO pattern that is expected to return to the prior level (LB).  If this happens, look for PA to reenter the range and run to the opposite target.  Today, the LB to the SB.  We essentially have a range bound (or trading range) day between the two BO-5 levels.

At the mid day, PA traded in a narrow, sideways action.  We see a flat EMA hovering around the LB.  Around point C, we break the EMA and the bull channel.  PA was rejected by the LB and likely to run to the SB.  We also see a gaping develop between the EMA and PA. (D)

A small bounce at the SB as the BO-5 shorts take a +10 cover, then the market continues to run the levels reaching a BO-20 support.

5/29/13 and 5/30/13

Little catch up in the posting for 5/29.

Market stalled at upper resistance creating a possible PB similar to b2-3.  We are interested in multiple supports/resistance levels being broken in a relative short range.  This is believed to offer a significant run in the breaking direction.

At point A, we break the 50CB (developing), the b2 50CB TL, and the 20EMA.  This break allowed high seller (at the stall) a +8 to +10 opportunity.

Point B:  a reversal set up with a minimum expected PB to the b16 50CB

Options

[10:56] <CM> b18 double signal developing
[11:00] <CM> multi-mkt interest favoring buy  can be short covering but worth watching for a long entry 1 conservatives will let it sell lower and possible enter on next pb through the level  aggressive long and will add lower if needed
[11:04] <CM> for number purposes the es value is 1640-39.5

[11:29] <CM> es pb targets  43  44  46 

[12:15] <CM> if I could control the mkt  push to 42 area, trap new shorts then reverse to 47.5-48.5
[12:17] <CM> would be a nice bear/bull swing day of 10 dn +10 up.

The PB hit the 1640 support and established a HL for the next long consideration, and the +8 to +10 run for the bulls.

[12:23] <CM> dominant trading range today  (link removed)     48.5-41.5

We hit the BO-5 and price sold retuning to the dominant range.



TODAY:  5/30/13

The game plan:

[08:31] <CM> today  long above 1652 (LB) stronger above 54  short begin around the 1649 TL  stronger at 1647   trade range to be aware of:  50cb at 1651 to 1645.5

At the open we had a failed break out of the SB.  PA quickly ran the range and extended to the BO-5.  We then see the bull channel keeping price above the 50CB Tl  (a gap)

The shorts returned at the end of the day to gain some favor in the market.  The break of the TL was a valid entry.

[14:07] <CM> well, a 58-58.25 sh has upside risk +2  (60.25) downside +  to 54

Not bad.  PA went 2 ticks higher (60.75), then ran for 52.5.

NARROW RANGE BREAK OUTS WITH LONG AND SHORT SWINGS 5/28/13

PA was in a narrow range and was an alert to a break out day.   The plan for a narrow range day:

•  When we have a narrow range, look for the break out
• After the BO, look for the +5 move.
• A trend day should break the 5 with some ease, and often will be a 50CB bar
• Struggle at the BO-5 (a FBO or shallow move slightly beyond the level) is an alert for a reversal back to the range
• Once we have a FBO at a level, PA is expected to PB to the prior level ( i.e.  BO-10 back to BO-5)
• With a FBO at the BO-5 or BO-10, look for the possible swing to a similar level for the opposite trade forces.  A FBO-5 Bull/Bear often will swing to the BO-5 Bear/bull.  This creates a BO-5 range bound day.

TODAY:

narrow range bull BO that stalled in the mid range between the BO-5 and BO-10.  With the additional 50CB break for the bear, we can assume that we do not have a trend run day, but likely will see a range bound day.  This would imply a run to the bear BO-5 to BO-10.

RANGE RUN PRICE ACTION 5/24/13

HOLIDAY weekend for the US. 

PA TODAY:

Pre open buy at the SB as price stabilized on the sell off and completed a range run to the LB where the reversal began for a range run back to the SB.

We broke the SB for the BO-5 run and found support at a double bottom from yesterdays lows.  This was the next buy area as price was expected to return to the SB at a minimum.  Opinion: a BO-5 that fails to break will reverse.

After the SB we look for buyers to get  a +8 to +10 return.  With a bull channel in play,  the range run back to the LB developed.  It took four hours, but was completed.

FOLLOW THE SET UPS: NOT THE NEWS 5/23/13

NEWS NEWS NEWS.  The herd will jump on it and provide you with a trade.  Then the rug is pull out from under them, and you clean up along with the professional.  Trade your set-ups, not the herd knee jerks.


TODAY

[09:04] <CM> wider range today   understandable after the bo swings   lb 1643.5  mb  1638  sb  1634.5

[09:06] <CM> the bo-5 increments yday still valid as well 

[09:06] <CM> next upper roughly 1647  but today likely a range bound effort

PA stayed in the range dropping to the SB for support.  A quick range run followed by a TL check and we were off to the upper targets (the bo5 levels from yesterday) and the BO-5 levels for today.

Follow the set ups.  The tune the market plays will be your favorite.



 The SPY

Notice both had a play near the 10 AM  SB support challenge.

BREAK OUT SWINGS 5/22/13

Today's open began looking like yesterday, and was played in a similar manner, and a  reference was made to the 5/21/13 blog post.  These are some of the charts posted as the trade developed.


HOW THE DAY DEVELOPED

[09:15] <CM> ES points of interest today  1667 SB  1669.75 LB  very tight range

We began with a very narrow range in the bull/bear bias levels, called BOTs:  Break Out Targets.  A narrow range (opinion) is associated with a break out day.

We had a mid range buy on bar 1 and bar 2 turned into a 50CB at the LB

[09:42] <CM> es a bo from mid range..
[09:42] <CM> also note lb is the 50cb that developed
[09:43] <CM> b2 a 50cb at lb

[09:46] <CM> b4 first pb  also touch of 45 tl

Buy entries are at the support (b1) the break out (b2), at a 50CB break and/or at the TL hold  (b4).  The expected run for the trend is a minimum of +5.

We now have the trend lines to guide the trade as we expect a gap to develop.  See 5/21/13 post for more on the terms.


[09:50] <CM> 45 hold (touch)
[09:52] <CM> similar to yday  gap developing
[09:53] <CM> 1674.75 is bo-5

The BO-5 hits and becomes another 50CB.

The reversal, short.  Began forming a H&S variation.  We also have the 50CB and BOT tool working together to fine tun the trade.

The 45TL's long and short off the 50CB's.

[10:59] <CM> nice day  party may be over  look for range bound into pm session

Flat (range bound) it was until the sellers struck in the PM to bring more excitement to the market.  We end with a +10 to -20 swing.

A REASON TO TRADE: ENTRY/EXIT/COVER 5/21/13

TIME for an update to explain some of the "tools" used to consider a trade.  Basically, in simplest form there are three parts to a trade:

REASON

• First, all trades must have a reason to enter
•  Second, an expected exit (or cover) point for part or all
•  Third, a reason to get out NOW

 TOOLS (few terms)

LB     the long Break Out target or the point in trading where the bull has a bias greater than the short bias for trading

SB   Opposite of the LB.  This is the Short Break Out Target; bear bias > buy (bull) bias

50CB  Approximately (often a visual rather than the exact although there is a math thing) 50% level of a control bar.  A CB is a micro trend bar that by nature controls the price or gives clues to the next price move.  A break positive (+)  (higher for the long, lower for the short) continues the prior trend.  A failure or failed break out tends to reverse the prior trend.

TL  Trend line.  for the 50CB it is a 45 degree and often (for a quick read) drawn on the chart.

GAP   In this instance, gap refers to the distance between current Price Action (PA) and the TL.  Can be used with the 20EMA as well.  The gap is used to measure/judge the strength of the trend.



HOW IT LOOKS

  [16:12] <CM> more visual and the long (similar for short)  long at support, TL test, 50CB +  (green zones)   reason to exit all/part:  break of support:  50cb, perceived support levels, TL's (red zones)

50CB BREAKS: UP AND DOWN 5/20/13

THE market had a nice break long and short today, both with a varying degree of gap.

The long had a nice rise with two gaps , PA away from the 50CB trend line (and the 20EMA).  A single reversal top sold- broke the upper 50CB and the bull TL- and sold again at the second bear 50CB.

PA was flat for the balance of the day trading in a narrow, consolidating range.

A LOOK BACK: ARE WE CLOSE TO A CORRECTION? 5/18/13

RELIEF BREAK OUT RALLY 1/2/13

BOT TRADING SYSTEM

T he market responded to the mini agreement by the political teams, opening with a gap of some 20 points.  The near term threat:  a move to sell off some by profit takers.  This is not that unreasonable with a range day after the gap, and investors beginning to throw in some puts.

THE PRE-OPEN LOOK

[08:40] <CM> goodies for today   48.5-44.75-41.75
[08:42] <CM> a +20 gap even on the Globex  today we will likely see a trading range until all the talk settles in Washington
[08:43] <CM> some econ news later in the week to note.  if they continue to talk and show progress, we will see es eventually move into 1500  and possible 1652-83 for the year highs 


Corrections are like the "guesstimating" business.  When it occurs, it will occur.  Play what the market provides and leave the tops and bottoms to hindsight..

BULL BREAK OUT DAY 5/17/13

The bulls were ready early with a break out developing:

[08:04] <CM> current ES break out wedge w/ upper targets (chart deleted)

THE CHART

and the close up view....

Price broke the wedge and hit the targets, and broke out of the second wedge for additional highs.

NEWS DAY: RANGE BOUND 50CB'S 5/16/13

Price was range bound early between the 50CB's then failed late in the day.


EARLY:

The open came off the trend line and pushed to test the highs, establishing a new 50CB.  By mid morning we had a 50CB range bound market.

PA following the trend line for the second high test and retest of the upper 50CB line.  The break is the last exit (aggressive) for the longs.  Conservatives would exit at the high test, while the aggressive trader will continue to hold with a wider stop to capitalize on the bullish trend movement.

PA traded in a narrow range around the upper 50CB before breaking  lower for the end-if-day short.

EARLY 50CB BREAK OUT FOR BULLS 5/15/13

ANOTHER day with an early, opening market 50CB break out that followed the 45 trend line.  By mid-morning, we had the second 50CB that pushed to  1660.

The afternoon was a mid level retrace back to test the 50CB level before resuming the bull tone.

EARLY 50CB BREAK FOR THE BULL 5/14/13

Bar 1 price break on the 50CB followed the 45 trend line.  When it broke, price was flat, trading in a narrow range for the balance of the day.

BIULL HOLDING IN A 50CB RANGE 9/13/13

Today we had numerous 2 bar dojis and price action that stayed in a (approx.) 10 point 50CB range.  Waiting for long holds to stop out, as price consolidated today.

Price consolidated in the 50CB (#2) to #3 after an initial shakeout at the open.

VOLATILE SWINGS AS MARKET DECIDES DIRECTION 5/10/13

Volatile swings played havoc for most traders, if they were in at all.  But played correctly, volatility equals profits.  Stagnant, small movement markets offer small opportunities for the traders unless they can hold for the bigger picture.

Few notes for Friday, just points of interest.  The 50CB lines have been extended, and were important for the swings or followed a swing low/high.  The 50CB 45 TL's worked very well in alerting to the changes in price direction early on, and support for the final bull run.

ES FINDS THE 1630's and A MINOR PULL BACK 5/9/13

Well, ES hitting the 1630's and we have our first pullback negative day, but not the major adjustment.  An early 50CB reversal (a break lower from the consolidating price action) found support for the reversal long.  Additional 50CB's continued to find good entries.

BULL PARADE CONTINUES 5/8/13

BULLS continued the run, getting us closer to the 1630's for the max run before the summer cooling of the bull.  We will see.

BULLS NOT DONE, YET 5/7/13

BULLS found new interest as markets moved higher.  1630's ES still a target.  We will see.

Early break out stalled and we had a 50CB sell off.  Interesting start, but bulls had a better entry and drove the market higher off the 50CB.  Also interesting, the trend line was near perfect in connecting the additional 50CB entries.

5/3/13: THE BULL FOLLOW UP

Price was attractive.  It pulled backed prior to the FOMC and buyers entered.  Today we see why.  NEWS sent prices into the 1600's.  Give it another week to week and a half  to see if we are in a near term correction.  Topping seen in the mid 30's if the summer slow down begins.

Price broke early.  By the US open we were near the max move, where it moved back to the trend line. A pull back to 1608 was anticipated and the only short for the day from the 11.50 level.

5/2/13 BULLS RETURN

The anticipated move:  a sell off before the FOMC followed by new bull interest for a push back to 1600.  Bulls got a better entry point, and entered.

The sell off recovered...

5-1-13: BUSINESS AS USUAL

PRICES became weak early this A.M. prior to the US open.  First news reports hit about an hour before the open, and the market began to sell.  At first, it appeared the market was pushing through stops.  The pre 8 AM bear was not that strong, and the 8:15 bar established a 50cb that was quickly challenged by buyers.  They failed, and by 8:40 we broke the lower support and had a bear breakout that followed the 45 degree TL from the 50CB bar.

There were buy opportunities but were CT in nature: reversals at B10, 46, and 52.  The last being a response to the "no news" FOMC.

Not ready to say "sell in May" but more a pullback prior to the FOMC to allow buyers a better entry for the 1600+ run.