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.