FOLLOW THE 50CB BO TO RESISTANCE 3/28/14

Trading discussions have covered the 50CB, resistance levels, and targets for the buyer/seller at the +8 to +10 return on their trade.  Today, we had it all play out nice and neat.

The early 50CB break out ran to resistance.  Price was above the 20EMA and the 50CB upper trend line.  This is used to gauge the strength of the run and a focal point to look for exits.  It also servers as part of the planning for a reversal trade when a new direction develops in the market.

The second part of the decision process was the signs of resistance: buyer taking exit and bears entering the market. These entries are expected to produce a +8 to +10 return for the risk .

Have a plan and execute your trade.  Let the market work for you.

THE SELL BIAS 3/27/14

The bias last evening was short.  The bias continued into the US Open and covers for the shorts and a 50CB pull back was anticipated.  The bull was expected to wain and exhaust with the market retuning to the short bias and ultimately remain flat for the day.


red:shorts   green covers       green: counter trend buys   EMA exits















IN THE CHAT

[09:45] <CM> mkt continues to sell; shorts from last evening covered  (LINK DELETED)
[09:47] <CM> us mkts ym tf nq es buyers b4 on 5m charts ES target 38.75-39.25
[09:48] <CM> test of b2 50CB
[09:57] <CM> target exits

[10:12] <CM> if you like fbo of selling channel this buy push will exhaust and rekindle shorts ym 16180 nq 3570 tf 1153 es 1843.5 approx flip points essentially a flat day outlook for mkts

TRANSITIONING MARKETS CREATE SWINGS 3/21/14

Nice end to a week.  Market opened and seem spooked by the high of the day.  Some were looking at YM pushing higher.  I was watching NQ and thought the read was a market ready to short or sell off for the day.  Bias in, look for the trade, have a strategy for exiting.

[09:47] <CM> gm  nervous open  something is about to be released
[09:52] <CM> mkts spooked at highs? bears seem to be looking for reason to swing lower

A multi-market look is akin to a multi-chart look:  both can provide a clue to the market.  The read was a market trying to sell, and if wrong, the upside risk was known (HOD or some percentage of it).

Do not be distracted by the trade to the point you miss the why for the trade.

Exit, and look for the next trade.  My personal bias is that buyers/sellers will look for a +8 to +10 return on their investment when in a strong move, making the exit a -8 from the ES HOD.

[10:09] <CM> looking for ES -8 from hod

 [10:27] <CM> buyer support hit es -8 area from hod
[10:28] <CM> ym recovery push
[10:32] <CM> buy the falling knife...
[10:34] <CM> ym should pull others to ema

The new vigor in YM was expected to pull the other markets higher

The markets seem to be turning (read) for a quality pull back.  Had a why, a target, and known risk at the lows.

Sometimes looking at the trade helps to clarify the thought behind the trade.  Read the market, practice, know why to enter, your plan, and your exit.  Also try to get a feel for the risk involved.  Risk is always in the market and the best you can do is try to minimize it.

Enough on trades. back to discussions next week.

MARKETS IN TRANSITIONS: SAME REASONS TO TRADE 3/20/14

Markets can be trending, moving in a side-ways range, stagnant, or simple in transition from one to another.  markets now appear in such a transition.  Are the bulls ready to rest?  Not today, but tomorrow can be totally different.  Small, moderate, and large swings are feasting times for traders if your on the right side.  Transition swings also offer value  for those unable to wait out a trend, which likely is most traders.  Only the institutions and deep pocket accounts can hold a trade over an extended time and, by its very nature, futures are short term holds due to expiration and gaping weekend action.

So, what are the trades for these swing days?  In simple terms, they are the same as any other trade.  They will be with trend or counter trend, however the swing volatility tends to create better PB CTs.

You will need the basics:  a reason to trade and an exit strategy.  If you do not have a answer to either, save your money and find another adventure.

SIMPLE EXAMPLES

Today I was sharing some information and made simple trades for clarity.  There is no need to watch someone trade 20 contracts if you only have 1-5.  You will sooner or later find yourself trying to mimic the trader and loosing while they win.  Why?  They will add to average and get out with a profit (oops. you can't average!) or they will (by larger leverage) take a profit that is OK but minuscule for you.   Cost eat up your account and you stop trading, or continue to loose.  The same actions but expecting different results folly.


in chat:  [10:27] <CM> sellers noted ym es tf nq

selling pressure noted and worth a look.  Price was starting to stall after a bullish run up and had sights of a quality pullback.  IF WRONG, your exit gets you out and you evaluate an entry in another push by the bulls.  In transitions, the PB CT seems more viable so a trade was executed.

Now we are back to the EMA (or slightly below) in the majors:  YM, NQ, TF, and ES.  A range at the end of a push run with price pulling back for support.  A single trade which is doable by traders.


Once the support is reached, The exit in this case, you must evaluate again.  Does the bears have more or will the bull return.  Wait for your read on an entry and trade.  In this case, the read was: support would likely hold and longs were viable, lower risk trades.

  [11:39] <CM> bar 26 pb (5m chart) buyers at top of b25 ym es nq tf will be looking for new hod


We now have support, and a "why" to look long.

Markets as a whole were stable around the EMA and we played to the high of the day and the exit window when price again showed signs of slowing.  Another single and doable.

ES TODAY

Support by the EMA, price bullish (favored trade) and two resistance levels where price stalled.

Read, react, exit.