Tuesday, April 30, 2013

ZB not looking good

A close below 148 '12 completes a double top at 149 '05, and targets 147 '12ish.


Friday, April 26, 2013

Updated look at the ES & TF charts

This is the state of the Russell or TF futures as we stand today. Key support and resistance levels above are outlined. Still looking to sell rallies, and if things line up, buy support.


ES - 1581 is now the key level on the upside. There's also an uptrend in progress, which needs to break for more downside. And be aware of the key 1571 level as support.




Thursday, April 25, 2013

ES - tomorrow is important

SPY put in a shooting star candle today on higher volume, so coupled with yesterday's doji, we've seen some distribution, so I'm expecting lower prices.



On ES futures, 1576.5 which was today's low becomes key, if taken out tomorrow, I'd expect 1571 first which is another strong support level, and below that comes  flash crash tag of 1557 to be tested.


On ZB, 148'08-'09 is now key for more upside. A break above brings 148 '16 into play, and then the spike to 149ish. Below, we have the 147 '20ish level which was strongly bought(hammer bar, higher volume on that bar) as support.




DOW and SPX comparison

DOW seems to be majorly lagging ES in this rally, and DOW is usually right and it leads. YM is currently trading around the same price as when ES was at 1570ish



ES however has broken above and is now treating 1570 as support. 


Crude oil, strong resistance at 92.15-20ish


Tuesday, April 23, 2013

Trading as a business

The key to trading success is emotional discipline. Making money has nothing to do with intelligence. To be a successful trader, you have to be able to admit mistakes. People who are very bright don’t make very many mistakes. Besides trading, there is probably no other profession where you have to admit when you’re wrong. In trading, you can’t hide your failures. - Victor Sperandeo

Something I've been thinking about all day today - how trading is, and should be handled as a business. Because obviously it is. Anyone who wants to make a living off trading, needs to approach it like a business, and needs to be concerned with the following:

  • Business expenses
  • The main market or markets the business targets
  • Business model - how does the business intend to make money?


One wouldn't take business decisions casually. Everything would need to be planned. Lets say you are a cotton candy dealer, you'd try to get your supplies in order, have everything prepared, know how much demand might arise, etc. So planning, anticipation, and sticking to what you know becomes key.

Trading is similar. Follow the Hedgehog concept.

If you run a cotton candy store, would you try and sell wine? Poor analogy maybe, but as a trader, its important not to chase various markets. Its important to know and stick to markets we know well.

Last night, I put on a gold short. It was a good setup, however, it completely spiked and stopped me out. Fine, I had a stop, and I respected it. BUT, its not a market I trade, so why should I be in it??

A cotton candy dealer, stands outside a park or a school, waiting for the right time where customers arrive. How is trading any different? Its just waiting for your setups. Waiting. Patiently. The dealer waits for his "setups", so should I, the trader.



Bad Apple

Look at this after hours action in AAPL. There was 1 big spike when it opened up for trading, and since then it has been a steady decline. Love it when all call and put buyers are punished! Options were apparently pricing in a $30 move. Where is it?



I'm looking to sell TF in this sell zone around 930.5-931.5, shown below:


Keeping an eye on GBPUSD




ZB trendline

ZB is testing that trendline again, and this time its important. Its one big ugly reversal hammer on the daily chart so far, so does not look good. Try longs here? Hmmm



NQ at resistance

NQ is at resistance, and ADX is close to signaling a trend exhaustion, so am looking to get short here soon. However, the AAPL earnings thing might mess with NQ. Hmmm, sidelines? Or take the trade?


Monday, April 22, 2013

Euro H & S

Euro is at a critical level at the moment, break of this would target 1.28ish??


Saturday, April 20, 2013

Remembering last week

Last week was an awesome trading week for many reasons. The main reason it turned out great was because I didn't chase setups, and mostly took proper ones. The second reason it was great was because it was volatile, and this created multiple opportunities.

So let that be a lesson. Take your setups, some weeks you make a little money, but other weeks, there will be multiple opportunities and if one doesn't force trades and lose his chips during other times, he/she's fit to take advantage of a volatile trading environment.

Friday's trading continued to be awesome, I was short the Euro at pretty much the perfect time. It was an ADX & price at resistance setup for me.


Also, all the XIV I had been buying paid off finally! I was beginning to worry about a VIX breakout, but nope! VIX is a mean reverting instrument, so its a pretty high probability trade. So my XIV purchases at 20.50 and 19.50 were unloaded at 20.50 and 21.02.


I tried shorting Natural Gas again, and it just acted weird all day and I got stopped for a small loss, and it then spiked into the pit close. Blah. 

Thursday, April 18, 2013

A look at charts

TF, in a clear downtrend. Needs a break above for anything bullish maybe?


A longer term look at ES, today's low is again key. Below it would be fugly!


ZB is in a massive uptrend, any bearish sentiment would need a break of this trendline.


For the near term, we have resistance above at 148 '14ish, and support below around 147 '21


For fun, lets look at a few stocks.

BAC looks fugly.


JPM at support


GS would find support around 127ish


Balance

All trades from last night worked out as planned. Market gapped up nicely overnight and I was able to upload the ES, NQ and 6B longs for a nice gain. Now, here's the tricky part. I am up nicely for the week and its only Thursday morning. I've more than doubled what I usually plan to make on a given week, so what should I do now? Be fearful? Play defense? I asked one of the guys I look upto for advice  - @debrink. His reply:

"Take all set ups. When has the prevent mode ever worked - in sport, or any other facet of live. You have to go with the game plan you have. Prevent defense - such a misnomer - it allows the other team to score more easily. Do what got you into the good situation - that is what works - no harm in protecting a profit with a stop - that is sound money management, but do not stop taking trades that appear in your setups."

So true. And thats what I'll continue to do. Stay calm, and if there are setups, I'll continue to take them. On another note, I skipped on taking the corn short at 643 and now its down 10 pts. Let that be a lesson.

Wednesday, April 17, 2013

The market wants more blood

More selling today. We made a lower low from Monday. VIX has now broken out of that descending wedge chart I posted yesterday. However, I still bought some XIV today at 20.5, but not looking for much out of it, have sell orders at 21.5, which I hope happens tomorrow.

There's some bullish bias which hints that we might atleast gap up tomorrow, if not closing in green. Anyway, I'm long ES and NQ. Long ES because of the reasons below, long NQ also because of the reasons below plus AAPL ADX > 65, so I'm thinking it retraces some, and possibly gaps up tomorrow.

Why bullish?

1. Positive RSI divergence on SPX.



2. We tagged and held 50 day MA today.



3. VIX rose more than 18% today, also note the topping tail on todays candle.
From cobramarketview - VIX up 18%+ in a single day, 71% chances SPX would close in green the next day, counting the last 2,000 trading days.




4. AAPL sauce



5. Extremely high Put/Call ratio - total PC ratio is the highest since november, and look at the VIX P/C ratio, super low, means people keep buying VIX calls and obviously they need to be punished.

  • Total Put/Call Ratio  1.19
  • Index P/C Ratio  1.15
  • Exchange Traded Products P/C  1.97
  • Equity P/C Ratio  0.79
  • VIX P/C Ratio  0.54

6. 2 Major distribution days - I will post more about this later.

Onto other markets..

Euro did the opposite of what I expected it to do today, and is now back down at the 1.30 level, but ADX > 60 on hourly, so as far as I am concerned, it held a key level and its a buy. However, I am also long GBPUSD for a trade, looking for about 30-40 ticks on it, lets see how that one works out.

Did not get a fill on July corn, but I might chase it a little here when it opens this afternoon? 

Tuesday, April 16, 2013

Bounce back

We bounced back huge today in equities. Luckily, I was not on the wrong side of that trade. Last night's bond short worked out great, and I had SPY 154 calls, which I also sold for a decent gain, although not as much as I would have liked because I bought it yesterday when ES was trading around 1550.

I did not however get a chance to buy XIV under 22 like I wanted to yesterday. Huge gap up today means VIX got killed. Although, not to the extend that I thought it would. VIX shot up 43% yesterday, and only retraced about 20%, so VIX is still overbought. However, going back a few months, VIX is in a descending wedge pattern. So it might shoot up big on a break above?



However, this 20% loss in VIX today means it closes back inside the upper Bollinger band, which is a VIX buy trigger according to Cobramarketview - http://stockcharts.com/public/1684859/chartbook/179178685

One another caveat however, when VIX drops 18% in one day, there's 82% odds of the next day closing in red.

At this point, I have no edge, so I'm going to try and do as little as possible with the equities.

Euro rallied again today making highs. Ashraf Laidi wrote an article about this - highlighting this fact:

"In recent EUR/USD history, the 55dma has been an important trigger. In the previous 4 instances following a close through the 55dma, the average gain/loss over the following five days is 145 pips. In 3 of those 4 instances the gains/losses over the subsequent month were substantially larger."

Chart below. Does this mean there's a lot more upside for EURUSD?



Tomorrow, I'm focusing on corn as well, since its approaching the key 666 level (may corn). I however am looking at July corn and will look to sell 646ish. I mentioned this in my weekend post as well.


Monday, April 15, 2013

Bloodbath!

What a day in the markets!! Russell dropped 4.5%!! VIX climbed 43% which is ridiculous. Everything got destroyed. Gold and Crude oil are still in free fall.

Anyway, trade setups for tomorrow. First one obviously is XIV. VIX had a parabolic move, so its important to scale into this, but hoping to buy some XIV under 22 tomorrow morning.


Expecting ES to have a small range day tomorrow and eventually close in green. My guess is ES gaps up, sees some selling, and then crawls its way back up and closes in green?

ZB made a new high, but was barely up compared to the amount of selling we saw in equities today, so I'm expecting ZB to close red tomorrow, and so I'm short.

Crap, fact of the matter is, I have been really busy today, and havent tracked the markets like I should have. So I'm really out of ideas for tomorrow. Only idea I have at the moment is long XIV. Right now, I'm getting long sleep. 

Sunday, April 14, 2013

Charts for early next week

Small pullback on Friday in equities, but if I have to guess, we're going back up on Monday. Few reasons to support this line of thought:


  • We held 1580 on Friday, which also means Friday's low of 1575 in ES becomes key. 
  • Tax day is historically super bullish because people pour money into IRAs for tax deductions
  • Largest POMO day of April ($4.75 - $5.75 billion)

Some charts - 

TF, Friday's low is key, needs to hold for more upside. 


ZB hourly has gotten pretty extended, might pullback here a little? 


6A, if this current level holds, look higher, else look out below!


Havent looked at grains in a while, but this 666 level is key. 



3 other markets I'm keeping an eye on this week - Cotton, Euro and Natural Gas. Will post their charts when they setup for trades.

Thursday, April 11, 2013

Over cooked everything

SPY opened and closed above its upper BB today, and RSI(14) on the daily. Note the previous instances when this happened. Lets see how this works out.



So at this point, good idea to look for ES shorts. Its held the 21 EMA all along the way, and only seems to be breaking it as I write this post at the moment. Lets see how that works out. Support levels below abound! 2 main levels are 1580, and below that is the breakout re-test level of 68.


ZB also has retested its NFP breakout, so would be good to look for longs here, but probably above 146 '12?


Anyway, not doing much at this point and trying to keep things simple. ES and TF day trades still working great, just need to manage risk. 

Tuesday, April 9, 2013

Setups for tomorrow

I'm looking at TF and NQ for tomorrow primarily. For NQ, 2810 is still a big level, and shorting that today would've been money! I will look to re-short 2805-2810. Its pretty obvious from the chart below that 2810 is a big level.




With TF, the 931-936 level is still key, so hoping for a big enough bounce for me to short there.

Next is 6A. Here's a chart of AUDUSD, to get a better view of the continuous forex contract. If we stay above this 1.05 level, where's the next clear resistance? 1.0577ish. About 70 ticks higher. Lets see if we get up there!


Finally, keeping an eye on Copper. 3.47 has been a big level in the past, and I'll try to take advantages off any price rejection off that level.


This chart from ukarlewitz on twitter is pretty interesting, shows whats next when CPC, CPCI and CPCE are trading where we are at the moment. Needless to say, I'm leaning bearish over the next few days.


Sit on hands, make money

Well, turns out all I need to do to make money is to pick my spots, put on a trade and then step away from the screen ha ha! Or today was just one of those days all things worked out as planned.

I ended up covering my 6A short for just 8 ticks by the way. Wanted more from it, kind of lame. Who knows, it might also rollover big time here, but the setup is over. I also shorted it from the Interactive Brokers account at 1.0446, made 10 ticks on that trade there.

Like I mentioned in my previous post, my NQ short at 2805 worked out pretty sweet, closed it out for +8 pts. I'm itching to short the euro here, but would be nice if I get a 1.31 fill maybe? ADX(2) at about 90, and RSI(2) at 99 or so, and price is right at resistance...tomorrow is FOMC minutes, so I dont really know if this is a smart trade.

So at the moment, flat all trades except for FDX 92.5 calls expiring next week.

ES new highs!

Just when one would think ES has "topped". It freakin rallies and puts in a new high LOL! 








A wise man(Peter Campbell from M3financialsense) tells me:

"I think that the Fed and Central banks are paying more attention to the SP500 therefore, I would focus on shorting TF and NAS100"

I concur! So I'm short some NQ here at 2805, and will also short TF if we get upto 935.5ish, which might be unlikely. We'll see. Also a little under water on that 6A short from earlier, lets see how it all works out. 


Aussie setting up

If you look at the 6A chart below, you'll see its right at resistance, ADX is extended, and although it pushed through to a new high, it didn't close above. I'm looking to sell it here, targeting about 1.04.


TF trading

The overnight TF trade worked out nicely. I posted a setup this weekend that the 930.8 level was significant resistance. So I got short there overnight. We traded in a tight range overnight, and this morning, we pushed down hard and I covered for a nice gain.



On another note, I shorted ES 1555.5 yesterday and took a 57.5 stop, at the same time I had 2 TF scalps for 1 pt each, so that worked out neat. I'd much rather take a 2 pt loss than hold a large loser overnight and hope for morning's action to rescue me.

Finally, I've bought some FDX 92.5 calls expiring next week here. Lets see how that works out.  

Monday, April 8, 2013

Trading patterns

Asking yourself, "What is the common denominator behind my different trading mistakes?" begins the process of finding patterns of patterns. - Dr. Steenbarger in The Daily trading coach

I've been reviewing my trading log over the weekend and I noticed one common theme. My losers are unnecessarily large. My win rate is quite high, 5 winners to every 1 loser, but my average loser is 3 times the size of my average winner. Granted a couple of trades were not my fault, but still, the fact is that I need to cut losers quicker.  So its important to identify what makes me get into the frame of mind where I tolerate these losers.

Anyway, moving on..

I shorted NG last night, covered this morning for a nice gain. Risk to reward was 2:1 on the trade, but I took very little heat on it. I put this trade on from 2 different accounts, so that was cool. NG sold off a lot more this morning, but seems to be holding support.



I've had some other good trades today in TF, KC and 6B, but I am disappointed that I missed on all the setups I posted this weekend. The setups I posted are:


  • I was absolutely sure that ZB will end in red on Monday, yet I did not short it. 
  • Said I'd look to short 1554 today with tight stops above, did not do it.
  • Said I'd look to short TF at 922 on Sunday evening, would've worked out nicely, did not do it. 


Hmm, need to respect my own work and stick to it. Still looking to sell TF around 930ish, a trade I will take.

I also talked to Chris today about my win rate, and losers being larger than winners. He said I should focus on larger winners, although it reduces my over all win rate. His win rate on trades is less than 50% but he consistently comes out ahead. Something to think about. 

Sunday, April 7, 2013

Other markets for next week

I'll be focusing on few markets for this coming week.

For ZB, support levels are below:



For 6A, the marked areas are sell zones on corrective moves -



For interest rate products, looks the moves have a bit further to go, along the 10 year note underperformed the 30 year note, which is weird. 10 year rate is also at support here, all of which points to some retrace in ZN and ZB on Monday.



Will continue this post later.