YM, ES and DJIA Analysis

[brownsfan019]

Taking a look at the recent action, I see a potential short here:



My previous post said:

	Quote:
	I don't really see any strong support that the low touched or came close to. I would like to see an attempt to run at 1440 or so.

While price heavily respected that area, there was no reason to go long on the daily. It's too bad b/c that area was and remains strong resistance as illustrated above.

This short should have a target of taking some/all profits at the 1440. That level remains strong until broken so you could plan to exit before that level is approached as a conservative play or you can hold as it approaches looking for a break.

[TinGull]

Already got short the cash index at 1488, and again at the close at 1478. Tuesday hard rally on light volume was enough for me to get that done.

[james_gsx]

Hew brown, nice analysis. This whole thing played out perfect for me, all the e-minis found support and resistance where I thought they would, it was almost text book. Sorry I haven't been posting, there was a death in the family this week so I have been fairly busy with that. I think someone needs to finally try doing some of these swing trades and see how it affects the equity curve

[brownsfan019]

James,
Hope all is well there! We're all thinking about you.

As for today's action, it worked nicely for our short:





Here's the possibilities on this this trade:

ENTER AT MARKET ON 11/15 SHORT

ENTRY: 1478.00
STOP: 1497.00 (RISK OF 19 PTS)
TARGET: 1440.00 (GAIN OF 38 PTS = RISK/REWARD OF 1 TO 2)
CURRENT PRICE: 1455.75 (UNREALIZED GAIN OF 22.25 PTS)

ENTER ON THE BREAK OF THE LOW

ENTRY: 1469.75
STOP: 1497.00 (RISK OF 27.25 PTS)
TARGET: 1440.00 (GAIN OF 29.75 PTS = R/R OF 1 TO 1)
CURRENT PRICE: 1455.75 (UNREALIZED GAIN OF 14 PTS)

Obviously a few things stand out here:
1) The more aggressive entry (enter at market) provides smaller risk and bigger gain. The R/R is very nice at 1 to 2. The catch here is that if today would have been an up day, you could have easily been stopped out the same day. Not a big deal, but it sucks when that happens.
2) The more conservative entry leads you to a 1 to 1 R/R, which is fine but obviously 1 to 2 is preferred.

One note here - take a look if you just exit right now on the first scenario - +22.25 pts = $1112.50 PER CONTRACT. Do the math on how many you could comfortably swing trade.

James is right, the money is there and we've got some good analysis here but I wonder if anyone is making any money with it. I'm still stuck in my daytrading mode and since it's been doing well lately, hard for me to change right now. Maybe during the next cold streak.

[brownsfan019]

One last note - I'm not a fan of holding a futures position trade over the weekend. Overnight is hard enough for me. So, if it were me, I would probably look to exit some/all of my position sometime Friday. I might even consider just closing it out now and say thank you for my 20+ pts in ONE day.

[neustaju]

Brownsfan, Congratulations! for shorting wave "4" (or "C") of "C". the "NO ZONE" for my entry for short was 1493.21. A 30 min candle closing in there was a reason to cover. I am also hoping for 1440 break because then I will have confidence in all in *long* at 1413.72. We hope wallstreet bulls will let shorts think we will break 1400 so we can have a great covering rally up to 1540. PLZ Wallsteet! NO sideways volatility for 4th Q/07 b4 we buy dips for the bull rally (5 of 3) up to 16000+ DOW

[brownsfan019]

UPDATE:

1) Short that is working.

2) Concern for still holding this short. If that spinning top occurred closer to the 1440 level, I would go long quickly. The market doesn't always go exactly where we want it to go however.

At this point our options on this short are:

1) We exited Thu night / Fri morning / Fri at the close. A few reasons for the exit as I mentioned earlier.

2) Exit Sun night / Mon morning based on this possible long signal.

3) Exit IF the spinning top confirms, which for me would be price breaking through the high of the spinning top.

Each exit has its merits. #1 and #2 are more conservative. More of the 'take the money and run'. #3 is saying that we still like this short and are not overly concerned about Fri's price action. If the market drops good on Mon or Tue, the short will generate even more profits. If we get taken out at the high of the spinning top, you will 'give back' some money.

To each his own.

[james_gsx]

Has anyone considered using VBCs and seeing how they correlate with the daily chart? I was looking at the 59049vbc chart on the YM (I use multiples of 3 for my VBCs thats how I came up with that number).

Overall I found that at first it seems like more noise, but you are able to ride the 2-3 day trends for considerably longer compared to the daily chart. Sometimes on the daily chart your confirmation would be a wide body, and if you missed a good entry then you basically miss the big move. Whereas the shorter VBCs the entry signal is formed much earlier. I also found that price tends to move with my moving averages better than the daily.

Of course it all comes down to preference and I certainly like the look of the daily more, but I think scaling down to a large VBC could be useful for entries/exits on a swing play.

I attached some charts that aren't annotated, but so you could see the difference.

[brownsfan019]

	Quote:	james_gsx
	Has anyone considered using VBCs and seeing how they correlate with the daily chart? I was looking at the 59049vbc chart on the YM (I use multiples of 3 for my VBCs thats how I came up with that number).

James,
In this thread at et, proflogic does discuss going to a high setting on a VBC for swing trade purposes. I think the logic holds and may prove to be more useful depending on how you trade.

The only question is how/when would you take on a position.

[brownsfan019]

1440 level being tested here today.

If you held your short over the weekend, you are being rewarded handsomely (as of 1:35pm EST).

So many ways to trade the exact same setup - do you exit on the first day, do you exit on Friday b/c of the hammer type candle or do you take a few pills and hold over the weekend?