Taylor Trading Technique Nov 2007

[Dogpile]

review for Thursday:

Had Low Violation in morning
Formed range trading around previous days low price (1478.75 area)
Market then tested up towards 15-min 20ema
Then Broke Lower (momentum away from VWAP)
Test up fell short of VWAP
Formed Higher Afternoon Low
Broke Up Through VWAP and rallied hard
Traded 'High To Low'

2 high to lows in a row now

1478.00 was Peak Volume Price

Since 1478.75 was previous day low and now we have a PVP at 1478.00, I think this is becoming an important price pivot. Watch action closely around this level.

strange sidenote:
NQ dropped -3.4% today while Russell closed up +0.21%
NQ futures were actually limit down at one point today (-100 pts)

[Dogpile]

	Quote:
	1478.75 was previous day low and now we have a PVP at 1478.00, I think this is becoming an important price pivot. Watch action closely around this level.

this isn't magic, just monitoring the high-volume zones and highs and lows. Todays afternoon high was 1478.50 and then it reversed by -24 pts.

[Dogpile]

Review for Friday Nov 9, 2007

Today was good example of Taylor concepts defining trading

1) we had a very low start due to a large gap down. but given the high close of the previous day, we did not violate the previous day low right away. when starting far below the 15-min 20-ema, the market often trades towards this level FIRST. this is what happened on Friday. (note that the overnight move as measured from the 4pm close into the opening bar low was negative -2.0% --- this is the equivalent of an entire 'trend day' happening in the overnight session. this is a massive gap and given our tendency (per Taylor) to look for 'morning reversals' -- shorting right off the bat was not a high-odds trade. note though that there was no 'low violation' right off the bat.).

2) after testing the 15-min 20-ema on an up-move, 'location' has now improved for a short (remember, there had been no 'low violation' so fading the initial move up for a 'morning reversal' is reasonable Taylor type of play. the market did reverse and proceeded down until it made its 'low violation'. note that coming into the day, we already had 2 'high to low' days. at this point, we had a third day. now, you have to think. you have had a very large move down. you have a 'low violation' and it was still 'morning session'. after 2 high to low days and a 'morning low violation' --- the Taylor play is to look for a potential LONG.

3) the market went and 'accepted' VWAP, confirming the LONG bias. at this point, the market is either going up or its going to chop sideways. in order to short here, I think you need 'renewed downside momentum' away from VWAP. Thus, the default play here is to be long.

4) the market did chop sideways for a while (consistent with my 40k contract-rule) then broke UP until reaching its key resistance near 1478.00-1478.75. This was important pivot for 2 reasons:
a) 1478.75 was Wednesdays low for the day --- and highs and lows are important.
b) it was Thursdays highest volume price --- and the daily PVP's are important. (note that this was a significant 'volume price' as over 60k contracts traded at 1478.00 on Thursday --- program trading algorithms seem to respond to these key daily PVP's quite reliably).

5) After testing this key pivot, it drove down hard. Note that the entire move up was on low-volume and actually led by the lagging financial sector. After a LONG move up and a test into key resistance, a short here is a reasonable play for at least a short-term trade. You can see how the 'higher timeframe' is in a downtrend and that this was confirmed by aggressive selling to end the day as 'higher timeframe players' came in and sold.

[Dogpile]

Review of Monday Nov 12, 2007

Had 1 'Low to High' coming into the day = neutral factor
Had 'low violation' in opening few minutes = factor to look long
Price traded 14-15 pts below 15-min 20-EMA = factor to look long

Market traded up and through 15-min EMA. Then tested Fridays PVP of 1465.00 = factor to look short. It then flirted around this pivot and eventually got to 1469.25 before making high for day.

Have seen this a lot recently where price tests 4-5 pts above/below the key PVP before reversing. Seems to really want to shakeout a lot of traders watching that level before it reverses. Today was no different.

the market then chopped around on opposite sides of VWAP (1460.00). I generally look for 40k contracts to trade at a single price before a directional move occurs. This was good today as S&P's didn't move directionally until they printed 40,903 contracts at 1461.00. The market then did a late vertical plunge all the way down to 1439.50, closing far below 'value'. Down volume swamped up volume in the final hour of trading. Somewhat odd action, IMO. Why did the market let longs out during the day only to plunge at the end of the day? Usually, if the market wants to go down, the bias is for the market to go down hard early in the day and force the weak longs out at bad prices. Today, the market let longs out and then tanked at the end. Perhaps this is a sign of a mini-capitulation? The 'profile shape' does not suggest continuation. Note that Market Profile concept is that a close far away from the days 'value' is most often a 'fade' if the profile shape is not 'elongated'.

Note that 1438.50 was the lowest price that has traded since the Fed first eased in that surprise 50 basis points on August 17. The futures tested this level after the close. Will 'value' migrate down tomorrow towards/below this level or was today a 'bear trap' whereby price will revert towards the prior days value? We will have to see but 1438.50 is the key pivot to watch for now...

[RAVIN]

Dogpile,
Correct me if I am wrong

Monday was High to Low following from Friday,
Tuesday expected to a buy day "Low to High" , hence Tuesday can be considered as Sell day, and it did turn out to be "High to Low"

So a Buy Day followed by a Sell day, so today it should in theory be a Short Sell Day, "High to Low"

[Dogpile]

yes,

note we started out -20pts vs the 15-min 20-ema so we needed to work-off oversold situation. we also had a 'low violation' early on. this argues for a long trade. after we trade towards the 15-min EMA, location is now set-up for the High first...

Note that there is strong support in the 61.00 - 61.50 area so look to exit shorts above that.

[RAVIN]

	Quote:	Dogpile
	yes, note we started out -20pts vs the 15-min 20-ema so we needed to work-off oversold situation. we also had a 'low violation' early on. this argues for a long trade. after we trade towards the 15-min EMA, location is now set-up for the High first... Note that there is strong support in the 61.00 - 61.50 area so look to exit shorts above that.

Thanks again for that insight, greatly appreciated. Beginning to get some sense out of this TT stuff.
We ended up with "High to Low" yesterday, and the momentum was such that it broke through the support zone, hene following the analysis, a buy day can be expected especially with LV on the open, i.e Low to High.

[RAVIN]

Dogpile,
Today looks like somewhat similar to last Friday, except that it is a gap up, then the prices test the yesterdays low,, could the rally be sustained so that it would end up as "Low to High" day , remains to be seen,

Still that expectation of the test meant that a short after the open was a high probability and also the bounce for quick 10-15min trades.

[Dogpile]

after 2 high to lows, a possible taylor buy is a 'higher bottom'

there are 2 entries he looked for, the low violation or the 'higher bottom....

today looks like higher bottom buy day...

expiration friday can be tough though in afternoon

[RAVIN]

	Quote:	Dogpile
	after 2 high to lows, a possible taylor buy is a 'higher bottom' there are 2 entries he looked for, the low violation or the 'higher bottom.... today looks like higher bottom buy day... expiration friday can be tough though in afternoon

Friday turned out to be zig zag day (LBR Term) after a wide range on Thursday and also a "Low to High" day , (the second bottom came within a tic though of the prior test). and the previous 1460 support zone turned to resistance.

Monday therefore in theory we should see higher prices in which pros. would be selling i.e a Sell Day, and Tuesday therefore a SS day. Hope I am on the right track, we will see how all this pans out.