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Dogpile

ES Trading For 9/17 + Rest of Week

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Hey Dogpile, the ES is perfectly balanced right now, like you said. There are resistance and support areas above and below the market. I think my preference would be for a long position near the selling tail, gap, or 9/18 POC at 1533 or so for play towards 1544-1546 and maybe higher. My preference comes from the breakout on Fed Day which occurred on high volume as well as yesterday's session (with higher value) which also occurred on good volume. I'm thinking of the ES trading yesterday and today as a pause within the uptrend.

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note JY (yen) is taking off -- have a sell stop to short 36.25 on ES / 818.50 on ER2...

 

just seems like could carry to downside and scare a lot of late-to-the-party longs who filled at bad prices... if wrong, will stop out for a few pts -- if right, could run to 28-30.

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note JY (yen) is taking off -- have a sell stop to short 36.25 on ES / 818.50 on ER2

 

Really interesting point! Strength in the Yen could spell weakness in US markets.

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<<I think my preference would be for a long position near the selling tail, gap, or 9/18 POC at 1533 or so for play towards 1544-1546 and maybe higher.>>

 

thx ant, I have been on a roller coaster today.. down then up. interesting call --- could be a 'higher low' play coming up late today then

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yen has now backed off and the market feels like struggling to go down -- could be higher timeframe nibblers and could end in a move up near end of day... possibly. but keep eye on yen to see if there is residual momentum to the upside there.

 

Note I played the short side but it ran out of gas, got divergence and I covered around the time you went long --- we are on the same page. this is good stuff.

5aa70e0680621_Sep201418pmEST.thumb.png.c713a01835015727168bdc9c4c6152c9.png

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Note I played the short side but it ran out of gas, got divergence and I covered around the time you went long --- we are on the same page. this is good stuff.

 

Huh, pretty cool.

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push down 'impulse' or 'price spike'?

 

thinking this is a long very late in day -- the intraday move is bearish but its on low volume with symmetrical distribution and into support -- as you say... might need until tomorrow to bounce though...

 

I did go long Yen (see attachment). I rarely trade currencies but for some reason, markets went down and Yen wasn't going up -- yen was delayed reaction --- so I entered with a tight stop thinking it was a free-trade if ES continued down and I could cover if ES bounced hard...

 

Now indices are spiking down... look long ES into the close would be gutsy trade for a gap up tomorrow

5aa70e068fd92_Sep20JYTrade.thumb.png.48677c1a6f8ef076652a4c741ce565ef.png

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Ha, looks like that down thrust ended in a Three Little Indians. All that talk about LBR by you two made me digged up my old dusty copy of StreetSmart from my attic. Its been there since the late 90s.:)

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just noticed, we have a 3-bar daily 'cap' formation going into tomorrow. this has been a very good bearish signal in terms of reward potential -- particularly for NQ. Sometimes it takes until the 2nd day to play out -- but often it goes the first day if the 3rd bar (today) doesn't close too low. If it closes too low, it often needs that extra day to screw more short-sellers...

 

EDIT: tomorrow is options expiration --- dangerous to do much overnight on short side. watched the market gap up a number of times on expiration fridays... last 2 fridays have seen gap downs (those obviously weren't expiration fridays).

 

Location is no good to be short anyway.. gap up was my profile call based on 'symmetrical distribution' --- prolly just gonna wait until something clearer sets up.

5aa70e06a1271_Sep20NQCap.thumb.png.881de9af4de6541c8274d29aa3e55ebc.png

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Ha, looks like that down thrust ended in a Three Little Indians. All that talk about LBR by you two made me digged up my old dusty copy of StreetSmart from my attic. Its been there since the late 90s.:)

 

Welcome to the discussion OAC. I thought it was going to be followed up by an A-B-C correction.

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Summary for day:

 

Market closed weakly yesterday and opened lower. We had 2 straight up days so Taylor rule says to look potentially for a down day. This was confirmed with down open --- value was starting to be built lower -- in-line with Taylor and a potential bearish day.

 

The market spent opening few hours in a tight coil where PVP = VWAP = Price (balance). It faked down, then up, then impulsed down, formed a bear flag and proceeded to trend down and away from VWAP until it reached around ~10 pts below VWAP -- where it stopped going down and limped into the close.

 

Volume was lower and does not suggest continuation without at least a test up.

 

Profile shape shows range extension to the downside. This could just be a 'price spike' -- meaning value will not migrate downward to price and implying price reverting back toward 1536-38 -- the value zone of today. On the other hand, no good bottoming pattern occured such as an inverse H&S or a 'b' profile with a higher low. The market may be in the midst of an uncompleted down auction. So 'price spike' or continued auction? we will just have to wait until morning to see -- complicated by it being an options expiration Friday.

5aa70e06a8678_Sep20FinalProfile.thumb.png.8b81d807ceb4fb9e94e6000f1e77d04b.png

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<<Is the book by Art Collins worth reading? TIA.>>

 

my view is that any book that teaches you 1 good thing -- even if it just inspires thinking on your own in a new way --- is worth reading. I would say I picked up a lot more than 1 thing in that book.

 

it also taught me a slew of EasyLanguage tricks which you probably already know having a background in engineering.

 

it was just cool to see how a 30-year trading veteran thinks. I don't use very much out of it mostly because it just isn't consistent with my discretionary/price-pattern style. nonetheless -- I am trying to add another dimension to my trading and think mechanical trading might be a nice complement -- especially on the long-side.

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Dogpile, nice analysis and chart!

 

Today was a tough day to trade the ES. For me, there weren't too many opportunities. The break of yesterday's low seems to have provided the best opportunity (i.e., the bear flag that Dogpile mentioned).

 

The only thing I would like to mention for tomorrow is that trading into the bracket from where the ES broke out of (upper limit around 1523) would be bearish, and that there is virtually not volume in the ES on 9/18 between 1503 and 1512. That is a potential trade destination over the next few days if the market stays weak.

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Dogpile, thanks for your comments on the book. I perused it at amazon.com and it looks interesting. I agree with you about complementing a discretionary style with some 'mechanical trade' ideas.

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re 'complementing a discretionary style with some 'mechanical trade' ideas.'

 

to a large extent this is what the Taylor technique is.... I have found this to be quite helpful. Just some simple tendencies to keep you thinking flexibly.

 

don't know if you have checked out this other thread I started but this is kind of similar to the Taylor technique

 

http://www.traderslaboratory.com/forums/f34/a-mechanical-strategy-journal-2488.html

 

Can see how well this works on the long-side particularly. Sometimes, the market goes up relentlessly and it doesn't work. But a lot of the time, the market does not go up relentlessly and instead chops around in step with a couple of simple indicators (I like the 2-ROC, 3-ROC, pinball, cap-pattern etc...). This 5-day one is like another one of those potentially for me. Presently the market is in unusual position so the 5-day Collins strategy is not indicating much -- but it doesn't look like a great long here to me... we went up and up and up on no volume, then went vertical on big volume. As Dalton would point out, that is not the best support structure. But eventually we will get another 5-day buy signal to think long. If it just presses up and up and up --- then I will have to rely on my scalping --- but I like to expect the Taylor type of rhythm and adjust on the fly if the market isn't confirming that rhythm.

 

Also, next week is one of the worst weeks of the year seasonally -- the September post-options expiration week has been down 14 of past 17 years. We could get a trend day down on one of those days and flush out all the people who bought AFTER the vertical move up.

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Dogpile,

Have you ever read "How Markets Really Work - A Quantitative Guide to Stock Market Behavior" by Larry Connors ,who also co-authored Street Smarts with LBR ? It is also full of mechanical strategies you might want

to look into if haven't already. I believe it is self-published and only available

from his website. It is a 150-page hard cover book that sells for $25. Hmm,

I wonder why it is so cheap ?:roll eyes:

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well, I didn't have the guts to go long the low volume 'price spike' --- after the close, the market whipsawed down and would have stopped me out anyway... but 'location-wise' -- it was a good long -- maybe go long smaller size and hold for next-day value with only a 'disaster stop' -- or no stop -- was the play.

 

Can see in attachment an analysis for the future as it is all easy in retrospect but can see how if you break the day into two parts (the coil and then the break lower) the market did build a 'b' after the coil break lower. 50,000 contracts is a fat profile and can often mark the PVP for a day. 50,000 printed at 1531.00 so clearly there was some responsive buying going on at that level (patient buyers on weakness -- likely higher timeframe players). a 'b' is an awesome profile to find a way to be long --- 'P' is less tradeable in my experience.

 

posting this just as a note for the future.

5aa70e06e5828_Sep20VolumeDistribution.png.153dd2827fed69373b06a9b082f798bd.png

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Welcome to the discussion OAC. I thought it was going to be followed up by an A-B-C correction.

 

Actually we had a larger ABC that came down from 9/19 high and the length

of A leg = length of C leg

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