Thursday, January 29, 2009

Thursday 01/29/09 - Mini Russel (TF)

I watched Austin P's video from last night in which he discusses the Mini Russel (Symbol: TF), and how it trends much better and is essentially an easier instrument to trade compared to the Emini S&P500 (ES). I do see his point; trading the ES is pretty brutal and one can easily get stopped out of good trades due to noise alone. So I spent some time today trading the TF on Sim, and I'm pretty pleased with the results. Only 1 trade was stopped out for a 1 point loss (TF is $10 per tick, 10 ticks per point - $100), which was more than made up with several 1-4 pt winners. A lot of people don't trade the TF due to the lack of liquidity, but that's not really a problem for me since I'm trading 1-2 contracts. Volume is slowly picking up in the Russel as well, and it's now averaging over 100,000 contracts per day. I'm going to sim trade for a couple of more days and then try it out on real $ with 1 contract.

Unfilled Gap

ES/TICK (3-min)

ES Market Balance (5-min Continuous Contract)

ES Market Balance (5-min Day Session Only)

TF Market Balance (5-min Day Session Only)

Wednesday, January 28, 2009

Now I ain't sayin' she a gold digge

Normally, I stick to posts strictly centered around trading and the markets, but this was too good to pass up.

Now I ain't sayin' she a gold digge

But she Ain’t Messin’ With No Broke Banker

I honestly can't believe these girls! The economy is in the crapper, people are losing jobs left and right, and instead of being supportive in a bad time, they're concerned about bottle service and expensive dinner dates! Unbelievable. And what's up with these ex high-rollers being all needy and clingy? I say drop the b*tch and move on. Be thankful you saw their true side in time, i.e. before you tied the knot, and be more careful next time.

Girls don't like boys, girls like cars and money...

Wed. 01/28/09 - FOMC Day

No $ trades today either - Market action was pretty weak most of the day. There were some opportunities after the FOMC announcement but I wasn't at the screens to even watch the action. Market gapped up this morning, and was unable to fill the gap. So we now have an unfilled gap from 839.25. Lets see if the market fills that gap later in the week.

Unfilled Gap

ES/TICK (3-min)

Market Balance (5-min Continuous Contract)

Market Balance (5-min Day Session Only)

Tuesday, January 27, 2009

S&P500 E-Mini Gap Tracker

Total # of Gap Days Tracked: 61
# of Times Gap Filled Same Day: 43 (70.50%)
# of Times Gap Unfilled Same Day: 18 (29.50%)

Check out Gap Guy Blog for helpful tips on trading gaps.

Tuesday 01/27/2009 - ES gapped up 5.5 points opening at 837. It then shot up another 7.5 points and hit 844.50, and then dropped down to 831.25 filling the gap. Price then shot back up right through 844.50 hitting 847.50, tested that area a couple of times, and then went back to test the open (837 area) and then shot back up past 844.50.

Wednesday 01/28/2009 - This was an FOMC day. The market gapped up 20.75 points opening at 860. It then chopped up to 863 and down 856.50, which turned out to be the Low of Day. From there, it went up to 865.75, crept down to test the open, and then continued moving up to the High of Day at 876, and closed at 871.50.

Thursday 01/29/2009 - No shortage of bad news today (new home sales lower than expected, jobless claims higher than expected, durable goods fell more than expected). The market gapped down 14.50 points opening at 857.00. It then edged up to 859.50, which was the high of day. The market then made a move lower, and back up to retest the 1st hour high, and it was all down-hill after that to 840.25 with a close at 843.00

Monday 02/02/2009 - ES gapped down 14.50 points opening at 811.25, and immediately tried to make a run up to fill the gap, but encountered resistance in the 819-821 area. From there price moved down to 814, and then made another thrust upward to fill the gap and put in a high of 827.25. From there, price moved down to the 812 area and bounced off that to move back up to 827.50 with a close at 821.75

Tuesday 02/03/2009 - ES gapped up 4.75 points, and went straight for the gap fill right off then open. Price then swung back up, and met resistance at 829.75 and headed back down to re-test the previous day's close. It remained range bound between the opening price and previous day's close, and then broke out of the range to the up-side later in the afternoon and hit resistance at 839.75. ES closed at 831.75. Lets see whether this 828-830 area now acts as support.

Wednesday 02/04/2009 - ES gapped up 7 points, and attemped to fill the gap at the open but buyers came in and pushed price up to 849.50, which acted as strong resistance (Tim Knight called it). From there, price took a dive lower and filled the gap at 12:55 PM central and continued down to the 826 area, where it again found support and moved back up through the previous day's close, and finally closed at 829.50. The 828-830 area did act as support, as I thought it may.

Thursday 02/05/2009 - ES gapped down 6.75 points and attempted to fill the gap right off the open but met heavy selling in the 825 area, and dived to a low of 816.75. Price bounced from 816.75 around 9 AM central, and went straight up for gap fill and beyond all the way up to 847.75 (31 point up move!). The 847-849 area proved to be strong resistance (it has been for days now) and ES finally closed at 840.25.

Friday 02/06/2009 - ES gapped up 4 points, immediately took off and never looked back to fill the gap. As I mentioned in the post for Friday, a runaway gap was expected since gaps were filled every day of the week. Reference the post for Friday to learn how to identify gap fill days and gap and go days early in the morning using the TICK. Price moved up strong off the open and continued moving higher with shallow pullbacks all the way up to the high of day at 869.25, and closed strong at 868. I would expect some continuation of the up trend next week fueled by the Fed's Stimulus plan, and the market could very well tank once the Fed actually announces the plan (buy the rumor, sell the news?). We shall see. Doesn't matter either way as long as you keep your losses small and let profits run.

Monday 02/09/2009 - ES gapped down 2.75 points (tiny gap). Price moved up in an attempt to fill the gap, but couldn't do so on the first attempt, and reversed to downside to put in the low of day at 859. It rallied strong from there, and not only filled the gap, but continued moving up to put in the high of day at 873. From there, price re-tested the open a couple of times and tried rallying back up to high of day, but was unable to do so, and closed on weakness at 865, printing a doji candle on the Daily chart.

Tuesday 02/10/2009 - ES gapped down 6.75 points and filled the gap within the first 30 minutes of market open. From there, the ES began selling off on news of the Treasury's bank rescue plan, and the ES went from a high of 866 at 8:55 AM down to a low of 819.50 by 2:45 PM (central); a 46.50 point down move! At 10:10, the ES fell 12.25 points in 5 minutes. At 10:35, the 5-minute candle printed another 12-point down move. The price action was violent, to say the least. I'm anticipating some consolidation and range-bound price action in the next day or two.

Wednesday 02/11/2009 - ES gapped up 3 points, and filled the gap within the first hour of market open. From there, it rallied back up to 836.25 which was the high of day. That area proved to be strong resistance, and ES fell back down to yesterday's low and held it to the tick at 819.50. From there, it again made a push back up but couldn't get to the high of day and ended up closing at 831. Given the market conditions, that's a fairly strong close, and even though everything's pointing towards more selling, I have a feeling we migh test the mid 840s tomorrow (50% retrace from 873 to 819.50). If we break 819.50, I'd be looking for price to move down to the 806-807 area.

Thursday 02/12/2009 - ES gapped down 13.75 points, and attempted to fill the gap earlier in the day, but was unable to do so and fell to 805.50 (low of day). Buyers came in at that price level on government mortgage subsidies news, and the market filled the large morning gap, and rallied from 805.50 straight up to 836.75, and ended up closing at 835. That is a very strong recovery, and I'm glad the 805 area held. This move definitely strengthens the support at 797.50 - 806.

Friday 02/13/2009 - ES gapped down 4 points, and initially the momentum pushed price lower to 826, at which point price reversed and filled the gap before 10 AM. Price then hit its high of day at 837.75, and began a down move which took it down to 822.75. Price then moved back up and re-tested the open, and then down again. The ES closed on weakness at 820. On the bright side, at least it closed over the 818 area which was significant support for a while. Democrats pushed the $787 billion stimulus bill late Friday night, so I'm expecting some up-side on Tuesday. Just because I'm expecting up-side doesn't mean I'll be trading with a bullish bias; it just means I'm aware of the news and up-side will not surprise me. Even though I'm strictly a technical trader, being aware of the fundamentals doesn't hurt. As long as I trade the charts and keep my risk in check, I should do fine. Just one more thing to note here: gaps have filled on every day this week. We could get a run-away gap and go day soon.

Tuesday 02/17/2009 - ES gapped down 23 points to open at 797, and was unable to fill the gap. The high of day was set at 801.50 within the first 10 minutes of market open. Price moved lower from there and traded in a tight 8-10 point range for most of the day. Moves happened quickly with little or no follow through. Definitely one of the toughest trading days. After looking at the 15 min chart of the VIX, I'm expecting further down-side action tomorrow. Lets keep this open gap at 820 in mind though.

Wednesday 02/18/2009 - ES gapped up 7.25 points, but quickly filled the gap within the first 30 minutes. Weakness continued and price went down to 778. From there, it made a V-turn, and re-tested the previous close, and then went on to test today's open and put the high of day in at 794.75. From there it sold off again, and headed south. The low of the day (776.50) was printed during the last 5 minutes near the close of day (779.25), so we closed on major weakness. Looking at the 15-min VIX and ES chart, I have a slightly bullish bias for tomorrow, but I expect us to be range-bound for a little while. Also lets not forget that open gap up above at 820. In closing, trade what you see as information becomes available throughout the day. Every moment in the market is unique!

Thursday 02/19/2009 - ES gapped up 14.25 points, and put in the high of day at 796.75 within the first 15 minutes. It was all down-hill after that and the gap was filled late in the afternoon by 2:15 PM central. ES put in a low of day 775 and closed at 779, just a tick below yesterday's close! Looking at the 15-min ES/VIX chart, I'm still slightly bullish but will trade what I see, as I did today. We still have an open gap above.

Friday 02/20/2009 - ES gapped down 16.50 points and immediately attempted to fill the gap. If you draw some Fib retracement levels from the previous close (779) to today's open (762.50), you'll notice that price hit resistance around the 61.8% retracement level. From there price, headed lower and tested the mid-point and then headed back up to the 61.8% retracement but was met with resistance once again. From there, price broke down below the open, re-tested the mid-point, and then headed lower to the low of day 752.50. Price made a V reversal and headed back up for the gap fill. It hit a high of 778.75, missing the gap by just a tick! That's so close that I'm gonna go ahead and count it as a gap-fill. We saw heavy selling near the gap-fill, and price tested the mid-point once again and closed at 770 (770.75 is 50% retracement to gap fill). Overall, I think we still closed on a strong note (above mid-point), and I'm still slightly bullish. Lets see what next week brings.

Monday 02/23/2009 - ES gapped up 7.75 points, opening at 777.75, and immediately put in the high of day at 778.00. From there, it began trending lower and filled the gap by 9:00 AM, and continued drifting lower all day. Price remained below mid-point all day, and couldn't even retract to the first hour low. Price broke the Nov. 08' lows, touching 839.75, and closed at 745. With the November lows now broken, we could see continued selling pressure.

Tuesday 02/24/2009 - ES gapped up 3.25 points, and filled the gap within the first 35 minutes of market open. From there it rallied to 757.75, at which point it hit resistance (yesterday afternoon's swing high was 757.25), and retraced lower to re-test the open. From there, it made another up-swing but this time only made a high of 756 which signaled weakness. Price retraced down to test the mid-point, but strong buying came in at that point and the ES rallied from 750.75 all the way up to the high of day at 774.75. ES closed strong at 769.

Wednesday 02/25/2009 - ES gapped down 2.50 points, and came within 1 tick of gap fill. Prices dropped on a larger than expected decline in home sales, and put in a low of day at 751.25. Then news came that the govt will be providing bad banks with additional capital, and the financial sector rallied, taking the futures along for the ride. ES made an up swing to 765.25, and then back down to 752.50, and then rallied back up to test the open, and then back down again past the mid-point. ES climbed yet again from there, and hit a high of 779.50, but was unable to hold on the those gains, and sold off into the close; closing at 762. A lot of zig zag price action.

Thursday 02/26/2009 - ES gapped up 11.50 points, and tried filling the gap immediately but was unable to do so. Prices headed higher and put in the high of day at 779 by 10 Am (central). From there, the sell off began and prices began to head lower and the gap was filled by 12:15 PM. Once the gap at 762 was filled, price bounced back up to the 766 area, and then sold off again putting in the low of day at 750.25. ES closed on weakness at 752. At this point, we've had 7 straight days of gap-fills so a run-away gap day is probably right around the corner.

Friday 02/27/2009 - ES gapped down 16.50 points and made a few attempts for the gap fill but was unable to fill the gap. The high of day was set at 750.75, right around yesterday's low of day. ES sold off from there and put in fresh lows at 732.50, and closed on weakness at 733.00

Monday 03/02/2009 - ES gapped down 12.75 points and immediately made an attempt for gap-fill but was unable to do so, and instead the high of day was put in at 724.25 in the first 30 minutes of trading. ES sold off from there, and broke the important 700-level, putting in a low of day at 698.75. ES closed at 705.50. We've now had two straight run-away gap days, so I am expecting the next few gaps to be filled on the same day.

Tuesday 03/03/2009 - ES gapped up 5.50 points, and immediately put in the high of day at 712 and went for gap fill; as expected. ES continued the sell-off but found support in the 690 area, and re-tested the mid-point and the previous close. It sold off again from there, and closed on weakness at 689.50. I haven't studied the larger time-frame charts yet, but I feel a short squeeze is right around the corner.

Wednesday 03/04/2009 - ES gapped up a massive 17.50 points, and attempted to fill the gap earlier in the morning but was unable to do so. The 699 low of day was set within the first hour. From there, the ES began trending up. I was aware of the open gap above at 733. ES could not fill that gap either, and the high of day was set at 723.75 by 2:35 PM (central). From there, ES sold off and broke down to a low of 707.75, and closed on weakness at 708.25. At this point, we need to be mindful of the open gap above at 733, and below at 789.50. My guess would be that the 789.50 gap gets filled first.

Thursday 03/05/2009 - ES gapped down 12.50 points and immediately attempted to fill the gap but was unable to do so, and put in a high of day at 703.50 within the first 45 minutes. ES sold off from there and headed down to 682.75, filling the open gap at 789.50 in the process. From there, it re-tested the market mid-point, and sold off again. ES made fresh new lows at 676.25, and closed on weakness at 686.50, below the 1st hr low and market mid-point. We now have open gaps above at 708.25 and 733.

Monday 03/09/2009 - ES gapped down 14.25 points and immediately went for the gap-fill, and filled it within the first half hour. At that point, it put in the high of day at 694.75 and sold off from there. It tested the previous close and the mid-point, and closed on weakness at 675.50, just a tick higher than the day's open.

Tuesday 03/10/2009 - ES gapped up 14.50 points this morning, and ran up from there with shallow pullbacks. The prior open gap at 708.25 was filled in the first couple of hours of trading, and price ran up to 715.50. As expected after a big move, there was some chop/consolidation during the lunch hour and price pulled back to 707 and picked up steam after lunch and hit an intraday high of 721.75, with a close in the upper value area at 715.75. At this point, we have open gaps above at 733 and below at 675.50, and we're closer to filling the 733 at this point in time.

Wednesday 03/11/2009 - ES gapped up 9 points this morning, and attempted to fill the gap right away but buyers came in and pushed price up to 732.50 (high of day) which almost filled the open gap at 733. It's close enough in my book that I'll consider the 733 gap filled at this point. From there, ES sold off, tested the mid-point, and then filled the gap at 715.75, while putting in the low of day at 713.25. From there, it ran back up to the Upper Value Area (727) but closed at 720.75, below the mid-point which I view as a sign of weakness. If it was truly a strong move, we should have seen a close above the mid-point, closer to the high of day. At this point, we still have an open gap below at 675.50.

Thursday 03/12/2009 - No gap today

Friday 03/13/2009 - ES gapped up 3.50 points and filled the gap within the first 15 minutes of market open.

Monday 03/16/2009 - ES gapped up 6.25 points and attempted to fill the gap in the first hour but was unable to do so. Price set a strong up-trend from there and set a high of day at 771.50. Price formed a double-top at 771.50 in the afternoon and sold off from there, filling the gap by 2:30 PM (central). ES closed on weakness at 753.75.

Tuesday 03/17/2009 - ES gapped down 1 point, and immediately filled the gap right at the open. From there, it tested and broke yesterday's low, setting the low of day at 746. It slowly trended up from there, and broke yesterday's high of day (771.50) in the last few minutes of the day, setting today's high at 777, and closing strong at 775.75.

Wednesday 03/18/2009 - ES gapped down 6.50 points. Price drifted lower in the early morning setting the low of day at 761.75 (760.50 - 761.50 was Volume Trend History 1 and 2). An up-trend developed from there, and the gap was filled by 12:45 PM. Price resumed the up-trend and rallied on the FOMC announcement (no rate change) and price set a new high at 800.50 where it met resistance (profit-taking) and swung down to test the mid-point at 780.25, where it found support and headed back up to close at 791.25 (upper value area).

Thursday 03/19/2009 - ES gapped up 9 points to open at 800.25, set the high of day 3 ticks higher, and immediately sold off from there. Price set the first swing low at 784.25, then retraced slightly more than 50%, and sold off again setting the next swing low at 778 (138.2 % extension). From there price re-bounded to test mid-point and sold off again, setting the low of day at 777.25, and closing at 780.50. So we now have a low of day that's above 777, and a close above 780. All in all, not a very bearish sign. But as always, trades should be taken based on price action and trend in the now moment; and that's the plan.

Friday 03/20/2009 - ES gapped up 3.5 points, but quickly set the high of day at 785.25, and filled the gap within the first 15 minutes of the open. It tested the mid-point a couple of times, and then continued trending down from there to the low of day at 761.50. It double-bottomed at 761.50, and attempted to re-test the mid-point, but was only able to set a swing high at 772, at which point it sold off again and closed on weakness at 763.75.

Monday 03/23/2009 - ES gapped up a monster 19.75 points, and only went down 3 points at the open to set the low of day at 780.50. Price rallied from there on the rise in existing home sales (+5%), and the Fed's bank plan. Price remained above the mid-point all day, and set a high of day at 821, closing on strength at 818; up 54.25 pts from Friday's close. We now have an open gap at 763.75.

Tuesday 03/24/2009 - ES gapped down 9 points, it took price 3 attempts/pushes but it finally filled the gap at 12:25 PM (central), but price could not reach yesterday's high, and sold off from 820. It tested the previous close, and then sold off into the close setting the low of day at 801.25, with a closing price of 803.25. The 800 area held as support today, which is a positive. Price couldn't break yesterday's high, which is technically a negative, but given the fact that ES closed with a 54 point gain yesterday, a consolidation day was expected.

Wednesday 03/25/2009 - ES gapped up 5 points, and shot up straight from the open putting in a new intraday high at 823, which proved to be an area of resistance. ES started retracing back from there, and broke below the mid-point by 11:30 AM, at which point, the selling accelerated. ES filled the gap by 1:00 PM, and continued to head lower to the low of day at 787, at which point, the market found support and reversed all the way back up to 812, closing on strength at 808.25. Quite a recovery!

Thursday 03/26/2009 - ES gapped up 10.50 points and attempted to fill the gap but was unable to do so, and set the low of day at 811. Price found support at 811, and began surging up towards the 828 area, where it met some resistance and sold off to re-test the open. Price rallied again in late afternoon setting a new intraday high at 830.50, and closing at 827.25

Friday 03/27/2009 - ES gapped down 10.50 points and attempted to fill the gap but could only reach 821.50, which turned out to be the high of day. ES sold off from there and headed lower to fill the open gap below at 808.25, and put in the low of day at 809.50. That's close enough for me to consider that gap filled. Price bounced 10.50 points from 809.50, but the market couldn't find any strength and sold off again down to the 810 area. Price bounced back up to the mid-point and closed at 815.50, right around the mid-point and volume trend. Two run-away gaps in a row are pretty rare, so we should see a high probability gap-fill play Monday morning.

*** Went on vacation for 2 weeks ***

Tuesday 04/14/2009 - ES gapped down 8 points, but was able to fill the gap by 9:45 AM (technically it came within 3 ticks), and set the high of day at 853.25. ES sold off from there, and put in a new low of day at 836.25, where price found support and rallied back to test the mid-point (844.75 area). Price could not sustain above the mid-point, and sold off again, but this time found support at 837, and closed on weakness at 840.50.

Wednesday 04/15/2009 - ES gapped down 6.75 points, and went for the gap fill pretty much straight off the open filling the gap by 9:15 AM. The previous close acted as resistance, and price retraced down to test the open, bouncing back up to the 843 area, and then retracing down again. Except this time, it did not make it all the way down to the open, which should have been a sign that this market isn't going any lower. Fueled by strength in the financial sector, ES rallied in the afternoon from 834.25 all the way up to 850.50.

Thursday 04/16/2009 - ES gapped up 5.50 points, and immediately went for gap fill straight from the open, filling the gap by 9:00 AM (central). After testing the mid-point a couple of times, price went lower and set the low of day at 843.25. Price found support there, and rallied back up to the mid-point, tested it and proceeded to the opening price, which initially acted as resistance. After testing the mid-point one more time, price broke higher through the opening price setting the high of day at 867, and closing at 861.25, near the upper value area.

Friday 04/17/2009 - ES gapped up a tiny 2.50 points, and filled it within the first 10 minutes of market open. From there, price tested the open, and then broke down through the mid-point, finding support at 856.75 (low of day). Price rallied from there, breaking up through the mid-point. After testing the previous close, price broke out higher setting a new swing high at 872, and closing at 867 (yesterday's high of day).

Monday 04/20/2009 - ES gapped down 16 points, and it turned out to be a gap and go day. ES opened at 851, set the high of day at 852, and broke down never looking back. Price broke through several key areas of support, settting the low of day at 828.75, 43.25 points below the previous swing high at 872. So now we have an open gap at 867 above.

Tuesday 04/21/2009 - ES gapped down 10 pts, and attempted to fill the gap right from the open, but was unable to do so. Price pulled back, but never got to the opening price, and re-bounded setting the trend for the day. The gap was filled at 10:15 AM (central), after which price continued to move higher right into the close. The high of day was set at 848.75, with a strong close at 847.50 (847 is a 50% retrace from Friday's high to this morning's low). Expecting further up-side.

Wednesday 04/22/2009 - ES gapped down 9.25 points but was able to fill the gap by 9:15 AM.

Thursday 04/23/2009 - ES gapped up 6 points but was able to fill the gap by 9:03 AM.

Friday 04/24/2009 - ES gapped up 6.75 points, and set the low at 852.25, leaving an open gap at 848.75. Price closed strong at 866.50, above the first hour high.

Monday 04/27/2009 - ES gapped down 14.25, and came within 3 ticks of gap-fill. That's close enough for me to consider it filled. Price closed on weakness at 856.75, below the mid-point.

Tuesday 04/28/2009 - ES gapped down 11.75 points and went for gap fill right off the open, and had filled the gap by 9:45 AM (central). Price closed at 851.25, right around the mid-point.

Wednesday 04/29/2009 - ES gapped up 9.25 points and it turned out to be a gap-and-go session, with price above the mid-point at 1st hour high for majority of the session. ES rallied to a new swing high of 879.25 after the FOMC announcement, but met heavy selling at that level and retraced lower with a close at 868.75, right around the mid-point.

Thursday 04/30/2009 - ES gapped 12 points, and set the high of day at 885.75 at 10:18 AM (central), where it met resistance and retraced down to the gap fill by 12:24 PM. After bouncing a couple of times, ES closed at 865, near the low of day (864.50).

Friday 05/01/2009 - ES gapped up 4.75 points and went for gap fill right from the open, with the gap filled by 8:48 AM (central). ES bounced at gap fill and re-tested the open, where it sold off again putting in the low of day at 862.50. Price re-bounded from there and rallied above the first hour high. Price pulled back to mid-point, and then rallied to a new high of day (877.50) where price met resistance again. After pulling back to the lower value area, price rallied into the close setting a new high of day at 878.25, with a strong close at 876.50.

Monday 05/04/2009 - ES gapped up 4.25 points, opening at 880.75. Price retraced lower to 879, and that turned out to be the low of day, leaving an open gap below at 876.50. Price rallied on housing data, and then continued drifting up all day, breaking through 900 in the last few minutes, with a strong close at 903.25.

Tuesday 05/05/2009 - ES gapped down 2.25 pts and immediately filled the gap at the open.

Wednesday 05/06/2009 - ES gapped up 8.50 pts and immediately went for gap fill. Price stalled a bit until 9:00 AM, and then continued down to fill the gap by 9:30 AM. Price re-bounded from there and closed near its highs at 917.50.

Thursday 05/07/2009 - ES gapped up 8.00 pts, and went straight for gap fill, and then continued moving lower. Price closed at 907.75, a little below the first hour low. Price moved to 914+ in the after-hours session.

Friday 05/08/2009 - ES gapped up 8.00 pts, and price came within 2 points of gap-fill but then took off again closing at 924.25. So now we have an open gap at 907.75

Monday 05/11/2009 - ES gapped down 12 pts, and set the low of day at 905.75, thus filling the gap from Friday. Price hit a high of 916.50, and then drifted to the low of day, with a close at 909.50. We now have an open gap at 924.25 above.

Tuesday 05/11/2009 - ES gapped up 2 pts and filled the gap within the first 10 minutes of market open.

Tuesday 01/27/09 - Tough Market

Again, no real $ trades, but I did manage to get into a few decent sequences on Sim. Today was a tough and choppy day in my view. I spent 20-30 minutes today trying out different risk management techniques addressing issues like when to move stop to break-even; whether to trail or not, etc. This is a continuing effort since there's no right answer, and I don't have enough data to really share any personal insight at this point in time. Please use the comments section to share techniques you use to manage risk and lets get some ideas flowing!

I'm curious about gap fills, but don't really have the time (at the moment) to go back and back-test market behavior around gaps, so I'm going to start tracking gaps going forward in a separate post.

Gap Fill Chart

ES/TICK (3-min)

Market Balance (5-min Continuous Contract)

Market Balance (5-min Day Session Only)

Monday, January 26, 2009

Monday 01/26/09 - Loser Bucket Trade Setup

Too many meetings on Mondays so no real $ trades today. In other news, I will be opening an account with Infinity Futures due to their low intraday margins, extremely competitive commission, and excellent trading platform (AT platform). Click here if you want a 30-day demo of the AT Platform.

Now I'd like to share a Trade Pilot Pro setup that I've personally used with good success. I haven't back-tested the method but I've seen it work in live market conditions over and over, so feel pretty confident about it. I'm using the TPP indicators for this method, but it's essentially buying a pullback in an uptrend or selling a bounce in a downtrend. Since I'm bearish I'll use a Short entry for my example.

Open the following chart in a new window to follow along:

In the Loser Bucket setup, for a short signal, you're looking for the on-balance volume indicator to be negative, and then you look for a price bounce with the Vol Osc positive. You can then enter into a short position when price bounces back to resistance, or you can use a bearish candle as an entry signal. In this situation, the OBV MA indicator is displaying continued selling pressure, and the Vol Osc turns green from the price bounce (probably due to short covering), and then the primary trend resumes, which in this case is down. You would cover at an area of support or if you saw a bullish candle signal. I've highlighted this setup on the chart above for my short trade. But if you look at the earlier part of the day, the same method can be used to buy pullbacks (OBV is green, but Vol Osc turns red). Again, I realize this is a simple trend continuation setup but the indicators help me since I can just take a quick glance at the chart and know what setups I should be looking for.

ES/TICK (3-min)

Market Balance (5-min)

Sunday, January 25, 2009

Last Week of January

With all the economic releases and earnings reports coming out this week, it should provide plenty of volatility for short-term traders. I'll be trading very lightly this week, if I put on any trades at all; not due to the economic #s and earnings but because I have a technology project I really need to finish up, so I'll be dedicating the evenings working on the project. It's a win/win since it may actually keep me out of trouble during this volatile week, and it provides even more trading capital :-)

In other news, My Trading Rules were mentioned on The Kirk Report, which was very cool and as a result I now have a few more people following along on this Blog. Glad to have you guys here.

Some numbers to keep in mind:
865.75 - Previous week high
831.50 - Previous week mid-point
823.50 - Previous week close
797.50 - Previous week low
Based on Historical Volume Trends (where majority of the trades occurred), the 817 - 822 area is important, and then the 848 area.

Here are some Fib levels I'll be keeping an eye on this week (60-min chart)
817.75 - 50% retrace
807.25 - 78.6% retrace
849.94 - 38.2% extension

If you have any questions, or have your own S/R numbers you'd like to share, please do so by utilizing the comments section.

Friday, January 23, 2009

Friday 01/23/09 - AT Platform

I downloaded the AT trading platform from Infinity Futures last night, and tested it out today. It's a very simple and easy-to-use platform, with the necessary features like bracket orders, trailing stops, etc. Here's something interesting: I was testing the AT platform on my train ride in to the city this morning, and didn't want to clog up the bandwidth on the mobile air card, so I didn't run Trade Station (my charting platform). I was making Sim trades on the AT platform using Joe Baker's support/resistance levels and watching the price action on the market depth screen in AT, and was up +$500 in less than 20 minutes.

This got me thinking that maybe trading is relatively simple, and I'm over complicating it for myself. Over the next week, I'm going to make an effort to simplify trading as much as possible. I was also thinking about how pit traders figure out where to enter/exit their trades. From what I know, they don't have live charting with indicators like the screen traders, and yet, the pit/floor traders make huge profits. So, are they simply keeping track of pivots and s/r levels, and placing their trades around those areas?

So I tried keeping it simple and simply playing the momentum today. I would enter with market orders, and exit on pre-set limit orders or get stopped out (6 tick stop). Again, I would wait for the momentum to come into the market, and then ride it out by entering on market, and having automatic target orders placed at +2 ticks, +4 ticks and +6 ticks. Many times the +2 and +4 would get hit in less than a minute. I was up over $1000 in a short period of time trading 3-6 contracts on AT using this method.

AT Depth of Market Screen

ES/TICK (3-min)

Market Balance (5-min)

Thursday, January 22, 2009

Thursday 01/22/09 - Roller-coaster Price Action

My schedule was pretty packed today so I didn't make any real $ trades, and just stuck with taking some jabs on the Sim. Going forward, I'm not going to bother posting the details on the Sim trades unless they offer something particularly educational. At this point, the Sim trades are just helping me develop more faith and discipline in my rules. If a particular trade helps me come up with a new rule; I will be sure to post details about it here.
Needless to say, it was a roller-coaster ride in the markets today. I was able to take advantage of the morning swing down from 817. A couple of my afternoon shorts got stopped out since I stood in front of the freight train run up; even though my buddy Matt warned me against taking shorts in that area. But when you're on Sim, it just doesn't matter and I wanted to experiment. I was able to catch the late afternoon puke though, and shorted the 833s. Unfortunately, I only rode that out for a 4 point gain.
In other news, I got in touch with Infinity Futures today since I've been hearing a lot of good things about their AT trading platform. They set me up for a 30-day trial, and I'll probably Sim trade tomorrow on the AT platform. If the platform works well for me, and Infinity can offer me a decent deal on commissions, I'll move over my trading account in a couple of weeks.

TICK/VIX (3-min)

Market Balance (5-min)

I can't believe we re-tested the 1st hour low so late in the afternoon. I was expecting a pullback on the gap fill at prior day's close, but didn't expect it to tank as much as it did.

Wednesday, January 21, 2009

38-Steps To Becoming A Successful Trader

Steps to Successful Commodities Futures Trading as published in Commodity Futures Trading Club News and in Traders Organization's Real Success Daytrading Course:

1. We accumulate trading information - buying books, going to seminars and researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.
8. We start to listen to 'outside news' & other traders.
9. We go back into the market and continue to donate.
10. We switch commodities again.
11. We search for more trading information.
12. We go back into the market and continue to donate.
13. We get 'overconfident' & market humbles us.
14. We start to understand that trading success fully is going to take more time and more knowledge then we anticipated.

Many Traders Will Give up at this Point as they Realize Work is Involved

15. We get serious and start concentrating on learning a 'real' methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but overall we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We go back into the market and continue to donate.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the trade methodology.

This is where I was at on 01/21/2009

23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don't follow them.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.

I think this is where I am at the moment (03/19/2009)

31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and trading rules.
33. We begin to consistently make money.
34. We get a little overconfident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money then we ever dreamed to be possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.

Wed. 01/21/09 - Emini Addict

I was too busy at work to put on any real $ trades, but I spent part of the day in Emini Addict's live trading room (it was free for today). Due to lack of time, I didn't really focus much on his "ambush" setups but I think the gist of it is drawing Fibonacci retracement levels from swing high/low and expecting a buy/sell response at certain fib levels (50%-61.8%). This is an over-simplification and just a guess (you can check his blog for details). One thing that did catch my attention though was his money management technique. He always uses a 6-tick (1.5 point) stop-loss. He exits half of his position at +2 ticks, and tightens the stop-loss to 4-ticks, or at times, to 2-ticks making it a risk-free trade minus commissions, and rides out the remaining position to target or stop. I tried it out on Sim trading 2-lots and was up +$300 on a few trades; and this was with relatively poor execution (a couple of trades were taken while I was on a conference call). Do you guys have any feedback on this trade management method? It requires at least 2 contracts, along with a very high hit rate in order to be successful (my win rate was around 80%). Regardless, I think Emini Addict was up pretty good on the day, and at $29.99/month, his chat room is a good educational resource for new traders.

TICK/VIX (3-min)

Market Balance (5-min)

You can see from this balance chart how my Rule of Shorts below the mid-point and Longs above, would have kept me out of trouble today. The mid-point is the gray line on the chart.

Tuesday, January 20, 2009

Tuesday 01/20/2009 - Inauguration Day

Yesterday was a company holiday in observance of MLK day; so today was the first business day of the week, which is typically filled with too many meetings so I usually stay out of trades. Today was also the inauguration of Barack Obama as the President of the Unitest States; definitely a historic day! So no trades on this end but I'll post a couple of charts. The TICK and VIX provided clear market direction today with the TICK spending most of the day below zero, and the VIX spending most of the day trending higher, and remaining above its first hour high. My Trading Rules would also have kept me out of trouble today.

TICK/VIX Chart (5-min)

Market Balance (5-min)

Dennis Gartman's 22 Rules of Trading

  1. Never, under any circumstance add to a losing position.... ever! Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!
  2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.
  3. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.
  4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never know what price is "low." Nor can we know what price is "high." Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed "cheap" many times along the way.
  5. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
  6. "Markets can remain illogical longer than you or I can remain solvent," according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
  7. Sell markets that show the greatest weakness, and buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily. In bull markets, we need to ride upon the strongest winds... they shall carry us higher than shall lesser ones.
  8. Try to trade the first day of a gap, for gaps usually indicate violent new action. We have come to respect "gaps" in our nearly thirty years of watching markets; when they happen (especially in stocks) they are usually very important.
  9. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In "good times," even errors are profitable; in "bad times" even the most well researched trades go awry. This is the nature of trading; accept it.
  10. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we, trade.
  11. Respect "outside reversals" after extended bull or bear runs. Reversal days on the charts signal the final exhaustion of the bullish or bearish forces that drove the market previously. Respect them, and respect even more "weekly" and "monthly," reversals.
  12. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.
  13. Respect and embrace the very normal 50-62% retracements that take prices back to major trends. If a trade is missed, wait patiently for the market to retrace. Far more often than not, retracements happen... just as we are about to give up hope that they shall not.
  14. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.
  15. Establish initial positions on strength in bull markets and on weakness in bear markets. The first "addition" should also be added on strength as the market shows the trend to be working. Henceforth, subsequent additions are to be added on retracements.
  16. Bear markets are more violent than are bull markets and so also are their retracements.
  17. Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are "right" only 30% of the time, as long as our losses are small and our profits are large.
  18. The market is the sum total of the wisdom ... and the ignorance...of all of those who deal in it; and we dare not argue with the market's wisdom. If we learn nothing more than this we've learned much indeed.
  19. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more. New highs are to be bought; new lows sold.
  20. The hard trade is the right trade: If it is easy to sell, don't; and if it is easy to buy, don't. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidelmeyer taught us this twenty five years ago and it holds truer now than then.
  21. There is never one cockroach! This is the "winning" new rule submitted by our friend, Tom Powell.
  22. All rules are meant to be broken: The trick is knowing when... and how infrequently this rule may be invoked!

Monday, January 19, 2009

My Reading List

This post will document market/trading-related books on my reading list. I may add a short review for each at a later time.

Books I'm currently reading
Books I've Read
Books I own but have not had a chance to read yet

My Trading Rules

I'm going to use this post to keep track of some common sense trading rules:
  1. Do Not put on a trade if you're on a time crunch
  2. Do Not put on a trade in the first half hour (8:30 AM - 9:00 AM Central)
  3. Do Not put on a trade if you're frustrated or not in a calm mindset
  4. Do Not rush into a trade. If you feel like the trade is running away from you, Let It Go! There will be another setup a few minutes later.
  5. Do Not widen your stop once you're in the trade.
  6. If Price is above the Mid-Point; Only take Longs unless Price is rejecting a higher area of resistance such as the Upper Value Area.
  7. If Price is below the Mid-Point; Only take Shorts unless Price is rejecting a lower area of support such as the Lower Value Area.
  8. Do not even attempt to catch an absolute Top or Bottom. Let price make a higher low prior to going Long from a Bottom; and let price make a lower high before taking a short position from a Top.
This is a working document and will continuously be updated as I pay my dues and the market teaches me more lessons. Btw, the learning never stops!

Saturday, January 17, 2009

S/R Numbers For Upcoming Week

From Hourly Chart
  • 942.75 - 200-bar High
  • 857.75 - 50-bar High
  • 842.00 - 50% Fib Retracement
  • 826.50 - 5, 10, 20-bar Low
  • 812.75 - 50 & 200-bar Low
From 4-Hour Chart
  • 942.75 - 50 & 200-bar High
  • 893.00 - 61.8% Fib Retracement
  • 877.75 - 50% Fib Retracement
  • 875.00 - 20-bar High
  • 857.75 - 5 & 10 -bar High
  • 826.25 - 5-bar Low
  • 812.75 - 10, 20, 50-bar Low
  • 812.50 - 200-bar Low
From Daily Chart
  • 1008.00 - 50-Day High
  • 942.75 - 20-Day High
  • 885.50 - 5-Day High
  • 877.75 - 50% Fib Retracement
  • 812.75 - 5 & 20-Day Low
  • 747.75 - -50% Fib
  • 738.50 - 50 & 200-Day Low
From Weekly Chart
  • 812.75 - Previous Week's Low
  • 885.50 - Previous Week's High
  • 848.50 - Previous Week's Close
From Monthly Chart
  • 812.50 - December Low
  • 897.00 - December Open
  • 900.00 - December Close
  • 918.75 - December High
  • 942.75 - January High
  • 965.25 - November Open
  • 1008.00 - November High
  • 976.25 - January, 03' Close, February 03' Open
  • 985.50 - February 03' High

Friday, January 16, 2009

Friday 01/16/09 - Angry Trades

I took 2 trades today (1 winner, 1 loser) and ended the day with a +$27.90 net gain in the real $ account.

I took the day off from work to catch up on some much needed sleep (was up till 2 AM last night due to work). I got out of bed right around noon, and didn't really plan on putting on any trades, but got up and checked the charts. ES was trading in the low 830s (the thought of staying up all night last night and shorting ES in the mid 850s crossed my mind but I was too burned out to stay up). It looked like the downside was limited at 830, so I stepped away to shower and get ready. I had to be somewhere at 1:15 PM so didn't really have much time on my hands, but after I got ready, I ended up back in front of my laptop with my trading platform fired up. I shouldn't have even started up my trading platform since I literally had 10 minutes before I had to leave, but saw price trading below the mid-point and it was having trouble breaking the 836-838 area, so I decided to scalp it short at 838.50. Got stopped out a minute later for -2 points; I deserved that. And that brings me to another common sense rule: Do not put on a trade if you're on a time crunch! $100 for a rule that could save me thousands down the road; not a bad deal in the grand scheme of things :-)

I came back from my errand around 1:35, and went back to the laptop. I saw ES testing the mid-point, but was unable to reach the 1st hour low of 845, which signaled weakness. Price tested the mid-point and went lower, and I initiated a short at 842 on the re-test. The short was good for 4 points, but I bailed at +2.75 points. One thing to note here is that I was pissed off when I got back to my laptop, for reasons unrelated to the market. I think being angry allowed me to just trade the charts and not give a shit about the P&L...I honestly didn't care about P&L when I took that trade. I saw the setup, executed and fully accepted the risk. Now I'm not saying trading while pissed off is a good idea; quite the opposite, but being completely detached from the P&L allowed me to make a quick scalp based on the charts. The resettable volume trend was at 838, and given the strong move up, I didn't want to overstay my welcome.

All in all, it has been an educational week. The plan for next week is to focus on execution and improved discipline. I'll also be creating a new post to keep track of my trading rules, and this will be a working document updated as often as needed. Have a good weekend!

IB - Trade Executions

ES TICK/VIX - 1:45 PM Central

ES TICK/VIX - End of day

Market Balance (5-min)

Joe Baker's Break-Out/Break-Down Levels

I encourage everyone to sign up for Joe Baker's Daily Levels. The levels are sent out every night for the next market day, and provide a very accurate map of the markets (ES, NQ and YM). By the way, this is a free service! I know of another company that charges $550 for a similar service.

Thursday, January 15, 2009


I'm just curious who's following along with me on my trading education. If you check this blog semi-regularly, please introduce yourself in the comments.


Thursday 01/15/2009 - Impulse Trades

I was busy with work most of the morning, and by the time I got Trade Station and my trading platform up and running, ES was trading down in the 817 area. I stuck to yesterday's rule of staying out of Long positions below the mid-point; even though price looked really stretched out in the 812-815 area. 813.50 was Joe Baker's downside target and 812.50 is a huge support number since it's December's low. I was expecting that to provide a bounce, but I stayed out of Longs sticking to yesterday's rule.
When I came back from lunch, I saw ES trading in the 835 area, and without analyzing the price action, and without even looking at the balance chart (balance chart plots all the S/R levels like 1st Hr high/low, mid-point, etc), I initiated a short; purely out of impulse. In less than a minute I was stopped out for -2 points. One loss usually isn't enough to drill the lesson into my head, and I re-shorted at 838.25 a few minutes later, and again was stopped out for -2. This time, I paused and switched over to the TPP Balance chart and cursed at myself for a minute since I had failed to follow my rule of staying out of Short positions above the mid-point. But there was also an exception to that rule; which meant I could short around 846.50 since it was a strong area of resistance. I shorted around 841 for a quick +2 point gain. Unfortunately, I got pulled into an impromptu meeting (someone walked up to my desk and started asking questions) and wasn't watching the market when price got to 846-47, so I missed that short setup. I could have shorted a little lower around 844, but figured I would stick to the rule and short closer to 846 since price could easily bounce from 844 to 847 and stop me out. I'm sticking with my 2-point stops. They're doing a good job of keeping me out of trouble. Overall, ended the day down $100 + commission.

IB - Real$ Trade Executions

And on to the charts...

TICK/VIX Chart - 1:39 PM Central

TICK /VIX Chart - End of day

TPP Sync Indicator - 11:41 AM

TPP Sync Indicator - 1:24 PM

Market Balance (5-min)

Wednesday, January 14, 2009

Wed. 01/14/2009 - Need to FOCUS on Execution!

Execution is turning out to be the hardest piece of the trading puzzle. My analysis of the market (market reads) are pretty much on the spot, and yet, I'm unable to turn a profit. I started the morning by trading in my real $ account, and took two back to back losing Long trades for a -$250 loss. I quickly came to my senses and realized I was trying to catch the bottom, which is a loser's game and stopped the bottom fishing. I'm glad that I was at least able to limit the losses. After two consecutive losses, I switched to Sim, and guess what...I ended the day up +$987 on SIM. I again took several screen shots of the TICK/VIX chart throughout the day and will post them here.

In order to rid myself of the bad habit of trying to nail tops and bottoms, I'm going to stick to the following rules:
1. Above mid-point of the market, initiate LONGS only. The only exception would be if price is really stretched and trading above 2X High Range.
2. Below the mid-point, initiate SHORTS only. The only exception would be if price is really stretched and trading below 2X Low Range.

That simple rule would have kept me out of trouble today.

Please post in the comments if you have any other ideas/suggestions on how I can improve my execution skills.

On to the charts...
I don't time to analyze each screen shot tonight, but the trade setups are the same as yesterday.

9:50 AM Central

10:21 AM Central

10:24 AM Central

10:48 AM Central

11:03 AM Central

11:19 AM Central

11:44 AM Central

11:46 AM Central

11:57 AM Central

12:04 PM Central

12:13 PM Central

12:34 PM Central

12:36 PM Central

12:41 PM Central

12:53 PM Central

1:02 PM Central

2:05 PM Central

2:43 PM Central

2:48 PM Central

Market Structure/Balance