May 31, 2006: Cnsld

Market breadth was +ve all day so no shorts. Dow hovering around bull zone. The W patterns are underway so are the semis wedge indicating upside action. What bothers me is the N pattern on ES & NQ which usually resolve to the downside. 108 support level on BKX is the area to watch.

Everything moved in unison after a pre-market weakness on currencies, gold, and oil. Further confirms the correlation I've been talking about. BP & JY are usually better indicators than Euro in signaling nice swings. Gold broke the daily bear flag on very little volume. 

May 30, 2006: TD

The market wasn't kind for the shorts today and on the daily looks like it'll consolidate around this area. Trade setups marked on chart.

I'm still on a break and won't trade this week as well. I need to rest up.


Nice H&S on Gold. Watch how the currencies and Gold rallied in unison - further confirms the correlation. The 8-10EST is an interesting period.

Looking at currency charts it seems that any rallies in the Globex & European markets up to 8amEST are subsequently sold during these 2 hours. Can it be that traders take their profits during that time? Don't know but something for me to follow. 

May 26, 2006: Upward Cont.

The market continued moving past the bull-zone on Dow. I'll resume trading this coming week.

Again let's look at how gold was behaving in relation to currencies. Definitely weak in addition to Euro within ascending channel. Ditto for crude. Notice TL on bottom of range on Gold. 

May 25, 2006: Stairs (UP)

 

May 24, 2006: Cnsld (Hook)

Ideal setup on chart. Action of breadth in relation to the zones should be noted.

How about that 'fugly' multi-day pattern on BKX. Believe it or not I've seen it before!





What were the metals doing when currencies wanted to b/o from 240 H&S pattern? They were selling off!! Look at (highlighted) fake b/o on currencies then what happened subsequently. Yes, exactly! Ditto for crude. There's correlation and metals seem to be wiseman unlike the currencies that keep behaving like an 18yr.-old. There're consistent occurences that I'm seeing on metals & currencies and I shall post in due course. 

May 22, 2006: Cnsld

Mondays are usually predictable - mostly games played in the morning that wind up w/zero gain/decline by the end of the day, i.e. cnsld.















Gold hitting support on daily - prior triangle/b.o. point.












B/o aka continuation on Euro 120min. 1.30 will prove challenging.









2 b/o scenarios on crude 120min.

Weekend ramblings: Risk Management

Had an interesting discussion with Dave around risk management and read some of FL's thoughts and methods on that topic. Makes very good sense and might be the missing piece in my trading journey. I'm confident about my method and the expectancy is quite acceptable. What needs to be accounted for is the change I've introduced few weeks ago, namely 'diversification'. Now that I'm trading metals, currencies, notes, and soon Gas & Crude, on top of stock indices, managing what size I enter will be crucial and will need a disciplined approach on how I spread the size and risk on all these markets. Can't just rely on what the setup looks & feels since my goal is capital preservation before thinking about profits.

Here's a link for future reference that has great insights on risk management and position sizing albeit most discussions are on stocks and optimal number of shares. How about futures contracts guys???

I spent some time working FL's spreadsheet and created the 3 columns he talked about in his discussion posted on monkeys.dacharts.com

May 19, 2006: Cnsld

I decided to go against my plan and trade today - mainly currencies & metals. There was no interest on my part to trade indices since I don't trade Friday afternoons and there weren't any setups I saw the night before.

Today the market consolidated and as mentioned in last blog entry I was looking for the Dow to dip and retrace to the 'Bull Zone'. This is what happened today as highlighted on the Dow chart and now it's time for the market to show whether it'll be resistance or will go penetrate and stay above it. Looking at today's breadth it clearly chopped around the zone and there were no setups on YM nor ER cuz both were out of sync w/breadth in relation to ma.

Monday mornings are the toughest so I'd wait till the afternoon part of the session and see where the market is before trading. If long then I'd like to see all the indices including BKX above their ma. There's a chance for a gap down or chop in the morning with a strong followthru to the upside in the afternoon.


This chart is what spoilt my planned long weekend :P.. I kept thinking about the Euro setup that I decided to show up just to trade it. As previously mentioned I was expecting the RS on the H&S to materialize after retracing to upside of the longer-term TL. That's what took place and I entered on break of the RS TL and ma (50&70ma)..don't they look like anaconda?? lolll.... The trade setup is highlighted in the chart below..Ditto for the JP which broke the bear flag on 120min as expected but didn't trade it.

As for Gold I was expecting a bounce up but that didn't happen and never reached top of triangle. It breached the 675 level I talked about and that was a trade entered as well. I missed the notes (ZN) trade but that wasn't my focus. The BP moves better in terms of profit range and shall look at it.

Note: I've changed the commodities layout and added NatGas and Crude which I shall be trading in the near future. Grains will have to take a backseat for now since they're not electronically traded till end of summer.


This is the euro setup I was looking at the day before and the RS setup highlighted in Red. One can see that the profit target was the neckline. Didn't catch the whole move but walked away with total of 140 pips on 2 contracts which was my best trade ever on Euro! :)

I will be off next few days since I deserve a break.

May 18, 2006: Chop & Drop

The market chopped around most of the day and broke down late. I sure missed the nice move down. There was only 1 evidence that I can see predicting this downward pressure which is shown on Addq - that creepy pattern that keeps going bleeding then drops like a rock (waterfall)...The Dow did chop all day in that bull zone but eventually gave up and the bulls didn't indicate any interest in defending it, sheesh!!

So what now? Everything is well below its ma so no longs. Nevertheless, I'm expecting the Dow to retest that zone from that underside so a bounce should be in the cards tomorrow. I'm taking tomorrow off and enjoying the long weekend. The hours weren't as bad this week.



I was challenged today with Gold trades. Based on yesterday's analysis I saw a bounce to the upside so the first trade was playing that descending channel anticipating a revisit to 706 or so...got chopped around pretty good although the idea & setup were correct....the 2nd trade was the H&S neckline break and that made up for it and some more.. Euro bounced to upside as I anticipated and I went long for a nice trade, nothing big but good enough. Best trade was notes where the long setup provided a nice trade. I sure missed the move on Silver.

For tomorrow I expect Gold to hold the support line as well as Silver holding above it's 50ma. The triangle on Gold is still playable as long as 676 level holds.



The H&S provided a long setup that I've been watching as it developed over last couple of days...yeehaawww :) (So that makes me a cowgirl???)













The Euro hit the underside of its major breakdown TL as I expected. Today's low was right on the neckline & today's up move was the formation of the RS on a larger H&S as indicated on 120min. Any break of today's TL signals the completion of H&S pattern and possible further breakdown if neckline is breached... something to watch for tomorrow.



I also see a consolidation and a bear flag on the Yen (10 & 120min). The patterns on currencies indicate downward movement.

May 17, 2006: Continuation

As mentioned yesterday continuation patterns were aplenty and suggested more downside & that's exactly what happened. Vold was huge and I've don't recall seeing it as these levels. The nice thing about breadth when it it's behaving that way is that one can be very confident about entries cuz they're all in 1 direction. There's no temptation to countertrend.... BKX, Semis and ER acted as I expected them to.

There was one nice short entry on tri-break in the morning and that was really it.

For tomorrow I'm watching the Dow since it reached what I think is the bull final stand. This is the area highlighted between yellow lines and has given grief to bulls & bears few months ago. The 2 scenarios are highlighted in red and that will be what I'll be monitoring in addition to the cnsld pattern on NQ.



I can just write volumes about today when it comes to trading Gold...Ok, so there're certain things that seem to be working on metals as well and one of them is the previous b/o points so that's good :) Look at where Gold topped for the day and a prior b/o also.

This is where I took my trades in addition to the tri topping pattern. This is as clean as it gets in terms or price action. Also had nice trade on Euro on the long side but didn't participate on the short side, why??




Ok so for tomorrow it gets pretty interesting. Looking at the 120 I see a major triangle forming so that indicates a possible upside for tomorrow till it hits the TL. It it doesn't by breaking the lower TL then an ABC will form with a measured move.





For Euro I also see an H&S forming which is a topping pattern. Right now it's the RS that's forming above the neckline so that might suggest more upside tomorrow.

May 16, 2006: Cnsld

The market continued to consolidate today and it formed clear continuation patterns that shouldn't be taken lightly (as marked in red).

There was only 1 trade today on ER taking the break of the 3 humps pattern. Still a reliable pattern (thanks LBR :)).

For tomorrow I see some downward price movement based on the patterns highlighted especially BKX, semis & Dow.




Gold had some nice movement and b/o-ed from a slanted H&S and that was the trade of the day for me. It's creeping up and I wouldn't be surprised if it visited the previous b/o levels from H&S break at 705-7 area or so which also coincides with the 9sma and volatility stop which I looooove :)

Euro is still struggling with that 1.30 level. Notes is setting up a long on the 240min and I'll be there to catch it :)

Ok I'll need to get going on NKD. It's too much fun to ignore. 

May 15, 2006: More down

Sheesh, talk about missing the mark on market analysis! I was expecting a bounce on Friday - yea right we got that :P Ok, so we got a mini-bounce today hehe (ok ok enough lemme focus now). The market sure got it's butt kicked on the short side last few days. That confirms that NQ/Naz is still king. The market will eventually follow them and it's only a matter of time. I didn't trade the indices today since I left early after trading Gold but the charts do tell me that we're not done yet on the short side.
So what is it that I see? Well, it's the Dow again! There's a huge line of defense just below today's lows that dates back to the dual topping/bottoming patterns around the 11230-60 area. This is the last line of defense for the bulls as far as I'm concerned.


In my last blog entry last Thurs. I mentioned the possibility of having a considerable pullback on Gold and I also highlighted that tops are confirmed by topping patterns especially on Gold. Well, guess what happened? Exactly :) The short entry is marked on this chart and the one below to show what I was anticipating and seeing. The fact that Euronator didn't take out 1.30 proves that it'll be a major resistance level and I don't think Gold will advance that much unless that's taken out.

I've been noticing that currencies correlate very well w/metals during early hours and definitely made me comfortable shorting Gold. Silver had a classic fake b/o on daily and many got trapped big time. That surely added fuel to the fire. Look at the triple bottom on Gold being taken out? You think that it'll be taken out to the upside? That would take major buying and it'll prove to be a strong resistance on Gold at least for next few days.




This was as perfect setup/trade as it gets - one of my best for sure. Wish all of them were like that :)


Note: I've added volatility stop to currencies & metals to trail. Seems to be working very well. Settings: 4 bars 1 multiplier.
 

May 11, 2006: TD

Boy, did I miss out on a great day to trade indices? TDs are my bread and butter cuz there's only 1 direction to trade the market and look at the range WOW! With how I've been going this week I better get some rest otherwise.......

As mentioned in yesterday's entry I expected a TD within 1-2 days post FOMC and that's exactly what happened. Also from previous analysis having NQ & Semis lagging the market badly for the last few weeks didn't bode well for the market and that action was bound to take place.

Moving forward the indices should have a technical bounce on Friday and I'm taking off for few days.


Gold gold gold..silver silver silver..my my oh my, what can I say? The 1 setup speaks for itself as marked on the charts... H&S pattern confirming daily b/o on silver... same pattern for gold with continuation on daily... The currencies supported that b/o and only thing I wasn't happy with is my early exit...was it really early?hmm.

The red arrow on gold marks an entry I like to take when it presents itself which is shorting V. It could've worked today and positioned one to play this for few days as it's close to a top.

Looking at the Gold intraday b/o it is akin to the one on NQ daily that happened few weeks back. These are usually blowoff moves that preceed prolonged cnsld periods. So I'm looking at today as a key day on Gold that might signal a pullback. In case today's high is taken out then the target I got is 740 area which isn't too far from here then the market should stall and reverse. Should note there's a pullback on Gold worth at least $2k per contract. The rules are simple: No tops picking! The tops reveal themselves within larger patterns. E.g. if the top is a H (head) then the RH(right shoulder) is the entry...as simple as that.



I see the NKD and the patterns look clean so might take a closer look at it.

May 10, 2006: FOMC

Today was day 4 of cnsld pattern a resolution to the upside or downside was supposed to ensue. It was also FOMC so there the picture was mixed. Dow and ES continue to lead market while NQ & Semis continue to warn that this rally isn't supported. One of the positives I see is BKX breaking out to new highs and holding. As far as setups I didn't see anything enticing other than dbl. humper on NQ but that was about it.

TDs are not unusual after FOMC and they usually take place 1-2 after announcement. So I'm expecting some fireworks especially on ER that keeps holding at the highs. My hunch tells me that the picture might stay mixed till Dow fulfills its promise by hitting all-time new high.


Gold is on steroids and I'm going along for the ride. Silver gave a nice short setup. These two are more suitable for me in terms of trading hours and setups. I had my best trade on notes today after bumping up the tf to 4h. Let's see how that goes but that might be the way to put less focus on notes and more on those big movers such as metals. Currencies remain a mystery although I had nice trades on Swiss Franc & Yen and that was after the FOMC. Something must be moving these things from a technical perspective and my mission is to find out :P

May 9, 2006: Cnsld

In yesterday's entry I mentioned the cnsld of the market for the 3rd day and that's what happened with the exception of the Dow which seems to be suffering from "mad Dow disease" lollllll... Today is day 4 and there should be some resolution to that cnsld.... looking at today's market internals they sure pointed at some crappy action as all 3 were contained within their respective zones so that means no trading!...as simple as that...


Gold continues to surprise and I was able to get in a very nice loooooong trade early on on the H&S pattern break.. I put up a daily chart with a 9sma and it sure shows that volatility picked up since it crossed the $600 level... tells me there's plenty of speculation at this point but who cares as long as volatility has picked up :)...geez, on some days the range is $2400!!! Am I complaining? Noooo waaaay.... Is there more upside to Gold? There might be but I'm not swing trading it so all that matters is intra-day at this point...Nevertheless, we're very close to an intermediate top based on the weekly/monthly charts (as posted over weekend).

Observation: The metals and currencies correlate very well starting 8am (EST)... I might try to enter currency trades based on that.