We are in a trade from 29.47 in QLD. SO far we are in a good 40 tick move. Some is off and the rest we are going to try to hold to the top of our value area. We waited a long time today for this position. Once again Patience proves to be a huge part of successful trading. By the way , this position was triggered off watching the ym futures chart below.

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Yesterdays I was looking over some notes I made of things I had to work on. Everyday when I finish trading I make a log sheet of what the day brought. I make note of my good decisions as well as my poor ones. One things I noticed I have been doing is that I am moving my stop up to BE and waiting a long time for the runner. Sometimes (like EOD yesterday) we get it ,but sometimes it just comes back and stops us out. So this morning I realized fairly quick that the market was presenting a lot of symmetrical movement. It tended to be rotating around it midpoints and never really following through. This type of price movement tells me not to stick around long in the market as it will probably come back at me. SO this morning as soon as I was green (green enough to balance the risk of coarse) I was taking full profit and getting out. this worked well. I am currently green on the day and probably going to step aside till the afternoon.

So how an you tell this is a symmetry type price action. Here is one clue i use. Notice on the charts below how the 24 hour VWAP that I have drawn on the bar chart(green line) and the developing POC on the market profile chart are very close to one another. When these to are within touching distance of one another it is usually a sign that the market is balancing and I would not expect and big moves till it breaks out of the general area. (www.tradeinwaves.com)

First let me warn everyone on the futures side that today the March contract starts rolling over to the June contract. Keep an eye on the volume to see which contract is most active. More on how to handle that later.
I want to talk now about what the market profile world seems to have dubbed the 80% rule. This is essentially a value area technique. So what it means is that if price was outside of a value area and it gets back inside to find interest (and thats the key element) it has a 80% chance of making it’s way across the entire value area. Does this really happen you ask? Short answer, yeah it does. 80% ahh but yes this idea does hold water. I bring it up now because this morning trading in the dow mini futures shows a perfect example of this type of price action.
Look at the chart below. You see a open inside value area. Ok that means we should go and test one of the extremes. In this case it goes to the low value area. Then it get outside the value area early in trading. Notice now that within the first hour of trading it gets back inside of the value area(make sure your looking at yesterdays value points). At this point we would be looking for a long entry which we did get around 9:56. then we took some off at the midpoint and let the rest go to see if we could cross the value area entirely. In fact we did. I took the position off but as you can see if you held some of the position the market continues to climb. I m not a buyer here . If the market is going to be a strong trend day to the upside I am still awaiting the pullback to take part.

Here is a sample of the real time trade log available to members at www.tradeinwaves.com

The market is currently back at it’s balance point with a slight skew to the upside. However we must be careful. Lot’s of symmetry here with old waves coming together. If you going to take long use tight tight stops. Keep the risk /reward high in your favor. It’s not safe to gamble in this area.

We just had a volume POC flip around and get on top pf price. This should try to flatten it out and we would be looking for a test back to the mean of the last swing move around 6599. Let’s see how that area holds.

The market continues to play it’s game. If you are following you know we have been waiting for a break of Monday’s high to think about a swing position in the qqqq up to about the 731 area of the S&P. Well yesterday we did get the break above however the pullback late in the day and overnight is just slightly pulled back to far. It almost pulled back to the exact level I was watching but it a bit stretched thin here. So the plan is to wait a little longer . Let’s make sure this market does not get below the purple line I marked on the chart below. The level is about 6702 in the DOW futures. An area to start getting in position would be with decent momentum above the top purple line at around 6815. Other then this we are going to take some smaller scalps day trading this thing. Hope all is well.

YM Futures Numbers

Globex High 7816

Globex Low 6702

VAH 6908

VAL 6802

POC 6858

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We we clearly did not get above our line in the sand on the daily DOW chart. Like i mentioned if we do not get a grip above it it is high probability that we are heading to test those lows from late last year. Take a look at the daily chart below. You can see we are just about ready to test them. So let’s just say that if you in longer term long positions uh well I am sorry about that. Yesterdays post had a very paramount tone to it which was that this market is still showing so many signs of weakness that unless you are going for short scalps on retracements I don’t know why you would be in longer term position long.

So as of now the market is pulling back some. Take a look at the second chart. Note the green line I have around 7604 in the mini Dow(YM contract). THat is our balance  area for todays range so far. As long as price stays below this area we are skewed to the short side intraday. If we get up to that point and balance at it or even break above it , then a possible small position in say the qqqq’s may be a nice way to play a small bullish rally(this would be a reversion to the mean trick which I will talk about in a seminar soon). Remember, Only is we see higher high and higher lows above that balance area. Otherwise we still look for weakness at least up to about lunchtime.

Well for those trading with us you know it’s not use being lazy but the market itself that has recently gone into some tight range days. This is always a fun time for the fundamentalist because now is the perfect time for all the talking heads to come on and start talking all the nonsense. Until something in the market really happens they have to basically take every little move and give it rhyme or reason. the fact tho is that not much has been going on in the market. Whatever the reason for all the consolidating, as traders we take it as it comes. In fact they say the market spends about 70% of it’s time range bound and my research tells me that that number is fairly accurate.

Let’s not let the current congested market conditions fool us tho. The skew is still very much to the downside. In fact if you take a look at the daily chart of the mini DOW futures you see that i have a level drawn at 7866. This is an important line in the sand that was created from a few weeks back when the smaller timeframe bulls tried to dig this thing out of the mud and failed on 1.14 to push on the lows again.  What we want to look for is how the market respects this line. If it get above it and makes hh’s and hl’s then we will have an attempt at some upside. If the market can not get a grip above that level the I would be ready for a decent push down again to test the lows of last year. Also I posted a 45 minute chart that shows a swing timeframe and how it’s current swing is down. The red line drawn up above is this swings vwap so if the market did begin a bull rally I would not mind seeing a test up that way around 7914.

My point with showing these charts to to show that we really are still in a very negative market and any thinking otherwise would be very optimistic thinking. Unfortunately the daily market profiles have been showing very small value areas and so rather then show them here in this post I decided to show you a 15 day composite profile. From this we can see the market did have a run up  in the last few weeks. It could not find an interest up at those levels and came down fairly hard. Fridays close was near the bottom of our profile. This profile  shows that the market may want to spend some time filling in some of the low volume and TPO points above. Note the orange lines I have placed in regards to levels to target on a intraday basis if the market does in fact make and attempt higher. Of coarse I would not even consider this upside momentum to kick in really until we have broken above and hold 7772 area in the mini DOW and I still expect nothing more then a test of the vwap above. Thats about all I can say for tonight. Sorry I don’t have more straight ahead trade ideas but that’s how it goes sometimes. Let’s wait for the open tomorrow to see how folks are responding after the three day weekend. I will try to post something early part of the day in regards to some trade ideas we can take during the day. Hope everyone had a nice weekend.

If you got in at the POC like we had planned your taking some heat right now. If it’s to much ,take the loss and I will call another point to get in. If your still in I would stand by the position. The fact that we rallied like this is even more reason to hold the short position. More on this later. Currently flat on intraday positions. Looking for a signal to get short but would rather wait till a trend starts on a smaller timeframe rather then call this a top.

The market did pull back yesterday at the end of day giving us a decent signal to get short. However I was away from my desk at the time. So rather then throw my hands up and complain about it , let’s just stick to our plan of getting short but let’s find a good pullback target to do it. Unless otherwise updated I am waiting on yesterdays point of control on the Dow market profile structure as a place to enter short a longer term ETF position in the market.

The number we are looking for on the ym chart below is 8354. If we get it today great. If not I will still wait for  it.

OK well it may not be that bloody. However we are getting the sell pressure that I spoke about looking for in the last post. Patience is the key here. Let’s wait for this to pullback and give us a little more information before we fire up our short positions into the week.

Morning News:

GE down 3%

Oil is taking a hit lower

Lockheed down in Germany trading.

All this will make for a weaker open but like I said let’s show some restraint and wait for the right time to enter. I will update when we get closer to the right time.

Sorry to not have been around for a few months. I have taken trading to the next level and have been busy working with some partners on automated  trading. In any case, I will be back more often from this point. I was just going through some charts tonight and wanted to bring this to your attention. Here we see the S&P 500 mini index chart and it’s relation to the advancing issues (plotted in green below). Notice the blue box I have around the climax’s in the issues. Note that during a downtrend ,which we have clearly been in for a few months now. When we see these extreme reading we usually get follow through to the downside shortly after. I have to say I am looking for a short position this week at least to get some of a pullback from last week’s strength. However, please note the last two climax reading on the issues have not triggered and selling. Why? Well this is due to the holiday. With the low volume trading around the thanksgiving holiday we often will not get the follow through we normally want. So a lot of the time around holidays the markets will drift upwards simply because sellers are not around. So I am not going to short right out of the gate Monday but rather wait into the day and see how the adv issues are holding in relation to price. If they start to break down I will start looking for a short position. I would consider call options on a leveraged ETF such as QID. Once we get a profit we must take some off as things down here can just rotate for awhile and we don’t want to get shopped around.  See you in the morning for a fresh day of trading.

Good morning folks. So far this morning has been a little bit of both sides. Internals are on the weaker side and so far PA is to the downside. It seems a little choppy tho. Not as much follow through as I would like to see so I am still flat on the day. It’s also Monday so I like to give the market and hour to adjust from the weekend.

I still see lower in this market. I think today we could get a small consolidation type pullback but look at the charts below and it looks lower for the week. These two charts are the DOW and  SPY. You can see the DOW has went back through it’s 61.8 retracements and heaeded lower and the SPY just cracked its 61.8 to the downside recently. I would expect SPY to continue lower at least as far as the DOW went. So overall looking for market weakness. For day trading today I will look for small drops to scalp but I know some paper will try to protect it down here so don’t hold to long. and expect a little tug of war at the bottoms.

Well we can see the market did take another drive down even lower. It’s ok tho that we took profit this morning at the time we did. As I mentioned I did not want to take the heat on the pullback so it’s all good for me As I mentioned earlier, this is the selling I was looking for this week. From this point I have to say we are in new territory. I think we will see a lot of news and panic and of coarse excuses this weekend as to what is really going on with the economy. For me it’s time to step away this weekend and start a new game plan here. I will be going through each sector index and looking for relative weakness/strength, and then next week I may start looking for about three stocks to pick for swing positions. I will be back at end of day with some new info. Careful here those of you who are day trading. The end of day today will be a bit choppy.

Today was the big down move we had been waiting for. If you had been folowing we would have been short from wednesday. Well now it’s time to take some profit, move that stop up and let’s see how she goes. At this point you should be in a free trade and have some profits. If you only traded one contract. Take profits now unless your ok with taking a little heat on the pullback. I personally would just take profit since my stops are tight.

Let me share with you this chart below which demonstrates and opeing range breakout play. This is just a small tieframe tick chart. ! minute after the cash open bell we box the range a seen by the blue box. When we broke down out of the box with conviction it was a short. If you took the trade you would have not had to deal with much heat at all and you would be green on the day. Again, If you got a good move out of this morning trade. Take profits. I’m just about to call it a day. I may check back kin the afteroon and see how things are shaping up.

Options expiration is this week and so I wanted to touch on a very important point which is  “you don’t need to be trading all the time” Yup, it’s true. Even the best traders get up from the desk and take a break. I bring this up today since a lot of my trader pals take the Thursday and Friday of OEX off. If you have been trading awhile you probably have noticed how these two days can become very slow and choppy. Today had it’s slow moments but it was also swinging back and forth. If you had been trading today you would be range trading, but that topic for another post.

I guess the point I want to make especially for new traders, is that you don’t have to trade every hour, every second, even everyday. In fact sometimes it’s good to take breaks. I find for myself if I don’t take breaks I begin to fidget and make poor decisions. I also have times of the day that I always break. Like between 2:30 and 3:00 I always get up and go for a walk or get a soft pretzel(yummy). I also avoid much trading during the lunchtime doldrums, which does not really have a set time but you have to follow volume to tell when it’s kicking in. Usually it will last about 2.5 hours before volume starts coming back. I even at one point used to drop and do 50 push ups after each trade, profitable or not, just to blow off the energy.

So options expiration, what do you do? For me it’s pay less attention to internals as they will get all whacky. The high probability trades are not as high probability today so be aware of that. I look at mainly price action alone and just don’t trade much. OEX does sometimes set up nice runners so I like to stick around but I probably scalp half of what I would a normal day. Take a look at the 5 minute YM chart below. Notice how we had no real direction just swings up and down. And look at those candle wicks. Those should throw up a red flag alarming you to the chop. Not that chop is bad, it’s just you have to be aware and trade according.

Tomorrow trade plan is to try to pay close attention to pit audio in the morning, and get on the first decent move, then call it a day. See you then.

If you are reading everyday, you know we put our short sentiment on hold Monday and waited to see if we got some selling pressure on Tuesday. Well we id. So our short would have taken place today right under Tueday’s close. If you took it you are already in a good position. Things are a bit back and forth late so I am not about to give back anything. So I would move your stop up to right B/E and see if we can get a runner out of this. The chart looks bad, and the pattern looks like it wants to go much lower. We are at some Key levels so it could get slapped back up but thats ok, We are in a position, we have no risk now, Let’s just see if we han hold on and get this thing to drop off.Back in the am.

Back from lunch. WE are still getting some lower lunchtime volume. I am also listening to pit audio and things still see quiet. Let’s give this thing another 30 minutes and revisit it then. I expected the next 30 minutes to get choppy then volume should come back and we can start looking to make some cash.

ok, we cracked below the LVA and headed lower. This is haeading towards the type of selling I was looking for the last two days. I would need to see another push down at least to test the 12167 area before starting to reformulate my swing trade ideas. Meanwhile,we are green so far intraday trading and as you see in this chart we are resting at S1. I think this area will hold for a little while ,(although I’m expecting more weakness sometime today)so I am going to sneak off and get sme grub. See you in the afternoon.

We got the break under yesterdays point of control and our target of 12241 (LVA) was taken out. I did take a scalp long at that point but now I am flat and going to wait and see if market wants to test this LVA again, or try to head back to POC. So far a good morning. This is fun stuff.

If we see price above and accepted above 12268 keep an eye out for bulls to step in and make an attempt at least back up to 12284 (today’s developing POC)

I was not fatst enough to get thhis to you in time, but let me tell you a decent trade thus far today that we can learn from. We opened above yesterdays value area. So in that situation what we wait for is a test of the UVA. We did test it and failed. As we entered into yesterdays value we see if we have interest. Now please understand this happens in a matter of minutes, sometimes second. and only practrice can help you to be able to determine what is and what is not interest. Anyway, as I noticed sellers under the upper value area I target yesterday’s point of control at 12269 and take a short. The trade was good and as you can see from the chart below, we went down to the POC to the tick. now we wait for a retrace and see if we can find another short IF we get under the POC and target the lower value area at 12241. Since we had a relative small value area yesterday, I see no reason this should not take place.

So one decent trade thus far, and we are waiting to see if we get the crack at the POC. If not we will start thinking long side, depending on the rotation factor on a market profile chart.

Today was a little choppy ,but if you noted it was a range type of day early enough, you should have been able to catch a few decent fades. I myself took a very small amount of trades today. If you read yesterday’s post you would see that today is exactly what we did not want to see. I really wanted to see a bit of failure(selling) on this qqqq’s chart . Had we got a red candle hanging off that 8 period moving average, I would have been looking to get short on Tuesday. However we did not get this. We actually opened in value area today and tried to find trade in both directions, only to close a little up on the day. In my opinion not much conviction of any sort. The lack of extreme selling has delayed my plan to short tomorrow. Let’s give it one more day to see if we get the selling I am awaiting. We will see what happens and formulate a new plan of attack at the close Tuesday.

In the meantime let’s stay intraday trading. I will be currently looking to make some daily income from scalping the YM Sept contract. I will post some of my intraday idea after the open in the morning.

Let me also point out that since the financial sector has been so paramount these day’s, I will be keeping an eye on Goldman Sachs earnings report tomorrow before the opening bell. I really don’t care if they beat the street or not, but I think it’s worth keeping an eye on for any surprises as they are the big boy’s of that sector.

QQQQ’s closed up , negating our plan to swing a position short on Tuesday. Also notice we are above our 48.35 line in the sand. This is not a good sign for the bears. Let’s see if the bull’s can hold it above the line or if they step off the gas and let it get slammed.