$ES_F weekly notes and long term outlook April 12 – 2014

[Updated 21/May – just look at the charts and the 2 tweets in the comments after. ]

This is what I saw Wed-Fri:

es_test

I find trading from the short side is rewarding and can be quicker but more stressful than from the long side. The setups are different and the mood is panicky. Buying and going with the market feels more natural, unless the valuation is absurd and people know it.

I read that fear is a stronger emotion than greed. That may explain why down moves go faster than up moves. They are the expected outcome of traders betting with the market. It is normal to be “pyramiding” or aggressively adding to long positions on the way up. This gives better rewards but adding at the wrong time can jeopardize the entire position Of course the opposite is true of selling short but it depends on what phase of the market we are in. The way the mood changed due to Ukraine/China was important to detect and not ignore. Some were saying that FOMC was the bull trap when in fact the NFP and what is now 80 points away is for now the All time High.

I wrote 1828 was key:

https://twitter.com/atoast2trading/status/454559144448512000

I marked that area of negative development – I knew it would be interesting when it eventually came back down. It is without much structure where price is free to move down quickly (and back up again it should be noted).

es_composite_long_term_plain

NOTES:

  • Fridays volume was higher than Thursday but range was lower. EoD delta bar a lot smaller.
  • This 85 handle pullback is short term oversold.
  • It is at the 50 back of the Feb-April swing (dashed white line).
  • The momentum has shifted the the short side.
  • Negative 135,000 EoD delta is pretty big. It is part of the process of creating selling exhaustion. If this phase is similar to Febrary then some consolidation and then a drop lower may be on the cards before accumulation begins again and any attempt at a climb. This shows February and is why I have -135000 marked on my Delta bars.
    • feb_sell_climax

      Watching for additional markdown:

      primary_market_phases


      Weekly chart:

      • Monthly range vs prior 3 and 6 month avg of 90 has been reached. If fear persists then we could see >= 140 pt range in April (this was the largest range of 2013 and something we also got in Feb 2014. This would bring us to the hvn area 1780’s

      es_weekly_range_plain


      Momentum trading:

      On a different note. I was looking for the definition of RSI and I came across some different definitions on different sites. It brought me to Investopedia. (I don’t trade individual stocks and am not really sure the indicators mentioned here are useful or if this is even true however I found this interesting).

      To engage in momentum trading, you must have the mental focus to remain steadfast when things are going your way and to wait when targets are yet to be reached. Momentum trading requires a massive display of discipline, a rare personality attribute that makes short-term momentum trading one of the more difficult means of making a profit.

      You must remember to step off the momentum train before it reaches the station.

      The style of trading that I have learned and prefer are short term trades where you are looking for the zig or zag of intraday moves when the market is at its most active. This involves trying to time to turning point in the futures market, taking as little drawdown as you can, taking small losses and taking profits at your objectives or key points.

      Beginning traders should read http://www.mtrader.com/classroomsystem/letterofdiscouragement.htm

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2 thoughts on “$ES_F weekly notes and long term outlook April 12 – 2014

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