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ES and the Great POMO Rally


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ES and the Great POMO Rally

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  #401 (permalink)
 whatnext 
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Beggars can't be choosers. I was just trying to prepare for a world where you can't trade silver as it goes way up and way down.

Though they sounded like good ideas - easier isn't always better - but sorry to futures.io (formerly BMT) if wrong.

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 whatnext 
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Ignore what I said about giving away your edge.

I'm using futures.io (formerly BMT) to compensate for the lack of social life that comes with this type of trading and need to find a better balance away from "hero worship" and laying out upcoming trades.

If I ever get the advice of a self described Master it will be a lucky day. Crushed silver last night in the latter of two ways described - can't even imagine what they do.

Edited to add:

Michael - you got the brunt of a foul mood - I'm talking a break on here.

But not even clarifying your statement was annoying.

Glad people who trade ES stepped in to say don't short - shorting at 133 would have been the worst possible trade in days.

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 Private Banker 
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I just wanted to provide an update of what I'm seeing on the ES from a big picture perspective. I have price breaking below it's bullish trend line back on May 16th where it then found support down at the 50 DMA and retraced back up where it found resistance at the noticeable bearish trend line and the bottom of the previous support TL. Additionally, I have a wedge break to the downside on the MACD where the average is approaching the zero line. Also, all the moving averages are beginning to compress signaling a potential change in trend.

My thoughts here. In a normal market environment, I would be building a short position on a break below the 50 DMA with the anticipation of a break down while cycling in profits at key fib levels. But because the trend has been so bullish, there could also simply be another bullish wedge break out forming and a break above the bearish trend line which would be a good potential entry area. This would also keep price above the 50 DMA obviously and no short signal would be generated.

In any event, we have about a month left of the infamous POMO liquidity pump. I wouldn't be surprised to see many traders becoming more neutral until either a definitive signal occurs or confirmation from the Fed on what their plans are next in the rigging/wealth effect of the markets. As I've said before, if the liquidity pump ends, it's game over...

Cheers,
PB

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 whatnext 
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If the S&P goes up to about 1400 - it could then correct to at least 1250 - if this year is an EWT diagonal triangle pattern.

99% chance of other's charts being better - I'm just throwing it out there .

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 Private Banker 
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Update: Nothing really new to report on the ES from a big picture perspective other than price has thus far respected it's bearish trendline but has also found support on the 100 DMA. It seems that this market is getting ready to make a big move. A break in either support or resistance will be the obvious signal but I would recommend being careful as the Fed has not made a formal announcement of their intentions of extending and pretending or simply falling on their sword. I would think we may have something happen this week which will be an attempt to front run the Fed.

Cheers,
PB

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 Private Banker 
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As anticipated of a big move, it conveniently came overnight on bailout rumors from Europe. Price broke out above it's bearish trend line (what a surprise) and got up to 1344 before retracing back down to last week Thursday's high where it found support. There also appeared to be an extension long coinciding with that same area that got buying interest and ripped higher. This morning's pull back also nearly filled the entire overnight gap which was nice and was probably influenced by the bad economic reports that came out.

Going forward, it appears that the bulls (primary dealer banks) are still in control of this market with their endless bid gifted by the Fed. We are now in the month of June which is when QE2 will end. There are a lot of opposing opinions on whether the Fed will continue with QE3 or some variation. I feel the Fed will have to continue with it's liquidity injections because without it, the market would have a quick and severe correction. But regardless of what their next idea is, it won't work. The economic data we've been receiving is confirmation that Bernanke's 100% sure it will work is nothing new but expected from him given his hideous track record. But if we continue as we have, the ES should continue to move higher. I'm still not looking to build up a long position however, until we have a more definitive idea on what's to come.

Cheers,
PB

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 Private Banker 
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Wow..... Didn't see that one coming! I assumed it was business as usual with the daily liquidity pumping. It now appears we had a failed break out. Price retraced up to roughly the 61.8% level from the high's of 1373.50 and got denied sending price all the way back down to it's 100 day moving average.

Today was full of amazing short opportunities of selling into any retracements that occurred. The market opened up gap down and could not fill it's overnight gap which is where I started selling and was able continue selling into retracements several times today. At around 11:30 EST, price attempted to re-enter into the intial balance area and ended up getting denied. An amazingly bearish day with the NYSE TICK's barely being able to print above +600 all day with a low tick of -1,385.

Now, I would normally just build up a nice short position at this point but I'm still uncertain of what's to come next from the Fed so, I was just taking profits on these trades as they went along. Should this be it, there will definitely be plenty of opportunities to build a short position.

In any event, a very exciting day. So much for the CME lowering the margin requirement on the Equity Indexes, lol!

Cheers,
PB

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 Private Banker 
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The market opened up today relatively flat from yesterday's close. This could have been because of the Holiday in Europe but who knows for sure. Market bounced around a bit at the open, caught a nice little short right away and watched price bounce right back up. Watched price chop around, get denied at the initial balance high and drop below it's supporting trend line where I caught another nice short. This one was a run away with little to no retracement. Just gone. NYSE Ticks were pinned to the ground. Price came all the way down to the recent low of 5/25 where some buying came in at around 1304 that day. From that point, price found support and bounced back up into the day's initial range where I took a few more longs on the way up before wrapping the day up a bit early and was off to the Beach.

I think if we take out this level, we can be on our way down to test the next swing low of 1290.25 and the previous swing low before that of 1243.25 which is where the 200 day moving average is currently. But, I'm not a market forecaster. I just trade what I see and what makes sense but this is starting to make sense, lol! If we keep up with the selling, I will probably start building a short position with the potential to test the 200 day moving average. But we'll see how it goes. Tomorrow, we have Non-Farm Employment change where they're calling for 194,000. Something tells me this is going to be a big miss based on the Unemployment Claims we saw this morning where the forecast was for 416,000 and the actual was 422,000. We also will have the official (non-official) unemployment rate which is calling for 9.00%. The reality is the real unemployment rate is way, way higher and growing by the month. But rest assured, according to Bernanke, he's 100% sure that his quantitative easing will solve all of our economy's problems...

Cheers,
PB

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 Big Mike 
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Most of us have been saying we're overbought and need a sizable correction for many, many months now. But I would encourage us all to trade what we see - and that is buy the dips.

Now obviously with QE2 ending there is uncertainty, but as has been pointed out here in the thread - QE3 is all but guaranteed. At some point, buy the dips is going to fail, and we will see a huge market correction. But don't let it get in the way of trading what is in front of you, which is a bull market with endless bid.

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 Private Banker 
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Just to wanted to provide a very brief recap of the week and yesterday's price action. The start of the week being Tuesday as Monday was Memorial Day. Tuesday's open saw a nice gap up with a mixed day and the market closing at it's high's. There was speculation that this was influenced by the CME lowering the margin requirements for it's equity index contracts. This move/gap up signaled a break to the upside from it's resisting bearish trend line. I believe this move trapped many traders and appeared to be a bit of a pump and dump. As the remainder of the week was met with lots of selling and horrible economic reports. Yesterday, Friday, was another interesting day as the market opened gap down and attempted to close it's gap throughout the entire morning session which it almost did but most importantly closed at least half of it's gap which allowed the market to continue on with it's downward direction with price closing RTH right on it's lower initial balance level.

Looking at the big picture, we still have not pierced through the previous swing lows of 1290.25 and 1243.25. If you use 1243.25 as an anchor for a Fibonacci retracement to the recent high of 1367.25, 1290.25 happens to be the 61.8% level. A break in this could signal accelerated selling with an almost certain test of 1243.25 which is also where the 200 day moving average is sitting.

As I mentioned recently, there is quite a debate developing on whether the Fed will continue with it's Quantitative Easing efforts and what the next attempt will be. It's blatantly obvious now that the only thing the Fed has managed to do with their recent efforts is to inflate the stock market and provide artificially low U.S. Treasury interest rates. The side effects have been devastating with the price of commodities ripping higher and the USD getting crushed. The underlying economic problems of our country have not changed one bit with the Fed's efforts. I feel they may need to go back to the drawing board here and figure something else out. We've got a month left of the liquidity pump. Be sure to pay close attention to what's happening and what comes out of the horse's mouth in the coming weeks. When QE2 was announced, stocks ripped up full throttle, be ready for anything.

Cheers,
PB

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 jonc 
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Just to wanted to provide a very brief recap of the week and yesterday's price action. The start of the week being Tuesday as Monday was Memorial Day. Tuesday's open saw a nice gap up with a mixed day and the market closing at it's high's. There was speculation that this was influenced by the CME lowering the margin requirements for it's equity index contracts. This move/gap up signaled a break to the upside from it's resisting bearish trend line. I believe this move trapped many traders and appeared to be a bit of a pump and dump. As the remainder of the week was met with lots of selling and horrible economic reports. Yesterday, Friday, was another interesting day as the market opened gap down and attempted to close it's gap throughout the entire morning session which it almost did but most importantly closed at least half of it's gap which allowed the market to continue on with it's downward direction with price closing RTH right on it's lower initial balance level.

Looking at the big picture, we still have not pierced through the previous swing lows of 1290.25 and 1243.25. If you use 1243.25 as an anchor for a Fibonacci retracement to the recent high of 1367.25, 1290.25 happens to be the 61.8% level. A break in this could signal accelerated selling with an almost certain test of 1243.25 which is also where the 200 day moving average is sitting.

As I mentioned recently, there is quite a debate developing on whether the Fed will continue with it's Quantitative Easing efforts and what the next attempt will be. It's blatantly obvious now that the only thing the Fed has managed to do with their recent efforts is to inflate the stock market and provide artificially low U.S. Treasury interest rates. The side effects have been devastating with the price of commodities ripping higher and the USD getting crushed. The underlying economic problems of our country have not changed one bit with the Fed's efforts. I feel they may need to go back to the drawing board here and figure something else out. We've got a month left of the liquidity pump. Be sure to pay close attention to what's happening and what comes out of the horse's mouth in the coming weeks. When QE2 was announced, stocks ripped up full throttle, be ready for anything.

Cheers,
PB

PB, are you still waiting for confirmation before you will start to build a short position? I am led by last week movement to believe the market is going for a big fall this June. It would be a perfect trap for the bears if the market would instead recover from here.

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 Private Banker 
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PB, are you still waiting for confirmation before you will start to build a short position? I am led by last week movement to believe the market is going for a big fall this June. It would be a perfect trap for the bears if the market would instead recover from here.

Right now, I've just been trading the intra-day moves either long or short. My thoughts are to remain neutral until we hear from the Fed on what they're going to do next. I think everyone is predicting them to do the same as they have and that's where many can get into trouble. The Fed's economic models are derived from economic theory rather than common sense so it's difficult to say what they have planned next. But I feel the buy the dip and hold on is a crowded trade at this point which could mean we see a big move to the downside.

So going forward, I will continue to just intra-day trade the ES with an anticipation of establishing a swing position on news from the Fed. Also, in the past I've said I only swing trade ES, but I've change my mind on that lately. I feel there are only a few valid moves in ES throughout the day which doesn't get in the way of my trading of other markets. In fact, feel it compliments what I'm doing in other markets.

Cheers,
PB

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 mmaker 
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I notice on some of your charts you draw your trendlines off the body of the candle as opposed to the high/low.

Is this just personal preference?

I never know which is more "correct".

Great thread btw.

Nice to see someone tying the ES into what is happening day to day with the US economy and other events.

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 Private Banker 
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I notice on some of your charts you draw your trendlines off the body of the candle as opposed to the high/low.

Is this just personal preference?

I never know which is more "correct".

Great thread btw.

Nice to see someone tying the ES into what is happening day to day with the US economy and other events.

Thank you! Regarding the way I draw trend lines, like everything in trading, you need to utilize whatever works best for you. My view on whether to draw a trend line from the body or the wick is this, wicks are areas of rejection and the bodies are areas of acceptance. So, for big picture trend lines, I prefer to draw from the body of the candles. The wicks never stick as they say.

Cheers,
PB

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 Private Banker 
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The ES broke through the important support of 1290.25. As I mentioned before, a break in this should have the market test the next level of 1241.25. I believe I previously made a mistake on this level which was an issue with my charts but the correct level is 1241.25 which is now just below the 200 day moving average.

This morning's session was pretty slow but provided a decent short opportunity around 9:45 where price found support at the 1290.25 level and bounced briefly before rolling over again and eventually taking out 1290.25. Another day closing at the low's as well and sitting right on the -23.6% level from the recent swing high.

I would think we should see some sort of retracement next but this market just keeps falling. Look out below!

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 trendisyourfriend 
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Market Profile today:

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 Private Banker 
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What a nice sell off this afternoon to finish off a mostly lack luster, tight range day. I would assume the market didn't like what Bernanke had to say. The morning's session acted like it wanted to fill it's gap but ended up just range bound with two attempts to go higher where it was met with an extension short 50% level which was also last week's low and got sold into each time. So, thanks to the "Bernank", we got a gap fill at the end of the day and then some. I was expecting a bit more of a retracement today but price just couldn't get out of the initial balance for very long before getting sucked back in.

From reading about Bernanke's speech today, it still amazes me that anyone would take him seriously. He lives in a world of keynesian economic models while reality laughs in his face on a daily basis. Funny thing that equities sold off today while Oil ripped higher breaking out above it's bearish trend line. But hey, it's just transitory...

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Hi PB, I've been reading this thread lately with great interest because my macro economic acumen is sub par . I really lean a lot by reading and re-reading this thread. My concern is QE3...from this article from Zero Hedge is QE3 a done deal?

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 Private Banker 
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Hi PB, I've been reading this thread lately with great interest because my macro economic acumen is sub par . I really lean a lot by reading and re-reading this thread. My concern is QE3...from this article from Zero Hedge is QE3 a done deal?

Good article. By looking at the list of Primary Dealer banks, it's a no brainer who received the most funds from QE2 but I think by saying no US banks received funds from QE2 is completely naive. US banks have simply parked a majority of their funds with the Fed as well. Also, I'm wondering if Bernanke were to be impeached (wouldn't that be a riot), why is there a case for QE3? I would assume the board of Fed Governors would either reassess the direction of the Fed while determining a new President or they would carry on with their QE plans, who knows. I will say there has been a lot of commentary from the Governors stating that no further QE is needed at this time.

All in all a good article with some interesting facts but how it relates to trading the ES, I would advise this. Continue with your day to day trading following your rules, set up's, etc. When we do hear word of what the Fed will or won't do, trade the market's reaction but stay within your rules (of course). Do not establish a bias based on articles you've read and assume the market will do the same as it has in the past. If you look at the QE's affect on the market, you'll see that QE1 had a greater influence on price than QE2. Should there be a standard QE3 of the same caliber, I'd be curious to see if there was a sustainable impact at all. But like I said, trade what you see happening on your charts vs what you're reading from the media and blogs.

As of right now, the ES is fading with a hot date with the 200 day moving average any day now (it's just about there). I would expect some sort of bounce at this level whether it be just a retracement to the next measured move or whatever. We also have our next swing low at 1241.25 which could provide support. But a break beyond the 200 DMA and the the swing low, could signal a big free fall. Of course, the flip side is the Fed finds another scheme to goose the markets back up and continue to extend and pretend. But at the end of the day, it's fun to analyze and try and figure what's next but we're trading to make money which requires us to just stay within our rules and trade what we see on our screens (sorry for the repetition but I really can't stress this enough). Stay safe!

Cheers,
PB

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 Michael.H 
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Looks like we're hitting some support here, i grabbed some shares today at 1264 on the ES, im gonna keep it tight on this, but expecting some sort of bounce within the coming days. Maybe ill get a runner out of this, we'll see.

Its actually currently trading at 1262 in after hour right now... Lets see how it opens tomorrow..

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Looks like we're hitting some support here, i grabbed some shares today at 1264 on the ES, im gonna keep it tight on this, but expecting some sort of bounce within the coming days. Maybe ill get a runner out of this, we'll see.

Its actually currently trading at 1262 in after hour right now... Lets see how it opens tomorrow..

Did you hang on to your position today through the gap fill?

ES definitely found support on the 200 DMA as expected but having a hard time with the 10 DMA. I would think we would bounce from here as well for some sort of retracement. A run up to the 20 DMA would be a half way back from the June 1st selling and a run all the way back up to the 100 day MA would be a half way back from the May 2nd high. Then again, who knows what news is coming out of Europe next. It reminds me of 2008 when there were all kinds of crazy announcements coming out over the weekend. The Euro stopped dead in it's tracks today as it retraced back up to the 61.8% level from Tuesday's sell off. Could get pretty interesting.

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 Michael.H 
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Im still holding on to it. I wanted a little bit more follow through. I don't like how we ended the week. I wanted to see a bit more strength. Ill give it a few more days.. 2-3% cushion..

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 jonc 
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I had been doing some intraday trades on the DAX; mainly shorting. I was doing quite well until yesterday's mid-day rally caught me big time and it was painful to sit through it. The market retreat came at the last few hours - europe time and allow me to close my positions.

I am thinking any rebounce in the market for the next 2 weeks would be difficult to sustain so I'm looking to short the ES if it re bounce next week. You guys think its a good idea?

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I had been doing some intraday trades on the DAX; mainly shorting. I was doing quite well until yesterday's mid-day rally caught me big time and it was painful to sit through it. The market retreat came at the last few hours - europe time and allow me to close my positions.

I am thinking any rebounce in the market for the next 2 weeks would be difficult to sustain so I'm looking to short the ES if it re bounce next week. You guys think its a good idea?

It looks like price is trying to form a bottom here on the 200 day moving average so, I can definitely see a bounce from this area and a retracement to the 1290.25 - 1300.00 area. I would definitely keep these levels in mind but be sure to just follow your normal trade entry and exit criteria/risk management.

The only issue with this however is an extension short level at 1277.25 which was hit on Friday and sold off from there. If this follows through, I would expect price to get down to around the 1240.50 area next which would be a break below the 200 day moving average and a break of the next swing low of 1241.25 which could signal some major sell programs and create a big drop. Tough to say what will happen but just utilize your rules and trade what you see on the screen. Also, keep an unbiased opinion on what the market will do because who knows, maybe the market just needed a good pullback to attract more buyers and take this thing to new high's. It wouldn't be the first time that happened and we still haven't heard officially from the Fed.

Cheers,
PB

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I just wanted to add another screen shot of the ES because I think we are about to touch a very important trend line that has held the market several times. I'm also noticing a huge wedge formation on the MACD with the average bearing down on the support line. A break in this trend line could be a signal of things to come. I've observed these wedge break outs several times in the past and many have led to nice moves but of course there is no guarantee. This one just happens to be a lot bigger in scale so it will be interesting to see what happens going forward.

Cheers,
PB

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 jonc 
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PB, from a fundamental perspectives how do you see the debt crisis in Europe affecting the stock market in the near future? It seems for now that they have agreed on an interim solution for Greece but there are others who say it is going to be a repetition of Lehman brothers on a nations level - leading to a even bigger crisis.

I do in a sense relies on the "fear" factor in the market to cap rallies and I would take a short trade on moves up to key resistance levels.

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 Private Banker 
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jonc View Post
PB, from a fundamental perspectives how do you see the debt crisis in Europe affecting the stock market in the near future? It seems for now that they have agreed on an interim solution for Greece but there are others who say it is going to be a repetition of Lehman brothers on a nations level - leading to a even bigger crisis.

I do in a sense relies on the "fear" factor in the market to cap rallies and I would take a short trade on moves up to key resistance levels.

If the situation in Europe gets worse, we're going to see 2008 all over again, if not worse this time. So, I would agree with the Lehman scenario to a degree. I'm watching this situation closely because I'm very concerned of the contagion affect this will have. If one of the PIIGS go down, I would assume the others will follow. The affect on the global stock markets will be disastrous of course. The CDS market is certainly pricing in a disastrous outcome of all of this. Rtrade posted a link to an article on Zerohedge discussing what the Fed has done in QE2 which makes sense in that the Fed has filtered a majority of the liquidity to the European primary banks to add a buffer in the event of a major blow up. But like the article mentioned, this will certainly not be enough.

If you've been trading long enough, you'll know that news has a funny way of coming in right around an important support/resistance level. To take advantage of the overall situation, just continue to trade what you see on your screens, pay attention to the news and you'll do very well.

Cheers,
PB

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 rtrade 
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Hey PB, can I post some charts for some serious critiquing?

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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rtrade View Post
Hey PB, can I post some charts for some serious critiquing?

Hi Rtrade,

Sure, feel free.

Cheers,
PB

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Hi Rtrade,

Sure, feel free.

Cheers,
PB

Thanks PB…ever since I got a good handle on my day trading I moved my game up to a higher level, swing trading. It’s more challenging and more demanding to manage. I don’t trade the news during day trading with the exception of the FOMC interest rate announcements. But recently I find myself paying more attention to the news during my swing trading. I’ve included two charts, Chart A, a more optimistic view; and Chart B, a more in dept analysis of upcoming economic events. I still use my standard and typical technical analysis tools but I’m using a weekly chart to emphasis the time line more clearly, perhaps.

Chart A, The GOOD. I was listening to Bloomberg radio and several so called experts or talking heads were talking up the ES, that the ES was headed to 1500. I wondered how they came up with that magic number since they never said how or why it would get there…until I saw it. A classic AB=CD pattern. I readjusted the trend line T1 from C to D, then I readjusted the trend line again, from A to C to bottom of last candle, T2. The time frame of hitting it’s mark would be sometime after 2012. It’s quite an optimistic chart, but something tells me life just ain’t that simple. Unfortunate, I think Chart B is going to be more realistic.

Before I go on to Chart B, I do have to say I agree with you in, trade what you see, but it’s very interesting to come up with possible scenarios to guess where the market will go. So when I looked at your most recent daily chart of ES, the price action is just sitting on support, the 200….but above the price action is significant resistance coming down in the form of your faster indies. And yes, that set up has the tendency for the price action to bounce off the support and bounce off the resistance, creating a wedge formation. And only two things can result – break above or break below. Which leads to Chart B.

Chart B, The BAD. So much is going on with this chart that I will start with what struck out to me the most . 1) the Gartley pattern, it’s highlighted in the dark blue, consisting of pivot points X, A, B, C, D,…where the abcd is in it’s abcd pattern. Note that the abcd pattern differs from the abcd in Chart A. In chart a, the( ab=cd )where as in Chart B, the (ab not=cd). But in Chart B, the D is a 78.6% retracement from pivots X to A. This Gartley Pattern is a STRONG indication that a Major Short is DUE.

2) The second leg retracement of C to D. If you noticed the retracement of A to B was 38.2% and holding at a 38.2% is a strong bullish sentiment which made the C to D. But on the second leg of C to D, it already tested a 38.2% and now it’s heading back down towards it a second time…and a lot of times the second leg retraces to the 50% level. ES will hit 38.2% retracement of second leg C to D.

3) QE 1, QE 2, and possibly QE3. I’ve noted where QE1 and QE2 started and where they end. This is where my lack of financial knowledge will show, but I’ll take a stab at it. As you can see QE1 created a significant move in the markets and the moment the FED stopped QE1, the market immediately responded like a drug addict in need of a fix. But now look at QE2, the move is only about HALF of the move of QE1 and the market is NOT going to wait…it’s HINTING of Bearish sentiment Way before the Fed ends QE2. Yes, the arrow is correct…ES will be at the 50% retracement of second leg C to D by the end of QE2. And didn’t factor in the Debt ceiling…

4) Ok, this is probably where I begin to really get out of my league. So now the price action is at the 50% of the C to D, and QE2 is over. If QE1 is any indication, Bernanke will wait maybe 5 months and give it a wait and see…but ES will now be at the 38.2% of A to D pivots and it will be around December.

5) Enter Politics an Election Year. Knowing Obama and his thug style politics, people like him are mad for power. He’ll deal with Bernanke to start up QE3…boost the market, boost his ratings…buy votes. But from the results that QE2 produced, I don’t think the market will believe much in QE3 and it will not sustain an artificial market or should I say a BUBBLE…the market will TANK in 2012. Which leads to Chart C.

Chart C. The Ugly. Well, there’s no chart, just my imagination with startling facts:

World Debt – $42,024,635,246,592.00 and growing
National Debt - $14,682,655,589,406.00 and growing
House Hold Debt - $16,040,476,501,714.00 and growing
Mortgage Debt - $14,019,466,539,780.00 and growing
Consumer Debt - $2,409,201,596,879.00 and growing
Credit Card Debt - $812,764,942,901.00 and growing…let’s just make this an even TRILLION.

With so many in debt, I'm wondering who is the debtor that is collecting all this money?

I don’t know where ES will be but I fear there will be riots in the major cities to the point where Obama will declare martial law and extend his presidency…”Never waste a good crisis.”

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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 Private Banker 
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rtrade View Post
Thanks PB…ever since I got a good handle on my day trading I moved my game up to a higher level, swing trading. It’s more challenging and more demanding to manage. I don’t trade the news during day trading with the exception of the FOMC interest rate announcements. But recently I find myself paying more attention to the news during my swing trading. I’ve included two charts, Chart A, a more optimistic view; and Chart B, a more in dept analysis of upcoming economic events. I still use my standard and typical technical analysis tools but I’m using a weekly chart to emphasis the time line more clearly, perhaps.

Chart A, The GOOD. I was listening to Bloomberg radio and several so called experts or talking heads were talking up the ES, that the ES was headed to 1500. I wondered how they came up with that magic number since they never said how or why it would get there…until I saw it. A classic AB=CD pattern. I readjusted the trend line T1 from C to D, then I readjusted the trend line again, from A to C to bottom of last candle, T2. The time frame of hitting it’s mark would be sometime after 2012. It’s quite an optimistic chart, but something tells me life just ain’t that simple. Unfortunate, I think Chart B is going to be more realistic.

Before I go on to Chart B, I do have to say I agree with you in, trade what you see, but it’s very interesting to come up with possible scenarios to guess where the market will go. So when I looked at your most recent daily chart of ES, the price action is just sitting on support, the 200….but above the price action is significant resistance coming down in the form of your faster indies. And yes, that set up has the tendency for the price action to bounce off the support and bounce off the resistance, creating a wedge formation. And only two things can result – break above or break below. Which leads to Chart B.

Chart B, The BAD. So much is going on with this chart that I will start with what struck out to me the most . 1) the Gartley pattern, it’s highlighted in the dark blue, consisting of pivot points X, A, B, C, D,…where the abcd is in it’s abcd pattern. Note that the abcd pattern differs from the abcd in Chart A. In chart a, the( ab=cd )where as in Chart B, the (ab not=cd). But in Chart B, the D is a 78.6% retracement from pivots X to A. This Gartley Pattern is a STRONG indication that a Major Short is DUE.

2) The second leg retracement of C to D. If you noticed the retracement of A to B was 38.2% and holding at a 38.2% is a strong bullish sentiment which made the C to D. But on the second leg of C to D, it already tested a 38.2% and now it’s heading back down towards it a second time…and a lot of times the second leg retraces to the 50% level. ES will hit 38.2% retracement of second leg C to D.

3) QE 1, QE 2, and possibly QE3. I’ve noted where QE1 and QE2 started and where they end. This is where my lack of financial knowledge will show, but I’ll take a stab at it. As you can see QE1 created a significant move in the markets and the moment the FED stopped QE1, the market immediately responded like a drug addict in need of a fix. But now look at QE2, the move is only about HALF of the move of QE1 and the market is NOT going to wait…it’s HINTING of Bearish sentiment Way before the Fed ends QE2. Yes, the arrow is correct…ES will be at the 50% retracement of second leg C to D by the end of QE2. And didn’t factor in the Debt ceiling…

4) Ok, this is probably where I begin to really get out of my league. So now the price action is at the 50% of the C to D, and QE2 is over. If QE1 is any indication, Bernanke will wait maybe 5 months and give it a wait and see…but ES will now be at the 38.2% of A to D pivots and it will be around December.

5) Enter Politics an Election Year. Knowing Obama and his thug style politics, people like him are mad for power. He’ll deal with Bernanke to start up QE3…boost the market, boost his ratings…buy votes. But from the results that QE2 produced, I don’t think the market will believe much in QE3 and it will not sustain an artificial market or should I say a BUBBLE…the market will TANK in 2012. Which leads to Chart C.

Chart C. The Ugly. Well, there’s no chart, just my imagination with startling facts:

World Debt – $42,024,635,246,592.00 and growing
National Debt - $14,682,655,589,406.00 and growing
House Hold Debt - $16,040,476,501,714.00 and growing
Mortgage Debt - $14,019,466,539,780.00 and growing
Consumer Debt - $2,409,201,596,879.00 and growing
Credit Card Debt - $812,764,942,901.00 and growing…let’s just make this an even TRILLION.

With so many in debt, I'm wondering who is the debtor that is collecting all this money?

I don’t know where ES will be but I fear there will be riots in the major cities to the point where Obama will declare martial law and extend his presidency…”Never waste a good crisis.”

Rtrade,

Great analysis! I like that you've mapped out several potential outcomes. Chart "C" has some scary statistics. The numbers are just baffling. I guess the answer to who is collecting all this debt would be Bond Holders. This will not work out well. And the Fed knows it which is why they are doing their best to keep rates low. A blow up in Europe could trigger the domino effect.


Cheers,
PB

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 Private Banker 
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As I expected the Bernanke came out with basically nothing new at this point and all those that were hoping for a QE3 announcement today were definitely disappointed. Many are now speculating that the Fed will make some sort of an announcement in August but that remains to be seen. The Fed will still be conducting QE Lite beyond the normal POMO schedule where they will be reinvesting their income from their MBS portfolio into US Treasuries through their journeymen, the PD's.

Today's non eventful Fed announcement has disappointed the risk correlated markets negatively and we are seeing selling continuing from this afternoon and into the over night session. As I've said before, without the Fed intervening in the markets, we would see a major sell off. We recently bounced off the 200 day moving average and have run straight into the 20 day moving average where we've found some more selling coming in. I'm still watching to see if we get below the 200 DMA to start building a swing position and will continue to intra-day trade the ES in the mean time.

Tomorrow should be another interesting day with unemployment claims and new home sales. They're forecasting claims of 414,000. Who wants to bet we miss this? Lol!

Cheers,
PB

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Is it as weak as it appears to be. I can' help but wonder if today 6/23 is more of a "shakeout" type move more than anything else. Just something to consider. If the immediate lows get taken out then I would change my tune, but until that and the lows just beneath the market, I still wonder if we will see more upside.

David

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David_R View Post
Is it as weak as it appears to be. I can' help but wonder if today 6/23 is more of a "shakeout" type move more than anything else. Just something to consider. If the immediate lows get taken out then I would change my tune, but until that and the lows just beneath the market, I still wonder if we will see more upside.

David

It's certainly possible. What we're seeing is a war between which way the market will go next. I expect to see these types of attempts at these levels. A break below the 200 will be what the bears are looking for. Today's bounce was supposedly news driven on Greece meeting an austerity plan so tough to say. The market rallied straight up into the 61.8 level from yesterday's high which was also a gap fill (ironically). The markets are just extremely sensitive right now and anything can cause them to turn on a dime. The good news is, we're getting some great intra-day moves. It was a great day for intra-day trading ES and CL among many others. Let's hope this sticks around for a while.

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 Zondor 
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Great article on Zero Hedge.

A Blinking Idiot & the Banking System | zero hedge

Meanwhile my own realtime calculated dollar weakness index seems to be a helpful tradng tool, at least for now.


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 Private Banker 
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It appears that the 20 day moving average on the daily ES chart is still proving to be substantial resistance. The market wiped out the previous day's rally and we officially have a war on our hands at the 200 day moving average. The 10 and 20 DMA's are very close to crossing the 200 DMA as well. Like I said before, a break below the 200 could trigger some massive selling and with the world's economy in a very sensitive situation, this wouldn't come as a surprise.

When looking at the the S&P 500 index on a weekly chart, we're pushing down hard on it's supporting trend line and the MACD is essentially pointing straight down. This is getting very interesting.

Friday provided some amazing short trades in the morning before just chopping around at the low for the remainder of the day. I'm hopeful this volatility will stick around. We have a lot of economic reports coming out next week coupled with more Fed jawboning so, we could be in for some wild markets. Stay safe!

Cheers,
PB

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 rtrade 
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Michael.H View Post
Looks like we're hitting some support here, i grabbed some shares today at 1264 on the ES, im gonna keep it tight on this, but expecting some sort of bounce within the coming days. Maybe ill get a runner out of this, we'll see.

Its actually currently trading at 1262 in after hour right now... Lets see how it opens tomorrow..

Hi Michael, I noticed you made a good trade. I was wondering if you can share how you managed this trade?

Since you didn't have a chart of your trades, I took the liberty of using PB's chart (hope ya don't mind PB...). I wanted to know the following (note: the letter's are associated with the letters on chart):

a) Did you scale some profit for taking some initial heat...ie reward yourself for fortitude?

b) Added to your existing position?

c) Scaled or Close all positions?

d) Let your protective stops take you out?

e) Re-entered market or added more to your position?

f) Scaled out or Close all positions?

g) Added to position?

h) Scaled out or Close all positions?

i) Added to position?

j) Close out all position....FLAT?

k) Close out position....add position...?

l) Re-enter market?

The reason I'm asking is because in my intra-day trading, I'm in and out of my position...But in swing trading, I'm still trying to find my groove.

Oh, and if you don't want to share....no worries or pressure....it's cool.

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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 Private Banker 
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The last few days have been excellent from a volatility perspective. The ES battle has provided so many amazing intra-day trade opportunities, I'm smiling from ear to ear.

Well, as I expected, we would get a good bounce off of the 200 day moving. The next obvious area of resistance is the 100 day and 50 day moving average which also happens to be half way back from the high of 1373.50. I love how the market will move roughly 50 points on no significant news. Greece is a foregone conclusion, we all knew they would pass the austerity measures despite the literal chaos that is ensuing. The market is blind in the dark with one boxing glove on swinging for the fences at the others in the room at this point. There's no rhyme or reason here. But like I said, the good news is the intra-day volatility is amazing.

Tomorrow morning we have unemployment claims with a forecast of 419k. Come on... Bets anybody?

Stay safe!
PB

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 Michael.H 
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I pretty much went all in, and im still holding my position. I haven't done anything yet. When the market goes a little higher, i will scale some out. My average position was somewhere around 1263-64. Here's a screenshot.


Its not letting me upload the image.. don't know why

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 Michael.H 
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Swing trading, i usually make judgement calls by the weeks end. I do have a protective stop, and i thought we would go a little bit lower, but it pretty much double bottomed. When the Nas didn't follow suit and made higher lows with the russell, I held. All those moving averages and indicators do nothing. Only thing you watched that made this a tradable swing trade was huge spike in volume with inability to move lower. You can take everything else off( chart patterns, MACD... etc)
Hope that helps.

I no longer have the time to day trade, so all are swing trades only. BTW... Notice i got a 40+ move on what most poeple are calling a crash. Took about 10 pnts worth of heat, and i called the trade with the market was actually trading below my entry.

Trust me, all you need to watch is price and volume. Indicators and moving averages don't help, specially when it comes to intraday trading, completely useless. I keep saying it.

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 Private Banker 
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Michael.H View Post
Swing trading, i usually make judgement calls by the weeks end. I do have a protective stop, and i thought we would go a little bit lower, but it pretty much double bottomed. When the Nas didn't follow suit and made higher lows with the russell, I held. All those moving averages and indicators do nothing. Only thing you watched that made this a tradable swing trade was huge spike in volume with inability to move lower. You can take everything else off( chart patterns, MACD... etc)
Hope that helps.

I no longer have the time to day trade, so all are swing trades only. BTW... Notice i got a 40+ move on what most poeple are calling a crash. Took about 10 pnts worth of heat, and i called the trade with the market was actually trading below my entry.

Trust me, all you need to watch is price and volume. Indicators and moving averages don't help, specially when it comes to intraday trading, completely useless. I keep saying it.

Great trade. I'd have to disagree with your statement here about moving averages, etc. But that's fine, everyone is entitled to their own opinion and their unique way of trading.

Cheers,
PB

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 jonc 
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Great trade. I'd have to disagree with your statement here about moving averages, etc. But that's fine, everyone is entitled to their own opinion and their unique way of trading.

Cheers,
PB


i have to agree with PB, the way prices react to moving averages is almost spooky to me :P even for intraday


QE2 is ending today. do you guys see a down trend for Jul? The market feels so bullish now.

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 rtrade 
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Hi PB,

I was wondering if you can tell me the pros and cons of trading in a Wall Street firm as to trading on your own as Main Street?

Also, if a Hedge fund were to hire a trader, what would they want to see in that trader...in terms of track record, type of statistics, character of individual, etc...

Thanks

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 Private Banker 
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jonc View Post
i have to agree with PB, the way prices react to moving averages is almost spooky to me :P even for intraday


QE2 is ending today. do you guys see a down trend for Jul? The market feels so bullish now.

What we've been seeing since price found support on the 200 day moving average is a complete short squeeze/reversal. This has happened quite a few times in the last year or so. We have now retraced a little more than half way back from the high in May and are now hitting a bearish trend line. Which means we are on the verge of a technical break out again.

Keep in mind a lot of this move was "window dressing" being done by many funds as the end of the 3rd quarter has drawn to a close (as of today). It will be very interesting to see what happens now that the Fed will not be giving free hand outs to the PD's going forward. It almost appeared that they had a big intent to go out with a bang so to speak that last few days. I don't trust the long side at all and will continue remain neutral by just intra-day trading the ES (long or short) even if it means intra-day trading all the way up a wild bull market.

Wow, now that POMO is done, my thread here may be as well. I may have to think up a new one to create, lol! Of course I'll continue to post things as they develop.

And I would agree with your thoughts on moving averages. I feel it's important to be watching what others are watching to understand why the market is moving the way it is. I've used them my entire career and I have an extensive background in investment management where I learned to utilize these tools successfully. I think people should use what works best for them and not worry about what other people think. I think I've said this a million times, there's no holy grail in trading. If you make $1,000 trading off an indicator vs $1,000 off market profile (which is an indicator) or Fibs, what's the difference at the end of the day? Nothing, we're in this for ourselves and you have to trade with what works best for us. There's no better way to trade than another provided you are consistently profitable.



Cheers,
PB

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 Private Banker 
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rtrade View Post
Hi PB,

I was wondering if you can tell me the pros and cons of trading in a Wall Street firm as to trading on your own as Main Street?

Also, if a Hedge fund were to hire a trader, what would they want to see in that trader...in terms of track record, type of statistics, character of individual, etc...

Thanks

Sure, here are some thoughts on that.

Working for a firm on Wall Street

Pros:

- You receive a salary with some sort of bonus structure typically plus benefits
- You are constantly around other traders and the opportunity for learning and advancing your knowledge is very high
- You gain unequivocal experience in managing money that many never get to have
- You're trading OPM and the psychological factor is far different
- Your tools and access to the markets are phenomenal


Cons

- You have to answer to a boss and live within the corporate culture/politics
- Depending on your role, you may have to answer to clients and deal with their BS
- Your performance is closely watched and you have to be accountable for your mistakes
- You're a W2 wage earner
- You're income is somewhat limited over the long term unless you're a stellar CDS trader or something
- Compliance/risk management personnel
- You have to adhere to a schedule

Trading on your own

Pros:

- You're free to do what you want and trade what you want
- Your income is unlimited
- You have a significant tax advantage if structured correctly
- You make your own schedule and can trade from anywhere you have access to a work station
- You can create your own methodology for the way you trade

Cons

- You have to be profitable or you will go broke
- There is a distinct psychological difference between trading OPM vs your own
- Your tools and access to the markets are limited
- You have to pay for everything such as equipment, internet connections, commissions, fees, etc.
- You're on your own and have no one to turn to for advice typically (unless you want to pay for it)

I will say this, if you ever get the opportunity to work on Wall Street, I highly recommend it for the learning aspect of it. I was on the Street my entire career before deciding to go out on my own. The amount of knowledge you gain is worth it's weight in Gold.

As for what Hedge Funds look for I can tell you it is a case by case basis. It depends on what they're looking for specifically but generally I would say that they would be looking for someone who:

- Has a background in Finance and is an excellent financial communicator (MBA, CFA, CAIA, etc.)
- Is extremely knowledgeable with the capital markets
- Has an established track record for trading
- Can grasp a new trading concept immediately
- Can handle stressful situations while following instructions, thinking clearly and remaining composed
- Someone who is creative and extremely intelligent, who can think outside the box

The list can go on and on but those are some basics. But like I said, there are all sorts of hedge funds out there managing money in all sorts of asset classes and investment disciplines so it's pretty broad to try and nail down anything specifically. For example, let's say the fund specializes in trading an emerging market such as Brazil. I would imagine they would want someone that not only meets the criteria I've listed above but also has a working understanding of Brazil's markets specifically and can fluently speak Portuguese, etc. So, it really depends on the specific fund.

Hope that helps! Please let me know if you have any more questions.

Cheers,
PB

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 Michael.H 
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Scaling some out here at 1313.... have half a position left..... Have a happy 4th everyone. Not gonna be here tomorrow, going out for the holiday weekend.

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 kbit 
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Thought I might point this out here for your consideration...head and shoulders on weekly
<

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 Private Banker 
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kbit View Post
Thought I might point this out here for your consideration...head and shoulders on weekly
<
Attachment 42494

Wow, look at the body on that candle! That's the biggest up Weekly candle I've seen in a long time. Lol! Good observation on the H&S, we'll have to see what happens there. What a short squeeze! Five days in a row closing at the daily high's. QE2 going out with a bang. Crazy! The nice thing about this run up has been at least the big moves up have occurred during RTH allowing for some great intra-day trades as opposed to an over night ramp where we get side ways chop all day during RTH.

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 redratsal 
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kbit View Post
Thought I might point this out here for your consideration...head and shoulders on weekly
<
Attachment 42494

Assuming Kbit is right, and it makes sense, on a bigger picture we could be in a 3 hills and a mountain pattern (Suri Duddella). If the H&S will be correct its base would be below the 200 EMA and would lead ES to retrace on 61.8% Fib level from it's H at 1153 and reverse for the moutain formation with new HH.





also from the bottom March 09 the Fib extension 61.8 falls on today's levels, in the coming days it will be a bull/bear fight, in both cases volatility should increase


just my thoughts

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 Michael.H 
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Took another quarter off, for about 80 ES points... Have half position left. I like those head and shoulder patterns, since i remember statistically that they have the greatest failure rates in an up market. So hopefully everyone sees that, and when it fails, i can make more money.

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 jonc 
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Took another quarter off, for about 80 ES points... Have half position left. I like those head and shoulder patterns, since i remember statistically that they have the greatest failure rates in an up market. So hopefully everyone sees that, and when it fails, i can make more money.

Michael, I am curious how did you manage to hold on your position in the midst of the supposed Greece crisis? From the hindsight it is easy to see that is the right choice but when the outcome was still unknown how did you decide to stay in the market? From the charts alone?

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 Michael.H 
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You thought they were gonna let them fail? Charts said buy. Bad news, market failed to go lower. That was icing on the cake.

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 kbit 
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Michael.H View Post
You thought they were gonna let them fail? Charts said buy. Bad news, market failed to go lower. That was icing on the cake.

Yeah, your right. I guess that's what this thread is really about....seems no matter what happens the people behind the curtains will do whatever is necessary to prop up this market. Now that bernanke wrapped up QE2 it's even more important to BS everyone in believing that everything is fine in wonderland. Good job on seeing what the market is doing and taking advantage of it.

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You thought they were gonna let them fail? Charts said buy. Bad news, market failed to go lower. That was icing on the cake.

Would you consider buying in more next week if it dip? or you would let go of your remaining longs?

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 Private Banker 
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There's been some interesting selling coming back into the market here. The chaos in Europe is continuing and I'm certain more countries in the EU will step forward for a hand out now that they've witnessed Greece being helped. The same thing happened when the TBTF Banks started to get bailed out.

Speaking of similarities, as iTrade pointed out, the ES daily chart from the end of '07 compared to the chart of today is very interesting. I would agree with Michael H. in saying H&S don't always work out but when they do, they usually provide some big moves.

Looking at the big picture on the S&P 500, there are some interesting stats to note. One being that we've been stuck in the same price zone since the internet bubble crash with an average point swing of 801.20. From the 2009 March low to current we've run up 703.79 to the recent high. This potentially puts us in some heavy resistance area. Another interesting thing to consider is we have not tested the great bull market trend line since the 80's. If this were to happen, we would see the S&P move down into the 600's again. Any way, just some interesting things to think about. I don't want to come across as sounding bearish but just trying to make sense of the situation. Trade the charts not your bias of course.

Cheers,
PB

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 Michael.H 
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Im still holding

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 Private Banker 
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We had a nice day of volatility today. Bernanke made reference to potential further killing of the USD and the market ripped higher. We went all the way up to half way back from the recent high which stalled price and resulted in more selling into the close.

I'm still intra-day trading the ES as I'm very content with this approach given the uncertainty of what Bernanke might say next or all the other political events that are surrounding us. Who knows we could wake up to the ES down 100 points if things really get bad. I will say that the pick up in volatility has been amazing and very reminiscent of the end of 2007.

Cheers,
PB

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 jonc 
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Private Banker View Post
We had a nice day of volatility today. Bernanke made reference to potential further killing of the USD and the market ripped higher. We went all the way up to half way back from the recent high which stalled price and resulted in more selling into the close.

I'm still intra-day trading the ES as I'm very content with this approach given the uncertainty of what Bernanke might say next or all the other political events that are surrounding us. Who knows we could wake up to the ES down 100 points if things really get bad. I will say that the pick up in volatility has been amazing and very reminiscent of the end of 2007.

Cheers,
PB


PB, how do you intra-day trade ES? Take the example of last night, did you buy at the jump that happens at 10 am and short in the middle of the day when ES reaches it's peak?

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 Private Banker 
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jonc View Post
PB, how do you intra-day trade ES? Take the example of last night, did you buy at the jump that happens at 10 am and short in the middle of the day when ES reaches it's peak?

Hi Jonc,

Yes, my intra-day trades are target based and I trade with the intra-day trend. Traded to the upside in the morning and then noticed a trend change around noon and started taking short entries all the way into the close. I'm obviously using larger time frames as a reference for key levels of support and resistance while smaller time frames for my trade management.

I'm fine with doing this right now as the volatility has increased providing many nice intra-day trades while essentially remaining neutral bias.

Cheers,
PB

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 rtrade 
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Hello PB,

From my Good, Bad, Ugly post you mentioned the euro and bonds might start a domino effect into our economy. And there’s a reason why I’m not working in Wall Street because I’m somewhat clueless in understanding why or how it is possible.

Because as an intraday trader I stay away from news and just read the headlines. Also, I’ve notice when the Euro falls in price the USD rises in price and vica versa. So why would the collapse in the Euro-zone bring the US down?

In order for me to understand the complex EU’s financial crisis I had to just break it down to a simple scenario. From the news in the EU their current problems are Greece, Ireland, Portugal, Italy, and Spain. Each of these countries have large debt problems but Greece and Ireland has accepted additional BAIL-OUT CASH. And the other three are very close in following suit.

You see this is where I don’t understand and my scenario is this: If I have a first and second mortgage on a home and fall on hard times and can’t pay the notes…and then the Credit Co. ruins my credit score…and my kids (Greece workers) for some reason can’t work to assist in paying the bills, why would the same bank or any bank give me MORE money, give me a 3rd and/or a 4th additional mortgages?

IF I CAN’T PAY FOR THE ORIGINAL MORTGAGE, WHAT MAKES THE BANK THINK I CAN PAY FOR THE ADDITIONAL DEBT?

So right now, I’m thinking this is a house of cards? Can Germany and France really bail out the other three nations Italy, Portugal, and Spain?

But even if this FAILED EXPERIMENT, Euro-zone collapse, how is the US economy connected to this?

And then heard that the US BANKS are insuring the Bonds that EU has bought from these failing countries…is this true PB?

So the scenario is like the AIG scenario when they couldn’t pay the mortgage insurance? Only this isn’t just homes where talking about…we’re talking about NATIONS!

So if these Nations default on their debt, then the US Banks are left holding the bag, because the EU is going to want to collect on their insurance policies? Bank Stocks Worthless?

What happens to the dollar if this NIGHTMARE scenario plays out?

Will we be forced to use a new one world currency?

How will this affect trading?

Sorry, I’m not smart enough to figure this stuff out…and I'm sincerely concerned.

Thanks

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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 Private Banker 
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Hello PB,

From my Good, Bad, Ugly post you mentioned the euro and bonds might start a domino effect into our economy. And there’s a reason why I’m not working in Wall Street because I’m somewhat clueless in understanding why or how it is possible.

Because as an intraday trader I stay away from news and just read the headlines. Also, I’ve notice when the Euro falls in price the USD rises in price and vica versa. So why would the collapse in the Euro-zone bring the US down?

In order for me to understand the complex EU’s financial crisis I had to just break it down to a simple scenario. From the news in the EU their current problems are Greece, Ireland, Portugal, Italy, and Spain. Each of these countries have large debt problems but Greece and Ireland has accepted additional BAIL-OUT CASH. And the other three are very close in following suit.

You see this is where I don’t understand and my scenario is this: If I have a first and second mortgage on a home and fall on hard times and can’t pay the notes…and then the Credit Co. ruins my credit score…and my kids (Greece workers) for some reason can’t work to assist in paying the bills, why would the same bank or any bank give me MORE money, give me a 3rd and/or a 4th additional mortgages?

IF I CAN’T PAY FOR THE ORIGINAL MORTGAGE, WHAT MAKES THE BANK THINK I CAN PAY FOR THE ADDITIONAL DEBT?

So right now, I’m thinking this is a house of cards? Can Germany and France really bail out the other three nations Italy, Portugal, and Spain?

But even if this FAILED EXPERIMENT, Euro-zone collapse, how is the US economy connected to this?

And then heard that the US BANKS are insuring the Bonds that EU has bought from these failing countries…is this true PB?

So the scenario is like the AIG scenario when they couldn’t pay the mortgage insurance? Only this isn’t just homes where talking about…we’re talking about NATIONS!

So if these Nations default on their debt, then the US Banks are left holding the bag, because the EU is going to want to collect on their insurance policies? Bank Stocks Worthless?

What happens to the dollar if this NIGHTMARE scenario plays out?

Will we be forced to use a new one world currency?

How will this affect trading?

Sorry, I’m not smart enough to figure this stuff out…and I'm sincerely concerned.

Thanks

Wow, good post! You're correct on what you've said here. It is true that the US Banks are creditors and insurers of this debt via bond ownership and credit default swaps. The PIIGS bail out isn't a bail out of the countries themselves, it's a bail out of the creditors and insurers. Just like the credit crisis here in the US. Most of the bank stocks are already worthless. They've been manipulated by accounting tricks that are very similar to what Enron did back in the day and the SEC and the Accounting board are allowing it.

In a nightmare scenario like this, institutions/people take a fast flight to safety (cash) to the world's reserve currency which happens to be the USD. So if the sh*t hits the fan, you'll see a rush to cash. Until the US loses that reserve currency status, you'll always see the dollar move higher (more demand) when risk is off the table. If you notice the risk on appetite since QE1 & 2 have started, the USD has been getting crushed.

I can't imagine there being a one world currency. As the EU has shown, it's hard enough with neighboring countries.

How will this affect trading? It will increase volatility similar to 2008. If you're an intra-day trader, it was some of the best times ever. I've noticed volatility really starting to pick up lately which has been amazing. No more small doji days! Lol!

That's good that you're concerned but treat it like an opportunity to make some good money. That's the beauty of trading. We can hedge against catastrophic events such as these and benefit from them.

Hope I answered everything correctly.

Cheers,
PB

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 Michael.H 
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I added to the position today. i'm going to manage this one seperately from the previous trade. I bought the NQ as opposed to the ES, and its a very light position. STill holding the original from a few weeks ago with half position still open.

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 zt379 
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Hello PB,

From my Good, Bad, Ugly post you mentioned the euro and bonds might start a domino effect into our economy. And there’s a reason why I’m not working in Wall Street because I’m somewhat clueless in understanding why or how it is possible.

Because as an intraday trader I stay away from news and just read the headlines. Also, I’ve notice when the Euro falls in price the USD rises in price and vica versa. So why would the collapse in the Euro-zone bring the US down?

In order for me to understand the complex EU’s financial crisis I had to just break it down to a simple scenario. From the news in the EU their current problems are Greece, Ireland, Portugal, Italy, and Spain. Each of these countries have large debt problems but Greece and Ireland has accepted additional BAIL-OUT CASH. And the other three are very close in following suit.

You see this is where I don’t understand and my scenario is this: If I have a first and second mortgage on a home and fall on hard times and can’t pay the notes…and then the Credit Co. ruins my credit score…and my kids (Greece workers) for some reason can’t work to assist in paying the bills, why would the same bank or any bank give me MORE money, give me a 3rd and/or a 4th additional mortgages?

IF I CAN’T PAY FOR THE ORIGINAL MORTGAGE, WHAT MAKES THE BANK THINK I CAN PAY FOR THE ADDITIONAL DEBT?

So right now, I’m thinking this is a house of cards? Can Germany and France really bail out the other three nations Italy, Portugal, and Spain?

But even if this FAILED EXPERIMENT, Euro-zone collapse, how is the US economy connected to this?

And then heard that the US BANKS are insuring the Bonds that EU has bought from these failing countries…is this true PB?

So the scenario is like the AIG scenario when they couldn’t pay the mortgage insurance? Only this isn’t just homes where talking about…we’re talking about NATIONS!

So if these Nations default on their debt, then the US Banks are left holding the bag, because the EU is going to want to collect on their insurance policies? Bank Stocks Worthless?

What happens to the dollar if this NIGHTMARE scenario plays out?

Will we be forced to use a new one world currency?

How will this affect trading?

Sorry, I’m not smart enough to figure this stuff out…and I'm sincerely concerned.

Thanks

There's a phrase from a well known old UK sit-com "don't panic Mr Mannering..."

This is a free essay that's a relatively easy read on a complicated subject, giving a decent over view.
LRB · John Lanchester · Once Greece goes?

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 zt379 
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This might interest some.
It's 4 hours long, !!!
It appears to be quite profound. Being that Pension Funds make more money than almost any corporation and because of the way pension funds are funded, more by the Employer, who is the government via the tax payer, rather than the Employee, the government actually has the highest ownership share in leading corporations such as microsoft and apple etc..and leading banks.
But the tax payer is not the beneficiary of the profits the "funds" makes.!!

Hope it's of interest and not off topic for the thread.

&#x202a;THE GREAT PENSION FUND HOAX - Corporation Nation 2&#x202c;&rlm; - YouTube

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 rtrade 
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That's good that you're concerned but treat it like an opportunity to make some good money. That's the beauty of trading. We can hedge against catastrophic events such as these and benefit from them.

Hope I answered everything correctly.

Yes, of course, you did. I'm just trying to figure out how prepare in the event that the Hopeful Best doesn't happen and the Expected Worst does.

I guess as trader, if the worst does happen....US Dollar worthless, Bonds follow the dollar, Interest rates go Hyper-inflated, Commodities like the Softs, Grains, Metals, Energies go through the roof. I can always trade the Swiss Franc. Why, because the Swiss are the best money launderers in the world....so instead of having worthless green backs in my wallet, I'll carry Swiss Francs? As the Marine Corps saying goes...."Adapt and Overcome."

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 Private Banker 
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Yes, of course, you did. I'm just trying to figure out how prepare in the event that the Hopeful Best doesn't happen and the Expected Worst does.

I guess as trader, if the worst does happen....US Dollar worthless, Bonds follow the dollar, Interest rates go Hyper-inflated, Commodities like the Softs, Grains, Metals, Energies go through the roof. I can always trade the Swiss Franc. Why, because the Swiss are the best money launderers in the world....so instead of having worthless green backs in my wallet, I'll carry Swiss Francs? As the Marine Corps saying goes...."Adapt and Overcome."

Yeah, it's good to be thinking ahead. The best thing to do as a trader though is to be reactionary rather than biased. We have no idea what could transpire out of the next crisis. The best thing to do is have a plan in place for whatever event may arise. Semper Flexibilis! So, owning alternative currencies such as the Swiss Franc could be one option for sure. But like I said before, the USD is the world's reserve currency. It has more to do then just credit quality. It also has to do with stability as a country (vs. 3rd world countries) and commodities being priced in USD, etc.

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 Private Banker 
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Michael.H View Post
I added to the position today. i'm going to manage this one seperately from the previous trade. I bought the NQ as opposed to the ES, and its a very light position. STill holding the original from a few weeks ago with half position still open.

Great trade so far! I take it you are all in at entry and scale out at certain levels. It's interesting to see how others manage swing trades. This is very different than how I would go about it but it is obviously working out well for you. Please keep us posted on how it goes.

Cheers,
PB

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 rtrade 
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But like I said before, the USD is the world's reserve currency. It has more to do then just credit quality. It also has to do with stability as a country (vs. 3rd world countries) and commodities being priced in USD, etc.

Sorry PB, but I don't want seem like I'm harping on this, but what I was getting at was - What happens if the USD is no longer the world's reserve currency? What happens then? I know it will be speculation but what would be a "likely" scenario?

I mean I hear that China, Russia, and other nations are working to undermine the USD as the world reserve currency. Kbit just posted a video of Jim Rogers shorting USD and says the USD is done. (yes, it's one opinion)...but then there's other talking heads saying that Crude Oil will be the next reserve currency....how is that even possible?

That's why I'm asking...because I really don't know what to expect if the USD is no longer the reserve currency...hope you can understand.

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 Private Banker 
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rtrade View Post
Sorry PB, but I don't want seem like I'm harping on this, but what I was getting at was - What happens if the USD is no longer the world's reserve currency? What happens then? I know it will be speculation but what would be a "likely" scenario?

I mean I hear that China, Russia, and other nations are working to undermine the USD as the world reserve currency. Kbit just posted a video of Jim Rogers shorting USD and says the USD is done. (yes, it's one opinion)...but then there's other talking heads saying that Crude Oil will be the next reserve currency....how is that even possible?

That's why I'm asking...because I really don't know what to expect if the USD is no longer the reserve currency...hope you can understand.

No worries, I completely understand what you're saying here. If the USD were to lose it's reserve currency status, then obviously there would be a massive market event but I highly doubt that it would happen overnight. If we remain reactionary to the events that are unfolding and trade what we see on our screens, we will be far ahead of the average Joe's out there. I know a guy who is literally a genius and he has been predicting that China will be the new world power and their currency will potentially take out the USD as the reserve currency. I'd rather wait and see on that one though.

Jim Rogers isn't the only one who has been short the USD. By simply looking at the daily chart, it's a clear no brainer to be short the DX. I think this has a lot to do with the Fed and their obvious debasement of the USD. If you look at the chart today (daily interval), it is in a bit of a wedge pattern. I think there's a big move brewing here. Will it be risk on or risk off? It appears that the moves up are weakening with every attempt. If it were to break out below again, obviously we would be risk on and we would see equities and commodities rip higher. We'll have to see how it goes though.

Cheers,
PB

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 rcabri 
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rtrade View Post
Sorry PB, but I don't want seem like I'm harping on this, but what I was getting at was - What happens if the USD is no longer the world's reserve currency? What happens then? I know it will be speculation but what would be a "likely" scenario?

I mean I hear that China, Russia, and other nations are working to undermine the USD as the world reserve currency. Kbit just posted a video of Jim Rogers shorting USD and says the USD is done. (yes, it's one opinion)...but then there's other talking heads saying that Crude Oil will be the next reserve currency....how is that even possible?

That's why I'm asking...because I really don't know what to expect if the USD is no longer the reserve currency...hope you can understand.

Hi rtrade,
By the way Jim Rogers is long the dollar now News Headlines
Roberto

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 rtrade 
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Hi rtrade,
By the way Jim Rogers is long the dollar now News Headlines
Roberto

Thanks rcabri...now I'm feeling bad. I see you're from Switzerland. I'm sorry about using launderer and Switzerland in the same sentence in a previous post. I have to remember this is a global forum....sorry.

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 rcabri 
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Thanks rcabri...now I'm feeling bad. I see you're from Switzerland. I'm sorry about using launderer and Switzerland in the same sentence in a previous post. I have to remember this is a global forum....sorry.

No problem rtrade I do not care and by the way the Swiss are the first of the class against laundering now, the laundered everything in the 60' 80' but was another world.
Roberto

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 Michael.H 
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Great trade so far! I take it you are all in at entry and scale out at certain levels. It's interesting to see how others manage swing trades. This is very different than how I would go about it but it is obviously working out well for you. Please keep us posted on how it goes.

Cheers,
PB

Still have original ES position, and the NQ traded like i expected. Double bottom.
Still holding the NQ.... Light position. Will scale one out about 40 points above near 2380, the next one will be at previous highs. My stop is not too far below.

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 jonc 
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Michael.H View Post
Still have original ES position, and the NQ traded like i expected. Double bottom.
Still holding the NQ.... Light position. Will scale one out about 40 points above near 2380, the next one will be at previous highs. My stop is not too far below.

Seems like it is going to be a great trade from yesterday' actions. It's quite amazing how you manage to hold on to your positions.

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 Michael.H 
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Yea, i wasn't expecting such a big move so quickly to be honest. I just scaled out passed my intended target. Still have half position on the NQ now and half on ES still.

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 jonc 
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This morning rally is huge. Is it because of the Philly Fed Manufacturing Index or its a short squeeze?

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This morning rally is huge. Is it because of the Philly Fed Manufacturing Index or its a short squeeze?

I would say that this is a continuation of a measured move to the upside. ES retraced to it's 61.8 level on 7/18 and bounced higher. You can also see that there was buying interest at the 50% level so should this play out, we should be seeing new high's. That is of course if nothing bad comes out that would turn this around. At this point, the market ignores bad news and goes sky high on good news. Also, the market has blown through the 61.8 level from the recent high of 1354.50 but it appears to have hit resistance at the 78.6 level which is also last week's RTH high area. On the daily chart, there is also another wedge formation which could provide for a big move.

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PB

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Yea, i wasn't expecting such a big move so quickly to be honest. I just scaled out passed my intended target. Still have half position on the NQ now and half on ES still.

Hi, do you plan on going flat on all your positions today?

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 jonc 
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I don't quite understand Greece is set to lead the eurozone's first-ever default with banks across Europe to take as much as 17 billion euro of writedowns on their holdings of Greek sovereign debt and the market is rallying?

Why didn't they default earlier?

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 Michael.H 
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Last week, it was a classic head and shoulders pattern which i remember some poeple saying that the ES would go to 500.... Now that the market rallied, it was a fib retracement. Just shows you that these are all useless stuff people teach to newer traders to help explain moves that they don't fully understand. Please DONT take this the wrong way, but you gotta get rid of that stuff. They're all distractions. If you don't believe me, backtest it and tell me how successful it is trading fibs or head and shoulders( or any chart pattern for that matter).... ITs just price and volume.

Im not flat, but i did scale out one more on NQ, still have half position left on ES. Im waiting for the head and shoulders pattern to fail. I've already booked over 25k in 1 month(I did only 6 cars on ES and 4 cars on NQ ). Im not worried about this trade anymore. Remember, my original position was on the ES on 6/16. The NQ trade was just an added bonus. The circles where my entries, which i posted on this thread in real time. No hindsight, you can look back yourself.

Look at that chart and tell me what chart pattern or any other method traders use would give better entry's? And I went all in, meaning you could have looked at my post and gotten better entry's....

Note that chart is only of the ES... You can just look at my post to see where i entered for the NQ......

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I would say that this is a continuation of a measured move to the upside. ES retraced to it's 61.8 level on 7/18 and bounced higher. You can also see that there was buying interest at the 50% level so should this play out, we should be seeing new high's. That is of course if nothing bad comes out that would turn this around. At this point, the market ignores bad news and goes sky high on good news. Also, the market has blown through the 61.8 level from the recent high of 1354.50 but it appears to have hit resistance at the 78.6 level which is also last week's RTH high area. On the daily chart, there is also another wedge formation which could provide for a big move.

Cheers,
PB

PB, from a fundamental standpoint do you see that we could rally through the month of August, which is a generally a good month for equities?

All the problems seems to be kicked down the road.

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 Private Banker 
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jonc View Post
PB, from a fundamental standpoint do you see that we could rally through the month of August, which is a generally a good month for equities?

All the problems seems to be kicked down the road.

It's definitely possible. The only thing I would say is if any of these issues blow up in Europe or in the US, we'll see a severe reaction I would imagine. But I'm still just intra-day trading the ES given the uncertainty we're going through right now. If you recall in December of 2007, we had a very similar chart pattern occurring where many people had thought a crisis had been avoided. Also, the volatility has picked up quite a bit vs the slow moving days we had during the melt up which signals that there is a power struggle going on with which way the market will go next.

Last night we hit the top of the wedge pattern trend line and have dropped a bit. It will be interesting to see if we blast through it today or re-test the bottom TL over the next few days.

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 Private Banker 
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Michael.H View Post
Last week, it was a classic head and shoulders pattern which i remember some poeple saying that the ES would go to 500.... Now that the market rallied, it was a fib retracement. Just shows you that these are all useless stuff people teach to newer traders to help explain moves that they don't fully understand. Please DONT take this the wrong way, but you gotta get rid of that stuff. They're all distractions. If you don't believe me, backtest it and tell me how successful it is trading fibs or head and shoulders( or any chart pattern for that matter).... ITs just price and volume.

Im not flat, but i did scale out one more on NQ, still have half position left on ES. Im waiting for the head and shoulders pattern to fail. I've already booked over 25k in 1 month(I did only 6 cars on ES and 4 cars on NQ ). Im not worried about this trade anymore. Remember, my original position was on the ES on 6/16. The NQ trade was just an added bonus. The circles where my entries, which i posted on this thread in real time. No hindsight, you can look back yourself.

Look at that chart and tell me what chart pattern or any other method traders use would give better entry's? And I went all in, meaning you could have looked at my post and gotten better entry's....

Note that chart is only of the ES... You can just look at my post to see where i entered for the NQ......

Great trade so far! Thank you for sharing those details. Nice profit off such a small position, that's awesome. Please keep us informed on how it goes.

I would agree that using Fibs as a sole reason for an entry is usually not the right decision but they are good for an after the fact technical analysis tool IMO. By just using price and volume as a means for an entry is fine if it works for you. But just because it works for you doesn't mean 1. It will work for everyone and 2. Is the best methodology. There is no one single best method out there.

You can build a case for and against any method out there. Obviously the best method is what ever works best for each individual trader that allows them to achieve CP. It doesn't matter what other people think of their method as we aren't in this business to try and impress others. At the end of the day, we're doing this to simply make money and if that means someone is using a method that requires them to trade with a Bra on their head (lol!), that's fine. As long as they're making money (and hopefully no one sees them), that's all that matters.

Cheers,
PB

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Michael.H View Post
Last week, it was a classic head and shoulders pattern which i remember some poeple saying that the ES would go to 500.... Now that the market rallied, it was a fib retracement. Just shows you that these are all useless stuff people teach to newer traders to help explain moves that they don't fully understand. Please DONT take this the wrong way, but you gotta get rid of that stuff. They're all distractions. If you don't believe me, backtest it and tell me how successful it is trading fibs or head and shoulders( or any chart pattern for that matter).... ITs just price and volume.

Im not flat, but i did scale out one more on NQ, still have half position left on ES. Im waiting for the head and shoulders pattern to fail. I've already booked over 25k in 1 month(I did only 6 cars on ES and 4 cars on NQ ). Im not worried about this trade anymore. Remember, my original position was on the ES on 6/16. The NQ trade was just an added bonus. The circles where my entries, which i posted on this thread in real time. No hindsight, you can look back yourself.

Look at that chart and tell me what chart pattern or any other method traders use would give better entry's? And I went all in, meaning you could have looked at my post and gotten better entry's....

Note that chart is only of the ES... You can just look at my post to see where i entered for the NQ......

Could you give us more clues how did you pick those entries point? Is it because the volume is higher than average and the price is holding at that level?

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 Michael.H 
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Thats part of it, but it also has to do with areas of prior resistance/support. You also want to mark areas where important news came out, and market made a big move. Those areas will usually respond when the market revisits. Also, intermarket analysis( bonds is a big one, oil, gold, forex).. and market leading stocks in relation to the actual index. Market sells off on the ES, makes a lower low, while aapl and goog gap up. Greece defaults, market goes higher. Don't listen to reasons why, just look at the what.


I have alot of posts if you use the search function.

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Michael.H View Post
Last week, it was a classic head and shoulders pattern which i remember some poeple saying that the ES would go to 500.... Now that the market rallied, it was a fib retracement. Just shows you that these are all useless stuff people teach to newer traders to help explain moves that they don't fully understand. Please DONT take this the wrong way, but you gotta get rid of that stuff. They're all distractions. If you don't believe me, backtest it and tell me how successful it is trading fibs or head and shoulders( or any chart pattern for that matter).... ITs just price and volume.

Im not flat, but i did scale out one more on NQ, still have half position left on ES. Im waiting for the head and shoulders pattern to fail. I've already booked over 25k in 1 month(I did only 6 cars on ES and 4 cars on NQ ). Im not worried about this trade anymore. Remember, my original position was on the ES on 6/16. The NQ trade was just an added bonus. The circles where my entries, which i posted on this thread in real time. No hindsight, you can look back yourself.

Look at that chart and tell me what chart pattern or any other method traders use would give better entry's? And I went all in, meaning you could have looked at my post and gotten better entry's....

Note that chart is only of the ES... You can just look at my post to see where i entered for the NQ......


Hi, what is your status now? Are flat? Are you still holding? Are you going to reverse and start shorting? Thanks

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Yup, i saw we're down 1%, but thats not even near my NQ entry point.... Im gonna hold for now.. We'll see what happens tomorrow.

I really want to start scaling out on new monthly highs.... I don't want to sell down here.

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 jonc 
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It looks like the gap is being covered as I typed

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 tigertrader 
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Michael.H View Post
Thats part of it, but it also has to do with areas of prior resistance/support. You also want to mark areas where important news came out, and market made a big move. Those areas will usually respond when the market revisits. Also, intermarket analysis( bonds is a big one, oil, gold, forex).. and market leading stocks in relation to the actual index. Market sells off on the ES, makes a lower low, while aapl and goog gap up. Greece defaults, market goes higher. Don't listen to reasons why, just look at the what.


I have alot of posts if you use the search function.

I have to agree with you on this one. It is better to forget about “why” the market is moving in one direction or another, and just concentrate on the fact, that it “is”.

Traders like to think in terms of cause and effect, and in reality, it is that simple logic that determines price. More buyers than sellers, and the market goes higher- more sellers than buyers, and the market goes lower.

Prices moves as a result of traders’ changing attitudes, and shifts in perception about the market. At the most basic level people buy stocks because they think the price is going to go up, and they sell stocks because they think the price is going to go down. On a more practical level they are either following movement and momentum, or are “trapped” and are exiting their positions. This thought process is carried out at a very basic emotional level and has nothing to do with fundamentals or technicals, although a fundamental and technical rationale is often trotted out to justify why the market is going higher or lower.

Traders can visualize a double-top, a head-and-shoulders formation, and identify a Fibonacci retracement, but the market can’t. It’s the technicians that try to attach a logical meaning to these abstract patterns, and the concomitant phenomena of self-fulfilling prophecy, that makes it appear to play out.

We would like to believe there is a natural development of price unfolding over time. The eternal struggle between buyer and. seller and the inextricable laws of supply and demand that inevitably determine fair value. But there is nothing natural about the current market - it’s being controlled by an 800 lb. gorilla. As mentioned by Tyler Durden of ZeroHedge on March 4, 2011, every single asset class correlates 1:1 with the Fed's balance sheet. Take a look at how the S&P 500 correlates perfectly with the asset purchases of the Fed.

“Extend and pretend” has bought the Fed time ( 2.5 years to date), and the ECB bailouts continue to buy the EU more time, but as Charles Hugh Smith said,At some point, the announcement of a new bailout or Fed "fix" will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next "fix" will crash the credit and stock markets because participants will finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.”

But until then...

Q: Where is the market going next?

A: Where does an 800 lb. gorilla sleep?

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Tiger, it had been a long time since you posted. Do you have any strategy for the current market situation?

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 Private Banker 
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tigertrader View Post
I have to agree with you on this one. It is better to forget about “why” the market is moving in one direction or another, and just concentrate on the fact, that it “is”.

Traders like to think in terms of cause and effect, and in reality, it is that simple logic that determines price. More buyers than sellers, and the market goes higher- more sellers than buyers, and the market goes lower.

Prices moves as a result of traders’ changing attitudes, and shifts in perception about the market. At the most basic level people buy stocks because they think the price is going to go up, and they sell stocks because they think the price is going to go down. On a more practical level they are either following movement and momentum, or are “trapped” and are exiting their positions. This thought process is carried out at a very basic emotional level and has nothing to do with fundamentals or technicals, although a fundamental and technical rationale is often trotted out to justify why the market is going higher or lower.

Traders can visualize a double-top, a head-and-shoulders formation, and identify a Fibonacci retracement, but the market can’t. It’s the technicians that try to attach a logical meaning to these abstract patterns, and the concomitant phenomena of self-fulfilling prophecy, that makes it appear to play out.

We would like to believe there is a natural development of price unfolding over time. The eternal struggle between buyer and. seller and the inextricable laws of supply and demand that inevitably determine fair value. But there is nothing natural about the current market - it’s being controlled by an 800 lb. gorilla. As mentioned by Tyler Durden of ZeroHedge on March 4, 2011, every single asset class correlates 1:1 with the Fed's balance sheet. Take a look at how the S&P 500 correlates perfectly with the asset purchases of the Fed.

“Extend and pretend” has bought the Fed time ( 2.5 years to date), and the ECB bailouts continue to buy the EU more time, but as Charles Hugh Smith said,At some point, the announcement of a new bailout or Fed "fix" will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next "fix" will crash the credit and stock markets because participants will finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.”

But until then...

Q: Where is the market going next?

A: Where does an 800 lb. gorilla sleep?

Good to see you back here. Great post!

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jonc View Post
Tiger, it had been a long time since you posted. Do you have any strategy for the current market situation?

Not trying to be glib, but if we have learned anything since March 2009, it is that you can't fight the Fed and it's co-conspirators (Morgan, BofA, Goldman, Citi). They have turned the broader market into a "cartel commodity". They now have more influence over the market's pricing than OPEC has over crude oil prices, and even more influence than DeBeers has over the price of diamonds. Remember when the trading divisions of the above banks all had perfect 1st quarters in 2010, where they didn't have any losing days? What are the odds of any 4 traders on this board pulling off a similar feat? Until further notice, the market is going wherever they want it to. Along with making them hideously wealthy, it serves as the ultimate sleight-of-hand and mis-direction. It makes for an effective public realtions vehicle as it helps divert attention from the debased dollar and loss of purchasing power. Ironically, the worse the economy and employment situation is, the more incentive the Fed has to take the market higher.

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Michael.H View Post
Yup, i saw we're down 1%, but thats not even near my NQ entry point.... Im gonna hold for now.. We'll see what happens tomorrow.

I really want to start scaling out on new monthly highs.... I don't want to sell down here.


Hi, has you status changed?

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Today's price action was pretty amazing. Some great short intra-day trade opportunities were on offer. Looking at the bigger picture, we had a wedge/double top pattern where price closed down and outside of the wedge. Additionally, price closed at the low of the day with someone dumping a ton of contracts right at the close. Pretty extraordinary.

This is definitely getting interesting. The US credit default swap pricing has to be shooting sky high by now with all the nonsense going on with the debt ceiling soap opera.

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 tigertrader 
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Private Banker View Post
Additionally, price closed at the low of the day with someone dumping a ton of contracts right at the close. Pretty extraordinary.

Heading into today, the S&P 500 had declined in the last hour on each of the last five trading days.


For much of 2011, the last hour of the trading day was actually contributing to the overall market's performance. Since the middle of May, however, the last hour of the day has gone from contributing to positive performance to dragging it down. In recent days, this drag has become even more apparent. As of Tuesday's close, the S&P 500 would be more than 3.5% higher on the year if it were not for the last hour of trading.*

*Courtesy of Bespoke Investment Group

The burning question is, does this represent a fundamental shift from risk preference to risk aversion, or is it simply a function of traders not wanting to hold stocks overnight with so much uncertainty in the markets?

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tigertrader View Post
Heading into today, the S&P 500 had declined in the last hour on each of the last five trading days.


For much of 2011, the last hour of the trading day was actually contributing to the overall market's performance. Since the middle of May, however, the last hour of the day has gone from contributing to positive performance to dragging it down. In recent days, this drag has become even more apparent. As of Tuesday's close, the S&P 500 would be more than 3.5% higher on the year if it were not for the last hour of trading.*

*Courtesy of Bespoke Investment Group

The burning question is, does this represent a fundamental shift from risk preference to risk aversion, or is it simply a function of traders not wanting to hold stocks overnight with so much uncertainty in the markets?

That's an excellent point. It has become a common event for the ramp into the close until like you said, the last five days. That's a huge and notable statistic.

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Wow! The ES just dropped about 14 points within a second in after hours trading. I assume it was the result of the house calling off the vote this evening. These markets are getting very sensitive at this point. They better not to off those HFT machines because we know what happens next.

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