Rhythm

Today’s pull back had the feel of a gentle, slow motion carnival ride.

The real thing like the thunderbolt leaves me nauseous; this kind of non-action just leaves traders frustrated and off balance.

Friday’s resistance held overnight, then price tested the subsequent supports,never mustering the strength to bounce very far. The first hour breakout was a weak attempt to back test some breakdowns, but in the end, it seemed like both sides lacked the will and energy to push things.

I wondered if it wasn’t the “option killing move” which is really an oxymoron; more like price stuck in molasses in January.

Students of the Eminiwizard system will keep track of significant pivots, because they are potential points of interest to be revisited.

In all truth, we never know which side will win, but we use our intuition to observe the objective supports and resistance as they develop, and then react accordingly.

The 16.5 resistance was labelled on one of the earliest charts I posted pre market; how is that possible? The 03 was a magnet to be tested, and shorts didn’t see it it in RTH but it was hit after hours, predestined to be challenged,  just a matter of time.

Keep studying, or better yet consider splurging (gasp) to learn some of my secrets that have been catalogued and are part of the program.

No hype, no nonsense. Day after day, students have seen the accuracy of this method. Targets identified, stops in place, and low risk trading. Results on Twitter, for all to see.

Isn’t this a better way to trade than guessing?

Sorry the post is late, company dropped in and the digital world had to take a back seat.

We are looking for a group of at least 25 traders who are ready to learn the system. I gave a free lesson last week to a few traders,and I told them they were getting one of my Best clues. A few of them have caught on and see the power of this great tool.

When you combine it with a few other things, you will see some remarkable results in your trading, as long as you stay disciplined and focused.

I don’t claim to be #1, or anything else. Just a humble student of those Angels and Demons.

How about you, interested?

Battlefield

We called the primary battlefield for the morning trade as the 42/32 range. That held up as the premise reasonably well until the late day breakout.

I was a guest in another traders room today. As usual I was pretty quiet, just observing the emotions of the smaller traders. It is a good way to get a feel for the amateurs, and my preference is to take the contra side.

Late afternoon, here is one comment:

AP: Who wants to go long here against the freight train, not me.

E: The Angel (35) is for profit taking at least, 32 has been defended well by the longs. (Shorts need to respect it).

In hindsight, not too bad.

Better to be lucky than good.

Yesterday, we said fingers and toes.

Still working on that premise.

Today’s chat room guru said he was short from 53’s, and he was scalping long in another account. I asked a dumb question, got no answer: “Where do you lock in some of those gains on your position short if this turns around and comes back at you?” (He may have missed the 9 ema on the daily chart).

Now my bias was short, because we broke yesterday’s low. I also know, however, that we are not going anywhere near the 22 gap until 32 breaks and until the 28 breaks.

So my warrior friend may be stubborn at 38 battle zone, but I am not.

I was as surprised as you perhaps at the last hour surge. I most times am already out of the market late, as I am no hero and unwilling to pay for the sins of others (traders who didn’t respect their stops). We called 52 stop for Eod profit taking, but that was hardly worth the effort if you had already had a good day.

Option expiration anything goes, and this commentary is not to be derogatory about anyone. It is simply to point out how our emotions are our worst enemies, until we learn to fade them.

All the trial and error of creating our fabulous new wazoo indicator is meaningless if we dont’ know how to admit it when we are jammed and wrong. This is not a predicting game, but often a probability business.

Be a lover, not a fighter. Respect the market, respect your money.

The Battlefield of our Emotions

The System

Yesterday’s late day 86 resistance held all day long for today’s continuation trade.

The retracement continues, searching for support.

The 60 minute chart got tested, now we will see Monday where the market wants to dig it’s heels in and try to do battle. Still lower in my opinion before the real test begins.

The morning chop frustrated both sides, and the longs finally blinked.

We had short side bias all day, and all targets but one were hit.

Option expiration week, and the calls that were profitable a few days ago got hammered.

I try to keep it simple. Follow the yellow brick road to see the wizard win.

In the world of illusion that permeates the markets, all I can say to my friends is: “Toto, we’re not in Kansas anymore.”

You’re in the land of the wizard.

We have so many wands and tools we have a huge edge in the markets.  The sorcery of the wicked witches is usually no match for our ability to see what’s hiding behind the curtain.

How is your system doing?

We welcome you new readers to this column.

Glad you’re here, don’t be shy.

Stay strong, stay humble, and keep learning.

Have a great weekend.

Emini of OZ

Intuition

The early morning test of the weekly low held, and that was all she wrote for the short side other than intra-day range trading and scalps.

Our system sell was 70 resistance, and we stood aside late day after the first attempt  as it became obvious the longs were trying to jam the shorts.

As a trader, having an opinion is necessary, being stubborn is not.

Both sides made money for us today, but the obvious winner at the end of the day was the long side trade.

The 59 flip became the key trade with 57 support when it was retested after the lunch breakout.

My intuition told me ” long side” late day because it goes contrary to what we saw yesterday, and most traders feel comfortable seeing the same result as what recently happened. Markets don’t work that way I have found, as they try to confuse as many traders as possible.

I did not take that trade, even though I guessed right.

Not all trades are of the same quality, and if I have already made “my goal”,  I am less reluctant to take riskier trades like that.

We are testing the next level higher, and no one knows where the true resistance comes in until after it holds.

Look at the 240 chart and see the testing of this next level, while daily charts show the significant 50% area higher at the 800 +/- range.

We focus on day trading,  and try to capture the swings both ways as best we can based on risk and reward.

Option expiration week, and the bigger 39 support is still supportive. Long proxies can be also held with calls if you are so inclined after this push.

A reminder: registration is free, and there is no obligation to buy anything, ever. Traders who are registered have access to the chat room, forum, and are eligible for a 25% discount on our system if and when it is offered.

This site is primarily for me to focus my thinking, and I welcome any visitors who want to explore trading ideas.

We do not consider ourselves as experts or gurus, but are students of the market, maybe just like you.

We definitely have discovered some ideas that consistently work, and they will work for you too.

If you are having trouble reacting to the market’s moves, try this: Reaction test.

Feel free to post some of your favorite sites and experiences.

Emini to the Maxi

Range Trading

Today was a typical narrow option expiration range day.

Running about madly all over the place and going nowhere.

Shorts: Going to take out that new low!

Longs : Got ‘em trapped, gonna breakout and hit 80 to 85!

Shorts at 74 area double top: Not so fast!

Longs and Shorts mid 60’s: Geez, death by 1000 cuts!

Shorts: Got ‘em now.

Longs 1 point above the Globex low: Not so fast!

Shorts: Should I short here or are they going to take me out with the late day push?

Longs and Shorts: Ended up at the globex starting line.

Long and Short Option traders: Where did my money go?

Some days we guess right and see it coming, other days the market eats our lunch.

Today was one of those days we saw it coming. The globex lower low was the carrot that kept shorts looking the wrong wa. The longs fixation on buying middle pullbacks hoping for the higher highs got them in trouble.

The outside-in trades were the ones that worked, and stringing a few of them together made for a nice day.

Catching the bus ride back across town on a reverse fare gets you just as many miles logged as does a one way ticket to the next county.

Scrolling to find the charts in play helps timing the trades, but price is still the final arbiter.

If the Boyz wanted to break it out, they would have; killing options was evidently more profitable.

Narrow Range Day

Breakout Day

A new Bear Market low was made again today.

Sounds like a broken record I know, but that ’s the reality of the price action.

News moves the market these days.

Reminds me of my college days, when we would greet any kind of news with raising a can of beer in a toast.

When President-Elect Obama announced his appointment of Timothy Geithner as Secretary of the Treasury this afternoon, traders raised their can in a celebratory toast.

Markets soared, and the Bear Market is over.

Or so they would like us to think.

Is it possible, that the weekly shorts waited until the customary 2:30 to see if we would make new lows?

When the 40 area db held, shorts decided to take profits, and for good measure, the PPT goosed the buying?

Did the divergence on the $vix.x signal the beginning of a potential seasonal rally?

Being option expiration, did “they” decide to kill some put options?

Who knows. Sharp rallies are hallmarks of Bear Markets. They can come at any time, and need to be respected. If we get it right, as a day trader, we can make it coming and going.

Knowing the secret code allows us to be aware of these potential reversal areas, and accept our trailing stop outs. The reversal trade is always available, and if we have made significant profits, risking a few points for the contra trade is usually a low risk/high reward proposition.

Today’s late day breakout is welcome relief for a maket that has already put itself in the history books as one of the worst ever.

Bear Market over? Expert Kevin Haggerty’s sobering view is that we are in a secular Bear Market that will continue through 2018-2019.

I respect his opinion, so I continue to seek out strategies that will allow me to continue to play the swings.

Trader extraordinaire Jeff Cooper  has said that “markets turn on a dime. Most traders can’t, that’s why they lose.”

Today’s 10 cent trade in the last hour is a great example of how lovers rather than fighters of markets can be extremely profitable traders.

I keep a dime on my trading desk to remind me that I am a lover.

The 10 cent trade

vix divergence

And let’s not forget capital.

Remember the old joke: “How do you create a small fortune trading?”

A: Start with a large one.

We always need to put today’s activity into context with the previous day(s). Traps are part of the game, and if you study the movement, the symmetry is always there.

The trick of course, is to guess correctly ahead of time, rather than seeing the obvious in hindsight.

Embracing the volatility and capturing the meat of the move in BOTH directions is the professional trader’s m.o. as support and resistance continuously get tested. Just over a year ago we were dealing with $vix.x less than 10 and travel range some days less than 10 !

When today’s lunch range finally broke out, the stubborn shorts who could not turn their minds around were in trouble.  It is always dangerous to “short too low” so if you went to the well one time to many, after we made a new weekly low just hit the reverse button and go with the flow.

Keep an eye on your time; often the traders take profits before going to lunch, and the last one to leave the party loses.

Option Shake and Bake

Money Mangement

 

The pullback that started after the open Friday continued today. Fibo traders looking for the 50% target found smooth sailing today hitting every bounce.

The week after option expiration is a great time for the boys to revert to the mean as it does significantly less damage at the beginning of the new month cycle.

So they killed the puts beginning Thursday, then Friday they killed the calls.

Just see it for what it is: a manipulated arena of professionals, amateurs, and everything in-between.

Fighting the flow will only get you in trouble.

Some gurus were calling for 10 point stops this morning. Ridiculous.

Stand aside if you cannot give yourself a better edge than that.

Houston, we have a problem

Psychology

Eisenheim : Everything you have seen here has been an illusion.

Nothing is what it seems.

Monday’s misdirection play was a thing of beauty; even the great Eisenheim would have been applauding.

Traders were so busy looking through their rear view mirrors at the premarket high that they forgot to look at the cliff they were driving off.

After Friday’s low broke, the bull’s had their heads held under water until they were finally let up for air late in the day. Intraday shorts scrambled to capture profits before the closing bell after kissing last week’s low.

All eyes are on that uptrendline on the daily chart.

 

Eisenheim Day

Psychology

Option expiration is a study in volatility.

If you accept the premise that wall street insiders have an edge, then you are ahead of the game. The trick is to synchronize our mind with theirs, and stay one step ahead of the pack rather than always being a step behind.

If you also accept the premise that the market tries to confuse as may traders as possible, go to the head of the class.

The early longs got trashed at the open, and it looked like the trend down day was being established. The two tick lower low at lunch then smoldered awhile, and then squeezing the shorts, ran for 20 points, passing the globex hi. Profit taking set in at the weekly middle, and the market closed near the daily middle.

The battle between long and short term traders continues, as it always will.

Trend traders cannot be stubborn when the bounce is stronger than expected. Many professionals prefer to go to lunch flat and relax. Then they will risk a portion of the morning’s winnings for the afternoon session. 

Trading with the trend until it stops working is one of the most valid forms of trading, and should be embraced by typically conservative traders.

Fibo traders were rewarded for guessing right regarding the down up down sequence.

 

 

Confucius short and long