Trading analysis for Tuesday 28 November 2006. I came in today with a strong bias to the upside. I posted that my long term view, heavily influenced by my observation of the hourly chart on Monday and the ZB failure to break 112 22, is for price to approach 115 00 to 115 19 prior to seeing 112 22 again. My desire was to buy around 0500 CST or so, but due to the 0730 report I elected not to. I had an old copy of my price S/R handy and simply waited for the report. We spiked up, I had 113 26 as a very important price projection number and I tried to enter between 113 27 and 113 30 only getting filled at 113 30. Since I was a little nervous about the trade I only took on 2 lots vs my customary 5 - 10 at this time. I had a target of 114 11 that I was shooting for. Obvioulsy we only got to 114 07 and started coming back down. I exited one at 114 05 and held the other. I wrote that I wanted to buy at 113 24 - 113 26 if possible. For the first move down we only got to 114 00. Ordinarily on a spike up day, this is a perfect entry. I started taking on additional size at 114 01. We got as high as 114 04 and then for the next 30 minutes or so we flip flopped between 114 00 and 114 03. As I posted, I didn't like the lack of follow through so I exited at break even. During this 30 min time frame after I exited at break even, my NN gave a buy so I went long ZB at 114 01. I ended up taking a small loss on that one when we started breaking down through 114 00. At that point I decided to possibly call it a day and wait for the 0900 reports. The 0900 reports came out taking price down to my stated 113 24 - 113 26 buy level. I even mentioned that I really wanted to go long but didn't have the time. That trade would have been good for 5 ticks depending on entry. Now at 0915 - 0920 you had a choice to make. Do you bank on the breakout to test new the highs of the day or do you bank on what the market has been doing consistently recently, short at 113 31 looking for a failure of the breakout. I did not trade but personally, I would have shorted. First, the early morning spike and lack of follow through to the upside should have warned you. Second the 0900 reports weren't favorable. Third, read up on my double 00's observation. That is it. Hopefully my wrap up of my activity is helpful. Regarding not shorting at 114 00, I think that was too early to make a commitment to a reversal in trend for the day. In my opinion, the only trades today were long at a good entry off of the 0730 report, long at 113 25 off of the 0900 report and finally short at the BO failure at 113 31.
Pre-market 29 Nov 2006 Important numbers to consider 114 11 114 07 114 04 113 31 113 26 113 24 113 16 113 11 Of the above, the most important will be 113 24 and 114 04. Watch very carefully for what price does around that level. I have no bias today. If I were to hazard a guess (guesses are not tradeable), I would say we'll have a spike up. My plan: I'll follow my standard "seconds after the report" strategy. To be honest this strategy has worked so well this year (even though I've downplayed it and cautioned against it) I'm thinking of making it my exclusive strategy and concentrating on only 1 or 2 report days a month. The rest of the month would be spent watching other markets, or pursuing other interests. The only drawback to the strategy is that there is theoretically the potential to lose 15 to 32 ticks on a single lot, in a matter of seconds. That is the show stopper. After the "seconds after the report strategy", I'll then look at the direction of the spike and consider taking on trades in the direction of the spike after retracements. Keep in mind that with yesterday's lack of follow through, I'll be very careful with retracements after the initial spike retracement. Good luck! By the way, every single one of the above numbers has been available to you since last week, if you know where to look.
0737 CST Ordinarily, as detailed in my journal, I would be shorting now around 113 28. The problem is the spike down was not decisive. In addition, we stopped at 113 22 versus going for a significant move down and then retracing. I'm standing aside on a short for the reasons above and what I mentioned in the previous post. We could head lower. It doesn't matter to me. I prefer taking trades where everything lines up.
0744 CST Looks like we'll test the highs today and maybe even yesterday's high. That is my take on this activity. No trade yet for me. Looking for my ducks to line up.
Neural network gave a buy at 0750. I'm posting after the fact but per earlier observations my trading comes first. In on a two lot ZB at 113 29. Long. Hmmm....reminds me of yesterday's long at 113 30. Let's see what she'll do.
FWIW, I think we are done with the lows today and I will be looking to take on considerable size soon. 114 00 or 114 01 is a good entry if we continue up. I think 114 04 is a done deal. You'll make 3 ticks on the trade, if you just want a quick trade.
0809 CST Bought 8 ZN at 108 295. Looking to buy more if we break 114 04 on the ZB's. I'll play both the ZB's and ZN's. There is a New Home Sales report at 0900 CST coming up so this may be only a quick trade. Remember, if you've been following me, I'm good for calling 4 - 6 tick trades. Take your profit and stand aside.
0815 CST I really don't like price behaviour here, but if you look back at yesterday's hourly, you'll see that this activity is to be expected. I'll give the trade a little leeway and I'll take a breakeven on the first ZB's and a small loss on the ZN's if we get back to my ZB entry.
You must manage this trade carefully. First, we have a 0900 report coming up. The market loves to set you up prior to the report. Second, anything could happen with the report. Third, as there is a report, the market may even trade in a very narrow few tick range until then. Fourth, it would be standard practice to see a brief kiss of 114 04 (or 114 07) followed by a body slam to the downside. I'm thinking of exiting all at 114 03 and equivalent in the ZN.