Bond Trader 2008 (Swing Trading Bond futures, Stocks, and ETF's)

Discussion in 'ETFs' started by johnpinochet, Feb 29, 2008.

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  1. 29 Feb 2008 0704 CST

    Today marks the beginning of a new format for my journal. Per my 2007 journal, I stated that I was considering a change in format from my rapid fire, real-time posting of trades to a more laid back approach. If you recall, we had some memorable seconds before and after major 0730 CST report trades. I get a rush just thinking about it now, and therein lies the problem.

    My new format will probably be no more than daily posts on where I see a small handful of issues trading. I'll be looking primarily at the following:

    30 year CBOT interest rate
    ZB (CBOT 30 year T Bond futures)

    I'm open to looking at additional items.

    Note that unless I say otherwise, a sell in a stock for me is simply a warning from my system to tighten stops, or exit with profit.

    I won't short stocks in this journal. I'll play the short ETF's for that.

    The technique I've perfected for this longer term (minimum of 1 day hold but more than likely several days to several weeks), is to look at the following:

    1) Recent turning points in the chart. Where is the peak and valley at various time frames: Yearly, Quarterly, Monthly, Weekly. Similar to pivots but based on my own neural network calculations.

    2) A 50% median line of the above. I found this as a tip from a trading author who uses a pivot point method of trading.

    3) Ehler's cycle research. Where are we in the cycle?

    4) WGSR - My tongue-in-cheek acronym which stands for "Working Group Support/Resistance". This is a discovery I made last year that a certain amount of "work" is performed at certain levels. These levels represent lines in the sand that if crossed indicate a change in trend. There is a lot more to this, and I hesitate to share much as I can honestly say that this whole course of study has given me a definite edge. The greatest benefit to this is intraday. I use the 1 hour chart to find these levels.

    There are probably some items I'm leaving out but we can include those if and when they come up.

    I continue my neural network and data mining research, and I've made some interesting findings (see items 1 - 4), but unfortunately my number one finding is that some discretion is required. The holy grail for me is automated trading with no human intervention. I suspect that this will be a long ways off.

    30 year yield
    We were above my weekly dynamic peak / valley channel. The long signal came on 29 Jan 2008. We just received a sell signal yesterday, 28 Feb 2008. Note that a sell signal in the 30 year yield is in fact a buy signal for the ZB futures contract.

    The hourly ZB has a very important WGSR at 116 02. Two other numbers of interest, but not WGSR numbers are 118 08 and 117 24. On the 0730 hourly bar, ZB showed its stuff. The ZB shot through my upper dynamic channel and hasn't looked back since. You had another chance to buy at 1330 hrs. Now I would be cautiously long, looking to buy dips. Remember we've moved over 3 points from a recent low, and on an intraday basis the ZB could come back for a breather. Long term, I think the ZB will head higher.

    Gold gave a buy signal on 21 Dec 20007, and didn't trigger a sell signal until 05 Feb 2008. Unfortunately there was a bit of chop until 15 Feb 2008 where we received a definite buy signal. Another interesting note is that GLD just broke through my upper level cycle high resistance line and this is almost always a signal for a major up move. The chart is phenomenally bullish. My best guess would be that we will hit 100 USD on the GLD ETF with no problem.

    Dryships gave a buy signal on 24 Jan 2008 and a confirmation buy signal on 28 January 2008. DRYS stalled on 15 Feb 2008, but continued above my dynamic peak/valley channel and signaled an add on buy on 20 Feb 2007. Unfortunately, price action on
    26-28 Feb 2008 is negative, and a sell signal was generated on 28 Feb 2008. Originally on 28 Jan 2008, my thoughts were that DRYS had entered a new phase and that we would continue higher. By that I meant, certainly above 90 a share. This didn't happen. After reading this article on Forbes, , I think I will stand aside for now and simply trade the cycles on DRYS rather than accumulating it for a long term (years) hold.

    RIO gave a buy signal on 29 Jan 2008, and hasn't looked back since. This has been my best and most stress free performer this year. On a very interesting note, all of Brazil appears to be doing very well. Take a look at EWZ.

    EWZ (the Brazil ETF) gave a buy on 29 Jan 2008, a sell on 05 Feb 2008, followed by a buy on 07 Feb 2008 and hasn't looked back since.
  2. 119 00 and 118 22 are two very important numbers for anyone looking to day trade the ZB (MARCH 2008) today.
  3. Surdo


    You may want to think about trading June's.
  4. 0817 hrs CST
    IB has a low print of 118 21 on the 0808 hrs CST 1 min bar.
  5. Per IB, high of 119 16 at 1005 hrs CST on the 1 min bar.

    Not a bad way to start the new journal.
  6. Please view the chart for today. I would add this (for me) to my list of "the most ticks gained in a single day on the fewest trades". I don't engage in day trading at the frantic pace I did in the last two journals. I don't have the time, and I don't want to my health to take a hit. Doing that and staying up to 2 - 3 AM throughout the week with 3 kids under the age of 4, and a cushy full-time job, just doesn't cut it. It took about 3 months for my sleep schedule to get back on track. Hopefully I haven't messed up anything.

    As for today, when the Fed makes a statement like they have in recent days (see article link), when the dollar hits a new low, when gold rises, it is as if the sun shines only on you, and blue skies are above if you choose to buy the ZB.

    No-brainer trade.

    Read this article printed on Thursday for a solid take on why Friday required no thought to trade the ZB.

    Data, Bernanke spur dollar to new low for third day

    Thursday February 28 2008

    (Recasts, updates prices, adds byline)
    By Lucia Mutikani
    NEW YORK, Feb 28 (Reuters) - The dollar fell to an all-time low versus the euro for a third straight day on Thursday after Federal Reserve Chairman Ben Bernanke warned some small U.S. banks could fail and flagged further interest rate cuts.
    The greenback's losses were broad, with the key index which measures its performance against a basket of six major currencies plunging to a record low also for the third consecutive day this week.
    Market mood toward the dollar also was soured by news the government's second reading on fourth-quarter U.S. growth was unchanged from its advance estimate of 0.6 percent, whereas economists had forecast a slightly stronger result. A surprise big jump in initial weekly jobless claims also added to rising worries about the slowing economy.
  7. DRYS now trading at 67.30 this AM.
  8. please clarify...will you daytrade any of these products of when you say 'swing'...does that mean hold from 1-2-3-5 days etc...the best trading to you!!!...why not Gold Futures or YM or...only 30 TBond futures...hmmm
  9. I think I may have time to do an end of week/beginning of new week post in a few hours. Things are looking bad per charts and my weekend readings. Bad for stocks I mean.

    I'll answer the two previous questions as well.
    #10     Mar 9, 2008
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