Just want to make sure I am understood here. A "gap open" is the same as an economic report. If the market gaps up on the open it is the same as getting a good economic report. If the market gaps down, it is the same as a bad economic report. That is the way you have to think about it. Now, once the market opens, you get to see how THE MARKET inteprets the report. Does the gap stay open? how long? If the gap does not close within a few minutes, I look for continuation because to me, it looks like the market endorses the gap up. The market "agrees" with the good report. and vice versa. There are several kinds of gaps, and the market will respond to each type in a different way. I suggest those who are interested take a while to investigate them. If you want to make it in this business, sooner or later you will have to figure this out, or you will be waiting to play breakouts up at the top of the range, which in this market (S&P) is a loser's game. Bye Lefty
Hello Folks: NY lunch hour is over and the first team is getting back on the field. I am looking for another trade before the close. Lets see if they decide to continue up or mark it down to the open. Lefty Edit: Ok theres a headfake down at 1:23 EST, just above the 50 EMA. I think we need to see one more move down to 1206.50 So now at 1:30, we either break below 1206 or back up into the wild blue yonder. Below 1206, I am short looking for 3 pts so that I can hit my daily target.
Took profits on my short from 1205.75. Exit at 1201.25. Got my daily target, now the rest is gravy. Lefty.
Well that was fun but I did not expect that much of a move. Your working on a pretty nice day. Back to the open. Nice call.
Thanks. When the market is dominated by institutions as it is today, you will see lighter volume and they will tend to mark it up for a while and then bring it back down to the opening range. If you take a look at intraday charts for the last month or so you will see other examples. Lefty
Here is the intraday chart. If you look back at other intraday charts over a period of 1 to 3 months, you will see many other similar examples. Gap up or down. Parabolic move, then doldrums during the mid-day. Final move at or near 2m EST as they mark it down toward the opening range again. The S&P is a very cyclical market. I'm going to call it quits for the day. Good luck Edit: by the way, those of you still in the game can look for continuation down into the gap below 1200. Technicians would be looking for a move to fill it at some point. Maybe today?
Here is an intraday chart of the OEX using 15 min bars. You can see the market turn over at 2:00pm EST and if you scan to the left, you can see the previous "failure" point. So, I have posted a couple of trades with my thinking on the subject and with them you have a couple of OEX charts so that you can see how the S&P 100 moves (as confirmation). If you look to the left on a chart (OEX, or S&P using 15 min bars) you can see transitions and previous reversals. This way as price moves you can have advance warning of possible moves. If you go with the trend, you can put on size, however I suggest you get in cheap and add to your positions on pullbacks or places where you can lean on pivots. See ya Lefty Edit: One final thought. Look at the chart (ES) at 2:46pm EST. You can see that price has rebounded pretty good. This tells us that the market is strong and is being run by institutional players. They are marking it up and down, but it doesn't stay down. Think about what this means when you look to buy or sell tops/bottoms.
Lefty, Very nice trading. Thanks for the charts with comments during the day. Very nice range today. I caught the open but had to pass on the afternoon. Thanks, BTW what source would you recommend on pivots (book, dvd, site, etc.)? D.
Lefty, Can I ask how you edit your charts. I'm using Esignal now and can only type in the chart by saving it as a .bmp file.. You seem to be editing yours in a different application.