Hi, This post is for my own purpose. I do not recommend that you read it (please move along, now), as it is for experimental purposes only. I trade part-time and have a full-time career as a software developer. Others here give (far) better advice. I can manage my own risk, but I have no clue if you can do so for yourself. Understood? Disclaimer: Any market recommendations are for me alone, and you are responsible for your own trading decisions, risk management, and losses. To clarify: This post does not contain any trading recommendations for you. It is for informational purposes only. <img src="http://i.imgur.com/2c544Mi.png"><br> Here, it appears that the Dow Transports are at *multi-decade* resistance. NQ e-mini's are at the top of a (possibly bearish) rising wedge on the short-term (daily, 4-hr, etc.) charts, and TF (Russell 2000 mini's) are also close to upper channel resistance around 1070 on the medium-term chart (daily, weekly, etc). If we stay below these resistance lines, it could support a short view for a swing trade (or more, ideally, given that I want to see the world burn, as my girlfriend says). Some thoughts: Playing counter-trend at the upper channel carries risks and other issues, such as these plays being lower probability. If you rationalize this out, there really is only *one* top (barring double/triple/etc tops) in a given localized price series, and thus trying to pick that one top, in advance, multiple times, is a lower-probability play. Since you do not know in advance where that one top will occur, you are likely to have to take multiple attempts to 'get lucky'. This is likely a big part of why many of the more experienced members of ET seem to recommend against playing counter trend. Why not keep trying long until it is obviously no longer an uptrend? Sounds like good advice to me. Having said that: To me, the play here is to consider selling (short) at resistance in the form of a quick-fire event. The trade needs to work, and work right away, else you're out. Scratch it, or take the small loss, but either way, you are out if it does not do what you think (i.e. a touch-and-turn at resistance, or clear downside break of a slowing-down final-up-push below resistance). Someone in another thread pointed out that we could have parabolic upside here (likely meaning upon a break of these critical resistances that we are currently directly below). And, as a trader, I would like to be open to this view. However, as a (very patient) kinda-perma-bear, I am willing to take shots within very tightly defined risk parameters. To me, where we are now is one of those areas, but I will *not* be blindly shorting now and simply placing stops above us. My strategy is to watch the price action and look for weakness of some kind, such as failure to make new highs, possibly forming some type of multi-touch tests upon an uptrend line such as the one on the /NQ chart, or some type of price action that indicates that the bulls are exhausted. Repeat: I am a (very patient) kinda-perma-bear, meaning I carry an obvious short bias, and am therefore speculating on a prediction, not necessarily trading on 'what I see'. What I see is an uptrend, but I do 'see' resistance, and therefore am willing to pay up to see if my speculations might lead to a reversal at these levels. Don't do what I do, it works for me -- I can contain my risk and am willing to start with a tiny position (with minimal losses if wrong) and build it upon confirmation. Good trading to all.
<img src="http://i.imgur.com/RaYOWTU.png"><br> Here, we have an updated chart for both NQ and YM. As can be seen, NQ did a perfect test of the uptrend support line today. The overnight action provided an entry on a retest of the high (chart not shown, pull up your 5-15 minute charts if you want to see), in the form of a small rising wedge with huge size shown on the market depth right at the 3139.75/3140.00 level (anyone watching should have noticed those 500 or so contracts sitting there). We went right up to that level, and that was the high. Personally I was waiting for higher levels to get short but this didn't happen. Now, since we tested support during today's down move, there are three strategies I might employ here: - Try shorting at the best price(s) possible. This ship sailed, in my opinion, last night, when we retested 3140. If we are bearish from here (at least on NQ), the highs might be in. YM having broke an uptrend line supports this case -- however, since NQ is still inside the pattern we could still test the highs again. If we do test those highs again then I am on the lookout for bullish action possibly breaking us upward (the infamous parabolic move someone alluded to in another thread). - Try shorting on a breakdown of support. What this means is that during RTH tomorrow, if you see NQ trading below 3112 or so, that could be a short entry. This carries the obvious risk of getting shaken out if you do not have a wide stop, and/or if you do not have a solid strategy and iron will to re-enter repeatedly. In my experience this can lead to death by a thousand stops and one might be better off just with a single entry and wider stop. - Try shorting on a retest after the breakdown. This one can happen *really* fast, so basically you are trying to get in where you think the 'stops are being run' if you believe that sort of 'manipulation' occurs. This one can be nice because, if right, the risk can be low and well-defined (you are selling a pop, not chasing it), and if right, is basically the 'last chance' to get in near the 'top' before the breakdown. What you do NOT want to do is just blindly short and not consider price action at support. In other words, we DID test that support, which held, and that support does need to break to confirm or suggest a correction/down move is to follow. Some other stuff I am seeing is TF making a more subdued lateral type upward move (it established and tested a more shallow uptrend line today), so I will be watching it to confirm or impede a move on NQ. Another interesting developing is the weakness of $DJT, in light of hitting the multi-decade resistance. One scenario is to see a slow final grind higher, with the bulls getting extremely exhausted. I have seen the scenario where the markets make a slow grind higher, possibly up to some type of resistance (like we are seeing above us), gently shaking the tree full of bears. One final push, possibly during an overnight move, bears gently capitulated, and then the drop begins. Either way, I wish to get on the right side of this trade, because volatility is likely to spike up shortly. Support is RIGHT below us on TF and NQ (especially TF, with a move below 1048/1047 being bearish IMO), so my system is simple: SHORT BELOW SUPPORT. K.I.S.S. and Manage Risk. I'll be looking at the interactions of various support lines if/when we start to head downward.. as each is taken out, additional confirmation is provided... or if one holds could stifle my dream down move. My belief is these unknowns are what make it so tempting to 'pick a top', because if you get in early you avoid getting trapped in the shakeout noise, and have the possibility to exit or reverse with a small winner if a support below holds. If you short at resistance or before support below breaks, and if support breaks, this gives you a nice cushion. The hard part, of course, is not getting sucked in to a big loser that grinds you out.. Good trading to all.
It just looks more and more to me like we are headed for some downside here. Areas of interest in the next 4-8 hours are 3103 - 3105 on NQ. TF looks a bit trickier due to possible lateral shallow up move, but since TF can be a runner if we do see some devil spikes down, I would be watching the 1038-1040 area. If I had deep pockets, I might employ this kind of strategy: Short every X hours, and short at regular intervals up to 3155.. look for some angel spikes to exit at a loss above 3165 or so, if needed.
My strategy is to sell the pops this week. If we do go up from here until tomorrow, 3120-3125 would be the resistance/retest area of interest, in my opinion.
I'm not so sure we will revisit the 3120-3125 level. I am open to it and my sizing plan will accommodate such a scenario, but I think just selling the pops, generally, is a better plan here. Going with 'trade what you see, not what you think', I see the market going down, in an orderly fashion. Traditional techniques to get into a trend could be helpful here. Wait for an upmove of some kind, and sell at resistance (such as above referenced #'s for big picture resistance) or sell a clean break on the intraday.
If we go up a bit more here: On NQ, looking at 3116 as possible resistance at or around 3PM EST, corresponding to Consumer Credit according to my calendar.
Being on the subject of Equities, looking at Japan: NKD futures have super clean uptrend support JUST below us at 13725 or so. This is a very critical support area looking at the log chart, and is part of a huge, gigantic, fractal-like symmetrical wedge. (We had the medium giant symmetrical wedge break to the upside in late June, and a smallish one break recently to the downside in late July, and both of those are within this big daddy one, at the extremes no less.. very controlled). Bullish? Long above 13725.. Bearish? Sell below it! edit: To accommodate shorter term descending supports, please revise support range to 13675 - 13725. NKD is a monster and can move a huge amount in a blink of an eye.. the margin requirements just finally went back down a bit after nearly DOUBLING due to the crash/volatility from a few months back. Good trading.
The 13725 price, then 13675-13725 range from my previous post was somewhat inaccurate. Low was 13735. <img src="http://i.imgur.com/dOsGzeh.png"><br> This might be somewhat predictive but such a furious retest of the lows here is ominous (for the bulls) in my view. Thus, I am on mega super duper watch to see if this massive uptrend line that literally dates back to the start of the Nikkei rally in November 2012 will finally be broken here, or in the coming days.
Testing support as I post *now*. 13730 low. Watch Here. Correspondingly, the uptrend in /6J has consolidated and is trying to break out again now. This is critical here, folks!
Seriously, watch /NKD here.. it is trying to break the major uptrend here. I would *not* be a buyer here. Support is now resistance, 13725-13750 or so...