Thanks steve. The chart does show a general resistance around that area, though price did punch through the pivot a few times (but failed to hold those gains like you said) Still for my purposes I don't think I can place much weight on daily pivots, they are too simple and calculate an S/R level based off of only 3 data points. I also do not like to trade with 2 point stops or 8 point profit targets. For my purposes I would consider daily pivots to show a crude level for squeezing out profits or assistance for my own eyeballing of the charts to place stops (IMO this is actually a great help, eyeballing the charts with no TA tool as a guide has probably been costing me some good money) What I am most interested in is the weekly pivot. From looking at your other chart this weekly pivot looks to be much more valid (by averaging a week of data points) and show good odds of either a significant S/R level or a significant change in price momentum. I tried to set up a weekly pivot in Ensign and it crashed the program, so I can't use it yet. But I look forward to using this tool. For now I have only a daily pivot to work with which I have used in my trading today. Stocks had an about even day today which I don't like. After a very weak close into the weekend they just paused, which is not typical of a solidly concurrent pattern (Chick says that solid trending moves usually don't give people much time or a good price to get in) Looking back over the chart I see that ES has a tendency to make a hard reversal following a neutral day just like this one. SL has also turned up for a higher low which is definitely an upside warning sign. I'm going to be safe and exit. There is a resistance point right around the current price (1318) so I am going to exit later today hopefully around 1315. Notes are in a pretty strong crosscurrent mode. However the ML, which is strongly up, is dying quickly and will reverse as it starts to drop a week of up cycle numbers from the SL. So there is a good case to consider ML actually down. In notes the SL is coming off of a lower high and is leveling off so there is good chance of it turning down. With price on highs after about 1.5 weeks of upside, I think downside odds are good. Shorting 3 notes at 112.075, stop 112.285. I do not like the weakness of the natural gas rally and would have exited today if I was still long. Natural gas rallies off of a dip tend to be explosive. This was a very large one day dip followed by a somewhat weak rally. Things may finally be changing in this market. Tomorrow will help clarify the NG situation. Grains finally look like they are done with their large upside rally. If we get one solid down day from this level this will leave about a 1.5 week "island" up top, which can signal the top of a rally. The short term picture here is extremely negative because while price has gone down a bit, it has not been in line with the size of the SL, which creates a "bearish divergence" between the SL and price. Price can be very irrational and since SL is an average of short term price flow, it can be a "truer" reflection of internal price momentum than the price itself. Since it is down so steeply and price is only down a little bit, I think this is a strong downside sign. ML is also sideways and will start dropping higher values off the SL from when it was on an up cycle 2 weeks ago. So I am also anticipating this ML down. Shorting 2 wheat contracts. There is a support level at 860 but the next resistance is at roughly 870, so I'm going to wait until the night time and short wheat for hopefully a few points higher than it is currently. Stop 893. Cotton is about the same situation as the grains except the trend is down (though rapidly going sideways) The ML pattern to the upside is also weakening but not at the pace tha it will in the grains. Price has also been weakening at a better rate than the grains (against the SLs) but there is also a bit of a bearish divergence here as well. Shorting 2 contracts, stop .7300. There is a spike situation in coffee. This seems to be where I have had the highest success with momentum trades, because extremely sharp intraday moves can happen when volatility is high. I would prefer that this market falls back into its sideways range and delivers some clean profits to me in the process. But both sides are potentially hot here and the upside may very well go into a large bull market rally (quite of few of these have been going on recently) So using the help of pivot points as a guide I have set up momentum orders on both sides: Open short (ie no profit targets) at 1.4165, stop at 1.439 Open long at 1.464 stop 1.437.
AshanD I appreciate your comment. My thought is that weekly (and perhaps Monthly) pivots can be a valuable tool for your trading. Ensign should be able to automatically calc the weekly pivots. Most charting programs allow you to activate pivots from a dropdown menu. If this is not available on Ensign, contact the owner (Howard) with your request. The gentleman is a good programmer and seems interested in making his charting program accessible to users. I am sorry your trade did not work out as you expected. I wish you the best of luck. Please let me know if I can be of help in future. Best Regards Steve
Sold 2 ES at 1321 breakeven. 3 notes stopped out at 112.285 for decent loss. Currently short 2 cotton (december) at .8005 and 2 wheat at 8.6275 Poor day overall. I tried to squeeze some extra profits out of the ES trade by waiting and the aftermarket ended up creeping a few points higher instead of lower when I sold. I thought notes were a good trade but was obviously wrong. Looking back I believe that I over-anticipated the ML. Anticipating that it would turn down was not wrong, but considering it down for today was definiely wrong given that the ML was so strongly up and would not be turnin down for a while so using a 5-6 day margin or error was not appropriate here. A more professional decision would have been to acknowledge that even though the ML will weaken, it is too strongly up to consider down currently and should be given another day or 2 for some weakness and then it would be justfiable to anticipate it down. Once again I was anxious to get into the trade and paid for it by expecting a better risk/reward situation than what was actually there. Disappointing action in grains with both corn and soy down decently but wheat up. I was debating for 15-20 minutes which market to short yesterday. Rule of thumb is to lean towards longing the strongest market of a group and shorting the weakest. Soy had the weakest short term lines (ML and SL), though all were pretty weak. Wheat had the weakest trend, though trend was rapidly neutralizing. I don't think my mistake was too bad for going with the market that had the weakest trend, but even here I feel I've learned to consider the whole picture instead of using binary thinking (trend is weaker in wheat, therefore go with wheat) The softs in general have been very thin lately. Steve notes that the summer months tend to be more thin which I didn't know. Sugar is still good with volume, but cocoa, cotton, coffee, and orange juice are all now having very poor volume. Orange juice and coffee are terrible right now, I think an hour passed before one of them had a single trade. I've had to drop both of them off the board despite coffee looking to make a decent move. I was about to drop cotton as well but found that the december contract seems to be the most heavily traded for some reason and has decent liquidity. Cocoa is very borderline and may be dropped as well. Cotton had an upside reversal day which doesn't concern me too much because it couldn't hold its highs and closed pretty weak. Also in this market while the ML is still up there is a better case to consider it down. ML is not nearly as strong as in notes and is rapidly weakening after dropping some old values from an up cycle in the SL. Today's analysis to be posted shortly.
After reviewing the cotton market I donât feel the case is very strong to the downside, if the SL turns up the short term pattern would strengthen upwards. I just over anticipated the ML here, I should have waited at least a couple days like in notes. At least for this one I can correct my mistake and get out at a small loss. CT exited at .8049. This market is also thin these days and may get dropped if I donât see the spreads improve. My ES upside reversal fear did not materialize and the pattern is negative so I am shorting one contract. Seeing the quiet sideways day after a good sized down day made me very suspicious because there are many cases on the chart of ES reversing after a day like this, but not this time apparently. Short 1 ES at 1316.5 stop 1330. The euro has a neutral to slightly down trend, but the ML is strengthening to the upside and the SL is on an up cycle off of a higher low. Also there seems to be solid resistance about 100 points below so I think the risk reward here is pretty good. Longing one contract at 1.5504 stop 1.5385. Now with 2 days down in the metals a potential buy in a dip situation is here. Silver is very close to solid resistance on the bottom (16.5) SL is pointing down in gold/silver but it is on a series of lower lows and highs, and also right at 0 which means there is no overextended condition. Even though trend is down weakly, it is neutralizing rapidly. I like upside odds here. Longing 1 SI at 16.68, stop 16.345. I am holding onto my wheat contracts because the short term pressure there is still strongly to the downside, with SL on a large bearish divergence which should indicate that short term price flow is due for some downside pressure. ML is neutral and should turn down these next couple days. Anything less than a good sized down day tomorrow will be a bad sign.
All of yesterday's positions were exited today. 1 ES stopped out at 1330 for small loss. I was nervous about shorting ES yesterday without any rally and so much recent downside pressure. The concurrent mode to the downside convinced me to make the trade. Sadly I was not surprised when this market rallied today. 2 wheat stopped out at 8.93 for large loss. I probably shouldn't have went 2 contracts deep with this market, the down cycle in the SL was so strong and combined with a good downtrend I felt downside odds for the next few days were quite good. I failed to consider that uptrends were present in both corn and soy. If I had weighed this factor in, I would have treated the rather weak down trend in wheat as a possible up trend and countertrend rules would have applied (stay in the trade shorter, be quicker to take profits or get out on any upside concerns) 1 euro exited at 1.5612 for small profits. The pattern here isn't strong enough to keep me long for more than one day despite good upside today. 1 silver exited at 16.795 for small profits. Stranger action with all metals closing low but opening higher in the aftermarkets. Although silver is still close to a resistance point it is still not strong enough to keep me in. The only markets I am considering right now are the energies. I once again want to be long natural gas after this 2 day dip. This most recent dip is showing more weakness than usual, but I still favor the upside. For the last couple days I was considering sticking a limit oder near the support band in crude oil. (132.20 area) I never ended up doing it because at the time I felt this was "lazy trading." Now after the fact I am upset for not doing it. Trying to catch a dip by sticking random limit orders in markets is lazy and will result in losses if no analysis of price flow accompanies such decisions, but when there is a case to use these orders such as here with a solid support level and price turning concurrent to the upside, this is a good risk/reward. Because I'm long natural gas I don't want too much downside exposure, although the upside odds look very good right now. So I went long outright on my NG contract and stuck a limit order at the support point in crude. My thinking is that only a solidly negative day could cause a loss with this setup. The day would have to be so negative that I get stopped out of my NG contract and the crude contract blasts past support to get stopped out, which is much farther down from this level. With a couple days of neutral to weakness I feel downside odds are less than usual on a pure price action basis and the lines are strongly concurrent to the upside, so this *should* be a good setup for tomorrow.
Natural gas had a good up day and will probably be sold for good profits. I decided to drop cotton off my list for poor volume. After checking for a market that would be good to replace it I decided to re-add cofee after finding that the september contract was trading with decent volume. I also added a couple meats, live cattle and lean hogs. Both are only good volume in the pit contracts. Chick warns that the meats are the worst trending market due to the nature of the commodity. Live cattle seems to trend ok but can sell off very hard even with a good trend. Lean hogs has basically no trend, but this market makes steady up or down moves with few intraday spike type rallies that most other popular markets have. There are certainly intraday reversals but not they are not as frequent. There are also easily seen support/resistance levels in this market. I probably violated about 5 of my rules by doing this last night, but I saw that lean hogs had a large 3 day dip and was on a big support level so tried the long side on 2 contracts. The dip continues and I was quickly stopped out from 74.05 to 73.325 for a small loss (these contracts are not worth much. I think lean hogs has less sharp intraday dips and rallies because it is only pit traded (there is a globex but almost no volume done on it) This probably keeps away a lot of small speculators, so the market moves around much smoother, despite looking like a wall of noise on a daily chart. This is the type of market that is great for intraday momentum orders. The problem is I cant use bracket orders in pit contracts. So I'll have to just let all my orders stand individually which may cause issues sometimes. It will be fun to try catching intraday moves in this market though. After no emails for almost 2 months Chick put out a short comment saying he sees signs of currencies and metals getting ready for an up move. I have also been feeling that currencies were warming up for this. Chick also says the grains may be continuing the same, but weather markets are less reliable to forecast.
Trading across Market Groups The major lesson for this week has been to look at market groups AS A WHOLE and then based trade decisions based on the individual market. Following this market would have generated the following results: I would not have shorted 2 wheat contracts since corn and soy were both on uptrends. I would have traded only 1 contract due to the group as a whole being in a crosscurrent mode. About $1500 savings here or $2500 if I would have used countertrend rules to exit on the day that wheat went up a little and the other 2 did not (unlikely I would have exited there though, but $1500 is still good) I would have shorted the YM instead of the ES, because YM was clearly the most negative index. I have an NQ bias for the upside and an ES bias for when Iâm unsure and this has been exposed. Shorting 1 YM instead of 1 ES 2 days ago 1) would not have been stopped out for about a $750 loss, because YM was so weak that even its intraday rallies were relatively small compared to what was seen in ES and NQ 2) would have generated about a $2000 profit today. Following the strategy of looking at the whole market group allowed me to do the following recently: Allowed me to get into the silver trade 2 days ago. While I didnât catch todayâs good up, I did get small profits in silver yesterday. However the silver pattern itself was marginal. Gold however had a very good pattern with SL clearly on a series of higher highs and lows and ML solidly up and strengthening. What I did that day was consider gold and silver together, and then place the trade on silver since it was about 20 ticks off of a large support band. Silver ended up hitting the support and bouncing off for small profits. Gold fell more since it did not have a support level as close before rallying. I still would not have been stopped out of the gold trade, but buying silver was clearly the correct move in terms of risk reward. The natural gas trade. Crude oil was concurrent to the upside and ready for a continuation, I just didnât know when it would happen and in a news heavy market such as crude, being uncertain of price direction for one day can be expensive. Like gold/silver, crude had the stronger upside pattern, but natural gas was on a good sized 2 day dip AND on a support band. (With this much positive potential I was very close to longing 2 natural gas contracts, which would have meant a $2000 move per every 100 points. âFortunatelyâ I held myself back) So as I mentioned yesterday, I outright longed NG because upside odds were so good, the only negative was longing off a dip and in doing that there is always the problem of calling bottoms (eg catching a falling knife) NG is my star market however and once again performed like a champ. If I was wrong and natural gas continued to fall and hit my stop about 300 points below, then I could hedge this loss by catching crude oil at a good price. Coincidentally the strong crude support band was 300 points below. A huge down day would have been devastating by causing a stop out in natural gas and then a loss or stop out in crude, but we always play the odds and odds are that there would not be a devastating down day. Odds were that if there was a down day, The NG contract would fail but the crude contract would be executed at a solid support level (and so not lose much if any for that day, and probably post a gain the next) Thinking back I used to time trades this way all the time between bonds and notes and that is why those 2 have been one of my best markets. It is time to use this strategy for all markets. Lines always prevail as the lead indicator, but considering the lines across the whole market group IMO will produce better trading decisions and better risk/reward situations.
I sold the natural gas contract for good profits at 13.270. As mentioned before, Chick has said that he sees potential for a large upside breakout in the currencies and metals. On the currencies I was very bullish as well, the euro, pound, and swiss all had a bullish COT situation and while this can not have any effect for a long time, sometimes years, A solid COT situation combined with an emerging trend can be a combination that leads to incredible bull/bear markets. This is what happened in natural gas several months ago. It was trading in the 7.50-8 range when the trend started to turn at the same time the COT became very bullish. NG does not trade at 7.50 anymore! I did not believe in staying long the euro because the short term line pattern looked like one that had some strength, but not that much for a 3+ day move which is about the extent of my vision these days. But now that chick has confirmed my suspicions of this market, and that he also feels a large upside breakout may be looming, it is time to put aside the short term trading rules and go back to position trading. I am looking for a minimum 500 point move here and so Iâm prepared to widen stops and ride through some down days. Long 3 contracts of 6EU8 at 156.91, stops out of range at 154.6. Gold and silver do not have the support of a bullish COT but they have several things working for them as well. 1) Like the currencies they have had a âbriefâ 3-4 month pause after a raging bull market. These are always tough to call but in a longer time frame can be considered a âbull flag,â a momentary pause in a much larger bull market necessary to keep the speculators on edge 2) Trend is rapidly weakening, if dropping off the last 10 days of TL numbers the trend would be neutral or even up. 3)short term line picture in gold is excellent with SL on a series of higher lows and highs and ML up (silver lines are a weaker version of gold) 4) Metals and currencies have a loose tendency to travel together probably because of fundamentals (weak dollar is positive for both) The strongest pattern here is gold. I am long 2 contracts at 915.4, stop 884.5. Because Iâm so heavy on the upside I need some hedges in case of a large down day: Crude oil has shot up today and is a good candidate for a momentum order to the downside tomorrow. Lines do not support a short at all, crude is solidly concurrent to the upside and if I wasnât long currencies and metals I would probably have longed this one if I could get a dip (right now it is tapping resistance and this always makes me nervous about trying to position to break through). Instead of going that route, this market will have to act as a hedge against strong downside pressure in commodities tomorrow. 1 short set to trigger at 135.55 with another stop for reversals at 139.16. The grains are looking to continue their own rally, though a sharp down day tomorrow would especially affect this group (unless the group overrides a big down day with their own strength, which I tend to doubt because of so much recent upside pressure here) Wheat looked the weakest today by losing about half its gains while the others closed on highs. I have 2 wheat set to short at 898, stop 924. The sugar pattern will set up nicely for shorts in 3-4 days if it stays around this area or even goes up a little (not too much) Trend is down pretty good and SL is plummeting off of extreme highs. ML is the issue, being very high and pointing up. Not a desirable short right now but with a wide margin for downside pressure confirmation this is another decent hedge against a large selloff across the board. Short for 8 contracts placed at 12.65 stop 12.88.
Very good day today with euro up a small amount and gold up a good amount. Even the wheat short was triggered for about 3 points of profit. It is unlikely I will hold onto the wheat trade because although wheat iteself is an okay pattern to the downside, corn and soybeans are both clearly strong to the upside (although weakening themselves). I always like having a good first day of a potentially large upside breakout type situation. it calms my nerves and helps me keep a longer term focus, whereas having a negative first day tends to make me want to get out with any decent profits I might have (like right now even). I will continue to hold both currencies and metals for a longer timeframe and through dips. Outlook is sitll very good, gold is looking like it may be ready to take a shot at 1000 again.
The euro stop will stay at 154.6, gold stops adjusted up to 899. Iâm going to close my wheat position despite the lines being decent for a downside move. Corn and soybeans are too strongly up, and there seems to be general commodity strength in all markets so a marginal short position isnât worth it. Coffee is also on a concurrent mode to the upside. No idea why everything is suddenly exploding into these bull rallies, COT data here does not support an upside move, but lines are solidly up and this is the most important thing. Trend has turned up, ML is on up cycle. SL is pointing down after yesterdayâs down but this is not that significant after so much upside pressure in a potentially solid concurrent rally situation. I am longing 2 contracts, stop 1.49 The energies are quite a difficult situation right now. Crude oil has some large positives but some equally large negatives. It is concurrent to the upside with both a strong trend and strong ML. Issue is that ML will be dropping off a large upcycle in the SL so the strength of the ML is questionable, although right now it is clearly up. SL is also on an upcycle right now. The last down cycle in the SL failed to push price down by any meaningful amount which is impressive for price strength. Commercial positions in this market are about even (very slightly positive) ML and SL have no meaningful series of higher lows and highs, actually the ML had recently made a lower high and low but the latest up cycle has broken the chain. Natural gas is now very short term negative and these two have been moving together recently. Most significantly to me, Chick made no comment about crude in his last email which makes me think he is also questioning the crude situation right now. This level is not a âdealâ to buy at, but on the other hand an intraday rally punched into the 142 area so price is ready to break new ground that way. Very tempting to go long here but risk is just too high, so Iâll stay on the sidelines for now. I have been one sided on natural gas for a long time, I tried a short a few months ago on what I thought was a good short term countertrend short situation and it was an expensive mistake. Once again the short term lines are quite negative, with SL on a lower series and ML steeply down (but from recent highs and after making a series of higher lows/highs) Also the pattern in crude oil is quite bullish and crude seems to be influencing this market lately. Still, the short term lines are very negative and this market is overdue for some sort of correction, even a small one. Normally this is still not enough reason for me to try anything on the short side, but I need a hedge against a big down day tomorrow and this is the only one that has a decent case for shorts. So Iâm setting a momentum order to short 1 contract at 12.934, stop 13.150.