Self Promo and Hype

Discussion in 'Trading' started by Brandonf, Mar 17, 2003.

  1. Brandonf

    Brandonf ET Sponsor

    This chart shows the tick at the time of an alert to short the SP500's. We had come up to the top of our most recent trading range and the TICKs had become "overbought" very early in the trade, then formed a 2b type top. This gave us a short scalp that we got a few points from.

    This chart shows my first trade in the NQ of the day, a short. You can see on the chart that the index was more or less trading in a range. It rallied to the top of that range which was also the 200 period moving average on the one minute chart. That gave us a short entry which had 1.5 to 2.5 points in risk. We got out with a 3 to 4.5 point profit.

    This trade was NOT alerted because I was distracted by some other things and the setup exactly coincided with the beginning of the UK Embassador to the UN's speaking. I mentioned it as a potential long above 1039 because of the bullflag. As you can see at this point the Nasdaq is in a fairly strong uptrend. This is the first pullback to moving average support. It produced gains of 4 to 6 points.

    Here is the first stock alert of the day, a long in NXTL. Nextel gapped down to an area of strong moving average support and immediatly began to fill in its gap. Most gaps ultimatly fill. The stock then based up near its highs and then broke out, giving us a buy setup on trades above 12.37. Profits taken around 12.65.

    This was a short in the ES from under 836.5 with a target around 834 which we got. You can see on the daily chart that we have been pretty much trading in a range. As we neared the top of this range I looked to find a short entry on a smaller timeframe that would allow me to take a small risk.

    Into noon the market had been very strong. The volume had been very high, the TRIN around .5 and the TICKs positive all day. I started to scan through the various stocks in the Nasdaq100 index looking for those with the best % gain since the opening print. CDWC was near the top of the list. Went long from 43.81 and stopped out for a 26 cent loss. In retrospect this is a trade that I should have passed up on. The normal cycle for the market is to have a morning move, then to fade this a bit over noon. Depending on how this fade holds that will determine how the afternoon goes, so going into this I should have been more cautious and expected more correction and just avoided this trade all together. A penny saved.

    This is a simple bullflag. As you can see the trend is obviously up, making higher highs and lows. The upper keltner channel has been pierced, which indicates there is a high chance that the prior pivot (high) will be tested again. Once this condition is identified I then look for basing or pullback setups in order to get me in (pullbacks are prefered). Trade was entered from 52.5 and closed around 55.5.

    I'm using the chart of the QQQ here simply because the ND (pit traded Nasdaq) volume is not that great so it is not as consistent. This chart is essentially the same setup as we had in the SP above. Over the noon the market did correct, but only slightly. It did so while the TRIN remained declining and the TICKs remained strong. Volume had also been very robust in the morning, A/D line very favorable etc. This is a very strong indicator to buy if you get an excuse to do it. This was a very nice bullflag that provided a perfect excuse to do just that. This one produced a gain of 7 to 9 points.

    Over noon the market will have a tendancy to give back some of its morning gains after a strong rally. This morning it did this, but barely. This is a strong indication that more buying will be coming in the afternoon. Given that I wanted to be looking at the very strongest stocks on the board. At the time of our buy NTAP was the very strongest stock in the Nasdaq100 measured from the % change since its opening price. I gave this one long from 10.90ish and alerted exits around 11.15.

    This trade was one of my screw ups on the day. The broker dealer sector had been one of the top three sectors all day and GS one of the top stocks in that sector. It was basing nicely near its highs. When it broke to a new daily high I went long. As it setup the futures had a pretty nice move but GS was slow, so I got out with a 5 cent gain, which after commissions is pretty much a stratch.
    Same stuff as the others really. As the market held together well over noon the only thing to is buy stocks. So, I was looking for the strongest stocks which have held their gains the best. ADI came up on that list. When it broke out we took the trade for a nice gain.
    Gorgous bullflag that speaks for itself. Nice gains on the trade too.
    This one I was a bit late on, entering around 26.22. AMZN was another of the days leading names. As it broke out took the long. Because I was late on the entry I was not as patient as I should have been and only made 10 cents where I should have made a lot more.

  2. Brandonf

    Brandonf ET Sponsor

    The above charts are each alert that I gave today in the #emini and #stock chatroom at TFMS. Members can confirm this.

    Very early in the day we had all of the criteria in place for today to be a nice trend day, and fortunatly was able to capitalize well on it. Most of the things I will do on a trend day are just simple breakouts and bullflag/bearflag setups.

    Most of the money was made for me in the afternoon today as the morning was far less certain. However, when we continued to hold up very strong over noon, the TRIN continued to make new lows (especially after the bonds closed) and the TICKs held up, there was nothing to do but buy. Hope everyone had a nice day today.

    Going forward the next few days I would expect us to slow down, if for no other reason then volatility reverting to more normal levels. But, on a news front I'm sure there will be all kinds of scary things over the next 47 hours.

  3. Brandonf

    Brandonf ET Sponsor

    Today was for me as I thought it would be a very slow day. I had two trades right near the open, one right before the Fed and one right after. Four trades more than I thought I might do :) While none of them produced spectacular profits, I did manage to go four for four on the day.

    Today's trades.

    Todays open was a small gap up in the indexes. Most small to average sized gaps will fill in on the day they occur (for more information about this please refer to In the premarket the Nasdaq had been forming something of a bear flag on the two minute chart, so that gave me a pattern to work with on the open. The short was taken from 1078 with a target of 1074 (yesterdays close).

    Small and average sized gaps have a tendancy to fill on the day they occur. Most large gaps though will not fill on the day they occur, and those that can hold up in the first few minutes of the day stand a good chance of moving higher. The large gap in HGSI this morning brought my attention to the stock. It held up and when it took out a prior high I had a long scalp in the trade. We managed to take 15 to 20 cents from this, not much but nothing to complain about either.

    Over noon the market managed to hold up fairly well. We also saw the TICK holding above 0 and maintaining an uptrend, a nice A/D line, decent volume and a low TRIN. The Nasdaq was at some support and then took out a micro prior pivot high. I took a long from 1078 to 1081/82 between 1:20 and 1:50 ET. A little longer then I like to be in the market for 3 to 4 points.

    Right before the Fed announcment came out the market started to sell off then began to rally. An important pivot low was established at 860, one which I really did not think would break, but that if it did would offer a good trade. When the ES broke under 860 I went short with a half sized position. Closed it 858.5 for a 1.5 point gain, which covered the risk taken. Looking back at all of my trades this was the highest risk one I took and probably one I should have not taken at all.

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  4. Brandonf

    Brandonf ET Sponsor

    I have talked a lot in the past about scanning for opportunities each night: What to look for, how to approach it etc. These have always been very popular. One thing I have talked about less is scanning intraday and how to find opportunities there. I'd like to do that a little bit tonight.

    On an intraday basis I look at a few things. First of all I look at the major indexes, Dow Industrials, Dow Transports, Dow Utilities, S&P500 and the Nasdaq100. I like to see which of these is the strongest intraday using the %change since the opening price as my gauge of strength. I next also have a sector list that includes each of the major sectors, I sort them the same way. If the overall market is up my primary focus is going to be buying. I will mostly focus my buying in the strongest sectors and indexes. I like to look at the top 5 to 10 stocks continually. This gives me a good changing core group to work with. I also will keep an eye on a few of the weakest stocks in the lagging (but participating) index in case there is a reversal. This has me prepared for what ever might occur. In each of these stocks I look for things like simple bases, flags, double tops, bottoms etc.

    Friday's Trades.

    This was the first trade of the day that I gave. Average size gaps have a 71% chance of being filled on the day they occur. The statistic alone though does not give us a reason to trade, we need a setup. Here you can see we opened right near the GLOBEX highs .This is a price level that very rarely breaks on its first attempt, so given these two things I felt that there were pretty good odds with this one and the risk was low. Shorts given under 1095.

    You can see here that MER had gapped up on the open. When stocks gap up their tendency is to fill the gap. When stocks do not fill in the gap, you can generally assume they are among the days stronger stocks. MER is also a member of the brokerage sector which was one of the top sectors on Friday. This was taken long from 37.18

    A very nice example of taking profits from a basing stock and a breakout. CAT is in a nice uptrend here making higher highs and lows. Nothing though will move in a straight line, there needs to be a resting period. That can occur either by sideways movement or by giving up some of the gain. Here with CAT we can see that it was holding up very well and basing up near the days high. It was one of the strongest stocks in the DOW. This was taken long from 52.

    Another of the strongest stocks in the DOW. You can see that an uptrend is clearly in place making higher highs and lows. The stock pulled back to the 20 ema forming a nice bullflag. Longs taken in this from 41.20.

    This is a very good example of a breakout chart. The stock gapped open and except for a brief move lower (it lasted about 1 minute) the stock continued to hold near its highs. This is a sign of strength and what I look for in breakout stocks. This was taken long from 52.26.

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  5. Brandon,

    Thanks for the informative posts. I see that some of the charts are 5 minutes and some are 15. What bar intervals do you scan and how do you decide which to trade off of? Sorry if you've covered this elsewhere already.


  6. Brandonf

    Brandonf ET Sponsor

    I look at the daily, 120 minute, hourly, 15 minute for my trades. I like to see the trend in evidence in one or two of these and also a continuation pattern forming. Then I will use a smaller timeframe, 1,2,5 to get an entry on a reversal in that timeframe.

  7. Brandonf

    Brandonf ET Sponsor

    Today was one that did not start out nearly as well as I would have liked, or had thought it would. Through persistance though I was able to turn things around and have a nice day again. One of the really striking things about the volatile moves the last few days is just how important it is to "be there" and ready to take your opportunities when they come. Positioning yourself to take advantage of larger moves is key, because for the most part the market likes to chop around. Until about a week ago I was making about what I could make at the local McDonnalds trading, over the last week and a half its been more along the lines of the CEO of McDonnalds. This underscores another important thing too, the need to be financially responsible and save if you are a trader. I can not think of a single person I know who has been in this business for more than 15 years who has not had losing weeks, months, quarters and even losing years. The point of this is not that trading is impossible, far from it, but simply that prudent personal financial managment is a key element of your long term survival. Its not just about what you do in the market, its also about what you do with the money you make in the market. Just some food for thought.
    The trap provided the technicals for the first three trades I had in the SP500 Emini and the Nasdaq100 Emini. When I have a trap in place, the smaller timeframe setup is really of secondary importance, ie I will take any excuse to get on that direction. So, the intraday setups here themselves are not that important. The frist trade was in the ES, the volume started off kind of slow and it was not really doing anything so I got out with a breakeven on half of it and a loss of 1/2 point on the other half. The next trades were shorts in the NQ and the ES again, both of these prooved to be profitable.
    XLNX is basically KLACs twin. Same idea. This one went very fast though and fills where basically impossible at a reasonable price.
    I don't trade the bond very often, but I really feel that traders should trade. That is, if you are a trader don't fall in love with being a "stock trader" or an "index futures trader" or a "commodities trader" or whatever. Love trading, and if you find an edge in a market, be prepaired to take it. Be a trader! There might not be anything going on in the equities market, but maybe the grains are on rocking(as they where this summer) or maybe stocks are in wait and see mode, but the Oils and burning down the house (last few months). So, as traders we can very rarely honestly claim there is "nothing to trade", only that we may not be looking in the right places, which is a shame. The daily chart here on the bond had a very nice trap, as detailed above. This provided a long trade that was closed for a nice profit MOC.
    The golden rule is of course "The Trend is your friend", but sometimes you have clear signs a trend may end. All day today we had the NYSE TRIN at or above 3.5, it in fact closed above 5 which is something I cant recall having ever happened while I was trading. This shows panic levels of selling. Going into the close I did not really want to establish a new short trade and wanted to look for signs of a reversal in the index on the chance there could be a big short squeeze. You always want to keep your trend definitions in place, because once that defination breaks you can often get into something early. So, when we stopped making lower lows and highs, and started to actually make higher lows and highs this was to me a good place to try the longside. I did not get the large short sqeeze I had been playing for, but still managed to pull about 3 points out on a risk of about 3/4 of a point, which is good work when you can get it :)

    Monday's Trades.

    From the outset of trading today it was about nearly a sure thing we would have a very sharp down day. Both the S&P500 and the 30 year Bond had very clear, strong Bearish Trap Plays in effect. Bearish Trap Plays occur when on the prior day the open is at or near the days low and then there is an expansion move (large range), high volume and the close occurs at or near the days high. On the following day if the open is under the Expansion days close you have a trap. This leads to trend days nearly 80% of the time. Something to keep in mind when we get one again in the overall indexes.

    As you can see it was a super day today even though the open started off not that great. Thats why it is important to stick to your guns and not give up. Keep your risk small so you can keep trading the setups as they come to you. If you do that, you will win in THE LONG RUN.

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  8. Brandonf

    Brandonf ET Sponsor

    I finally had a losing day after having had my best two week period in over a year. From my initial analysis down to my final trade of the day, I was pretty much off all day. Fortunatly this was evident early so I was trading small, and not very often.

    For the most part we had a very low volume day which adds a higher degree of risk to the trading overall. Volume is like oxygen to a fire, without volume a move will not go far. It is likely to fail or just chop around. I was focused mostly on the long side today, but just simply managed to time good trades wrong.

    All in all I lost 4 points in the NQ and was breakeven on stocks. Not bad for a worst day in a few weeks.

  9. Brandonf

    Brandonf ET Sponsor

    I'm back. Toni went to Europe for a few weeks and I was left to fend for myself. It was overwhelming so it really cut into my posting here on ET, I'm sure everyone feals terrible right :)

    Anyway, I'm thinking I might call it a day here. Bonds are closing and we are heading into a long weekend. The action today has been very positve, but I think it could trap you real fast on no volume now.

    Todays Trades From #mainstreet

    LEXR long above 4.18
    SNDK long above 19.75
    AMCC long above 3.66
    CHIR long above 39.20 (stopped out breakeven)
    ONE long above 34.70
    GM short under 34.97 (stopped out)
    UHS long above 37.11
    LRCX long above 12.66
    PHSY long above 28.25
    PAYX long above 29.90

  10. Brandonf

    Brandonf ET Sponsor

    This is a ways off, but I wanted to give a bit of advanced warning anyway.

    On Saturday, May 31st Trading From Main Street will be giving a free seminar here on Elite Trader. We have not yet formalized a time for it to start, but generally when we do these they last 5 to 7 hours. In the past they have been pretty well attended (average around 350 people). We start off with the basic things (Trends, support/resistence) and move out pretty quickly from there. By the end of the day you will definatly be armed with the tools and tactics that can make you profitable. (the harder part is putting it together yourself).

    The presentation will not be a sales pitch (If it takes on that, I will pay you for your time wasted) but will be full of useful things that will impact your bottom line.

    Obviously this is not the official "sales pitch" for the seminar (I'll let other people work on that for me), but because it will take up an entire Saturday I wanted to give some advanced warning.

    #10     Apr 23, 2003