DonKee, since there's been some discussion about what A/D indicator the OP is using, could you specify exactly what *you* mean by A/D? Also, why use the XLF in the mix for sentiment?
I would just watch the normal adv/dec on the nyse. Like right now, it's 2256/838. XLF is up 2.87%. XLF was a huge per cent of the S&P 500 last year when all of those stocks were near their highs. Of course, as they crashed they became a much lessor part. You are correct though about the XLF becoming almost a sentiment indicator at this point. At this time, the biggest players in the market are tied to financial institutions. On any given day, if the financials "feel good" we can get a rally going. If the financials "feel bad" (XLF going down) the path of least resistance is down. When the Nas and the XLF are in sync, just trade in their direction. ie: buy pullbacks if they are strong, sell rallies if they are weak. Today, so far, this has been a "no brainer" and worked beautifully. As we get near the close and into the holiday weekend, there will be fewer players and more chopping. And please, don't anyone take my word for it. Just watch for yourself and see if you can use it to make some money. Good luck.
I give Becky credit for having the discipline to follow her "rules" and not trade even though it is a great trading day...but like shifting sands there is subtext to her rules that I believe are not really "teachable". There is no method out there than can teach someone how to be consistently profitable in the market. Period. While she may give some guidelines to a newbe, no way can she guarantee profitablility over the long haul nor can ANYONE else. No offense but I've lost interest in this because there isn't much depth to it...as riskarb might say...boring.
Don't worry DonKee, I don't just run off and trade every idea I see. As far as the PP is concerned, the day you posted your idea (8/25) the open and PP were very near each other. So you setup that day was fairly straightforward. How about days where the open and PP are farther apart? Also how do you handle situations where the price is above the PP, yet the sentiment is bearish? Also, do the other levels (R1/S1, R2/S2) come into play for you?
I understand from Trade4 that if the opening price objective has not been reached by 11.30...the trade is cancelled...today Trade4 took an early mark , closing just after 11.est...the trade 127475 did not happen until just before 12 noon est.
There are a lot of folks who read these threads and I believe observation of the markets and observation of others' ideas are a good way to formulate your own trading method over time. If the other filters (nas, xlf, avd/dec) don't line up with the fade, then I'm more cautious. More cautious to me entails, less contracts, tight stops, and small targets. Yea, I use the R2, too. You can usually fade an R2 hit with a 4 point stop (today's R2 = 1297.50), but it doesn't get hit that often. That's the entry on that, but again exits are important, too. Remember, this is just one method that I trade. I have others that I trade for both the indexes and the ec. Over the past month the ec has been my the part of my trading that has been huge. The moves have been insanely good and trending. If you're going to pay the bills every month in this game, you must have a few different ways to take advantage of the markets that are the easiest to trade during that period. That's how I stay "alive".
The financials have been a classic tell for the S&P500 for years. Whether you use XLF, BKX or your own individual issue(s). Believe it or not Merrill Lynch was the magic crystal ball to the S&P and all of its derivatives until the banking loan fiasco completely obliterated the old standbys. Man, I was really pissed for a while there ...
I know my targets every day a bit early but I don't prefer to trade late I don't watch the market all day. so if I am not in a trade till about 11:30 I walk away.