The first chart is the 15 minute NASDAQ Emini futures. Last night I said, "The key elements to watch are the depth and choppiness of the retracement. On the 15 minute chart, I would look for prices to hold below the declining 50 period SMA in order to maintain the corrective bias."I expected that we might get a choppy reversal attempt after price retested yesterday's lows. If you click on the chart above to enlarge you will see that price observed the declining 50 SMA on both tests. After restesting yesterday's lows, price attempted to reverse but, it couldn't get any traction due to lack of volume.
The NQ chart helps guide my trading. So after failing on the open, I was looking to short weakness.
The next chart is the LEH daily, which I highlighted as a focus list chart a while back. Yesterday the trendline was broken, but had no momentum. Today it broke the base (black line segment) shortly after the open and fell like a hot knife through butter until it capitulated.
HUM was a B&B dummy long that I found on my momentum scan yesterday. If not for today's market weakness, I think this stock could have done much better as it attempts to rally out of a base on the daily.
DRYS was a C&H base & break. There was no momentum beyond the BO bar. When price rallied out of a two bar consolidation and then gave it back, I was stopped out. After all, $133 oil is not favorable for transports.Normal Fib. extensions for these setups is 100%. When both DRYS and HUM failed, it flagged the overall market weakness and it was back to looking for short setups.
SOHU carved out a bearish rounded double top pattern. The only problem I had with the setup is that it triggered before the FOMC minutes were released. But after reading the minutes, which were pretty gloomy, there was no need to take a partial at the blue support line.
18 comments:
Jamie,
Do you have days where you look back and realize that you must have been on autopilot? ... where you can't really recall why you took trades, but everything just worked? You may be in that zone often, but not me.
I shorted C taking out the ORL - I suppose I was thinking it would follow thru from yesterday. That was working so I found a spot to short JPM. They were a little choppy, but gave no reason to close. In the afternoon I noticed CF had retraced most of morning weakness, but on significantly lower volume. Following the 15m hanging men (12:45, 13:00), the 5m setup at 13:45 and I caught a fast ride down to the 50ma. I covered near EOD at 129.42. What is odd (for me) is that none of these were gaps...
Hey Jim,
Congrats on a great day! Financials finally broke down in a big way and WOW, what a nice trade in CF.
Monitoring and matching my trading to the futures is helping me stay focused. Having a Watch list also helps a lot. The hardest trade of the day is the first. If I get a loser or a scratch on the first trade of the day, especially if I waste a lot of time on it, it plays with my trader psychology.
Warning: Only one downside to the zone - not looking forward to weekends. ;)
Good SOHU trade there--definite double top. I shorted CAL today. Nice descending triangle setup on the dailys. AMR setup pretty nice with a narrow range bar at the base of the ORL and oil assisted by moving up all day long.
Hi Jamie~
Cool trades and analysis! Is there any advantage to using the E-mini chart over the QQQQ chart? I find that they typically move in unison but I might be missing something.
Thanks in advance.
anarco
Thanks Jamie. I am traveling all of next week and will not be doing any trading. That may be a blessing in disguise as I have a tendency to get overconfident and sloppy when I am trading well. Is your 'monitoring and matching to the futures' something new for you?
Jamie,
Great call on watching the Nasq. When looking at intraday overall market health condition, do you only look at NQ or you also look at ES as well?
On LEH, is the 10.45amET 5 min bar considered capitulation volume as well? If yes, why not take profit there?
Thanks,
YR
Jamie,
what futures are you looking at? and have you noticed if overnite gaps on foreign oil companies affect american oil co's at the open?
thanks
Jamie,
Got the chart, thanks
YR (if I may),
The 10:45 5m bar in LEH does have huge volume, but consider the following:
- 10:45 5m bar is first bar in a new 15m bar, notice the symmetry in terms of WR 15m bars around the 4th bar consolidation
- 10:45 5m bar is WR and ~full bodied, no significant lower tail
- 10:55 5m bar has a lower tail and slightly higher capitulation volume, and it completes a WR 15m bar
Nice work Rick,
I was also eying CAL and UAUA this morning - under pressure all day.
Jamie,
Along with the oils gapping overseas, financials gapped down: db ubs rbs bsc cs AND american financials sold off without a gap for a better pt move. Have you noticed any correlation between overseas gaps/american financials continuation?
Almost forgot, great negative news on MCO...a gimme. Damn!!
Thanks Anarco,
The main difference between NQ and QQQQ is daily range because of 24 hour futures trading. For example, QQQQ took out previous day high in the opening range but NQ did not even get close.
Unless you trade futures, there's no need to subscribe, QQQQ is good.
Jim,
I'm watching futures more closely as I sometimes get ahead of myself in anticipating a bullish/bearish turns.
YR,
I look at both ES and NQ.
Re: capitulation refer to Jim's response.
BL,
Wide range days overseas can influence US markets. Financials broke down following Asian markets as well as mounting recent downgrades, almost daily this week. Also, Citigroup offered $250 mln to hedge fund investors to dissuade legal claims this morning and UBS divested mortgage assets to BlackRock at steep discount. Everthing just snowballed this morning and the group broke down.
Bloomberg better than CNBC re: these types of news items.
Crude oil Wed, 10:30 has been a real market mover these past weeks as well.
Thanks Jim!
Jim/Jamie,
Re "10:45 5m bar is first bar in a new 15m bar, notice the symmetry in terms of WR 15m bars around the 4th bar consolidation" - I don't see it / don't understand. Can you guys elaborate.
I don't see higher volume on 10.55 5 min bar on my screen. But I do understand the longer tail explanation. Thanks alot!
YR
YR,
There is slightly more volume on 10:55 5 min. bar but not a lot more.
But Jim, is right, I am managing the trade on the 15 min. time frame and usually exit near the end of the 15 min. stick.
Just to clarify, capitulation volume foreshadows the end of the move. It can last for quite a while, so you want to tighten stops and be alert to a potential reversal.
Basically, what is happening is that stops are being triggered which causes price to bottom out. Aggressive traders start buying when they sense that all of the stops have been taken out.
It usually happens on very WRBs with huge volume.
Hope this is helpful.
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