Thursday, September 30, 2010

Technical Picture - Failed Breakout

The market made a solid attempt to breakout in early trade, but failed. Let's review.

All of the economic data was favorable. As depicted below, the Emini futures spiked on the GDP and Jobless claims giving us two waves going into the open. At 9:45 positive Chicago PMI spiked prices for a third wave, breaching the breakout point. By that time, the move was exhausted and it failed to hold.

Failures usually move in the opposite direction, so we saw a lot of selling when price took out support.

Last night we said that we'd like to see the SPY completely fill the Tepper Gap to confirm with the QQQQ. I'm still fixated on that idea. The backing and filling will be healthy and maybe we can make a clean break on the next attempted breakout. Keep a close watch on tomorrow's economic data, most of which, will be released during regular trading hours - 9:55-10:00 EST.



P.S. Emini futures slowly ticking higher in AH - China PMI 53.8 beat estimate 52.5

11 comments:

Andy said...

Jamie -

What do you do on days that you can't seem to find any setups to trade?

I sometimes get days where nothing good appears, and it seems to be happening recently, does that happen to you often?

Jamie said...

Andy,

The market is range bound now and we've had some choppy days, so it's normal that there be fewer setups.

It's better to wait in the sidelines than force trades. But on days with fewer setups, I focus on the momentum scanner and grab some quick scalps when price pauses to consolidate.

Ken said...

Jamie,

What do you use for your momo scanner, Trade Ideas?

Ken

Jamie said...

Ken,

Yeah, been using it for several years. Couldn't manage without it.

Andy said...

For momentum setups on your scan, are you focusing on the 1 min and 5 min, or still using the 15 min as the initial review?

joshua said...

Andy, you can use their pre-defined setup for "up 50" i think it is or something like that. then just tweak it to what you want. it works great for me. i can't figure out how to trade 'em, but i find 'em,lol.

jaime, do you often see 3 waves and then the move is over?

joshua said...

maybe the better way to ask, is 3 waves usually the extent of a move?

Jim said...

Joshua,

It is very common to see 3 pushes in the trend/momo direction, then you typically get a consolidation, pullback, or reversal. In a trend, a consolidation or pullback is more common than a reversal; a reversal is more common in a range bound market (range may be defined on a higher time frame than you are trading).

joshua said...

Excellent. Thanks Jim.

The Market Oracle said...

Hi Mr. Jamie,

I really like your blog about the financial market. I have already pur your blog as my partner for my blog www.themarketoracle.blogspot.com
I hope that you can link my blog to your blog as a partner as well, so that we can have a link to each other.

Thank you.

Regards,
Edmund Gaultier

Jamie said...

Andy,

For momentum names from the scanner, I like to scope out S/R on the longer timeframe and then I execute the trades from the shorter timeframe. The important thing is not to stay in too long. These are best executed as scalp trades.