04/10

today's trade

A key for the above chart to define the horizontal lines and dots.  For further explanation, see this link:  

Opening Swing and first hour-

Breadth -

  Silly scalpy trades most of the day because I messed up the morning.  Your head fills with all sorts of stupid reasons like; "Well I'm not going to buy into these highs", whatever.  I'm not here to position trade, I'm here to DAY trade.
  The Opening type was easily recognizeable (Open-test-Drive, OTD), and the first three 15-min bars (first two really) were clearly strong and indicative of a breakout.  The MO is to, at the very least, get long after those first 3 15-min bars showing strength, and if your position is not positive over the next 30-45min then your premise might be wrong.   I scalped more than I should have instead of holding through to the 1pm (Central) hour when you can always expect a market shakeout before the final 45-minutes of the day.
  Blue arrows are entries, black are exits.  I even attempted a short!? (obviously not jiving, although I did nail the 'top' I ended up scratching the trade when I could have gotten 1.5-points out of it).

Volume profile - trend day (short covering P-shape)

ES with globex

Finally

The markets finally broke out of their consolidation ranges today.
Here is an updated chart from one posted a few days ago showing the daily chart setting up the 2c-2d criteria.  To reiterate; 2c-2d criteria we want to see:
a). Trend on the traded time frame
b). 3-pushes to a low or inverse H&S on the trigger time frame which is often the 3d criteria

Same goes for the rest of them.
DIA

QQQ

and the harbinger, IWM - this one you had to look a little deeper to find the 3d setup (it happened on the 60-min chart, see below)

65-min chart on right

Fri. 3_30

GOOG had a nice bearish trend day to it on Friday.  Momentum on the open, pullback in the later morning, momentum continuation in the afternoon.

If one were considering the 10am momentum to be a 3d criteria setup (as it was a buy divergence) you could have gotten long (and price did get as much as a 100% projection off of its flag/seed wave).  There were two main things to remember in such a case; 1). With a 3d setup there is always a resistance zone to trade into and/or overcome, 2). You should trade through or above the 20- &/or 50-MA's;  Notice how the 20-period Moving Average contained any further price movement higher, thereby retaining the trend.

On the topic of the 3d setup, GS had what I often consider a 3d, but in criteria-speak is technically a 1d though the result and mentality behind it are the same (3-pushes to a low, inverse H&S, OR bear trap).

trend

One of highest probability trades out there;  entering on a pullback of strongly trending price (I added the ADX in there to show the degree of trend in case it's not obvious from the Moving Averages, but it can be useful as a component for an intraday scan).
The vertical lines on the 5-min chart indicate possible triggers to entry (if you need an indicator for that) or for a more aggressive entry, one could fade a red fast line reading on the 5-min.   The best entries coincide with a pullback to the origin of the breakout (notice the large reverse divergence on the 5-min chart).
Of the 4 vertical lines (entries), only 1 would have resulted in a loss or break-even trade.  The third entry never hit the ATR stop placement. 

The SPY didn't have as strong of an ADX reading as that of TLT but still provided the same concept as that above.  Look to fade higher price (green fast line)

But look to fade it in an area that corresponds with what can be considered a resistance level or overbought conditions (extreme TICK).
As the fast line goes green the first time a test of vwap corresponded to a new TICK high which was faded (though the payoff was a higher low).  The second push higher tested the 9:15 breakdown point on extreme TICKs and went to test the lows.

As an aside, I did take the 3d long entry towards the end of the day.  Price went beyond my stop by 4-cents before hitting both the 50% & 100% projections (though be it in a very choppy move).

UCO

Unfortunately this is a "hard to borrow" issue on the short side, but it's the only thing I've found that closely reflects the movement of Crude Oil.  When a trend is strong (for my purposes the 15-minute chart with 20- & 50-MA's indicate trend direction and strength), and the trend in Crude has been bullish all week, you'll see these momentum sell-offs into support that are good buying opportunities. The momentum indicator sets up a reverse divergence ("Sling Buy") where there is a lower low in momentum and a higher low in price. The 5-minute chart demonstrates three pushes to a low forming an inverted Head & Shoulders. First target was the 100% projection which coincided with the price breakdown point. Position closed on price failing to hold the Open on waning momentum near the end of day.

no indicator day

Trading off of a momentum indicator on a trend day like today would have you screwed six ways to Sunday.  Here's what buying a momentum divergence left you with today on the 15-min:

While on the 5-minute one would be sliced and diced:

  So, on a day when Advancers/Decliners are severely out of balance, the TICK starts of with -1000 and can barely get back to zero, and the rest of the breadth indicators are flashing sell, just turn the squiggly line indicator off.
What were some reasonable targets to aim for?
Fib Retracement as measured between the PDC and today's Open had a great proportion:

and the Fib retracement off of the PDH & PDL had similar results

the drift continues

Every sideways consolidation range has resolved to the upside:

Moving Forks

The moves with the most energy and probability for continuation behind them, often spring from a rejection test beyond support (or resistance), where (considering a down trend in place) a Lower Low (or equal Low) is made followed by the "first" Higher Low.
Once price gets into an area where traders think a Higher Low may take shape (likely a Fib. level), one of two things can happen:
- Continue lower and test the lows, nullifying a presumption that price was making a higher low.
- Move higher to test the previous swing high and see if there is enough demand to make a new higher high.
Should the latter be true, we then have our "seed wave" in place. Given the speed at which this "wave" forms will determine how high and tight it's trajectory may be. Using the pitchfork helps in visualizing this concept:Once this first Median Line is no longer in play we can start using the most recent pivots to give perspective to the trajectory, speed, and energy of price.
Currently POT is in a position where price may be putting in a bottom of some sort:
The most recent pitchfork becomes a process of elimination:This process can also help you to look a little closer at what price is doingEventually the energy will tire once a level is reached where buyers are collectively interested. Until then, you keep moving the Lower Median Line down until the first seed wave holds and the highs above bring demand rather than supply.
Currently the Higher Low in POT stands around $94 (right around the 78.6% retracement), so a test lower and it would seem we could keeping testing lower (even if for just an instant, a new seed wave would then take shape) until volume comes in to support a price. If $94 holds as the Higher Low, $98 followed by $104 can be in play.There is now a Longer-term pitchfork in play, adjusting as our lows are made, and shorter time frame pitchforks to gauge your trading time frame potential setups.
In this image above the purple pitchfork is nullified. The yellow pitchfork shows price pulling back to the Lower Median Line (LML) that also happens to be the LML of our longer term pitchfork (red). Price showing support at $96 could be a good entry long (as a day trade) imo.

Will it bounce!?

Shortly we should see a bounce or drown moment for AMZN. Perhaps a bounce higher could bring price back to $140 given a strong market headwind or, at least the midline of $135.
While to the downside, $110 is the low from an Oct. '09 momentum gap up, and $93-ish would be a gap fill and previous Resistance-turned-support level.
The previous two bounces were weak but it should be apparent very soon which way the crowd is leaning.

Chart for the Week

Looking ahead this week it will be very interesting to watch the Dow Jones Industrial Average and how it will deal with the confluence of overhead resistance.
Similar resistance above for the Dow Transportation and Utilities Index. Curious thing about these two is the Right-Angled and Descending Broadening formations taking shape (a bullish pattern).

Owned

Bulls were owned today while looking for a dip to buy. You only really need to see one chart from today; that being the SPY with TICK distribution, unbelievable:We've nearly filled the gap left from earlier this month:We did breach the trendline in place since the March lows on strong momentum.
Speaking of trendlines, let's look at other markets with a similar theme:
There's the IWM trend broken, ouch!
Ditto the Q's:
The DIA, however, is lagging (but then look at some of the stocks that comprise the Dow Jones Industrial Average, who wants half of 'em?):The Dow Jones Transportation Index leading the way:
These trendline breaches are important in the sense that when we do "bounce" we'll have to watch how these trendlines are tested and/or recovered. Take the Dow Jones Utilities Index for example. It breached its trendline, "bounced" back in an attempt to recover the trendline, only to fail.Watch for snap-backs to these broken trendlines and whether they can recover or if they're seen as opportunities to sell.