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Got it. I call these extreme spikes and use them a lot. I like to find
situations where (like this morning) the market is really overbought in the
hourly perspective but I really prefer that the market be near some sort of
prior support or resistance. It is a very powerful reversal signal that
works often. I did a study (like the three drives PDF) for my clients a
few weeks ago. When we exhaust the three drives stuff I will dig it out
and put it on the list.
Yeah, If you aren't trading with an S&P chart up with your bonds... you are
being foolish.
Stewart
At 09:46 AM 9/11/98 -0500, Timothy Morge wrote:
>Stewart:
>
>I call it a RR track...it's a price spike in one direction that then
reverses. I
>really like them when price makes a new extreme, then opens near that
extreme,
>retesting it and either just failing there or making another new extreme
high or
>low and then failing quickly. The prettiest of these formations are the ones
>where the second bar engulfs the first new extremep[a key reversal bar]. I
hope
>this describes a formation you can picture--I think my word skills
diminish as I
>trade during the day.
>
>Stops...well, in this market, that's gonna always be the problem.
>
>First, when the SPs started to give all their ground back and the bond
couldn't
>get back below 12900, I took profit and went flat. I don't want to get caught
>short today.
>
>IF we had taken out that 12827 low and added to the short, I would have
put an
>immediate disaster stop in the 129 12-14 area. I'll look closer now to
see if I
>can fine tune where the stop should have been.
>
>Best,
>
>Tim Morge
>
>Stewart Taylor wrote:
>>
>> Note that the broken t-l is now acting as resistance. Would hate to see
>> price spend much time crawling up the underside of the t-l (like
>> yesterday). You are right on (in my opinion) as to adding on a break of
>> the mornings low, but where would you put your stop?
>>
>> I don't follow your comment about the r-road track. Would you mind
>> elaborating?
>>
>> At 09:26 AM 9/11/98 -0500, you wrote:
>> >Stewart:
>> >
>> >Yes, I saw that as well and I thought about it for a good minute or two
>> before
>> >selling half a unit in bonds and in ten years.
>> >
>> >By the way, take a look at a 40 minute chart in bonds if you can, with the
>> >starting time of the open this morning. We have a nice looking RR track
>> from the
>> >highs today. Although I am treating the short position as a scalp, if
we take
>> >out the lows we just made at 12827, I think this could accelerate fast
on the
>> >downside and I would add on a break.
>> >
>> >Best,
>> >
>> >Tim Morge
>> >
>> >Stewart Taylor wrote:
>> >>
>> >> Another three drive move with a trend line break in the bonds this
morning.
>> >> Note the clear three drives on the 15 minute chart. 1st drive to
128.22
>> >> (09/10 @ 10:05 AM), 2nd drive to 129.17 (09/10 @ 2:20pm) and the third
>> >> drive this morning @ 129.23 (09/11 @ 9:50am).
>> >>
>> >> There are overbought conditions in all perspectives and the momentum is
>> >> declining. The set up was a very nice one.
>> >>
>> >> In this case the t-l intersected price at 129.12, Entry stop @ 129.10
was
>> >> filled cleanly and the initial break took prices as low as 128.27. You
>> >> have the choice, if you think that the break is going to be bigger of
>> >> holding the trade or treating it as a scalp (a better idea as all the
>> >> underlying trends are up).
>> >>
>> >> Anyway.... Im still trying to stimulate some discussion.
>> >>
>> >> Stewart Taylor
>> >> Taylor Fixed Income Outlook
>> >> Voice: 501-219-9774
>> >> Fax: 501-228-0963
>> >> E-Mail: staylor@xxxxxxx
>> >> Web Site: http://www.cei.net/~staylor/
>> >
>> >
>> Stewart Taylor
>> Taylor Fixed Income Outlook
>> Voice: 501-219-9774
>> Fax: 501-228-0963
>> E-Mail: staylor@xxxxxxx
>> Web Site: http://www.cei.net/~staylor/
>
>
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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