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Drats! Here it is 7:05CT and I haven't seen my 6:40 post returned to
me yet. If this is a duplicate, I apologize.
Bob Hunt
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T-BOND DAY-TRADING FOR FRIDAY, MARCH 5
released 6:30AM CT, 4/5/99
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Support, Resistance, and System Signals
USM9
R3 120 13/32
R2 120 3/32
R1 119 24/32
DP 119 17/32
S1 119 6/32
S2 118 31/32
S3 118 20/32
TODAY IS AN NR4 DAY!
TODAY IS ALSO AN NR7 DAY - GREATER POTENTIAL TO MOVE!
If during the day tomorrow YH of 119-27 is exceeded then either buy
the breakout (agr) or buy the retracement to the breakout (cons).
If during the day tomorrow YL of 119-09 is exceeded then either sell
the breakout (agr) or sell the retracement to the breakout (cons).
*** If no other direction is specified by other indicators ***
** favor that of the 100 min. 5 Double Stoch 2 period slope.** _UP_
Today is a 2 Day ROC BUY day - Look for intraday signals to go long
Today is an NR4 & 2 Day ROC BUY Day. DEFINITELY TRY TO GET LONG!
MONITOR FOR HOLY GRAIL SETUPS! If the 5/15/30/60 or 120 min ADX>30
then look to trade the bounce against that period's 20EMA with the
last intraday swing pivot extreme as the target.
Watch for OOPS! Trade - If O < YL then buy YL on a stop.
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Commentary
For yesterday’s market we had a 2 Day ROC Sell signal and a C<=20% Of
The Day’s Range signal working for us, but it would have been very
difficult to make any money! The initial drop from the open just
happened too quickly for all but the very nimble. The rest of the day
was spent bouncing back and forth between yesterday’s low at 119-22
and S1 at 119-10. Not very exciting stuff! But that kind of low
volatility can be expected on the day before the Unemployment Numbers
are released.
For today we have an NR7 and a 2 Day ROC Buy signal going for us. The
NR7 tells us that we’ve been going through a period of contraction,
and that in all likelihood, we’ll have a breakout of yesterday’s range
in store. But we certainly didn’t need an NR7 signal to tell us that.
That’s just something you should expect might happen on a big release
day. In addition, I wouldn’t put a whole lot of stock in the 2 Day ROC
Buy signal. The market has been holding its breadth, waiting for
today’s release, and it will become the trigger point in determining
the market’s next course of action.
Unemployment Friday is always a tricky one. It can typically lead to
extreme levels of intraday volatility in the bonds. I just don’t have
any concrete advice about entering Unemployment Friday except . . .
STAY OUT! . . . at least until 5 or 10 minutes after the report
release time (7:30 CT). Other than that, I have a couple of favorite
patterns that I like to look for immediately after the report is
released, but they are a bit more complicated than I care to get into
here. Two that seems to work well on these days are from "Street
Smarts". They’re called the Spike & Ledge and the Fakeout-Shakeout.
If you have the book, you might want to review them. But even here,
I’ve found that the stop needs to be placed further than I normally
care for.
Even with the potential increase in volatility, the heart of the
matter still boils down to identifying support and resistance levels
and watching how price reacts near those levels. So, if you decide to
trade today, you still need to do your homework and come prepared.
It’s just that its hard to devise an opening strategy when you know
that the market might be susceptible to extremes in volatility.
There IS one technique that I’ve noticed can come in handy when the
market makes a large impulse move. I’m always a little gun-shy about
jumping on board during these moves. Such volatile spikes often
require very wide stop placement. And I’m ALWAYS on the lookout for
ways that I can reduce my risk (which, of course, includes not trading
at all!). However, if you pay close attention to the 5 min. 20 EMA on
days like today, sometimes you can come out all right. If, for
example, we have a large impulse move upward, rather than using some
sort of breakout entry where you have to place your stop past the
extreme of the swing pivot, you can, instead, just sit back and wait
to see if price eventually returns to the 5 min. 20 EMA. If it does
so, and a price reversal pattern develops near the EMA and a
previously identified support zone, you can go long with your stop
just below that zone. You won’t catch the hero moves this way, but you
can still make some good money, AND you reduce your risk considerably.
Another important item of note on highly volatile days: The DP and S&R
levels posted at the top of this report can quickly become absolutely
worthless if the volatility is extreme. The calculations of those
values are based on the prior day’s range and close. The range on the
day before the Unemployment Numbers is typically very tight, because
none of the players want to go out on a limb just prior to this
release. Trying to use S&R numbers which are calculated from a very
tight-range, low volatility day to trade a highly volatile wide range
day just doesn’t make a whole lot of sense. To put it in author Tony
Plummer’s terms in "The Psychology of Technical Analysis", when
unfamiliar information is introduced to the system, a "price shock"
occurs, "and the system may have to change its dynamic structure in
order to cope."
Perhaps the best thing to do on a day like today is to come prepared
with a number of pre-identified intraday swing pivot extremes on both
sides of current price. Coming into the day armed with this
information and a watchful eye for Holy Grail patterns might be the
best strategy on a day like today.
Then again, if you’re an independent trader, you COULD just shut down
your computer and go do something else entirely. Oftentimes, that can
be your BEST course of action.
I might just go take my four year old to the zoo today!
Bob Hunt
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I am what I am . . . and that’s ALL that I am! - Popeye
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