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It looks like the chart didn't make it through attached this morning.
Let's try that again.
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T-BOND DAY TRADING FOR MONDAY, MARCH 8
released 6:30AM CT, 3/8/99
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Support, Resistance, and System Signals
USM9
R3 123 23/32
R2 122 18/32
R1 121 14/32
DP 120 15/32
S1 119 11/32
S2 118 12/32
S3 117 8/32
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
Well. . . THAT was interesting! We certainly got the volatility that
was hinted might happen in last Friday’s commentary. Pretty
breathtaking stuff!!! That’s why I recommend you stay away from that
kind of market during the initial impulse phase. You just DON’T want
to get caught up in the insanity. If you attempt to initiate or close
a position under those kind of fast market conditions your fills are
going to be absolutely terrible. And worse yet, due to order backups,
you won’t know it for several agonizing minutes, which makes it even
more difficult to devise appropriate exit strategies. It just isn’t
worth the ulcers!
Early on in the day, a potential double top formed at the highs, but,
at that point, so soon after a large upward impulse move, I would have
considered a trend to have been established, and any short position
would have had to been considered as low potential. The "Street
Smarts" Spike & Ledge pattern, mentioned last Friday, would have
worked, but, again, the stop would have had to been placed further
than I normally like. As price gradually drifted lower, it eventually
came in contact with the 5 min. 20 EMA near a support line created by
a 2/26 intraday pivot high, but there was no price reversal pattern or
oscillator divergence to buy on, so that set-up should have been
passed-up. There was a bit of a bounce off the 50% Fib retracement
level near 120-19, but by this point, the market just seemed to lack
any sort of bullish enthusiasm.
All in all, market action after the initial thrust was just very, very
sloppy. Which makes me believe that we might just have more of the
same for today. We have absolutely no system setups for today, so we
won’t get any clues for determining a bias from there. The one thing
that we have going for us is the fact that our cycle indicators have
registered a bottom. Both the 200 min. Double Stoch and 7 period %K
(attached chart) have turned up from oversold zones, indicating a
bullish stance is appropriate. But, I’m just not convinced yet. Not
until price action can dance a fancier step for us!
And that’s exactly what I’ll be looking for very early on. We have
several layers of support directly underneath current price. There’s a
late day intraday pivot low at 119-31, a 3/4 daily high at 119-27, and
a 3/4 intraday pivot high directly under that at 119-25. This is a
pretty good band of support. One might consider taking a long position
on any sort of price reversal pattern or oscillator divergence off
this zone, but you would have to be prepared for the possibility of
price drifting as low as last Thursday’s low of 119-09. That’s a
little too far for me to keep a comfortable stop.
Our DP level for tomorrow is 120-15. The nature of tomorrow’s price
action near that level will ultimately determine whether I can
maintain a bullish bias or not. Because the market has been so sloppy,
its probably going to take it a while to get its bearings. It will
take some time for it to "change its dynamic structure in order to
cope", as Tony Plummer would say. It might be best just to sit back
and wait to see if the market can, indeed, get its bearings and forge
onward and upward.
Ideal scenario would be some choppy market action in the morning that
eventually establishes some sort of base to work higher from. If the
market can then muster enough energy to thrust through the DP, I can
begin reestablishing my faith in a bullish bias. If the market then
returns to the DP and gives us a price reversal pattern or oscillator
divergence to buy on, I will thank the bond gods once again and get
long.
As I ready the commentary for its 6:30 CT release this morning, I
notice that in the overnight market we have price dancing around the
120-15 DP. We just might have cause to turn bullish very early on!
As always, identify support and resistance zones and watch price
action closely near those zones.
Bob Hunt
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By learning to make more distinctions, we increase the depth of our
level of understanding of the cause-and-effect relationship between
everything that exists. - Mark Douglas in The Disciplined Trader
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