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This is the last regular issue of The T-Bond Day Trading Report that
will be made available to the RT forum. I will, however, continue to
make contributions when market conditions or topics of conversation
warrant.
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THE T-BOND DAY TRADING REPORT
Spotting Opportunity in the Treasury Bond Futures Market
Report for Friday, March 19, released 6:30AM CT
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Support, Resistance, and System Signals
USM9
R3 122 25/32
R2 122 16/32
R1 122 6/32
DP 121 31/32
S1 121 21/32
S2 121 14/32
S3 121 4/32
TODAY IS AN NR7 DAY
If during the day tomorrow YH of 122-08 is exceeded then either buy
the breakout (agr) or buy the retracement to the breakout (cons).
If during the day tomorrow YL of 121-23 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.**__DWN__
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
Yesterday's market action was not much to speak of. Price meandered
about the DP all day long with no clues as to what the longer term
direction might be. This is the kind of market that is dominated by
the floor professionals with very little outside participation. The
floor just isn't willing to take it away from the equilibrium point as
defined by the Daily Pivot, and there isn't enough off-floor interest
to push it one way or the other. Trading is oftentimes like this. But
that doesn't mean you can become lax. Major moves usually begin with
minor ones in the same direction. You still need to take your trades
when they set-up. You still need to keep your focus.
The only System Signal for today's trading is the NR7. This signal
tells us that the market has gone through a period of contraction with
yesterday's range being the narrowest of the last seven. If the market
were thought of as a spring gradually being compressed, this signal
represents a potential trigger point for releasing that pressure. A
good clue as to if and which direction it might break can be
determined by today's market action near yesterday's high and low
levels. A break of either level is a likely indication of the new
trend direction out of this contraction period. An aggressive trader
can enter on the breakout. A conservative trader might want to wait
until a return to the breakout level, which often happens before a
sustained move begins.
Some initial clues to breakout direction can often come from early
rejections of these levels. If the high is approached, repelled, and
price then moves through the DP, the likely breakout direction is the
low. Likewise, if the low is approached, repelled, and price goes
through the DP from below, the likely breakout direction is the high.
Another clue can often be found in price action near the DP. If price
is unable to move through this level, the likely breakout direction
will be the same side as it originated.
All of these are if-then clues, but keep in mind that price can also
do none of these, if it so chooses, and may simply coil a little
tighter. Today is option expiration, so that could very well happen.
The 200 minute chart of yesterday's activity (attached) shows that the
Double Stoch has relieved its overbought condition and the 7 period %K
is still trending downwards. The second attached chart is a June
contract daily with two slightly different ways of measuring Connor's
volatility. The colored dashes on either side of the bars on the
topmost part of the chart identify either NR4 or NR7 days. Narrow
Range days during periods of low historic volatility are typical
precursors to sharp moves.
The only report release on the agenda for today is the Treasury Budget
at 1:00 CT. However, Greenspan is scheduled to speak to the Futures
Industry Association at 8:15 CT. He's not expected to say anything
that might rile the markets, but it would be best to be on your toes.
Also, President Clinton is having a White House news conference at
1:00 CT. In overnight activity we have a high of 122-03 and a low of
121-26 (overnight prices are as of 6:00AM CT).
I am entering today's trading with no particular bias. Our cycle
indicators have relieved some of their overbought status, but downside
potential still exists. Historic volatility measures tell us that
market conditions are very much primed for a sharp move, and such
moves often occur after Narrow Range days, so I will be prepared to
make my trades as they occur with the thought that each could
potentially lead to that move.
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THE PSYCHOLOGY OF TRADING
I've read some excellent correspondence lately in regards to outside
influences and what it takes to become a trader. I think the crux of
the ones that have really caught my attention concerns internal,
personal considerations and the soul-searching necessary to
successfully learn this craft. I wholeheartedly agree. Understanding
this aspect of trading is no small feat. One should not minimize its
importance nor relegate it to secondary consideration.
An excellent beginning on that journey is Mark Douglas's "The
Disciplined Trader: Developing Winning Attitudes". I sometimes wrap my
commentary up with a quote from this book, but today, I thought I'd
end it with my own words of insight - be forewarned: Mark Douglas I'm
not.
Never think that any one service, book, or methodology is going to
have ALL the answers for YOU. Learning how to successfully trade is
akin to trying on a great number of suits before you find the one that
fits you best. The experience of others can show you the suits that
others have worn, but only YOU can determine its fit.
Bob Hunt
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Statement of disclaimer: This information was compiled from sources
believed to be reliable, but its accuracy cannot be guaranteed. There
is substantial risk of loss in futures trading. There is no warranty,
express or implied, in regards to the fitness of this information for
any particular purpose. Past performance is not a guarantee of future
results.
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