ES 2005 Archive
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We will ignore the POC from Friday since it was a half day. We will not take the R1 short but will observe it on paper.

 

NTR for Thursday:
1227.50 is the Volume POC from yesterday, and 1220.50 is the Time POC.   Typically we only tke trades off of the Time POC's, but 1227.50 should be a good short pivot.  Likewise, keep an eye out "below" for the 1220.25.  We will definitely short 1233.50 using the Universal Method for trade entry.

The market closed right on the day's POC, so we'll have to wait and see which side it opens on tomorrow. If it opens within one point of the POC, then we won't use it for trades.  We'll also consider trades from 8:30 eastern onward.

 

 

Friday 10/29 5:30 PDT
ES Short signal at yesterday's POC:

10/27 12:00 PDT
We're going to take a look at the Oil Emini contract (QM Z5 on Interactive Brokers, QM #F on Ensign for the continuous contract).  Here is a POC chart for the past month.  3-minute chart looks good for the Universal setup.

This chart shows the Virgin POC's for the ES. 
It's worth keeping one handy.

10/26 7:40 PDT
Here we exited all at Keltner because there was no room to move the stop to  break-even, which is the normal method.  When the trade moves against you and the Keltner exit is at break-even or near, and there is no room to move the stop on the remaining half to break-even, it is safer to simply exit all.

10/26 7:20 PDT
Just a comment here, there was a buy setup at 8:30am and that was the proper signal to have taken.  This illustrates how even an objective method can be subjective if you don't see what the charts are telling you.

This also shows a five wave pattern from the long entry point, with Wave 3 ending at our sell point and prices extending up to the Wave 5 target areas of 1205~1206.

 

 

Wednesday, 10/26
ES sell setup but watch for stochastic confirmation

 

Tuesday, 10/25
ES closed right on the POC for Tuesday.  If the market opens Wednesday at 1199.50 then the POC will be invalidated.

Monday 10/24
The second touch of Thursday's POC shows why the Virgin POC is much stronger than a regular one.  Once prices have visited the point and retraced, then next time around they will often move on through.

Monday 10/24
The Natural Trading Range is shown below.  The market will open right on (or near) Friday's POC of 1185.75, thus invalidating that as a Virgin POC.

 

 

Thursday, 10/20 7:00 PDT
U.S. SEPT. LEADING INDICATORS FALL 0.7% V. -0.5%

Wednesday, 10/18, 6:20 PDT
The market gapped down to 1174, dropping to the mid point of the Natural Trading Range for today, as shown in the chart below.

10/18 11:35
This is similar to the NQ trade, but on the ES prices touched the Keltner so we were able to at least get out with 1/2 before taking the conservative break-even stop on the remainder.  Longs are always riskier than shorts, and the equity curve bears this out. The trade is shown below.

Long trades on the S&P Emini stop at -3. You can also trade without stops but historically this is the optimum place to stop out of a long trade.

Monday 10/17 7:00am PDT

Déjà Vu, All Over Again (and again…)
by Steve Selengut


During every correction, I encourage investors to avoid the destructive inertia that results from trying to determine: "How low can we go?" and/or "How long will this last?" Investors who add to their portfolios during downturns invariably experience higher values during the next advance. Yes, Virginia, just as certainly as there is a Santa Claus, there is another market advance in our future.

Corrections are part of the normal “shock market” menu, and can be brought about by either bad news or good news. (Yes, that’s what I meant to say.) Investors always over-analyze when prices are weak and lose their common sense when prices are high, thus perpetuating the "buy high, sell low" Wall Street line dance. Waiting for the perfect moment to jump into a falling market is as foolish a strategy as taking losses on investment grade companies and holding cash.

Repetition is good for the brain’s CPU, so forgive me for reinforcing what I’ve said in the face of every correction since 1979… if you don’t love corrections (and deal with them like visiting relatives) you really don’t understand the financial markets. Don’t be insulted, it seems as though very few financial professionals want you to see it this way and, in fact, Institutional Wall Street loves it when individual investors panic in the face of uncertainty. Psstt… uncertainty is the regulation playing field for investors, and hindsight isn’t welcome in the stadium.

A closer examination of the news that’s fit to print (but isn’t printed often enough) should make you more confident about the years ahead, whatever your politics.
 
The good news is very, very good: 1. Employment, jobs, and unemployment numbers are as good or better than they have been in years. 2. Manufacturing numbers are stronger and trending upward. 3. The “core” inflation rate is historically low. 4. Interest rates are also historically low. 5. Durable goods orders are trending upward. 6. Corporate earnings reports have been strong. 7. Corporate dividend payouts have been increasing. 8. Equities, as an Asset Class, are considered the most fairly valued, when compared with Real Estate, Fixed Income, and Commodities. 9. Income Tax Rates are at low historical levels, particularly with regard to investment income. 10. Gross domestic product is growing.  
 
The bad news isn't all that bad, pretty much the same ole stuff: 1. Hurricane Damage. We’ve actually had fewer major storms than anticipated. The ones we’ve had were devastating, but the rebuilding/preparation task ahead will be good for the economy. 2. War in Iraq. There’s always been a war of some kind, somewhere. It’s bad, but only the battlefield has changed… and war has also always been good for the economy. 3. Politics. We have an unpopular President who can’t seem to get out of his own way. Who were the last ones that were loved? Didn’t they have wars?   4. Wall Street/Corporate scandals. Hardly new and never economy busters. 5. Energy prices. I still don’t see gas lines, and maybe somebody will push for added refining capacity. 6. Trade deficits. News would be giving foreigners more money so that they could buy more of our products. 7. High consumer debt. New? Not. 8. The terrorism threat. A major serious problem for the past how many years? The federal regulatory agencies probably do more damage to the economy. 9. The Avian Flu pandemic? Maybe, but not yet, and we’ll really need those bad boy drug companies then, won't we? 10. The Anniston/Pitt break up, and neither the Yankees nor the Bosox in the World Series. Now we're talking!

Clearly, there are no new (economic) problems to be overly concerned about. And for now, we simply (and I mean simply) have to deal with the opportunities at hand. Low, but increasing, interest rates force fixed income prices down and yields up… Opportunity One! Economic good news encourages higher rates to reduce inflationary pressures causing equity prices to trend downward… Opportunity Two! These forces of good are intersecting with the dark side of calendar year mentality Wall Street, causing premature tax loss selling and portfolio Window Dressing… Opportunities One and Two squared!
 
There is an Investment Mindset Solution for the problems that most people have dealing with corrections, and rallies too, for that matter. I’ve never understood why “yard sale prices” here are so scary. What if you cut off a finger each time you get a splinter? Wounds heal, and so do the prices of high quality securities.
In recent years, Wall Street and the media have turned the process of investing into a competitive event of Olympic proportions and stature. What was once a long term (a year is not long term), goal directed activity, has become a series of monthly and quarterly sprints. The direction of the market isn’t nearly as important as the actions we take in anticipation of the next change in direction. Performance evaluation needs to be rethunk (sic) in terms of cycles!
 
The problems, and the solutions, boil down to focus, understanding, and retraining. It would be impossible to cover each of these issues here, but here are a few teasers. You need to focus on the purposes of the securities in the portfolio. You need to understand and accept the normal behavior of your securities in the face of different environmental conditions. You need to overcome your obsession with calendar period Market Value analysis, and switch to a more manageable asset allocation approach that centers on your portfolio’s Working Capital.
 
But for now, relax and enjoy this correction. It’s your invitation to the fun and games of the next rally.

 

This is the natural trading range for Monday.

Sold remainder at Reversal signal for +6. Notice how prices dropped after the stochastic showed overbought.

Sold half at the Keltner band for +3.5

10/14 6:35 PST
The S&P 500 Futures market gapped above yesterday's POC so the sell line is 1199 and the buy line is 1180.75.  Notice the Fibonacci progression on the downswing and the 123 reversal to the upside.
 

 

10/13 9:15 Pacific
Today's trade is a good example of how the method works. Scroll down to see the Natural Trading Range for the day (6:37 chart). You can see where our short area is. Then look at the next chart (7:47) which shows actual entry based on cross of the long and short time frame stochastics.  Note that we do not just enter at the POC line.  We wait for the sell signal, and trail the entry after that. Of course, you can use any method you wish for entering the trade, as long as you are consistent.  If you change methods mid-stream, you will open yourself to losing trades.  Same applies to stops and exits.
 

 

 

I/RT (Mac) Version of the same trade:

 

 

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