Thursday. That's what the SMH does when it's ready to move. It puts its swerve on. At ValhallaFutures, we use Event Concepts to define swing trade signals. And although the bulk of the work is focused on the shorter term intraday signals, an expanded version of the rules can be applied to the longer term end-of-day swing trades. Today, just such an Event Concept signaled an immiment turn for the weekly trend. The Russell 2k (symbol MR) filled a gap left open from Sep 22, the SMH displayced significant divergence, and furthermore displayed a topping pattern well-documented in the manual Pivots, Patterns and Self Recognition. A collision of pattern fruition and relative price. Come trade with us and learn the rules of these important signals. Check in at daytradersmethods.com.
Tuesday: Catching the early trend is the single most important focus of the day for floor traders. Nothing has more meaning and importance to their business. Some say that floor traders have an advantage over those working from their screens when trying discern early direction. They have noise, paper order flow coming into the pit, an immediate source of news and associated rumors, and an easily kept eye on the best traders around. But those of us trading off the floor from our screens have an advantage floor traders don't--if we would only learn to use it correctly. We have charts, and and a rule-based approach to go with them. What may seem like chaos to the inexperienced is like a piece of music when you learn the notes. The sell signal for today's downtrend was just such a sweet harmonic chord. How can all that pit noise compare!? Come join our trading room at daytradingmethods.com. Hear the music...be the trend.
Monday. Most of the signals garnered from leadership mentioned in this blog are from the Opening and 1st Hour Time Period. Holding positions overnight is higher risk. And in the futures markets, protective stop-loss orders placed in the Night Session in anticipation of tomorrow's Opening outcome run the risk of not being executed at all. But sometimes the leadership of the SMH is like a road map of what will happen on the following day, and is worth the risk. For instance, scroll back a couple days to the previous post of Thursday, September 24. The subject was bifercation. The SMH was in an ABC upward correction while the Dow futures, the YM, was continuing its downtrend from the day before. Now study Friday's end-of-day chart above. Friday's YM was a Sequel to Thursday's SMH Prequel. But bifercation occurred again on Friday, signaling that most likely, the YM would follow the SMH right back down. If on Friday, at the end of the day, I had put up a blank chart for the YM, and asked you to take a position for Monday's Opening based on what you see in Friday's SMH, which way would you position your trade, long or short?
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Friday. The first trade of the day usually has limited trend expectations, but it can often mean the difference between having a good trading day or not--but you only have seconds to make up your mind about it. And moreover, if multiple contracts are being used in a money management scheme to retain a partial position, then the first trade of the day can last the whole day. In any case, a decision to take one direction over the other in the first few minutes after the opening requires a clear and concise rule-based approach for immediate decision support. Take the course Pivots, Patterns and Self Recognition and learn why a buy signal occurred for the initial day's trend so quickly after the opening today. (Click to expand the chart above.)
Thursday. So it's bifercated....so what? No doubt you've heard this 25 cent word on a financial cable station before. It means the market direction is forked, one group going one direction, one in the opposite direction. Like today. The S&P exhibited good downside follow through to yesterday's selling, almost as a Sequel to yesterday's Prequel. The SMH, on the other hand correcting back upwards against yesterday's sharp thrust down. Moreover, you could see this taking shape in the first thirty minutes of trading. But so what? Knowking what kind of day model might be at hand can make or break you're whole trading day, that's what. Come to the chat room for Valhalla Futures and take the course that goes along with it. Learn why day modeling and their accompanying early warning signals can shape the way you trade.
Wednesday. The psychological decision environment the trader faces each day is full of challenge. Many of these mental challenges are the same from day to day. Take the one wherein an opportunity to get on board a significant trend already seems to have slipped away before it is even recognized. Sound familiar? Very often, a daytrading trend of such significance will extend out over the entire day as a continuous trend day. On the face of it, such a day would seem to contain the best and easiest of profit opportunities, with hardly any hesitation or back pedalling throughout the day. And yet, how hard it is to quickly recognize and meet such a day with confidence in time enough to take best advantage with an early position in the right direction. Take today, for instance. Note the weekly market background description from which it sprang: more signs of growth in the economy, with yet higher stock prices pushing the psychological background into bullish euphoria. The pressure surrounding the trader not to be left behind is hard not to resist. And then the sharp gap down, catching everyone by surprise.
If you're still bullish into this gap down, the temptation to fade it for a recovery rally is strong. And if you've seen it correctly as a long awaited correction, price is already so far below the previous day's closings that the opening seems almost to far gone to participate. So what do you do? You might choose to wait for higher prices and end up missing out on the bearish trend altogether; you might try to get even with the market for doing this to you by going against the trend, trying to pick the top or bottom; or place only tentative sell orders along the way that get shaken out quickly by counter trend bull spikes until you throw your hands up in disgust at the day in exhaustion. It is only at the end of the day, looking back over it that the correct strategy now seems so simple: get in early and out via a market-on-close order.
Take the course Pivots, Patterns and Self Recognition and learn the signals that would have gotten you short on this day shortly after the opening and then again before the big break down later in the day. A better mental decision environment awaits you...