KNOWING AND DOING: WHY YOU HAVE RULES 11/30/12

BOT TRADING SYSTEM

It seems inevitable, but somewhere, someone will post an end-of-day chart and tell you how it was a great day to trade.  How at Bar x and bar y you made a killing trading.  Hindsight is great, albeit when your live and going bar-to-bar  the market is a different animal.

Look at the range of the opening bar:  intra-bar swings as much as four points.  If you shorted the first PB at B3,  B4-6 most likely took many out and produced a holding loss.  If you shorted B8, B9-11 went against you.  EMA long/short did not fair any better.  You took scalps to two points if lucky, or BE on reversal bars.  The first clear entry was the two bar doji (two bars that negate one another acting like a single bar doji) short at B11-12 and again at B19-20.

That brings us to establishing and following your rules.  The trend at the open was a bear channel, range run.  The BOT rules look for and expect a range run if the BOT extremes fail. It would say hold for the range run to complete, which it did on B1 and 2.  Being range bound yesterday and PA suggesting Friday would be the sane, the US play would be to long the SB FBO.  PA was bullish until the upper TL of the bear channel, and the Middle BOT which was the same value as yesterday's LB.  Reasons to look for a stall in PA and short with the channel trend.  Again, that opportunity was at the two bar doji.

PA followed the channel until B25-26 when the second  buy support was hit.  The first was at Y-SB.  B25-26 is also a reversal pattern, the "L" variety.  By B40 we have a supporting bullish TL as PA reverses the range, with a reversal (r variety) at B59-60 that tested the LOD once more when buyers again jumped in for the final range run of the day.

The reversal patterns that are likely to work look like certain letters.  For bull reversals (at a low) look for a J or L pattern.  At the tops, look for a 7 or r pattern.

Hindsight: it was a great day.  Rules: it was a great day, and makes the DOING easier by removing the emotion of the trade.  Was it easy? No, but certainly easier than the fear that came in when PA danced 2-4 points before completing the ranges.  By B25 we were more settled, and back to normal, if any market can be deemed normal.

EURO NEWS

BOT TRADING SYSTEM

For our Euro Zone visitors ( other visitors too!) we have a special review and BOT Analysis for the Euro (USD_EURO) currency.  send us an e-mail to get  that link.

CM

NEWS: EXPANSION AND RANGE BOUND

BOT TRADING SYSTEM

The market pros love news:  it helps move the market often at the expense of those that try to jump on the moving train on to see the pros switch direction as they dump into the late arrivals, either buyers or sellers.  The sell side seems better, as covering fuels the market move.

Everyone has seen it.  Market begins to move before news.  "someone knows!"  so average Joe jumps.  The news comes out, and the market moves in an opposite direct!  What happened?  You were just played the "pump and dump" or the "sell and bail".  Look at bad news that sent your long into defeat.  If it is really "good" news (for the pros), it will resurface.  Examples are any Euro Zone country that had a debt issue.  Greece this/that market sells.  It seems to disappear only to be "an issue"  again when convenient for the pros.  It never went anywhere; just on the back burner until needed.

The next news type is the standard information that comes out regarding consumer sentiment, unemployment, prices, etc.  A good economic calendar can give you these dates, types, and a personal value as to the importance of each release.  Earnings are important and can be an individual stock mover, and market if the stock is an important element of the market value calculation.

The last category is Government Speak, and this is the market wildcard.  An official can say the wrong think at the right time (or right thing-wrong time) and send the market in a frenzy.  Government Speak is unpredictable.  yes  Treasury-FED types try to temper what they say, but even that is not a given.

News is, well news.  Sometimes less is more, and more is less.


WEDNESDAY 11/28/12

The news effect is evident.  Selling was in command until a Government Speak gave a strong endorsement to a financial cliff solution.



THURSDAY   11/29/12

Range bound because the Government Speak was not what it seemed;  it was reality that moved the market.  PA found it difficult to break the LB and the SB and range runs ruled the day.

The sell bias continued in the after hours with another range run, 5 point sell off.

POST HOLIDAY TURKEY 11/27/12

BOT TRADING SYSTEM

OK, bulls used low volume holiday feasting to run the market up.  Post Thanksgiving, the world seems out of  sync an ready from a massive repair.   Best news seemed able to do early on was run the ranges.  But the outlook early on was toward the short side, and the shorts won.



11/27

System 1

System 2

and a look at 11/27 with fixed BOTs from 11/26

Monday the 26th

 Range bound with an early run to the SB.  It failed, and a range run to the opposite level and a break out was expected.  The market complied.

REDUCED HOURS BUT EXCELLENT BO 11/23/12

BOT TRADING SYSTEM


The BOTs were set earlier than normal, and the MID location nearer the LB gave a hint of bullishness.  The hint was good, and we saw a near BO 15 hit with the EMA playing support.  If you miss the LB entry, then look a quality PB and play the trend.


5m CHART

THE DAILY LOOK

The bear reversal was good for us.  It hit the 1340 support  with relatively little bull movement. We were looking for a PB before the next leg into the 1500's.  The recent low Signaled, and it was off to the races for the bull over the holiday stretch.  What is interesting, we are at a key resistance which brings to question:  do we get a double bottom before 1500?  No signal back in August, but close for a double.  We are closing in on an inverted H&S variation which bulls need to break.



THE 233M LOOK

The 233m chart essentially breaks the day into two trading zones:  the AM  and the PM.  Each has different (perception) buy and sell characteristics.

Again, at key resistance that the bulls need to break.

24 HOUR BOTs 11/20/12 to 11/21/12

BOT TRADING SYSTEM


MONDAY began with a range bound attitude and a bearish bias (Lower Mid Range).  All after a volatile Euro Zone.  The open looked good as PA moved lower to the SB (Short Break Out Target).  STALL,  So much for the bear as PA reversed for a range run to the opposite target (LB).  The expectation was a run to the +5 or BO 5.  After all. we were in a bullish channel and Pa had a BO of the B1 50CB and we were North (+) of the 45degree TL from the 50CB.  All bullish signs.

But, PA reversed short of the BO 5, and the expectation was "a reversal and range run back to the opposite target and a BO 5 attempt".  So, a reversal and range run from the LB to the SB then a short BO 5.  OK 1 tick short, and PA reversed.  Read prior!.  Range run to opposite and BO 5.


 MONDAY

AFTER HOURS LOOK AT BOTs

After the run to the BO 5 we see the exit signals and the run back to the SB and the long signal near 23:20 that began a nice bull run going into the Euro Zone trading.  TL's are not added (sometimes a chart can be cluttered!) but you get the visual with the two arrows.

Tuesday:

New BOTs for the US Open  for Tuesday were again narrow, but this time favored the bull (Mid higher).  By the way, the Mid is not a 50% level between the LB and SB and sometimes is omitted.

By the open were in a range run down with a bull BO TL at the upper price hits.  B8 and 7 bears ran the entire range but there was no follow through.  By B12 we have a FBO with a signal establishing a new bull trend channel from the ascending triangle (top is the MB).  Zig and zag PA pushed higher to the BO 5 to the tick.

TRADITION PAYS 11/19/12

BOT TRADING SYSTEM

THE Monday before Thanksgiving has a track record that favors the bull.  Today did not disappoint.  After an early short  the market flash a long at the SB.  The alert was issued, day done, so to speak.

alert: longs 68.75 and shorts 66.25 for PA BO opportunity.

The long buyers were likely to get +10-12, which in this case took us to the BO-10 area.  Sideways action and a new HL buy for the next BO move for the bulls.  The final exit was the PM high.

THE WORKING CHART

a 50CB at B2 was the next controlling point from the AM long.  At the 50CB, I like to watch for a test of the horizontal ( a FBO tends to continue the prior trend, resist, where a BO tends to be a great reversal) and watch the 45 degree (bull or bear).  Today, PA followed that 45TL until we had a PA correction to the .382 from the high.  Same point for the new buy signal that gave the new push to to BO 15 and the bulls exit.

WEEKLY LOOK

At the lower channel TL, hit the daily 50CB target around 1340 and seeing a buy signal, similar to the HL buy that continued the bull bias.  Time to celebrate!  But...

My gut feeling is that we will see a new low test before the actual bull rebound.  Friday and Monday were aided by temporary news.  Let congress and the President stall on the "cliff" and we push down again as new fears of a recession appear.  This fear is needed.  A substantial bull (or a bottom different view) is developed when there is wide spread fear.  By the time the general population catches on, the pros are well entrenched  at better prices.

ANOTHER LOOK

THIS view, we see the buy again at the bear channel low and a BO to run to test a key resistance level.  This is likely to push back into the channel and deplete the "news" buyers and allow the pros a better entry point.  A double low shake out, doom and gloom, makes for an interesting point to build the next bull leg,

week ending 11/16/12

BOT TRADING SYSTEM

This is the first post since October.  November has been a personal trying month, and the markets have been fantastic.  Both causing the need for time to reflect, repair. and look forward.


Friday 11/16


Overnight trading had settled in a range.  Earlier we (assumes chat crowd followed) took shorts in the 49 zone.  As the Euro zone developed. PA would test highs around 52 and back to 45 lows.  By early morning US we were at highs again and saw a reversal run the range to establish new lows.  We eventually got the discussed  daily 50CB around 1340.  This was a support level on the daily chart.

Buys there led to a range run back to the BO 5 level from the pre-open.  A 50% retrace back to the triple bar 50CB area created a HL which again offered a nice return for bull longs.

A small wedge, followed by a larger wedge,


DAILY

We still have a gap from current PA to the last 50CB  bearish TL.  The TL is roughly a 45 degree TL (bull or bear) from the 50CB point.

This has bulls struggling against heavy resistance at the prior august 3rd 50CB, and the more recent one of  November 7th..  Upper resistance is at 1365, 1370, and the TL 1375.

Given the current economic and political climate, the market is likely to reverse the Friday positives to put in a double bottom test of the 1340.  Whether up or down, we are in a zone that likely will see continued testing- lateral PA in a narrow range-  before it can break out.