LAST DAY EXPANSION 12/31/12

BOT TRADING SYSTEM

Fireworks came early as the ES PA ran the range (open at the MB) and moved toward a BO-30 by the end of the day.  Last evening we had a +2 run off the 1390 short.  Two pushes down, a run back to test the 50CB, followed by the 3rd push down and a market reversal.  From that reversal, the market moved for 7 bull pushes running toward the BO-30 level.  I do not have permission to post nicks, and others will be referred to as "X" and charts associated with post are likely omitted.

[09:17] <CM> levels today  96.43-93.25-89.75

[09:20] <CM> last evening after a +2 on the 1390 shorts  buyers created 2 buy spots and tested the 50CB (x) & I were discussing.  point 3 was final low test reversal for buys or some waited until pa was back at pt 1 & 2  all 3 were profitable longs 


[09:24] <CM> bounce at MB  2nd push on high
[09:27] <CM> also note sb became a 50cb bo bar


[10:00] <X> would it have made sense to enter with a limit order at LB?
[10:01] <CM> yes  because it was also a fbo 50cb of b2 at b4-5
[10:02] <CM> and play odds that a 4th push likely
[10:02] <CM> the trend is bull from buy 3 (the lower 3)  so sh is ct pb's

[10:03] <CM> #4 is in but remember  a test is likely before we get a true reversal  and we have Washington talk...
[10:06] <CM> note also  gap to ema is bullish
[10:12] <CM> also that 1400 magical mkt value  seems to be a pivot pt for 2013 mkt


[10:15] <X> limit buy b8?
[10:15] <X> or level?
[10:16] <CM> yes  (bottom of 8)   likely another hod challenge

[13:01] <X> so, what now?
[13:02] <CM> Obama to speak on cliff at 1:30  if you see a bo run grab it and watch your stops

[13:03] <CM> P&I likely to pb  to get a lower entry  if he announces a deal will spike some 10-15 points
[13:03] <CM> pros & institutions  P&I


[13:05] <CM> (X) level 4 bo bo5 bo  at b38

[13:06] <CM> we have time to get back there before President's announcement
[13:07] <CM> if positive  1400 holds and we hit around 1422   


[13:09] <CM> likely:  he announces positive move to agree  and they announce a deal later in the evening  may be after hours
[13:10] <CM> entry note  ema has held all day  likely to continue

The big picture

WHY THE BOT TRADING SYSTEM 12/30/12

BOT TRADING SYSTEM- the break out targets & elements

Since March of 2011, The BOT Trading System has been discussed in this blog.  A tweak here and there, improving definitions and rules. then the addition of the BOT levels and the signals.

The 12/27/12 trading day sums up the BOT philosophy with all the parts in play.  An early failed break out (FBO) at the Long BOT, a range run, a control bar BO at the Short Break out Target (SB or Short BOT), and the four pushes into the BO Levels, the fourth being the reversal about mid range of the BO-10 and BO-15 levels.

People continue to ask, "why five point BO levels"?  This was a perfect response day:  PA moves in pushes designed to create exits, entries, traps, continuation, reversals, etc. (EECTR).  It is our opinion that PA must move a minimum of five points (beyond the BOT range) to create the opportunities mentioned, and PA must move 10-15 points to exhaust most runs.  On significant swing days, the exhaustion may exceed +20.

Control bars creates a micro trading range.  The 50% level of that range is considered a critical area for PA to test:  a FBO, PA resumes the prior trend.  If PA breaks the level, then a new trend is likely.

Similar action can be seen at the MB (middle BOT) or around the mid range of two BO Levels where PA will often find resistance (prior to the next level) and develop a reversal pattern.

EECTR's will be around the BOTs and/or the BO levels.  That, is why they are viewed with importance.  On 12/27 we opened with a 2 bar doji (2BD) at the the Middle BOT.  The MB is not necessarily 50% of the LB-SB Range.  At times, it will be nearer one or the other giving support to a BO in that direction.  By B3 we have a FBO  with a gap to the LB. B4 does not penetrate higher and challenges the 50CB of B3.  We have a known risk ( the gap to the LB) for a short entry.  B7 breaks the MB and begins the bearish gap to the EMA.  B10 is the first major  CB and the CB top and bottom have been added to the chart, as well as the 50CB near the SB.  These areas are important.  Look at PA in this area over the day.  The elements we use (BOTs, 50CBs, etc.) are important for a reason.

PA breaks the SB and pushes to four notable EECTR levels. The gap to the EMA and 50CB FBO makes any long a scalp, and frankly, a trade with limited potential.  There is truth in the saying "trade the trend".  While we would never suggest you hold a position for  five or six points against you,  The BOT System would support a look at such a stop.  While most traders would cut their loss earlier if PA has clues to support an exit, the "five/six" creates opportunities only seen by professionals and large institutional traders.  Look at the four levels down and the BOT levels.  Professionals can enter any of the levels. even add at the next for an average hold value, and hold for the PA reversal.   The BOT System was developed to be predictive and reflective.  Finding those area the P&I group make decisions. 

A reversal at level four (and BOT values with a signal) ran back through the levels for four bullish EECTR's.  The P&I group turned averages into gains, or they sold down the market and bought up the market.  Pick your opinion.  Either way, they made money.

 
Where PA is important, you will find professionals and institutions.  Your likely to find an element of the BOT System too.

LEVELS FOR 12/28 and the results

LEVELS: 12/28/12 and the results

BOT TRADING SYSTEM


PRE-OPEN POST:       ES LEVELS TODAY:   1405.25-1402.5-1398.25

OVERNIGHT AND EURO ZONE

The overnight (US after hours) and Euro Zone trading remained in the ranges and failed to break higher than the Middle BOT, and finally broke the SB in Euro Trading.

US OPEN

Yesterday, the ranges basically stayed the same.  Just a shift where the LB was a BO level.  Today was different.  New BOT levels were calculated. Interestingly, the SB seemed low.  1400 had been resistance bulls bought and supported as we moved higher to 1445.  With no activity to push PA higher, sellers seized upon (and buyers took profit) the government's lack of concern to resolve their spending appetite.  If revenue was the only issue, simple have everyone contribute.  Fixing the problem is an entire blog by itself, and really does not have to be difficult nor require all this drama.

Back to the BOTs.  The SB was oddly out in left field it seemed in the pre-open.  PA was in a range run, albeit finding that 1400 support.

That support remained until the US Open, and the failure to run the range was noted.  The "gap to the SB" had a bullish tone.  Three hits on the LB seemed to be the resistance, creating a trading range for the day.  Then the alert for the fourth hit on the LB:

[10:42] <CM> 1403.5 is the short to the 1400 lows we have 3 pushes to the LB long the 4th (chart link omitted)

[10:50] <CM> we had lows established pa could not push the full range buyers were defending the 1400 area

PA hit the BO-5 level and failed to break it.  Per the rules, a FBO is anticipated to return to the prior level, or the LB in this case.  A lower high develops around the middle of the pullback range and a bearish TL develops.

A steady, low profile selling into the range until the 50CB candle at B74.  Interestingly, the 50CB was approximately the Middle BOT.  It was also a range bar nearly completing the entire range run, and creating the bearish gap between PA and the EMA.

Now the lonely SB is important.  A BO is significant and expected to run a minimum of +5 points.  The strength of the BO and increased gap to the EMA was strong bear signals, allowing seller to capitalize upon an extended run to BO-15.

An end to a nice day, a nice week, a nice month.

Have a great weekend and a Happy New Year to all our readers.  Look for some important changes for 2013!

UNCHANGED LEVELS: PA RUNS TO TEST THE MAGIC 1400 12/27/12

BOT TRADING SYSTEM

THE levels remained unchanged for 12/27 and PA ran the range to BO at the SB, pushing deeper into the 1400's to attack the magical bull target of 1400.  At least it was the target no so long ago as bulls were running for 1450+ after conquering the 1400.

A     B1 and 2 was a 2b doji, and B3 tried to run for the bulls but failed to break the LB.  B3 was a 50CB for the short with a known risk to the LB.  The rules:  a FBO of a level is expected to run the range and attempt a BO at the opposite range.  That range today was 10 points!  PA began to gap the EMA at B7.

B    B10 breaks the SB and is a 50CB bar not tested until later in the day.  We still had a gap to the EMA, the B10 50CB was not tested, PA was stopping at 1407.  Read: strong bear.  BO to run for +5.

C    B38-39 is a reversal. 2b doji with B40-41 breaking the 50CB of B37.  Look for a run to prior level.

D    B46 doji and gap to the prior level creating some new selling that was stalling around the 1400 and the BO-10 at 1399.

E     The PA.  setting higher lows at B52-62 from the B38 lows. was consolidating.  The BO will be the entry  with longs at the 50CB's  of B60, 58. and 47.  Additional entries:  the BO-10 or the EMA.  The  FBO here is likely to run to the prior level.  With the strong gap to the EMA. this bull is likely to run.

F   A 2b doji at a level with signals:  exit time.  Exhausted run.

12/26/12: ANOTHER LOOK

BOT TRADING SYSTEM


I may still be the "holiday" mode, but the 12/26 post was lacking.  Any post should have an educational value for our readers.  Two to three sentences and a chart was not sufficient.  There is a substantial number of page visitors, and I want to keep the quality expected.


12/26: Another look

 A  At the open, PA was stalling at the LB and a bear TL was developing.  The pre-open high or the B3 high was the limited risk for the shorts.  the rule:  when a level fails, anticipate a range run to the opposite level and look for a BO.

B  Beginning with B11 we see a gaping in the highs of the bars and the EMA.  This gap is used as a visual to determine the strength of the bull or bear run.  With no clear bull effort, the shorts hold for the break out of the SB.  New shorts will enter at the SB.  The rule:  a BO is expected to run for a +5 as a minimum (range days). Swing days will run 10-20.

C  B20 50CB was challenged at the BO-5 but was a FBO suggesting more short activity.  The BO-5 was anticipated to run to the BO-10 (see rule B).  When PA failed prior to BO-10, a mid range reversal was anticipated.  The rule:  when a level BO fails, it is anticipated to return to the prior level.  B25 found the buyers and closed at it 's high (also a signal bar for LONG).  B26 failed to extend B25 selling (bullish) and formed a 2 bar doji with  an entry available at the B26 50CB, 1412.5) to the high of the two bars.

D  A bullish TL develops as PA reverses.  B40 was a valid long as would any point along the TL.  PA was gaping, a sign of strength.  The next valid entries:  B53-55 and B64.

E/F  B65 fails to hit the SB and B66 was a FBO of the SB.  See rule under "A" with an entry at 50CB of either B65 or 66.

TRADING RANGE DAY 12/26/12

BOT TRADING SYSTEM

Still in the holiday mode.  PA moved through the range and headed for the BO 5.  The attempt on the BO 10  was two points short ( read mid range reversal).

Nice bull TL back to the BO 5 and the SB, and back to the BO 5.

A A LITTLE SANITY AFTER THE BIG SPASH 12/21/12

BOT TRADING SYSTEM

After the PA cliff last evening,  today's market had a little more sanity and played by the rules.

RANGE RUNS        BOT LEVEL REVERSALS      BO-5  FBO REVERSAL BACK TO THE LB WITH A RANGE RUN, MORE FBO AT BOT LEVEL FOLLOWED BY A RANGE RUN BO TO THE BO-5 AGAIN.  Then toss in some micro trading ranges (TR).

TREND IS FRIEND & MARKETS LIKE NEWS 12/20/12

BOT TRADING SYSTEM

End of the year, people will be looking for the Santa Effect.  The best Santa for now is the government speak coming out of Washington.  Traders will disagree, but some events do seem to move the market:

• Release of information- earnings, economic data, sentiments, and measures like the Vix.
• Government Speak-  an official opens mouth inserts foot; Treasury, Congressional leaders, FED Meetings/FED Chair

Our current friend is the banter over the Fiscal Cliff. Japan is in a recession, Euro Zone leaders seem to be following.  Unless the correct measures are taken, we will join them.   Spending without income has a finite run and the cliff will make this one look like a bump in the road.


TODAY:  more activity as sides posture

B7 began the bull switch and reversed the SB BO,  Each return to the SB was a long, as was each move back to the bull TL.  Opportunity at the TL and SB, TL and MB, at the TL and the LB.

AFTER HOURS:  Government Speak 101

The US House delays Plan B vote until after Christmas.  Would be nice to be able to add a flushing sound here.  Seller reversed the PA  from the BO-5 to the LB.  Then the news, and the tick chart went crazy, the 5m ran the range with 1 bar and exit taken (again based on the tick activity).

The one minute showed stalling at the SB and began moving away.  A known risk limit (the SB) and the rules:  a BO is expected to run a minimum of +5.  If the BO does not have a FBO, an extended  run of 10-15-20 is likely to develop.  A FBO is likely to return to the prior 5-level.

When we get a news expansion bar, the prior 5-level is the stop and moves with the PA.  Large single expansion bars are a accumulation of the news, program selling/buying, program exits/covering, and thousands of Trader Joe's who are watching the market.

5M

1M

We can not say when these bars appear.  But that does not detract from playing what the market offers.

FLIP THE FLIP: 12/3 VISITS AGAIN 12/19/12

BOT TRADING SYSTEM

24 hours ago we were talking about how the day was like 12/3/12, but flipped.  12/18 hovered at the SB and ran the range for an extended break out.  12/3 had hovered at the LB, ran the range, and broke out for an extended run.

Flash forward 24 hours and we are still talking about 12/3/12:  12/19 was a similar repeat.  Two days ( 12/18 & 19) of back-to-back hovering, range runs, and extended break outs.

The levels were given early, even for the SPY and we noted today was developing like 12/3:

  [09:43] <CM> (x) sent the spy to you but here it is again  45.48-45.30-45.18
[09:44] <CM> ES today  45.25-44.5-42.5  tighter range   bias for shorting
[09:44] <CM> took B1 fbo of ema and the MB

[09:52] <CM> fbo of b3 50cb 42 is now long to upside b5 continuation of selling from SB at 42.5
[09:54] <CM> pa still gaped to ema at high of bars stronger selling still in play bo5 is 37.5
[09:58] <CM> looking a little like 12/3/12 PA hung around the LB ran the range and sold off

The BO-5 hits and we had a 2 bar doji at B11-12 which was a CT long with an exit when B21 created a gap to the SB and PB to the 50CB of B20.  The bull TL break was another valid exit point.  B32 bounce for a HL was another CT long.  CT longs that have a possible range to retrace are certainly more plausible trades, as opposed to a single bar or two with a limit move likely (i.e. near the EMA  or the first reversal bar in a strong multi-bar trend).

  Twice Bulls tried to hit the SB stopping short of the target, creating a gap between price and the SB.  We were also in a trading range (TR) from around B16 to B43.  The double top at B40 was another long exit from B32  and B41 was an excellent new short entry.  We have a new bear TL and the EMA is the resistance.  An additional opportunity emerged  at the FBO of the BO-5 at B74-75.  B74 50CB had a known risk, was at what appeared to be a FBO, and was considered a FBO of the bear TL from B40 area.

Where you enter is a personal decision.  having a known risk and some key factors greatly helps the process.  The trend continued to BO-10  and sold into the after hours.

12-3-12

and today:  12/19/12

FLIP 12/3/12: PLAY THE TREND, SCALP CT 12/18/12

BOT TRADING SYSTEM

Flip the 12/3/12 chart and post and you have the 12/18 trading.  This time PA had stalled at the SB after a sell off range run at the end of the Euro Zone trading.  B1 to B8.  Sound familiar?

We had a pre open low, B1, B6 and eventually B8 establish a know risk level for a long at the SB.  The three parts to any trade are the entry, the stop, and the target.

• The entry is a level (easier to see) or a bar-more difficult to read at times.  The entry must have a known risk if the trade does not develop as reasonable expected.
• The stop is at that known risk and will be adjusted as PA develops the expected move.  A stop in profit combined with a target creates a win-win scenario.  Any contract can be traded on a stop-only basis, but there are contracts (6E or CL as examples) that move rapidly.  A substantial move could be limited by a target.  But a trailing stop is likely to capture more of the move.
• The target is the point where you anticipate PA will strike.  It can be a rule, a range, an assumed support/resistance, etc.  Regardless of your target, your objective after entering a trade is to be aware of any reason to exit.

Now that we have the elements for the trade, the known risk was in play for the likely range run to the LB, or +6.25 points later. Add on or conservative longs entered at B10 cross of the EMA.  The strong bull was revealed in the number of bull bars without a PB, and the strong gap from price and the EMA as B15 broke the LB for a run to the BO-5 level.   Buyers returned at B33-34 to gain another run to the BO-10 for our exits as a flag developed off B38-39.  It expanded into a PB to the BO 5 (rule:  a level FBO is likely to PB and test the prior level).  Buyers entered at B61-62  and again at the HL (higher low) at B73.  BO-10, day done.

ALERTS PAN OUT: BO 15 MOVE 12/17/12

BOT TRADING SYSTEM

The bands expanded after days of narrow range trading.  Outlook?  An extended break out.  PA delivered today with an US Open range run, a PB  for a higher low, then off to the races for a BO5-10-15.

Other than the plays provided in chat, these PA points should be of interest and add to your analysis:

• B1 reversed three bear bars (globex) including the 50CB of the prior bar and closed above the EMA.  Read- lower risk long with a known support for your stop.
• Stalling above the LB for your exit and likely reversal short.
• B11-12 showing support at the mid BOT for an aggressive long; conservative on B13 at the EMA with a known support below for the stop.
• B16 and 19 that penetrated the EMA  but were FBO.  EMA is support in a strong bull market.
• With stalling at the BO 5, rules state we are likely to get a PB to the LB.  Also, we are in a trading range from 1419 to 1420.5.
• B55 was attractive to longs and was used to run short stops.  The close below the EMA was your lower risk new short with a known resistance (the EMA) above you.
• B59 gapped and pulled back from the LB' worth a long look with a known support.
• B66 broke the EMA and the prior five Doji bars (micro trading range).
• Expansion resuming, play each BO 5 range ( LB to 5, 5 to 10, etc.)

ALERT UPDATE

BOT TRADING SYSTEM

PA failed at the BO 5 Friday and gaps open toward the LB Sunday evening.  We got the expansion  from the previous narrow trading,and the expansion anticipated in the widening of the BOT range.

In the absence of a gap fill, we should see the market continue a bullish expansion.

BOT TRADING SYSTEM

PA DANCES WITH THE EMA 12/17/12

BOT TRADING SYSTEM

THINGS  were looking positive in the early AM.  Ranges expanded suggesting we may see a significant BO attempt. (see prior post).

Selling moved down the range. and the open had a nice pull back to the EMA.  B3 stalled and settled at the EMA.  From there,  PA hugged the EMA  and the upper TL, then slowly drifted down to the BO 5 for a +5 play.  TR (trade range) set in and PA stayed flat for the day.  We just could not get away from the EMA.

The BO 5 bounce was good for a +1.5 and 1.25.

12/14/12 ALERT

BOT TRADING SYSTEM

AFTER trading in a narrow range (with BO's) the BOT Ranges today broadened.  The alert today is for a significant BO beyond the BO 5.

The bias would be to the long side, beginning with an early range run.  This does not exclude a selling below the SB, but should a BO5 show a FBO to either side, the expectation would be the significant run to the opposite.

PATIENCE WITH SLOW PA 12/13/12

BOT TRADING SYSTEM

RULES or not, slow moving PA will try your patience.  Today, we saw a day market that acted like after hours.  It took an hour to hit the pre open high (which was also Y-SB), another hour to run the range where PA traded in a narrow range around the SB for another hour.  Finally, PA moved to the BO 5 (you guessed it) which took another hour.  You get the picture.

Trade holding for an hour is uncomfortable and not what most traders are in a habit of doing.  To improve our entries, in any market actually, what do we look for in PA to gain an additional advantage beyond the ranges and rules?  Today it was the trend, reversals, and consolidating break outs.

The bigger picture:  selling in a bear channel running the range and hitting the BO 5

THE WHAT: ATTRACTIVE PA for entries

Group 1, these bars are at a key level.   Some hit, then next bars break but stall at the same level and we have a doji followed by a bear bar.  This is a lower risk short.  This is not necessarily a bar entry but is a valid price entry with a tight stop loss.

Group 2 is PA consolidation.  We have a gap (the area from bars to the EMA) which illustrates the strength of the bull or bear.  Again note where bars are stopping at resistance below the EMA.  Sell any price near the tops with a small stop or use the EMA.

here we have price support at a prior key level and price is rising on a TL (visual or draw).  We had mentioned in the chat that a long at the support was desirable, or at the area just above the EMA .  News hit and B37 provided a +3 move  then reversed to remove all stops.  Great:  allowed both of our entry points  for the run higher.

GAPS:  gaps, the area between a level and a  bar, will often reveal micro resistance/support.  Support and resistance (like the trend) is your friend.  Five plays, again playing a price area.

PLAY THE LEVELS AND PA 12/12/12

BOT TRADING SYSTEM

STAGES OF THE MARKET:

PRE OPEN

Market is oscillating between the MB and the LB  in the pre open. If you look around 9 AM EST you will see a clue we are interested in:  a push to the LB  but two bars fail to hit, two hit but do not cross, and the only bar to cross failed and closed below.  Strong resistance screaming short.  As discussed in chat today, sometimes the entry is not a bar, but a level.  In this case, a short at 34.25 has a low risk  with a stop at 35.25 (above the high).  The FBO of the LB is expected to run the range, which is PA going from the LB to the SB in this  case.

OPEN

B1 completes the range run and closes exactly at the SB.  You could short the SB for a potential BO.   B2 was the first PB but B3 stalled.  Quick thought:  we are at support and holding for nth bars.  But the real story here is the failure of B2-5 to break the 50CB of B1.  This is the smarted short area. We just had a range run down, PA is stalling at a key PB, and the final piece:  look at the PA gap to the EMA (and the MB).  1432.50 has a 1 point risk to top of B1 and would be a close above the EMA.  The PA is not indicating that move.  The SB BO should work.  It did, but only to  the BO-5 from yesterday (Y-BO5) where it bounced between the SB and the Y-BO5.  B12-13 FBO at the EMA/SB was a lower risk short, as well as the  2B (two bar) Doji at B26-27 at the SB.

MID-DAY

With PA holding at the Y-BO5, we mentioned in the chat that 1429.25 was a lower risk long and a add-on was likely around 1431.25.

[11:56] <CM> add limit long ES 1431.25
[12:00] <CM> 1429.25 aggressive es long stop at 1428.5

PA began a bullish rise at B31, and was creating a gap to the Y-BO5 support.  News hit and we had a +3 run.  B37 sold from the high to remove stops and the pros took over running the range and breaking the LB for a BO5 run.

THE BO 5

PA broke the LB and a BO is expected.  If it fails, look for a reversal to the prior level (LB in this case),  We see a gap in PA highs and closes, and the BO 5 at 1439.5.  The question again, when to enter?  The answer given in chat, look for a value to enter.  This was 38.25-38.5 and certainly at the 50CB level of B37 (1437.5).  More conservative?  Then go with B59:  a BO below the recent micro trading range, and a break of the EMA.  We hit the LB.

THE REVERSAL BACK INTO THE RANGE

WE mentioned in chat that it was a H&S variation developing and would hit B32-34.  if you shorted B59, the PB at B63-64 most likely took you out if you did not exit at the MB buyers seen in B61-64.  But the gap in B64-65 was another entry short at the FBO of the EMA.

PA continued to the Y-BO5.  A clue to the bear (or a bull) strength is the gap on PA to the EMA.  The B65 short was a nice hold for 1- the BOT levels  and 2) the gap to the EMA.

THE CONSOLIDATION EXPANDS 12/11/12

BOT TRADING SYSTEM


The consolidation last week was expected to break long this week.  last Friday  [15:16] <CM> mkt ready for a 15-20+ move bias favors bull going into next week)  We now have an expansion for 10 points, and we will still look for the full 20 points.  With the exception of TF, the other horses were rising.  The initial selling turned positive with the ES closing above the LB on B1, with B2-3 being PB's for additional long consideration as they stayed LB positive.  Price broke to BO5 and stalled.  B9-11 offered a brief push for a short (assumed a FBO) but this was negated when additional bars could not move away from the BO5.  PA moved to hit the BO 10 where we see an "r" pattern at b23-24 and a 2b Doji at b28-29.

The PB to BO5 (expected when the BO 10 failed) established an ascending triangle.  We had lower support areas that were untested in each market and PA was likely to test those.

[10:37] <CM> mkts have moved higher this week (expected) from the consolidation support to test at dn side 1426.25    831.5    13238     2675


FOUR HORSES;  hit the targets and reverse

  By b57 we break the lower TL and have confirmation for the short again on b60.  PA hit all lower targets before reversing long.

The ES hit the LB and reversed at b70 and hit the BO 5 again via a modified two leg run.


ES

BEING RIGHT CAN TAKE TIME 12/10/12

BOT TRADING SYSTEM

You can read charts and be right about your interpretation of likely price action (PA).  The issue:  how long will the target take to develop much less hit.  Today we had a buy at the 5m EMA just prior to the open and near the LB.

The LB (or the SB for shorting) is expected to run for a minimum of 5 points.  Less is a different play.  The long did hit the BO 5 but took until B18-19.  When it hit, 18-19 developed as a 50CB at the BO 5 level.  With a FBO at the BO 5, PA is expected to return to the LB.

 Wait, wait, ....

to around B62-63 for a 2bar reversal  at LB plus 2 ticks, and a run back to test the BO 5.

From B1, PA played in the middle of the range almost all day at the 1417.5 level.  In the after hours, we finally hit the LB at B119.

THE BIGGER PICTURE: FOLLOW THE RANGE AND TREND 12/6/12

BOT TRADING SYSTEM

Globex or RTH?  Individuals will always have valid reasons to follow either.  The globex had a buy approximately 40 minutes before the open.  A buy that was the foundation for a buy TL:  the point that buyers entered over and over in the BOT Range.  On the extreme, buyers took exits as highs developed.

On the RTH, B1-3 ran the range and reversed at the LB resistance.  B4-10 bounced inside the range stealing  long and short stops.  Wicks and tails become a dangerous trading zone as each side positions for superiority.  The superiority that neither could gain with a BO of the LB nor the SB.

B10-11 developed as a 2B Doji at the SB and the buyer TL and ran the range for a LB BO for more HOD exits approximately LB +2.5.  The B16 50CB was tested on the PB to the low at B21 for a new run on the HOD.  B26 and 27 formed a reversal "r' pattern and a test of the B26 50CB.

The reversal ran to test the 1408 MB area where we saw new support buyers, when additional interest at the buy TL and B43-44.  This buying pushed back to the highs at LB +2.5.  The final buyer effort hit the buy TL at B71-72 for a new run to the HOD.

The two point bars were in a bull channel setting HL's.  The tick chart reflected the changing mood of the trades.  The 5m ran the range to fail and return.  When PA bars are overlapping and we are in a range bound day (5m) it will always be in the interest of the traders to follow the trend and wait patiently for PA at key levels:  the LB/MB/SB, the EMA, and any detected (perceived) buy/sell trend lines.

RANGE BOUND DAYS=EXTENDED BREAK OUT 12/5/12

BOT TRADING SYSTEM

Market PA repeats itself with some regularity.  Range bound days  are market consolidations and eventually produce an extended break out run day of 15-20 points.  Today was another in the range bound series and followed the BOT Rules.  A failed BO ran the range to the opposite extreme for a BO.  PA found support at the BO 10 level and reversed to the BO 5 in two legs, then pushed through the range for a long BO 5, where PA traded in a narrow range for several hours.

CHART HIGHLIGHTS:

1.  ranges in place, market in a bearish sell mode.

2.  Market open, B1-2 run the range.  B2-3 forms the "r" reversal pattern at the LB.  PA that exhibits key characteristics at a BOT level has a higher rating for success.  Add an EMA, etc. and we have three or more reasons that makes the PA worth noting, and ENTER the trade.

3.  After the SB BO, we have a PB test that ends in a 2 bar doji at the SB and EMA.  Again, a significant chart pattern of interest at 2 key points on the chart.  ENTER the trade.

4.  Two strong selling legs to the BO 5 level, followed by a third leg push to the BO 10 level.  A limit buy developed around the 1398.25-1399 as buyers entered at the support level discussed in the chat.  BOT Rule here:  when PA holds/stalls at a BO level, PA tends to PB to the prior level.  Buyers pushed the PA through the range for a BO 5 on the opposite extreme.

5.  Selling at the resistance around the BO 5 for a PB to the EMA.

6.  Extended  range bound PA between the BO 5 and the LB.  Stay out or stay with scalping.

7.    Double top at the BO 5 and a 2 bar doji reversal.  Three reasons to ENTER the trade.

Anyone can enter a trade.  Whether it is a reasonable trade or not is the question.  Experienced traders will look for a reason to enter and exit.  Follow your rules, and ENTER the trade when two or more key elements come together.

THE TALE OF TWO CHARTS 12/4/12

BOT TRADING SYSTEM


Charts are a reflection of market sentiment of the total trading public.  Toss in the direction of the market makers, and we get PA.  Any add-on to your chart is based upon price, volume, or number of trades at X.  Some try to be predictive, others are lagging in nature.  The point?  If your going to add MA's, pivots, MACD, etc. to your charts, at least check out the nature of the add-on and avoid duplication.  Duplication can lead to a false read, or "rush" you into a trade.

For BOTs. the only added feature is an occasional trend line or target level.  These are added for visual clarity when discussing in the chat.  Another visual is the line to estimate the 50CB level.


FULLY LOADED CHART

THE DIET CHART

Two bar reversals seemed in vogue to day.

FOLLOW THE TREND: SCALP THE CT 12/3/12

BOT TRADING SYSTEM

The BOT ranges were set, PA was struggling at the LB.  A FBO developed at the open and B3 closed below the EMA which remained in side the ranges. PA ran the range and broke the SB.  By B8 we had a two leg CT (counter trend) PB to the EMA.  With the EMA FBO, B12 pushed back inside the 50CB  selling to the BO5.  Each signal became a scalping CT long back to the bear TL.

PA continued  as the selling hit the BO 10 level.

THE BREAK DOWN

There will always be a "Why" to your trading decision, and all decisions are based in price action.  So this is a breakdown of some of the PA reads to the market today.

1.  PA is having trouble crossing (BO) of the LB.  Meaning, bulls can not seem to move into a dominate position.  While there is a risk PA will BO, the action is suggesting a range run sell off and is a lower risk short.  Certainly with the B3 break of the EMA we saw more sellers entering, and a range run is part of the rules.

2.    B8 is a CT long  for a scalp trade to the 50CB as a minimum, and the EMA as another  target.  It was a 2-leg EMA PB that failed at the EMA and the SB, both shouting SELL.

3.  Another CT PB at the BO 5 that should test the 50CB.  PA did cross the EMA but stalled inside the 50CB range and a sell signal near the bear TL.  This is a lower risk short.

4.  If #3 was not your cup of tea for shorting, then #4 was an EMA FBO and B38 broke the EMA.  A lower risk short.

5.  A spike to break the TL and BO5.  When it failed, the EMA was a lower risk short continuation  play.  We also continue to see the CT PB's  which are going approximately 2 points, thus giving the 5t scalpers their +exit.

6.  The BO 10 and a CT PB signal:  a lower risk long.

J-L-7-R PATTERNS

BOT TRADING SYSTEM



Some patterns look like letters to me, thus received the pattern name J, L, R, and the 7.

The lowercase "r"

the two bar Doji

The 7:  back-to-back

The "L"

The "J"