SmartDayTrader
Questions & Answers!
UPDATE
Hi Jim,
Sunny day here in
In these low range markets the
INTERNALS will become distorted, as we saw today (
Jim,
What I'm trying to do is come to an approach that I know will pay off more than lose and lately it's been real iffy to depend on the internals--esp the TRIN. This makes it very hard to pull the trigger. I'm thinking perhaps to use tight 2 point stops rather than 8 points t 'enable' trigger pulling.
While it’s good to adapt to
changing markets its important to learn your trades and strategy well and stick
to them. Had you been using 2 point stops lately you’d be losing money in a
tight range market. Instead of waiting for the pivot to be hit on high tick, or
waiting for a “back through the pivot” trade with a nice wide stop in place,
you’d be tossing 2 points back to “THEM” all day and wind up a net loser on a
day when the whole range was no more than 6-8 points.
Hi Jim,
In one of your recent reports you mentioned the theory that if a market
consolidates at the upper end of an up trend (or vs)
then this is bullish. You said that you didn't like to use this. Yet I have
noticed that this ties very well into George Angells approach that says there are usually two legs to a minitrend with the second leg mirroring somewhat the first
in price and time following consoidation to
equilibrium. Today is a classic example--first leg up to
While I prefer to watch
price/TICK/TRIN/TIKI/VXO and BREADTH, some prefer to watch charts. I, too,
glance at charts. The key thing is to know what YOU are capable of seeing. Some
people really SEE things in their charts and can trade. The break you talk of
is well known. As is the TRIANGLE formation, the WEDGE, etc. In addition some
people watch the 1 minute chart with a 14 period RSI. ALL of these are good IF
you stick with one or two and really learn how to READ it, not READ INTO
IT. Probably the best pattern we use is
a simple trend or head and shoulders. When you see this you will almost ALWAYS
make a lot of money. And, as you know, I like to look at the MACD 15 minute
histogram as it tells ME if there is confirmation or divergence. But just
because I see it doesn’t mean someone else can. Find the SIMPLEST set of parameters
to use so you can react as quickly as possible and not FREEZE because you are
so busy checking multiple charts, patterns and “what ifs”. By that time the
trade is usually gone.
Hello Jim
I am often confused reading TRIN.
Today TRIN stays over 1.00 (at least the data I get)
and market is moving higher.
So basically more volume flowing into declining stocks
but there are more advancing issues (BREADTH is positive).
Would you be able to help me with this?
Thanks in advance
Joseph
Well as you can see you weren’t the
only one confused by TRIN today. It’s a good indicator – when it works. When it’s
off, like today, you have to look elsewhere for guidance or stand aside if the
setup seems strange. I realize that absolute breadth was 2:1, so there were 2
stocks UP for every 1 stock DOWN on the NYSE, but the high TRIN would suggest
that the VOLUME of stock traded DOWN was greater. This, to me,
ADDED CONFIDENCE TO THE SHORT OFF THE HIGH PIVOT ON PLUS 1200 TICK as it
suggested that overall “pressure” was negative.
Hi again Jim,
Still wrangling over the decisions on early morning trade--from which as I said
I've stood aside. If I was in the trade-at this time (
The QUICKIE
trades are truly “nuanced”. In and out. USUALLY they
work out fairly quickly, but if the markets are dull, why exit, when you can
sit back with your wide stop in place and be patient? You would exit if there
was a suggestion from the markets, either unexpected news or a strong shift in
the internals to force your hand, but otherwise, relax. Let the trade work out.
They usually do.
Jim. I know a little about MACD and TRIN, but I need some
help with this
TICK. Could you help?:
First, please read all the
information on our web site as we explain the terms. Briefly
the TICK is the NYSE stocks advancing (or declining) at any given moment.
As there are fewer than 2000 stocks traded, the TICK might be PLUS 500, say,
which means at that moment 500 net stocks traded UP. If the TICK starts getting
up to 800 or more and definitely at plus 1000 or more this would suggest institutional
buying and we would start looking for a place to “fade” that trade, as they “finish”
doing their buying and the markets pull back. Same goes for strong MINUS ticks,
as the markets could pull back UP, after “they” are done selling – for awhile.
Hi Jim, where do I go on the SMARTDAYTRADER web site to
access the overnight
globex readings? rg-
We have access to free FUTURESOURCE charts which are
delayed a bit, but great for getting the GLOBEX numbers. You can access these
beautiful charts off of our NIGHTLY REPORT main page. Just scroll down to where
you see INDICES and click there. Then click the icon for either the E-MINI of
the SP charts and you’ll see the overnight numbers. You can also reach the same
charts at the bottom of each of our CHARTS pages.
Jim,
Is there an instant messenger arrangement like the Yahoo Messenger
with SDT subscribers so we can compare notes in real time?
Bill
No I don’t have this, but I’d be
happy to hear from more of you if you think this would be helpful. It seems to
me that by the time you “chat” about it, the trades have often gone by. But I’m
open. I don’t think it would be too hard to set up. Let me hear from y’all and
I’ll see if there’s enough interest.
Dear Dr. Raker: I continue to print out your nightly report and try to figure out what you are saying. Frankly, to me, you have so many different possibilities of what might happen, I just can't keep them straight. So what symbol do I use to get the "breadth indicator" on the screen? Is MO the McClellan Oscillator? What do you mean by "internals"? Is it not true that the market drives the indicators, not the other way around? What good are the indicators after the fact? Is there a proven way to trade the market with just the 1 - 5 intraday chart without all the indicators? Thank you lge
Let’s hope some of this frustration
will pass with the passing of the low volatility and the increase in your
trading skills. BREADTH is NYSE ADVANCE AND DECLINE issues. Each quote server
uses different symbols. The one I use has $ADVN for advancing and $DECN for
declining. The MO is the McClellan Oscillator END OF DAY number, raw. The
INTERNALS are what we are trying to follow and include PRICE, TICK, TRIN,
BREADTH, VXO, INTRADAY PUT CALL RATIOS (less often) in
relation to our pivots and KEY NUMBERS. Yes, the market, eg.
PRICE ACTION does “drive” the internals, but that’s how we detectives take the
VITAL SIGNS of the market – these are the tools of the trade. I do not know of
a way to use 1 and 5 day charts alone with much success, although I’m sure
there must be some computer models that claim success. There are many ways to
trade the markets. IF you read the NR, keep a diary and note what the “internals”
are doing at ½ hour intervals and at key pivots, you will begin to “SEE” how
they work. Be patient. Trust me.
Hi Jim , Ive got qcharts set up and Im trying to
get the same 15 min. macd
that you use, there are so many different settings Im
not sure how to get
there??
We use the “default” settings of
12, 26, 9. Take a look at the free charts on our web
site for a “classic” example.
Looking to exit the two short S&P
holdovers from Friday tonight on Globex, if
possible. Br
We would STRONGLY recommend AGAINST
carrying a FUTURES position overnight, let alone the weekend. We should be in
and out of our trades in hours…. If we feel we need “exposure” then we advise
OPTIONS or Long/short positions in the SPY or QQQ.
Jim,
Friday's report sure had some great stuff in it. I still need to use
it more effectively.
F.Y.I., both Dwyer and Marc have the Strategy Runner online order
platform. Its really good and easy to use with buy, sell, stop and limit
symbols on the charts.
I hope there are more bond trade suggestions in addition to
S&P. I have not started trading them yet.
Thanks for your excellent service. I will recommend it to any
traders I know. –bw
Thanks. As you know we have a
referral service. We’ll extend your subscription when you refer a new
subscriber. There’s a form on the last page of the web site or you or your
friends can just tell me. Thanks for the feed back on GLOBAL and NOBLE. They
both seem like good brokers who are offering good service and low commisiions and margins. The electronic platform you speak
of is excellent. Thanks for the feeeback.
Hi Jim,
If you have a moment would you tell me who we as individual day traders in the emini S&P market are competing against? In
Friday's trading, for example, who was making the breadth so strongly positive?
Thanks, Jack
The volume comes from all over. In
the end though, it doesn’t matter. Trading is ultimately an inner mind game in which
you are trading against yourself. Your own skills, AND fears and weaknesses and
strengths. Master THAT and you’ll rake in the profits.
Good day Jim,
I missed the early morning buy at mid pivot--price didn't
quite touch the pivot and the TICK was only slightly negative. I froze on the
way up thorough next high since I was so poised to go short at that level. I
watched and when the price crossed the high pivot and briefly stalled on
extreme TICK, I went short as per the NR. The market then went into run up mode
as I apparently had not given the high breadth enough respect. It's tough to
get a handle on it since the market has often recently moved as expected from
the pivots regardless of breadth at the time. Anyway I put in the 8 point stop
and have been suffering ever since. Given the run ad a small bit of averaging
I'm short actually at 1135.12 so my stop hasn't been hit.
The question is this: Should I have hung on this long with the stop or should I
have exited during the consolidation due to the now very positive internals
despite the over all bias that the market is due to retreat from any rally??
Since I've made lots of points this week I'm a little more risk prone today :-)
Thanks,
Well, the NR ALSO said DO NOT DO THIS if we GAP UP. And the
market GAPPED OPEN. We also, as you noted, opened on 2:1 plus breadth
and it just kept getting stronger from there. If you feel you are in a trade for the
wrong reasons, just find a place to cut the bleeding as soon as you can. You
mention that the “over all bias” is that the market is “due to retreat”. While
this may be our best estimate, don’t get stuck on a pre-conception from the
night before when a very different scenario is staring you in the face.
+++++++++++++++++++++++++++++++++++++++++++++++
UPDATE:
Jim,
For a quickie trade, is it
still the case that we focus on the after 10
period or are you more
likely to enter the trade before 10 in the case of a
quickie? –lem
The “quickie” trade
is do-able anytime, as they are based off of chart patterns which emerge from
the prior day. They are usually “carryover” trades, i.e. they assume that we
can capture points out of the range left behind from the afternoon before. Thus
they either work out or “evaporate” quickly. Often the first 30 minutes is
“noise”, but if the “parameters” hit, you should do the trade. If it’s going to
work, it’ll be fairly obvious. Otherwise, scratch the trade and move on to the
other ideas. Do NOT do these trades before the opening bell, i.e. don’t do them
in Globex
Dear Jim:
How do you place your orders
on your platform? Is it done after you confirm key numbers & pattern on the
1 min chart or just placed at key number areas or retracement at key numbers
based on Fibonacci or oscillator points. I ask because I don't quite understand
your entry confirmation or your back through pivot trades you discussed last
night. Sorry to be so dense. I appreciate your help. –dt
I use an on-line
discount broker and they have a simple order entry “ticket”. I use the exact
parameters that I discuss in the Nightly Report, as I trade for myself using
the same advice I give to you. I do not use intra day charts. I do not use FIB
or OSCILLATOR charts intra day. I use the PIVOTS along with TICK and TRIN, as
well as the direction of BREADTH and VXO. As for the BACK THROUGH TRADES, when
a market gets too far out of whack, but then starts to move back “in line” with
our pre-determined expectations, I find the nearest pivot as a “logical” place
for making the trade. Let’s assume we think the market is going to go up, but
instead the market takes a jolt and drops below LOW PIVOT. Then we notice it
stops falling and the “internals” start to improve. So we think we’d like to
get long. But where? We use the nearest pivot and go long “back up through”,
and try to exit at the next pivot above that, or simply keep moving the stop up
from there.
JIM: I made a long trade
early today which momentarily went+ when I was not looking and then downhill without
a stop! I failed to heed your 1147-1142 short because it referred to Globex and
I didn't understand what that really means. Maybe I should only look at
pivots and place orders early and wait to see what happens, then adjust as
needed to protect capital or limit loss. –bw
First you should be taken
out back and SHOT for not using a stop loss! Second, what do you mean you
weren’t looking? If you had to go out, you should exit the trade or ask someone
else to do the trade for you. Remember what happened last year to the doctor in
Mass who left the operating room to go to the bank and deposit a check? Think
he’s still operating? Nope, they took his license away. In our business, “THEY”
will gladly take YOUR money away when you’re not looking! As for our “GLOBEX” suggestion, you must
learn before you earn. Study our web site. Stop trading until you understand
EVERY TERM. PLEASE ask me anything you don’t understand.
JIM: All the other brokers I have
tried seem interested only in mechanical program trading systems which
often did not do well like you have. –bw
I cannot understand
mechanical systems, but that doesn’t mean they won’t or can’t work. Our system
is based on a lot of “discretion”, but that “discretion” comes from learning
how to read the market vital signs and trading along with our pivots. If you
have discipline and understand the system, you’ll make money. If you lack
discipline, always second guess your decisions, or simply don’t understand even
one small part of what we do, the odds are good you’ll end up among the losers.
I can’t believe that there are “good” brokers out there who know enough to take
your money and trade it for you. If you find one, let me know. I’ll give him my
money and go for nap!
Hi Jim, when watching charts
like tick & trin or S&P, do you use 1 minute
Or 5 minute charts.
I don’t use any
charts for this. I use a “table” of raw data. I find it useless to chart this
type of data. I admit that I do have a 1-minute chart of the SP futures and on a
smaller computer a 15 minute chart. This is mainly for the “quick look” in case
I’ve been off doing something for a minute I can get a quick visual. But, no
indicators. Everything we do is price-based and then confirmed by these
“internals” or market “vital signs”.
Hey Jim - I am able to read TRIN, TICK, MACD 15, and I can get and read the NYSE AD issues, but I do not have a clue what you are talking about with MO, RSI, R5W, or what KEY NUMBERS are used for. What is BB-up or BB-down mean? %R? -LE
All of this is
explained on our Web Site in our teaching area. The MO is the McClellan
Oscillator. The RSI is the Relative Strength indicator, R5W is my term for the
5-week rate of change, BB refers to the Bollinger Band (up and down) and %R is
William’s %R (I invert the number by the way, as it seems “logical” to me that
100% is the top, or overbought, while 0% would be the bottom). KEY NUMBERS are
all of these, which is why we discuss them each night in the Nightly Report,
but the table we supply has the numbers you need to watch during the trading
day.
I need a good broker to make trades for me without me messing up again and again. I am getting creamed in managed bond trading with my present broker. My account now is $5K, down from $7.5K in less than two weeks. –bw
Our service is for traders who want to learn how to
trade for themselves. We suggest trades and why. In addition we are very
conservative and would never trade even a single bond future with that little
capital. I don’t trust commodity Brokers in general. If you have someone you
trust, great. They should supply you with a proven track record, you should be
able to talk to other clients, you should have a large amount of “risk capital”
and then you go fishing and they send you money! IF you find such a
person/company, let me know and I’ll quit my day job.
Jim,
Could you please tell me essentially how the potential trade boundaries for tomorrow (quick short from 1112 to 1108) are derived? The reason I ask is because I would expect the trade to be from 1113.20 to 1106.40, since those are the pivots. Are you basically designating a trading zone between the two pivots which has a safety factor on both sides? -jm
PS - happy New Year!
Thanks and Happy New Year to you.
In addition to our regular advisory information, from time to time I will
suggest trades that I believe will have a high degree of success. These are
based on years of trading experience and are hard to explain. These are
referred to as our “quickie” trades. (the old “in and out”). The short answer for tomorrow is yes, there is
zone there with a safety factor and I don’t want to risk trying to pick the top
and the bottom. I just want to get my 4 points.
I am
looking for an internet real time platform to use in trading. Do you have
any recommendations? Real time data feed? –lw
There are many services out there. We suggest a
reliable quote feed, that can provide the numbers we discuss each night. Please
go to our web site and see what we use. They should provide a customizable
screen so you can set up a quote grid. Then you need a reliable discount
broker. Most now provide quote/chart screens as well. Please look at our web
site as we have some suggestions there, but remember, I am not familiar with
all the quote vendors and brokers. It’s a VERY competitive business. PLEASE
shop around and get a good deal. There is NO NEED to overpay in this day and
age.
Hello Jim
My pivots calculated by my charting program normally very close to yours. But not to-day
Also I have another program to get and calculate pivots and they are more like mine.
Do you have any idea why today would be different? -jo
There are many ways to calculate
“pivots”. I use the DAY SESSION BIG SP contract to make my calculations, so
this could explain the difference.
Jim,
It has happened to me
several times that I have taken a position before 10
say at 940 or 945 or 950
only to find that I get a better price/trade at 10
If I had waited till then.
-lm
Unless otherwise noted we, too,
usually wait for
Jim
I trade the ES mainly using
options, but trade the futures as a hedge or short term directions. It is not
clear what your service provides. Do I get an indication of what you expect the
following day and how to trade it?
I currently use the Mohan
method with mixed success. -rt
You can read
back issues of the Nightly Report for free. They are posted each night as the
new one goes up. Then it should be quite clear what we offer. I do not use
options on futures. I am familiar with Mohan’s service. He seems pretty solid.
I hope to meet him someday.
Any progress on the seminar? -rr
YES! We are
going to go to a web platform that will allow on-line seminars. This should be
up and running in early FEBRUARY 2004, then some testing and then some
SEMINARS. Apparently not many people are willing to trek to
Dear Jim,
Greetings.
We have emailed each other
concerning trading the emini dow. You mentioned
that you stay away from the
emini dow due to the disparage of indice and
future. Are you telling me
that the S&P is actual to the price of the
indice? -rc
No. The SP
futures price always trades above (premium) or below (discount) to the actual
cash index, or SPX or S&P 500. This is the most widely followed, has the
most (in my opinion) information “around it”, such as TICK, TRIN, VXO, etc. so
I find it the easiest to trade, per our methods.
I don't
seem to understand where "back through" the pivot is. What is the pivot
value? Could a number be given for the pivot? –bw
The
“back through the pivot” trade is a concept we developed. If the market shoots
“too far” one way or the other and then begins to reverse in the direction we
were looking for, we use our pivots as a “logical” point of entry. The pivots
are posted each night. This has been an exceptionally profitable method and
provides us with a frame of reference.
Hi
Jim,
I
just did a smart thing today, I signed up after reading your
weekly newsletter. I look forward to receiving you nightly report
starting tonight. –rb
THANKS!
The Smart Thing to do is to get your diary ready, take notes, and make a solemn
vow to yourself in the mirror every day to be true to yourself. Deep breath.
Control emotion. The market works when you do. I’ll be here to answer all of
your questions.
hi jim....i did enjoy following along in your 'look over my shoulder' article last friday...it's always very informative to watch how a real pro manages his trades...i'm still trying to get into that 10% box of winners.....i have just 3 questions:
1) what do you use for breadth measurement? you talk about it being positive, negative, or even...?
2) how do you communicate your intraday decision-making? do you have a trading room where the calls are made verbally or written? or do you email each new decision (which would, of course, be delayed)?
3) were those charts showing the big
s&p or the e-mini? (the e-mini symbol is 'es' on my esignal charts)...
–jb
Breadth is NYSE advance
and NYSE decline numbers. We communicate with our Nightly Report which comes
out the night before and we outline the plan for the next day. The charts we
chose to show were the BIG SP, as our actual trading is during the day!
Jim,
Are the terrific gains of 8 and 16 points in the S&P E-mimi last week
really actual gains made in trades or only theoretical? –bw
Actual
trades.
****************************************************
UPDATE:
Could you
please explain the significance of the premium between cash and futures? I
never saw an explanation of what it means. Thanks. –MD
The
SPX or SP500 is the cash index. The Futures, which we trade, can either be
higher or lower than the cash. The difference between the cash and the futures
is known as the PREMIUM if its positive or DISCOUNT if its negative. At
SmartDayTrader we loosely refer to it as “negative premium” when the futures
are at a discount. Large firms who do index arbitrage trading calculate “FAIR VALUE”
which is a complex formula for determining what the premium should actually be.
During the day they may notice that the PREMIUM has gotten too wide and
initiate rapid arbitrage programs in which they will sell the futures and buy
the stocks (or vice versa) in order to profit briefly from the imbalance. For
our purposes we simply make note of the value as it can often be helpful when
the spread (another word for the premium) is abnormally wide. You may notice
that right after the close some “bad” news sets in, pushing the futures down.
This would represent a MAJOR DISCOUNT and would alert us that the stock market
will open much lower the next day.
Is the
cumulative breadth indicator at futuresource.com (fastbreak newsletter) similar
to your breadth indicator? –MW
The
cumulative breadth indicator which I prefer is similar to the summation index
of the McClellan oscillator. For those of you who want to follow it on your
own, this will suffice. Mine is a variation of that. The simple idea is to take
a point in time (say
Hello Jim,
I understand the principle of the MACD histogram, but I am not really sure what the number (which is currently around
-1.001 means).
Cheers, -JC
The
absolute number doesn’t matter for our purposes. The MACD histogram, especially
the 15 minute chart, can be useful especially if this is diverging from the
price. As you know I do not advocate
trading off of intraday charts. The bulk of our information comes from price
and the pivots, followed by the “internals” or the TICK, TRIN, BREADTH and VXO.
However it pays to keep an eye on the 15 minute MACD histogram. The use of this
chart is difficult to explain, so you just have to take a glance at it several
times a day over a period of time and you will “see” what I am talking about. If the market is moving down towards one of
our buy pivots, but the MACD HIST is moving up, this would give us much greater
confidence in entering the trade, for example.
Hello Jim,
Could you please
help me with a definition? When you refer to entering a
position on pivots hit on isolated 1000 TICK, does "isolated"
mean that it raced to the TICK extreme rather than slowly reached it? For
example going from somewhere around 400 to +1000 in 1 minute
rather than 400 to +1000 in 5 minutes? -JM
The absolute
number is more important. I’ve known traders who’ve tried to draw trend lines
across the TICK, or put moving averages, etc. but all for naught. The key to
this indicator is that 1000 or more is an extreme reading and usually implies a
recently implemented arbitrage or program trade. The assumption is that once
this is done the “institution” will back away and the market will pull back.
(or vice versa if it occurs after selling). The isolated plus 1000 TICK is
usually the best to “fade” or counter trade, as waves of plus tick could signal
a buying (or waves of minus tick = selling stampede). Please keep track of the
market at periods of high/low (+/-) 1000 tick as it usually represents major
market points.
My broker at Alaron could
not sell me OEX puts, where do I need to go.
Global is offering me 7.25
round trip e-mini on a small account and 4.25 on
A larger account, is this
good, and do you like Global. –rg
I am not familiar with all the
brokers out there and I would be very interested to hear from any of you about
your experiences. There are a lot of good providers out there, but there are
also a lot of hucksters. Please pass along your experience. As to your
question. OEX options are not considered “FUTURES” and as such are not
available at future’s brokers. You need a simple options account or a
stock-type account, such as Fidelity or other discount broker, with
“permission” to trade the options. If you have enough capital you would use
this stock-type account for the occasional index option trade and you can use
it for going long or short the QQQ and SPY. Finally, 7.25 round trip for an
e-mini isn’t bad, but this is a cut throat and competitive business. If that
includes all the “hidden” fees, it’s not bad. Make sure you understand your
fees. If you trade more than a few e-minis a day, you could probably negotiate
a slightly lower price.
will J-TRADER be an easy
enough trading platform pick up on, or should I use
a more simple one?
also, will I need two
screens, or should I toggle from the trading screen
back to the data screen? –rg
J-Trader is a
very fast platform. It is probably not necessary for what we do. If that is
what your broker offers and you can handle the flow of data in your face, then
its okay. All you really need is a quick order screen with a simple “ticket”
format that allows you to enter BUY or SELL, quantity, and your limit price.
Then you should have a screen to see if you are filled, (confirmation) and a
screen to allow you to place and move your stops. A good provider should have
live quotes. As far as screens go, I prefer 1 screen that has a data board with
PRICE, TICK, TRIN, VXO, ADVANCING ISSUES, DECLING ISSUES, including Bid/Ask,
OEX, SPX, DOW, NASDAQ, QQQ, PREM, etc. On a second, cheap old computer I keep a
picture of the SPX with the 15 MIN MACD HISTOGRAM, but I purposely keep this
“off to the side” so I’m not staring at it. On my pri
Any good ideas to scalp bonds during the day??thanks. P H.
While I don’t officially suggest
this in the Nightly Report, feel free to trade the bonds intraday off the pivot
points. I do. Keep an eye on the KEY NUMBERS, so you know if we are more
overbought than oversold so you can try to trade in the pri
Jim, I see in your topics
for the seminar is "Traders Block". I have
> been stuck with this
for a couple of weeks.Any pre-seminar advice to
> over come this
frustration? Robert
One of the
reasons for this is trading with out a clear plan or
trading too big. Then you
get some losses which totally demoralize you
and then you don't want to
place a trade because you are convinced that
whatever you do will be
wrong.
One good way to overcome
this is to stop trading. Re-write your
business plan and scale way
back. Like trade 1 e-mini, but follow your
rules exactly. As you regain
your confidence increase your position
size, etc. Does this help?
<
Good to see you have an appreciation for 'Lord of the Rings'
Just a quick note to let you know I got my feet wet for the first time Friday, trading the short 1067.50 down to 1063.00, for 4.5 pts.
Thanks again for all your help in getting me set up.
MY PLEASURE!
Where do you find the figure for
the Globex you keep referring to? L H
GLOBEX is the
electronic session of the SP futures. You MUST have this on your quote board.
Your broker should provide this free and you need this in your quote server.
The quotes we provide free on SmartDayTrader are “GLOBEX”. I tend to look at
those quotes at night to see where things are at (remember, on the web site
they are delayed by about 10 – 15 minutes) and first thing in the morning
before I fire up my live service.
Gentlemen:
Is the TICK
used only for the SPX and/or ESZO3 or is it just as effective for the NDX
and/or NQZO3? Thanks for the answer. L.GE
No,
you can use the TICK to fade using many vehicles. I have bought cheap OEX index
puts when the TICK hit plus 1000 at a major pivot and I’ve shorted the QQQ
intraday as well, Follow it and you’ll see!
Hi Jim,
When you say "If GLOBEX is not too strong" does that mean that it generally drifted down overnight and/or is at least not higher at the open than it was at the prior close? -JM
We regard GLOBEX
strength or weakness “relatively”. If the range lately had been low, and the
GLOBEX range is wide, that would be significant. In general, if GLOBEX has
moved far from the closing range, say higher, we would consider that “strong”
and it would distort our call from the Nightly Report. If Globex has stayed
within a few points of the close, or did NOT move up (or down) on what would
have been perceived as market-moving data that would be considered “weak”.
Jim:
I'm sure there are traders somewhere making money today
(I'd love to meet them, find out how they time entries in this chop).
Just when a signal setups, gets triggered, runs like hell (in the direction you
would be in had you pulled the trigger), it turns around and comes right back
to the trigger point. The market is just TOO fickle to trade with any
conviction. All over the friggin' place today, a mess. -RL
I understand that you are
trading with moving averages, using short term time frames. This is precisely
what we are trying to teach traders to get away from, unless you want to sit
all day and stare at a screen for 1-2 point scalps. By the time the short term
MAs cross over, the markets are already moving back in the other direction. Of
course, if you could discover the “holy grail” formula which would tell us if
today was going to be a trend day or a sideways day, you’d “win”. In lieu of
that, we try to anticipate the most likely market direction and then trade off
the pivots, with the internals for guidance, and then place our stops and wait. The best traders rely solely on PRICE and
TICK. Period.
Jim: You sent out a recent email about
trading a 15 min chart with MACD as an indicator which ended with something
about you can't go wrong. Do you recall this and can you resend it to me?
-MW
I’ve
had several discussions of this, one recently in the Futuresource Plus article
from November. While the bulk of our trading comes from an analysis of the
PRICE of the market in relation to the PIVOTS we calculate, sometimes during
the actual trading day things are less clear. There are times when we’ve found
it helpful to look at the S&P BAR chart with the 15-minute MACD HISTOGRAM.
What we are looking for is divergence. Sometimes the market price is going
nowhere, such as going sideways or bouncing up and down a few points. If you
look at the MACD HISTOGRAM you may see it going steadily higher. This might
clue you in that we are about to move up. Then compare this to our anticipated
market direction and the nearest Pivot point and you have some extra confidence
in the trade. There is no “black box”, but this is a pretty neat tool. If the
market range has expanded, say 100 point moves in the DOW, you may want to
switch to the 30 MIN MACD HISTOGRAM for confirmation. The best way to learn how
to use this indicator is to follow it for a few days.
Dr. Raker:
I have been
studying all that I can access on the website but there are a few things I do
not understand. Namely, "TICK", "TRIN" and
"BREADTH". –LE
TICK
refers to the NYSE net stock movement at any given moment. You can see it on
the CNBC ticker (although you shouldn’t be watching) and it is a MANDATORY
indicator to get with your quote service. TICK above plus 800 implies strong,
institutional buying. Above 1000 is very strong. Likewise minus 800 or more
implies institutional selling. There are 2 ways to use this. If there are
“waves” of strong TICK, i.e. push after push of plus 1000 tick, the odds are
that the institutions are on a buying spree and it would not pay to go against
them until they are done. The other way to use this is if you see a single
strong move which happens with or ends with an isolated plus 1000 TICK. In this
case, especially if it happens at one of our pivots, you should go short (or
long if the opposite is occurring). The implication is that the institutions
have run out of money for the time being and there is nothing left to propel
the market in that direction further.
TRIN
is the ARMS index and is a ratio of advancing stocks on advancing volume to
declining stocks on declining volume. Above 1.00 implies more selling and below
1.00 implies more buying. The way to use this is both in the absolute – i.e.
“what is the TRIN?” and in the relative… i.e. is it increasing or declining? If
the market has sold off in the morning and the TRIN is high, but then you see
the TRIN dropping towards and then below 1.00, the selling is likely over, so
you would either cover your shorts or consider going long, in conjunction with
our pivots and plan for the day. As you become familiar with the TRIN you will
also see that after prolonged trends, when the TRIN is at extreme readings, say
close to or over 2.00 after several really hard down days, it will often pay to
trade in the opposite direction soon.
Finally,
BREADTH refers to the NYSE advancing issues minus the declining issues. Again
we look at this in both absolute and relative terms. Breadth of 2:1 positive
implies twice as many stocks went up as down, and this implies a strong,
bullish environment. You HAVE to watch the breadth during the day AND keep
track of it at the end of the day, too.
JIM:
Thank you kindly for your last answer. After I sent my question, I figured out that SPZ stood for the big S&P future. I too trade the e-mini including the NASDAQ 100, my question is:
The price
of the S & P equities is often lower than the big S&P futures and
the e-mini S&P futures. How do you relate the pivot points to the
e-mini? I know there is a premium involved but I do not fully understand
the relationship between the three. Thank you. -LGE
I’ll
answer this in 2 parts. First, the PIVOTS we provide you are based on the DAY
session of the “BIG” SP contract. Trust me, these pivots work. We do not need
to calculate the GLOBEX range. We do look at GLOBEX and will refer to it in our
Nightly Report, and we also use the GLOBEX range for exit points, but it is NOT
necessary for Pivot calculation. Second, it is important to understand the
difference between the SPX, or S&P 500 CASH versus the S&P Futures
price. The index (SPX) is calculated continuously as is the DOW and other
indices. The FUTURES price is different as it represents a commodity, so it
theoretically reflects what people are willing to pay for the SPX at any given
moment. If more people think that the market is going lower, than the FUTURES
price will head down and be LOWER than the cash price. This would be referred
to as a “DISCOUNT”. If they think its going higher, the futures price will head
up and this will be referred to as a “PREMIUM”. Sometimes in the Nightly Report
we refer to the discount as a “negative premium”. The PREMIUM is referred to as
the “spread” on some quote services. I traded for years using the quote.com
free service. This showed a live picture of the SPX on the left in a chart,
while on the right was a box with the SPX, the TICK, TRIN, OEX and other
indices as well as the “PREM”. I simply
made the calculation in my head and arrived at the current futures price. If
the SPX was at 1050 and the PREM was -1.40, then I knew that the current (front
month) futures was 1048.60. It’s a great service, but they now charge to use
it. Finally, it is important to remember that the BIG S&P trades in
nickels, while the e-mini trades in 0.25 increments. So when the futures I just
mentioned was 1048.60, the e-mini was probably at 1048.50 bid and 1048.75
asked. Close enough for trading purposes!
Jim, where do you find intraday put-to-call information?? Thanks. -PH
Some quote services include this as
do some brokers. You can also get intra day information from the CBOE at www.cboe.com This information is updated
roughly every 30 minutes and is currently free.
Jim,
Do you provide managed trading in S&P E-minis? -BW
No. It is my goal at SmartDayTrader
to teach traders how to trade and think for themselves. My assumption is that
if you want to trade, you are committed to trading. If you want someone else to
manage your money, you’d do well simply following a long-term approach by
dollar cost averaging into high quality stocks, using Value Line! There is a
link on our web site to Dan Sullivan (The Chartist) who is also an excellent
resource, but not for commodities funds. Probably the biggest problem with day
trading the e-minis is that the entry price is low and at first blush it appears
“easy”. Trust me, it’s not easy. It’s down right hard. You have to be willing
to do your homework, spend a ton of time, look yourself in the mirror hard, to
see if you are telling yourself the truth and following your plan. It is not
impossible – but it is hard. Hang in there or have the courage to quit with
your capital and your dignity intact.
Hello,
How does
the environment change after lunch to make the "quickies" trickier?
–JC
You
are referring to the trades we offer several times a week, which we refer to as
“quickies”. These trades are based on years of experience. They are meant to be
taken early – usually between the opening bell and noon – as they reflect
patterns related to action which took place towards the end of the prior day,
and are usually reflective of “inflection” points, or points in the market
where there was high or low TICK, or where the market reacted to various
support/resistance lines. We usually suggest smaller profits with these, too,
such as 3-5 SP points. Things just change as the day goes by, especially after
lunch. If we believe there may be a good short from 1048 to 1042, you will
notice that we usually are right. In the morning. Later, as the day goes on,
the market may move back to 1048 and blow right through! Just trust me on these
trades.
What are
your 2 most recommended books to read on technical analysis. –RS
There
are many books out there. I memorized John Murphy’s first text book on
Technical Analysis. No offense to John, but I still think the first version is
better than the re-write of a few years ago. Everyone reads Pit Bull by Marty
Schwartz, but I’m not sure if this is all that helpful, only to energize you
and remind you that it takes over a decade to get it right! And even then you
still have to do a zillion hours of homework every night!
Hello,
When there
are no more pivots left, what can we rely on apart from the regular indicators
like TRIN, TICK etc? –JC
What
you are referring to is what happens when the market trades above or below our
highest/lowest pivots. This would imply that we have a trend day, and these are
hard to trade. We use a technique called “back through the pivot”. When the
market has blown through, but stalls, we look to see if the market is slowly
changing direction by watching the direction of the TICK, TRIN, VXO, and
breadth. If the trend appears to be changing then we use the nearest pivot as
an entry point on the way back through, up or down. Otherwise, there isn’t much
to do. Counter trading off a major trend is extremely dangerous and
inadvisable.