Wednesday, April 18, 2007

April 18 Trade summary

This morning was choppy and the volume looked suspect to me for a selloff to occur. I wanted to go short with size at the open, but I was cautious and stayed out and only took a couple of scalp trades. I decided to open up my old indicator chart to see how it would have traded the first 2 hours, and found that it would have traded way better than me today. The relationship between YM and ER2 was unusual this morning, with the pair switching leadership a few times today.

P/L= $30

Market observations-
The 7:15 time reversal struck again.

Check out Traderfeed on how Dr. Brett uses the avg. volume for each 15min bar on ES to gauge the market. Knowing this information was helpful this morning in being able to determine if we were going to selloff. I also watched one of my recordings last night of a day where we sold off, and the difference was that the selloff day had much heavier volume and the NYSE TICK was making lows in the -800 to -1000 range, and NYSE A/D had wide range body candles to the downside. In other news, ZN continues to the upside. I expect when ZN pulls back, the stock indices will make new highs, and then this may provide a good setup to go long ZN and short the stock indices. I would expect to see this move within the next 7 trading days, but as always I will be trading what I see and sticking to my system.


Anonymous said...

I also saw the relationship with the YM and ES today.To compare the 2 I change the ES to a point value like the YM. Because as you know 1ES point=$50 and 10YMpoints=50$. So I just move the decimal point over one space. so ES 1.00=10.0. Then i monitor daily changes.

I didnt start trading untill 1:00EST today though but until the the end of day sell off the ES was tracking the YM by almost "exactly" 20points i was looking for a divergance in this to get a scalp oppertunity.It didnt happen untill all the indices tanked at the end of day.

I did the same thing yesterday and what kept happening was whenever the YM would get 30 points away the ES would rally to within 10points and settle between 10 to 20 points away. Both days the YM was the leader with the higher daily gain.

In your experince do you think this normal for the YM and ES to be leading each other? Or is this just some kind of fluke and I'm reading too much into nothing?

HPT on 10:56 PM said...

I think you are reading into the pair too much. YM has less real traders and has less liquidity, that is why you are seeing YM "leading" or having a bullish divergence compared to ES. Whenever you make a trade, do so because of what you are seeing on the chart of the contract you are trading, not because of something you see on a chart of a similar contract. I've been discussing a similiar question you posed on Elite trader, found here-

Anonymous said...

Thanks for the feedback LifePost. I didn't even consider the fact that YM has "less liquidity"(to say the least). I'm a newbie always looking for new signals. In retrospect this idea seems to be more of a wish than reality. Your new post (4/19) saying to fade YM seems like a much better strategy.

Thanks for the link I'll definatly check it out.

GL Trading. Jake.

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