Tuesday, January 12, 2010

Tactical update

As we all have seen, volatility in the ES has dropped dramatically over the past year. This reduction in volatility makes it possible for me to return to a more comfortable trading style (for me). I expect to hold more and more trades overnight, and many for several days when the profit potential seems great.

At the moment I am long one unit (half a position). I think a move to 1150 is likely and I plan to hold this trade overnight. Naturally I'll let you know if I don't do this.

8 comments:

DMA Trader said...

Nice.

Have a very good trading year.

jeff said...

The only way the long side works here is if we're able to push above 1136.74 on the cash index. In Elliott Terms, this would be Wave I down and this latest thrust got up to just shy of this mark. Provided we are unable to break above here, Wave V down is now underway and will push us down to 1125 or so.

If we break above, then today's low would be the bottom of Wave IV and Wave V up would take us to new highs before falling. This scenario would fit per your thoughts.

In the meantime, all we can do is watch.

Narayana said...

Isn't today's action a supply shock on /ES? The 12pm (EST) bar was a wide range down bar with the highest volume in 20days. Why are you bullish after seeing this?

jeff said...

Carl,

As I write, it looks more and more like the 12 PM upside was a classic ABC Wave IV corrective action that fell shy of the Wave I downside at the open. As such, I'm fully expecting we close near the lows of the day and will test the 1125 level before a larger Wave IV, ABC retracement up to 1135 before a Wave V fall into the 1110-1115 range.

Good luck with your long trade. I'm short right now, but will take it off after another wave down to new lows.

jeff said...

no advantage heading into the close. any trade above 1136.74 on the S&P cash and this market is going up. Any trade below 1132 and 1125 here we come. As such, I sold my short position just before the close and will watch the overnight action for some guidance. If there any flaw with Elliott it is this, the action will probably show itself at 3 AM when I'm dead asleep and when it's time to act, it will be too late. No room here for the 'small guy'.

Don said...

Jeff,
The percentages you posted yesterday regarding up Mondays is off Robert McHughs newsletter late last week. The site can be found at:

www.technicalindicatorindex.com

PM said...

Hi Carl,

No sell confirmation today, we closed above 1132.10 therefore my model is still long.

Thanks.

Kindest regards,

PM

Win said...

Carl,

I just saw something that may be of interest:

http://finance.yahoo.com/q/op?s=UUP

Note the Open Interest and Volume on the $23 Calls. Compare it to the $23 Puts. These options expire this Friday.