Wednesday, March 24, 2010

Shaking out the breakout buyers

Here is a 30 minute bar chart showing day session e-mini trading. Earlier this morning I thought that the break to 1161.25 was warning that a terminal thrust (false breakout) had occurred yesterday and that a correction of 20-30 points might lie ahead. But during the last 90 minutes the market has recovered all of its earlier sharp break. This negates the false breakout warning.

But the more interesting aspect of today's action thus far is that the break to 1161.25 low looks like a shakeout of the yesterday's breakout buyers. Notice the wide range bar which dropped the market three points below the first hour low and four points below the 1165.50 breakout level (red dash oval). Then notice the immediate, steady rally back above both of those levels. This is classic shakeout behavior.

This makes me think that the day's low is in place at 1161.25. The market is likely to meander the rest of the day and will probably trade higher tomorrow. My upside target for the next two or three days is 1179 (green oval), the confluence of the two upper trend channel lines I have drawn on the chart.

15 comments:

Kishore said...

Carl, good insight!

However, here is an alternate view:

Yesterday, the market had a breakout, which turned out to be false, i.e. a bear shakeout.

Today, as your say, the market had a a bull shakeout.

In other words, the market does not want anyone around.

IMHO, the wild swings, especially when the market is highly overbought, is the classic behavior prior to a big time fall.

septizoniom said...

WHY DON'T YOU JUST ADMIT IT CARL. YOU'RE A GAMBLER, A SPECULATOR. YOU HAVE NO IDEA WHAT IS GOING TO HAPPEN OR WHY. NOSTRADAMUS YOU ARE NOT, NOR IS ANYONE, BUT FEW HAVE YOUR BOMBAST OR HUBRIS.

pimaCanyon said...

septizoniom, your post made me laugh out loud, the all caps was a nice touch!

straightshooter1000 said...

septizoniom,
You're a funny guy. You claim Carl doesn't know what's going to happen, but I'll bet you check in on this site several times each day to figure out what you should do!!!

Kishore said...

It is important to have confidence. Otherwise, it is not easy to pull the trigger. However, confidence comes only from successful trading experience. No one can predict the future. But it is all about having a good batting average, by having an edge. Carl has that edge! And I am sure he must have paid a hefty "tution" (i.e. trading losses) to learn his lessons early in his career.

septizoniom, if you can do better and are willing to show your trading, start writing a blog! You may have to continue using CAPITAL letters to make your BS point.

AdrianD said...

it seems to me septizoniom`s post is more of praise to Carl. its the hardest thing to gamble and be successful.

might have misunderstood it. i am not a native english speaker.

Nick said...

Mr.Futia,
Great analysis! I think in the future you could publish a hard copy of this blog with charts showing each entry and exit, and a commentary on how the outcome played out. I'd buy a copy.
Cheers!,
Nick

pimaCanyon said...

What Nick said! I'd buy a copy too.

I'm reading Carl's book now. Excellent read and very useful info for longer term position trading.

curt said...

great idea Nick...i concur

yrichter said...

It boggles my mind that someone can criticize Carl's work here... Everyday he posts his trades and take on the market in near real time disclosing both winning and losing trades...

egnard said...

To be fair to septizoniom, Carl sometimes does reverse his predictions on a dime (but then explains why). I guess being nimble is what this business is about, and it seems to work for him. Carl has, however, warned against using his blog for your trades (see "Worrying about you" dated March 12- with loads of other advice in the comments in response to that entry). I speculate that septizoniom did not heed, or perhaps read, his advice and got burned (judging from the CAPS), as other readers have occasionally reported.

modazfuk said...

Does Carl ever engage with people who leave comments? I've noticed questions being left behind and/or just thoughts, but I've yet to see Carl address any of them (shrug).

kcounty said...

i think we saw a classic example of the futility of technical analysis on the short term. Carl described a fundamental shift from short to long in 96 minutes. this is precisely why i don't follow any of the e-wave guys, nor do i match carls trades when he posts them but man do I read like E.F. Hutton when he describes long term stuff - like the move to 1200 he has talked about for days.

Shlomo said...

Carl,
Just wanted to say thanks for a subtle change I've noticed in the blog recently: you are posting more about the "why" of your trades. It has really helped me get into your head as you trade. I don't personally use the trades you post, but it is greatly rewarding to benefit from your vast experience.
Thanks!

dcatlowpj said...

This is not meant to be emails to Carl, unless you note your comments to Carl as "personal" which I have done in the past. He has not replied to me in that way either...a trader does not have THAT much time. He's got to watch his charts, write up his blog and follow-up with his trades...do not expect him to reply. I think this blog is better for those who can post opposite trades to Carl...or contrary trades should be posted and why and be detailed about it. We can all learn here from that.

Carl is definitely on to something with range boxes...it is really interesting to pay close attention to those details.