1-19-2011

Composite: Another rally day yesterday. We extended the range of the micro composite up to the 1295 area. After two days of big up movement probabilities favor an inside day. Expected range 1295-1287.
15 min: Key zones marked. Yesterday was a 'd' shaped profile indicative of long liquidation which makes the underlying market structure potentially weaker. Day type yesterday was normal variation. T0his generally shows that OTF is valuing new information.
5 minute: Zones marked.
Globex: Overnight condition is range bound as of now ( 6:30 AM CST). Expect more of this during the RTH session.

Hypotheses/Plan: Overnight inventories are in balance. This means not much has changed from session to session. Expecting an OAIR and a balancing day. If the market opens inside yesterday's range, I will look to fade the edges of the range. If we somehow open out of the range, I will go with the breakout, but be cautious.

Quote of the day: 'Your personal growth always lies on the other side of your discomfort.'

1-18-2011

Composite: Huge rally on Friday. Top end of volume distribution looks light on volume. Probabilities favor movement into the light volume zone. Especially 1286.75-1283.75.
15 minute: Keys zones marked. Yesterday was a short trading holiday. Day type on Friday was a trend day to the upside. I will be looking for a move down to areas mentioned on composite section.
5 minute: Important HVN/LVN's marked on chart.
Globex: We ran up and tested the 1291.50 CLVN and rejected down to prior know support area from Friday ( 1282.75 ). Then we rallied off the support zone all the way to 1293 and now we are starting to show some chinks in the 'bull armor'. Now trading in the the 1290 area ( 6:40 AM ).

Hypothesis/Plan: Overnight inventories are to the upside. This means traders may be long at disadvantageous prices, that are too high. probabilities favor rotation to areas mentioned in composite section. If market opens within the range I will look to buy areas mentioned above. If we open outside the range I will look to trade a gap fill. If we open under Friday's value I will look for opportunities to short.

Quote of the day: 'Do the thing you fear and the death of fear is certain.'

1-14-11

Composite: Yesterday was an inside day as I predicted. The mini composite has a double distribution. And yesterday's close 1280.75, will be key if tested in the day session.
15 minute: Key zones marked. Day type yesterday was neutral. This morning they are pounding this thing down, but I will be looking for an upward move to the 1279-1280 area.
AM Thoughts: Overnight condition is down trend but we still have VPOC lingering at 1281.50. Wide overnight range. Expecting OAOR or OAIR.

Hypotheses: Overnight inventories are to the downside ( 7:35 AM CST ). Probabilities favor us continuing this downward move. Possibly into the old balance area. 1274.50 and 1276 will be key for bulls to defend. VPOC just shifted down to 1276 ( 7:40 AM CST ).

Plan: Today the plan will be to short against the mini composites double distribution ( 1278-1281 area ) or go with the break back into prior balance area ( 1276-1274 ). We could also have a snap back rally on the open, will be looking for a gap fill trade if possibility arises.

Quote of the day: "Trade for risk, not reward."

1-13-2011

Composite: Broke out of 7-day balance to the upside. We found acceptance in the upper area of the range.

15 min: Value moved higher. After gapping up then a short pullback to the support in the 1276 area. We closed near the HOD. Expecting a balance day today.
AM Thoughts: Overnight condition is balance. Expecting balance day after yesterday's big gap up. Opening type, looking for OAIR or OTD, but, as always the market will tell us what it wants to do.

Hypothesis: Overnight inventories are in balance ( 6:30 AM CST ). Probabilities favor day session to trade the same. We have jobs number at 7:30 AM CST. That could move the overnight market out of balance. I am guessing this is what the market is waiting on to move if it is going to move out of balance.

Plan: Today the plan will be to fade the edges unless we get continuation of yesterday's rally and break out to the upside.

Quote of the day: "Nothing Ventured, Nothing Gained." -"The Dean"

12-12-2011

Composite: Still within balancing area for past seven sessions. Mini composite looks "P" shaped which is indicative of short covering which makes the market structure potentially weak.
15 min: Areas to do business marked on chart. As of now (6:15) the overnight session rocketed higher, but has tapped on the 1279.50 CLVN and started to drift down. However, if we break out of this level, I will go in the direction of the breakout. Otherwise, I expect continuation of trading within balance zone.
5 min: Key HVN/LVN's marked.

AM Thoughts: Overnight condition to the buy side. Hit CLVN at 1279.50 and reversed. Expecting to open above or near the top of the 7-day balance area. Balance zone ranges from 1257.75-1274.50. Expect opening type of ORR or OAOR.

Hypothesis: Overnight profile is "P" shaped as well so we may get a liquidation breakdown on the open or we could gap higher and continue to run for a trend day. If we open near the top of the balance area or outside of it, probabilities favor a breakout of the balance area to the upside.

Plan: Today the plan will be to either follow the breakout or fade the edges doing business only at specified areas.

NO TRADING DAY 1-11-11

I have dental surgery today so I will not be trading. But will recap the day later on...I think ;)

Homework 12-10-2011

Chart:

A.M. Thoughts: Overnight condition inventories to the sell side. Value moving lower with volume. Expecting OAIR or OAOR to the downside. We are within a 5 day balance. Expect to break out to the down side. 1257.75 key to break for bears.

7:15 O/N VPOC shifted up.

Hypothesis: At the open, longs may liquidate because of the overnight liquidation. We may open in range. If so, probably be a fade-the-edges day. If we open out of range to the down side, we may continue down to the naked VPOC which is at 1254.25 also a CHVN at 1264.00. Conversely, if we open out of range to the down side we could have a snap back rally.

Plan:Will look to sell rallies if we break Friday's low, unless we get that snap back rally. However, should we stay within Friday's range, I will look to fade the extremes.

Follow the plan/chart

The potential of weekly options

Bigger Gains, Less Time. Tap Into the Potential of Weekly Options

Traders spoke, and the exchanges listened. And, if the growing popularity of the new weekly-expiration options is any indication, these shorter-term puts and calls will soon join their monthly-expiration counterparts as mainstream trading instruments.

Just as the name implies, the newest innovation in option trading are derivatives that are issued on Thursdays, and then expire the following Friday?. six trading days later.

But why bother with short-duration instruments when the traditional monthly expiries have been working fine for all these years? There are actually quite a few advantages these instruments boast that simply can?t be said for the alternatives. Consider this:

• Weekly options inherently offer a greater ?delta?. That just means each of them are more responsive to changes in the underlying security?s price during their lifespan than monthly options are.

• Weekly options don?t suffer from a high ?theta?. In other words, time decay isn?t a major impediment for weekly options. Since they?re so short in duration, there?s no excess time value (or premium) baked into the price. As a result, weekly options tend to cost less.

While those two details are the favorable technicalities, the overarching attraction to these new short-term derivatives is not only ?bigger picture?, but much more important than the high delta and low theta?.. weekly options are amazingly flexible.

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One of the more challenging drawbacks of trading traditional options has been the misalignment of a trader?s timeframe and the option?s lifespan.

For example, a trade?s ?sweet spot? may end up spanning the last week of one month and the first week of the next month. However, since monthly options expire right before that sweet spot has occurred (and are issued several weeks before that period), a trader may be forced to choose an option, expiration, or strike price that doesn?t fully maximize a trade?s potential.

Said another way, a lack of choices of when an option?s life begins and ends means the trade?s theta and delta aren?t ideal, leaving money on the table.

Weekly options, conversely, are new every week, so a trader can pick and choose to step into a trend that?s moving at the time. Or, he or she can choose to pass on a trade that?s stagnant at the time. And what happens when the underlying stock or index starts to move again? No problem ? just step in again with the next weekly issue. There?s no need to waste time and tie up capital by holding an option during the underlying security?s dead periods.


And what sorts of securities or indices currently offer these weekly options. All the usual suspects in terms of indices are available?. major indices like the S&P 500, and weekly options for some of the major sector ETFs are on the table as well. A few of the most highly-traded stocks are in the fray too. Since these are issued on a revolving basis at the discretion of the exchanges though (largely depending on demand), you never know which stock you may be able to play this way in the future. [Indeed, many traders have used them as a way to leverage a position for purely a one-time event, like an earnings announcement.]

While the advantages of trading weekly options are clear, a new set of trading mindsets and rules also apply:

• Get your short-term charts and ebb/flow predictions ready. One of the primary reasons equity and index options exist in their traditional timeframes - with a lifespan of months if not more than a year - is to offer an active investor a way to leverage his or her capital, while allowing that same trader to ride out rough patches on the way to the end-goal. Weekly options, on the other hand, are a short-term chartist?s dream. The key question is, where will this stock/index be in a week (or less)?

• Use the market tide to your advantage. In the same vein is ?think short-term?, traders should tap the market?s near-term tidal forces?. since 3 out of 4 stocks tend to move in tandem with the market?s strong moves. Yes, given enough time, the best individual stock trends can defy the market?s ebb and low. The whole point here is speed though, which means calling the market right at any given time is half the battle (whether you?re trading stock or index options).

• Keep the original intent in mind. It?s contrary to most everything we?ve been taught as investors, but the whole point of weekly options is to reap the benefit from a short-term move; get in and out accordingly. Some traders are using them to profit from news announcements (like earnings). Others are just using them to hedge a position through a certain timeframe. Don?t be afraid to cut loose once your reasonable objective has been met.

The proliferation of weekly option trading is sure to be a beneficial one for traders. Like any other trading arena though, it?s the mastery of the nuances more than the mechanics that will be the key to your success.

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@ES Volume Gradient

A daily chart with volume profile gradient. Lots of strong support below us.

Courtesy of @VPgradient

What is a loser bucket?

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A little behind

Thing have been hectic the past few weeks so I have not had time to finish what I had planned to start Oct 1'st. Sorry for the delay folks but things will be up and running shortly. I will show you a few things here and there and how I learned how to trade the ES for a living. It took me 2 years and all of the good sites I learned from are here with links to and free trials. If you have any questions on any of the sites let me know and I will do my best to answer or connect you with someone who can answer your questions. Also please excuse my crude writing style, I am a trader not an English major so please bare with me :)

Some great trade set-ups coming at you soon!

Poll

The reason I am polling is because I have allot of stuff for Tradestation and InvestorRT/Market Delta and me and my brother worked very hard on it so there will eventually be a private blog just for code. It will be a 1 time fee and you have access for life. I have had over 10k visitors show up just for the free code. The stuff on here is nothing compared to what there will be on the sub blog.

And yes I know I spelled definitions wrong LOL! But I am a trader not a English major so...please forgive me :) and please vote.....thank you!

P.S. All current followers e-mail me.....you guys get grandfathered in for being loyal ;)

COT Data for the week

Some CRUDE stats

Bullish factors for crude prices include 1: the unexpected decline in weekly crude oil and distillate inventories (crude oil -1.85 million bbl versus expectations of +1.0 million bbl and distillates -388,000 bbl versus expectations of +700,000 bbl), 2: the increase in compliance in OPEC production quotas in Aug to 53.5% from 52.6% in July, and 3: the recent rally in US and European stock markets to 1-month highs, which fuels optimism that the global economic recovery and energy demand may strengthen. Bearish factors include 1: the action by the US Energy Department to cut its 2010 crude oil price forecast to an average of $77.37 a barrel, down from last month's forecast of $79.13 a barrel, citing the reduced projections for US economic growth, 2: the action by OPEC to cut their 2011 global oil demand forecast to 28.8 million barrels a day, 100,000 barrels a day less than last month’s forecast, and 3: Citigroup’s cut in its 3-month crude oil price forecast to $74 a barrel from $78 and in its 6-12 month forecast to $83 from $85 a barrel, citing high inventories and “downside risks” to US economic growth.

Crude oil inventories basically have moved sideways since May and have not come down as they should at the end of the summer driving season. In the latest week, crude oil inventories were 8.7% above their 5-year seasonal average, which was the highest figure since May 2009 when the U.S. recession was drawing to a close. Product inventories are also high with gasoline and distillate inventories 8.9% and 19.3% above their respective 5-year seasonal averages. The high level of product inventories can be directly attributed to weak demand. there is little chance of a surge in US and global economic growth, the only solution for the oil market is for oil prices to either work their way lower to find stronger demand or for OPEC to start cutting production. OPEC production has been virtually unchanged since February 2010 at about 26.8 MBPD. However, non-OPEC production has been rising since mid-2009 and in July hit a new 5-year high of 49.9 MBPD. If OPEC doesn't want to see a continued deterioration in oil prices, then the cartel is going to need to start cutting production. As usual, the responsibility to cut production will fall first on Saudi Arabia as OPEC’s swing producer and chief market-fixer.

Like to trade crude? The best crude trader I know has a blog in the works and you all will be the first to know as soon as it comes on line.

Coming back

The blog has been down for a long time and I am bringing it back...so for my 9 followers, thanks for being patient and sticking with me.

There are going to be a lot of great things coming up and free trials to only the best services out there. As well as lots of useful Tradestation code and InvestorRT & MarketDelta deffenitions. Plus I will be using this as a sort of trading journal and this blog will never be a subscription based blog so no fees ever....this will all be free forever so pass the word out and good trading to you!

So get ready!

Projected back date: October 1st 2010

Weak gasoline demand

U.S. refiners see serious pressure from weak gasoline demand and weak crack spread margins

The crack spread margin over the past year has been weak and has put severe pressure on U.S. refiners with high operating costs. The crack spread measures the theoretical margin in dollars per barrel that refiners can earn from refining (or “cracking”) three barrels of oil into two barrels of gasoline and one barrel of heating oil. The chart below shows the crack spread for the second nearest-futures contract in order to eliminate the spikes that sometimes occur when the front month contract expires.

The crack spread saw severe downward pressure in late 2008 when the financial crisis caused gasoline and heating oil prices to fall even more sharply than crude oil prices. The crack spread fell as low as $1.95 per barrel in late December 2008, a level at which all U.S. refiners would be losing money after taking into account other operating and overhead expenses. The crack spread in 2009 has recovered somewhat and is currently at $8.20 per barrel. However, that is still well below the average of about $13 per barrel seen during 2005-07 before the U.S. housing and financial crises emerged.

The crack spread is not likely to show sustained improvement until strong demand emerges again for gasoline. U.S. fuel demand is currently about 3% below the five-year average due to the recession and the fact that drivers and businesses are spending as little as possible on fuel. Increased ethanol usage is also having a negative impact on gasoline demand as the percentage of ethanol in fuel rises due to federal renewable fuel standards. In fact, BP CEO Tony Hayward in June made the startling comment that U.S. gasoline demand may have permanently peaked due to increased ethanol blending requirements, higher fuel efficiency standards, and gasoline-electric hybrid vehicles. He said BP in the first half of 2008 “probably sold as much gasoline into the U.S. as we’ll ever sell.”

The U.S. refinery industry will be in for some even rougher sledding if gasoline demand and prices do not soon recover to higher levels. The bottom line for market prices is that there is likely to be continued downward pressure on the crack spread at least until a sustained U.S. economic recovery begins.

Source: Futures Magazine Market Pulse

COT Data 7-28-09

Last weeks sector performance

Looking mighty bullish....

Dow Supercycle chart

Eco. Releases/ Earnings