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S&P; 500 Jun SPM1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TODAY'S S&P; 500 COMMENTARY The only Pattern Signal fired for today's trading in the S&P; is the Low Historical Volatility with an NR7. This signal combines two very powerful ways of measuring market flux to warn us that the market is primed for a strong move. The Low Historical Volatility aspect of the signal originally comes from the work of Larry Connors. It compares volatility measured over the last 6 days to volatility measured over the last 100 days. If the 6 day reading is less than half the 100 day reading, a Low Historical Volatility signal is fired. The NR7 aspect tells us that yesterday's range was the narrowest of the last seven days. If the market were thought of as a spring gradually being compressed, these signals represent a likely trigger point for releasing that pressure. There is potential for the market to break out of this tight range today, and essentially trend in one primary direction. A good clue as to if and which direction it might break can be determined by today's market action near yesterday's 1281.00 high and 1271.50 low levels. A break of either is a likely indication of the new trend direction out of this contraction period. An aggressive trader can enter on the break. A conservative trader might want to wait until a return to the breakout level, which often happens before a sustained move begins. Some initial clues to breakout direction can often come from early rejections of these levels. If the high is approached, repelled, and price then moves through the DP, the likely breakout direction is the low. Likewise, if the low is approached, repelled, and price goes through the DP from below, the likely breakout direction is the high. Another clue can often be found in price action near the DP. If price is unable to move through this level, the likely breakout direction will be the same side as it originated. On the S&P; Half Day Chart, our Cycle Indicators appear as if they are still in the midst of a topping process, with the 5 period Double Stoch creating a second cycle within a single cycle of the 10 period Double Stoch. At this point, however, much more will be determined by today's economic releases than can be reliably discerned from our cycle indicators. ADX levels on the 5, 15, 30, and 60 minute charts (see below) have values less than 18, which suggests that we keep an eye out for any developing triangles, wedges, flags, or channels in the respective time frames. We can use breakouts from these patterns as either a trigger into a trade or to help determine directional bias. Some important economic numbers will have already been released by the time today's regular trading session begins. On the roster for today are Unemployment Rate, Nonfarm Payrolls, Hourly Earnings, and Average Workweek, all released at 7:30CT. Wholesale Inventories is released at 9:00CT. Principal market direction will likely be determined before the session even opens. We should enter the day prepared for the possibility of range expansion and a pickup in volatility. One of the more prudent approaches for entering today's trading is to simply stay out of the way until the dust settles. If opening volatility is extreme, we should wait 15 to 30 minutes before entering a position. By this time, you can usually get your bearings and market entry can then be made with a greater degree of confidence and with less chance of getting whipsawed. One interesting pattern to keep an eye out for early in the day is the Spike & Ledge from the book "Street Smarts". If we get a large opening gap or early spike move as a result of today's numbers, this pattern will trigger us into a trade in the opposite direction of the original thrust. It is identified by, first, an obvious spike, and second, a "ledge" created by the first retracement move away from the spike extreme. A violation of the line created by that ledge is our trigger to enter. The big disadvantage of this trade is the fact that the stop typically needs to be placed just past the swing pivot extreme. This is usually too far for my tastes. There is another trick that comes in handy after a large impulse move. I'm always a little gun-shy about jumping on board in the middle of these types of, typically, fast market conditions. You not only risk large slippage, but such volatile spikes often require very wide stop placement. And I'm ALWAYS on the lookout for ways that I can reduce my risk. However, if you pay close attention to the 5 min. 20 EMA on days like today, sometimes you can come out all right. If, for example, we have a large impulse move upward, rather than using some sort of breakout entry where you have to place your stop past the extreme of the swing pivot, you can, instead, just sit back and wait to see if price eventually returns to the 5 min. 20EMA. If it does so, and a price reversal pattern develops near the EMA and a previously identified support zone, you can go long with your stop just below that zone. You won't catch the hero moves this way, but you can still garner some good profits, AND you reduce your risk considerably. Another important item of note on highly volatile days - the Pivot System S&R; levels posted at the top of this report can quickly become useless if the volatility is extreme. The calculations for these values are based on the prior day's range and close. If a report is released that causes significant market movement, the value of the activity on the prior day, and any calculations resulting from that activity, can be rendered meaningless. Even with the potential increase in volatility caused by the reports, the heart of the matter still boils down to identifying support and resistance levels and watching how price reacts near those levels. In addition, keep a sharp eye out for Spike & Ledge and Holy Grail patterns.
Nasdaq 100 Jun NDM1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TODAY'S NASDAQ 100 COMMENTARY The only Pattern Signal fired for today's trading in the Nasdaq 100 is the High Breakout Continuation. This one is a little different than the bulk of the signals that we normally incorporate. Rather than creating a directional bias for the trading day, it points to a likely market development IF an additional condition is met. The setup for the High Breakout Continuation signal includes (1) the signal day's high is within the middle 20% of the prior day's range, and (2) the signal day's low is lower than the prior day's low. If on the day following the signal day (today's trading), the high of the previous day happens to be taken out (yesterday's high) then the probabilities of a continuation trend move upward is very high. This signal is NOT setting up a directional bias for today's trading. Rather, it is indicating that if the prior day's high happens to be taken out, you want to be on board the upward move because odds are it has further to go. On the Nasdaq 100 Half Day chart, all three of our Cycle Indicators moved lower from overbought levels with yesterday's activity. Of greatest significance is the downturn in the 7 period %K. A turn of this indicator from its overbought or oversold zone is usually a good indication that a new trend has begun and at least several more bars of new short term direction should follow. At this point, however, much more will be determined by today's economic releases than can be reliably discerned from our cycle indicators. ADX levels for all of the timeframes that we normally monitor (5, 15, 30, 60, and 120) are below a value of 18. When this occurs, we know that it is a good time to keep an eye out for any developing triangles, wedges, flags, or channels in the respective time frames. We can use breakouts from these patterns as either a trigger into a trade or to help determine directional bias. Some important economic numbers will have already been released by the time today's regular trading session begins. On the roster for today are Unemployment Rate, Nonfarm Payrolls, Hourly Earnings, and Average Workweek, all released at 7:30CT. Wholesale Inventories is released at 9:00CT. Principal market direction will likely be determined before the session even opens. We should enter the day prepared for the possibility of range expansion and a pickup in volatility. One of the more prudent approaches for entering today's trading is to simply stay out of the way until the dust settles. If opening volatility is extreme, we should wait 15 to 30 minutes before entering a position. By this time, you can usually get your bearings and market entry can then be made with a greater degree of confidence and with less chance of getting whipsawed. One interesting pattern to keep an eye out for early in the day is the Spike & Ledge from the book "Street Smarts". If we get a large opening gap or early spike move as a result of today's numbers, this pattern will trigger us into a trade in the opposite direction of the original thrust. It is identified by, first, an obvious spike, and second, a "ledge" created by the first retracement move away from the spike extreme. A violation of the line created by that ledge is our trigger to enter. The big disadvantage of this trade is the fact that the stop typically needs to be placed just past the swing pivot extreme. This is usually too far for my tastes. There is another trick that comes in handy after a large impulse move. I'm always a little gun-shy about jumping on board in the middle of these types of, typically, fast market conditions. You not only risk large slippage, but such volatile spikes often require very wide stop placement. And I'm ALWAYS on the lookout for ways that I can reduce my risk. However, if you pay close attention to the 5 min. 20 EMA on days like today, sometimes you can come out all right. If, for example, we have a large impulse move upward, rather than using some sort of breakout entry where you have to place your stop past the extreme of the swing pivot, you can, instead, just sit back and wait to see if price eventually returns to the 5 min. 20EMA. If it does so, and a price reversal pattern develops near the EMA and a previously identified support zone, you can go long with your stop just below that zone. You won't catch the hero moves this way, but you can still garner some good profits, AND you reduce your risk considerably. Another important item of note on highly volatile days - the Pivot System S&R; levels posted at the top of this report can quickly become useless if the volatility is extreme. The calculations for these values are based on the prior day's range and close. If a report is released that causes significant market movement, the value of the activity on the prior day, and any calculations resulting from that activity, can be rendered meaningless. Even with the potential increase in volatility caused by the reports, the heart of the matter still boils down to identifying support and resistance levels and watching how price reacts near those levels. In addition, keep a sharp eye out for Spike & Ledge and Holy Grail patterns.
US T-Bond Jun USM1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TODAY'S T-BOND COMMENTARY There are no Pattern Signals fired for today's trading in the T-Bonds. On the Half Day Chart, all three of our Cycle Indicators moved higher with yesterday's activity, further confirming Tuesday's activity as having marked a short term cyclical low. At this point, however, much more will be determined by today's economic releases than can be reliably discerned from our cycle indicators. ADX levels on 15 and 30 minute charts are very near a level of 30, indicating that the trend to higher prices is still intact in these timeframes (see charts below). If we were triggered into a long position by a price reversal pattern and/or Oscillator Divergence near the 20EMA in either of these timeframes, we would have the makings of a Holy Grail setup. A trade based in part on a Holy Grail pattern can take as its minimum profit target a return to the most recent swing pivot extreme, which would be yesterday's 105-31 high. If the move to that level can occur on Momentum Confirmation, there should be even more upside in the making. We have some important economic numbers coming out this morning. At 7:30CT we have the Unemployment Rate, Nonfarm Payrolls, Hourly Earnings, and Average Workweek being released. Wholesale Inventories is released at 9:00CT. Unemployment Friday is always a tricky one. It can typically lead to extreme levels of intraday volatility. One of the most prudent approaches for entering today's trading is to simply stay out of the way until the dust settles. Wait at least 5 to 10 minutes after the unemployment report release before entering a position. By this time, you can usually get your bearings and market entry can then be made with a greater degree of confidence. You also reduce your chance of being whipsawed. One interesting pattern to look for immediately after the reports come out is the Spike & Ledge from the book "Street Smarts". If we get a spike move as a result of today's numbers, this pattern will trigger us into a trade in the opposite direction of the original thrust (example in the chart to the right). It is identified by, first, an obvious spike, and second, a "ledge" created by the first retracement move away from the spike extreme. A violation of the line created by that ledge is our trigger to enter. The big disadvantage of this trade is the fact that the stop typically needs to be placed just past the swing pivot extreme. This is usually too far for my tastes. There is another trick that comes in handy after a large impulse move. I'm always a little gun-shy about jumping on board in the middle of these types of, typically, fast market conditions. You not only risk large slippage, but such volatile spikes often require very wide stop placement. And I'm ALWAYS on the lookout for ways that I can reduce my risk. However, if you pay close attention to the 5 min. 20 EMA on days like today, sometimes you can come out all right. If, for example, we have a large impulse move upward, rather than using some sort of breakout entry where you have to place your stop past the extreme of the swing pivot, you can, instead, just sit back and wait to see if price eventually returns to the 5 min. 20EMA. If it does so, and a price reversal pattern develops near the EMA and a previously identified support zone, you can go long with your stop just below that zone. You won't catch the hero moves this way, but you can still garner some good profits, AND you reduce your risk considerably. Another important item of note on highly volatile days - the Pivot System S&R; levels posted at the top of this report can quickly become useless if the volatility is extreme. The calculations for these values are based on the prior day's range and close. If a report is released that causes significant market movement, the value of the activity on the prior day, and any calculations resulting from that activity, can be rendered meaningless. Even with the potential increase in volatility caused by the reports, the heart of the matter still boils down to identifying support and resistance levels and watching how price reacts near those levels. In addition, keep a sharp eye out for Spike & Ledge and Holy Grail patterns.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ YESTERDAY'S T-BOND TRADING
Market Commentary Page
For the S&P; 500, Nasdaq 100, and T-Bond Futures Markets
Pattern Signals - an automated pattern identification process which
identifies today's most likely market scenario based on recent price behavior.
Low Historical Volatility with an NR7 Signal - Potentially Explosive!
This signal indicates that range expansion is highly likely.
If, during the day, yesterday's high is exceeded then either buy the breakout
(aggressive) or buy the retracement to the breakout (conservative).
If, during the day, yesterday's low is exceeded then either sell the breakout
(aggressive) or sell the retracement to the breakout (conservative).
Pivot System Support & Resistance Levels - used by floor professionals to determine
value based on prior day price activity. Shifts in market psychology often occur near these levels.
R3·1291 R2·1287 R1·1283 DP·1277 S1·1274 S2·1268 S3·1264
Range Projections - This market will have a tendency to trade within the Normal
High/Low Range today as noted below. If those levels are exceeded, use the Extended Range.
ADX<18 indicates ambivalence: use chart pattern breakouts to help determine directional bias. ADX>30 defines trend
moves in that timeframe: watch for retracements to the 20EMA. The colored bar under ADX represents trend direction.
Pattern Signals - an automated pattern identification process which
identifies today's most likely market scenario based on recent price behavior.
High Breakout Continuation Setup If yesterday's high is taken
out today, the trend higher is likely to continue for the rest of the day.
Pivot System Support & Resistance Levels - used by floor professionals to determine
value based on prior day price activity. Shifts in market psychology often occur near these levels.
R3·2093 R2·2054 R1·2014 DP·1986 S1·1946 S2·1918 S3·1878
Range Projections - This market will have a tendency to trade within the Normal
High/Low Range today as noted below. If those levels are exceeded, use the Extended Range.
ADX<18 indicates ambivalence: use chart pattern breakouts to help determine directional bias. ADX>30 defines trend
moves in that timeframe: watch for retracements to the 20EMA. The colored bar under ADX represents trend direction.
Statement of disclaimer: This information was compiled from sources believed to be reliable, but its accuracy cannot be guaranteed. There is substantial risk of loss in stock and futures trading. There is no warranty, express or implied, in regards to the fitness of this information for any particular purpose. Past performance is not a guarantee of future results.
Pattern Signals - an automated pattern identification process which
identifies today's most likely market scenario based on recent price behavior.
There are no Pattern Signals fired for today's trading.
Pivot System Support & Resistance Levels - used by floor professionals to determine
value based on prior day price activity. Shifts in market psychology often occur near these levels.
R3·106´16 R2·106´07 R1·105´29 DP·105´22 S1·105´12 S2·105´05 S3·104´27
Range Projections - This market will have a tendency to trade within the Normal
High/Low Range today as noted below. If those levels are exceeded, use the Extended Range.
ADX<18 indicates ambivalence: use chart pattern breakouts to help determine directional bias. ADX>30 defines trend
moves in that timeframe: watch for retracements to the 20EMA. The colored bar under ADX represents trend direction.