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S&P; 500 Jun SPM1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TODAY'S S&P; 500 COMMENTARY We have two Pattern Signals fired for today's trading in the S&P;, the first of which is the 2 Day ROC Buy. This signal is the Raschke and Connors way of quantifying the swing trading methods as taught by the Taylor Trading Technique. This technique teaches that there is a natural pattern to the sequence of buy and sell days. The 2 Day ROC Buy signal is telling us to expect today to be the "buy day" part of that pattern. The second Pattern Signal fired for today's trading is the Momentum Pinball Sell. The Momentum Pinball Buy and Sell Signals represent an attempt to identify potential periods of very short term buying and selling exhaustion so as to capture a possible move in the opposite direction. Before any action is taken, however, the Momentum Pinball Sell signal requires a breach of the first hour low for confirmation. Because Momentum Pinball Buy/Sell signals are intended to flag the potential end of a short term trend, it is not unusual to see, on the same day, other Pattern Signal firings which indicate likely movement in the opposite direction. When this occurs we know that a break of the first hour high/low represents a market bias in the opposite direction as originally indicated by other Pattern Signal firings. On the S&P; Half Day Chart, all three of our Cycle Indicators moved sharply higher with yesterday's activity, confirming Wednesday's move higher from oversold territory as having marked a short term cyclical low. Indicators are telling us to expect higher to sideways action in today's trading. ADX levels on 5, 15, and 30 minute charts are all above 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 any 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. If the move to that level can occur on Momentum Confirmation, there should be even more upside in the making. 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. Fed Reserve Chairman Alan Greenspan is scheduled to speak in Washington at 11:15CT. Although nothing of market moving importance is expected, a Greenspan speech always has to be considered a wild card. It would be best to stay on your toes. 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 We have two Pattern Signals fired for today's trading in the Nasdaq 100, the first of which is the 2 Day ROC Buy. This signal is the Raschke and Connors way of quantifying the swing trading methods as taught by the Taylor Trading Technique. This technique teaches that there is a natural pattern to the sequence of buy and sell days. The 2 Day ROC Buy signal is telling us to expect today to be the "buy day" part of that pattern. The second Pattern Signal fired for today's trading is the Momentum Pinball Sell. The Momentum Pinball Buy and Sell Signals represent an attempt to identify potential periods of very short term buying and selling exhaustion so as to capture a possible move in the opposite direction. Before any action is taken, however, the Momentum Pinball Sell signal requires a breach of the first hour low for confirmation. Because Momentum Pinball Buy/Sell signals are intended to flag the potential end of a short term trend, it is not unusual to see, on the same day, other Pattern Signal firings which indicate likely movement in the opposite direction. When this occurs we know that a break of the first hour high/low represents a market bias in the opposite direction as originally indicated by other Pattern Signal firings. On the Nasdaq 100 Half Day Chart, all three of our Cycle Indicators moved sharply higher with yesterday's activity, confirming Wednesday's move higher from oversold territory as having marked a short term cyclical low. Indicators are telling us to expect higher to sideways action in today's trading. ADX levels on 15, 30, 60, and 120 minute charts are all above 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 any 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. If the move to that level can occur on Momentum Confirmation, there should be even more upside in the making. 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. Fed Reserve Chairman Alan Greenspan is scheduled to speak in Washington at 11:15CT. Although nothing of market moving importance is expected, a Greenspan speech always has to be considered a wild card. It would be best to stay on your toes. 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 We have two Pattern Signals fired for today's trading in the T-Bond market, the first of which 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 104-06 high and 103-19 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. The second Pattern Signal fired for today's trading is the 90-10 Low Continuation. This signal originates from the 80-20s set-ups as described in "Street Smarts". But, rather than using the 80-20 guidelines, the parameters have been narrowed to 90-10, thus reducing the pattern's frequency of occurrence, but increasing its probability as a forecasting tool. The 90-10 Low Continuation signal is fired when the day's close is within the bottom 10% of the day's range. This signal is telling us to expect morning continuation of the downmove. On the T-Bond Half Day Chart, all three of our Cycle Indicators moved lower on the last bar of yesterday's activity. Indicator behavior has been so choppy and erratic recently that it would be best to wait until they've had a chance to normalize before using them to help determine any sort of directional bias. 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. Fed Reserve Chairman Alan Greenspan is scheduled to speak in Washington at 11:15CT. Although nothing of market moving importance is expected, a Greenspan speech always has to be considered a wild card. It would be best to stay on your toes. 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 recognition process which
identifies today's most likely market scenario based on recent price behavior.
2 Day ROC Buy
Momentum Pinball Sell: If price action is weak enough to break the
first hour low, then a bearish bias should be assumed. Look to either sell the
breakout (aggressive) or sell the retracement to the breakout (conservative).
Pivot System Support & Resistance Levels - used on the floor to determine relative value
based on prior day price action. Significant shifts in market psychology often occur near these levels.
R3·1191 R2·1179 R1·1167 DP·1150 S1·1138 S2·1121 S3·1109
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 recognition process which
identifies today's most likely market scenario based on recent price behavior.
2 Day ROC Buy
Momentum Pinball Sell: If price action is weak enough to break the
first hour low, then a bearish bias should be assumed. Look to either sell the
breakout (aggressive) or sell the retracement to the breakout (conservative).
Pivot System Support & Resistance Levels - used on the floor to determine relative value
based on prior day price action. Significant shifts in market psychology often occur near these levels.
R3·1627 R2·1590 R1·1552 DP·1500 S1·1462 S2·1410 S3·1372
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 recognition 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).
90-10 Low Continuation: Morning follow through
on yesterday's weak close is likely. Look for shorts.
Pivot System Support & Resistance Levels - used on the floor to determine relative value
based on prior day price action. Significant shifts in market psychology often occur near these levels.
R3·104´25 R2·104´13 R1·104´00 DP·103´26 S1·103´13 S2·103´07 S3·102´26
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.