Support and Resistance Trading
01/17/2007
Tom's Trades - Day Trading by AMBUSH!
more info
|
Support and Resistance Trading
11/08/2006
Tom's Trades for the Big Weekend Edition, Novemeber 6, 2006
more info
|
Support and Resistance Trading
10/16/2006
Traders Helping Traders Big Weekend Edition - Part One and Part Two
Traders Helping Traders E-zine for the week 10-15-2006 - Test Drive Edition
Question: Do you ONLY cover one or two markets??
Answer: NO!! We cover all markets in all sectors - wherever there's a good trade, we'll cover it!
This is only the TEST DRIVE Edition. Our Subscribers get the whole thing.
For a detailed analysis of ALL the markets Erich and Tom cover along with explicit charts, entries, exits, stops, risk/reward ratio, potential profit, (and much more) please join us at http://www.supportandresistance.com/subscribe.html
Part One - Erich's Trades:
Lesson du Jour
Question:
How do you arrive at your profit targets?
Answer:
Profit targets are nothing more than subjective targets that the market might stop at. I arrive at these targets using the following tools:
If the market is retracing:
Fib levels, especially the 50% and 62%, but on larger trends, or long term charts the 38% will sometimes be influential
Trendlines, if the market is retracing to a trendline I will assume that the resistance near the trendline will cause the market to react (especially if it's in the direction of the major trend and not the pullback trend)
20 day moving average, which is a "moving" trendline.
The neckline (or full retracement) of the previous move. The reason rounded top/bottom formations are so powerful is that they repeat over and over again. I almost always assume a full retracement past the 62% line, but given the size of the move it might be a very long term target and I'll have shorter term targets in the meantime.
It is IMPORTANT TO NOTE that these tools only help me narrow my search for important support and resistance levels. I do not trade the numbers these tools offer up blindly, but they are helpful for narrowing your focus.
In a trending market:
1. If the trend is strong (ie. DMI is strong or building) I will often opt for trailing a stop. This usually allows me the greatest flexibility in capturing the better part of the move, but will routinely leave a lot more money at risk. October Sugar is a perfect example where we racked up over $2300 in profit per contract before finally getting stopped out, but I was running a stop almost $400 – 500 back, and that's a lot for sugar, but was necessary to "ride" the trend.
2. If the trend is weak I will almost always opt for a profit target. This is any area where the S&R is strong, which is determined by the tools in the manual you got. Essentially it's any area of extreme population, especially if there has been a previous reaction in that area as well.
You might want to consider the size of your account as well. I almost always recommend that small account traders take profit on target when they get it. Sometimes the market will move well past your intended target, but other times it will reverse. More often than not you'll be better served taking profit on target, and when in doubt, that's what you should do.
Remember that it's not the size of the profit that's important; rather it's the consistency in getting the profit. Once you have the consistency part down, the larger profits come from taking more contracts, not making home run trades.
Does that help?
Got a question that needs answering like an itch you can't scratch? Send it along to me at Erich@tradershelpingtraders.net and I'll be happy to try and clear things up for you.
You can see a sampling of Erich's Markets we're covering this week- Currencies and Energies (mini Natural Gas, Canadian Dollar and the British pound) along with charts at http://www.supportandresistance.com/Trade-Updates/testdrive-10-15-06.html
A Sampling of Tom's Trades we're covering this week: T-Bonds and the Mini Russell.
Let’s take a look what the coming week has in store for us in trading opportunities.
NEW TRADES
DECEMBER TBonds
Seems to me traders are on a hyper-sensitive watch for any signs of inflation which they think might spur the FED to more interest rate increases. In Friday’s Bond trading we dropped a full point minus 6 ticks on reports that one had to really reach for the case to be made. In fact, many would say the drop was not at all supported by the data but traders shrugged it off and went the lower route anyway.
The coming week is rich with reports that speak directly to the inflation issue. Monday we have the New York Fed manufacturing report, Tuesday it’s the Producer Price Index (PPI) and the FED’s Industrial Production report. On Wednesday we have the big kahuna of inflation reports as the Consumer Price Index (CPI) comes out. On Thursday we turn attention to the employment report and the Conference Board’s Index of leading economic indicators.
Look for some choppy up and down trading for the whole week. If we can get to -00 and -16 to open the day along the way our methods should be productive. I’ll try to relegate my trading to -00 and -16 at least initially but will not be afraid to jump on the quarters if need be.
Friday’s session closed at 110-11 so we’ll be focused on 110-00 and 110-16 for Monday morning. I’m also going to be poised to take a flyer off 110-08 either way. If we look at the daily chart we’ll see that 11-08 and 110-00 are critical support levels for Bonds.
DECEMBER Eurodollar
We did break .620 so I decided to hold the trade over the weekend. .600/.595 is the next critical level to get thru. I now have the stop at B/E and will quickly bail if .620 is exceeded on Monday.
For those not in and looking to establish a trade on Monday, I’d be willing to sell a break below .595 or buy a failure as it rose above .600. Stops are at .625 on the sell and .595 on the buy. The only management that makes sense is thru the use of periodic RRR.
DECEMBER Canadian $
No mystery in the CD charts this week. We’ll buy a failed rest or break back above 8800. I’ll also sell a break lower. Targets are at 8920 for the buy and 8700 for the sell.
I also like the 8840 level and will buy a break out higher or sell the failed retest there as it breaks lower. I’ll use the same targets as above.
There’s S&R all along the pathway to each of the targets at 20 point intervals. We need to keep the stops rolling along behind any trade that’s making progress. We know in the currencies we have enough price flow to get trades almost every day so it is imperative that we come away with profits on every trade that gives them to us. There is no sense in allowing profits to dissipate where such high trade frequency exists. Be ever mindful of your periodic RRR.
We’ll use the same stop structure as usual … 3’s above on sells and 7’s below on buys.
DECEMBER Mini Russell
Strong earnings reports persist and all the economic reports seem to be reinforcing the “soft landing” the FED keeps talking about. That makes for a pretty rosy picture for stocks as the DOW continues to set new highs. This may be an October that breaks the normal pessimism that usually prevails during this month.
I doubt we’ll see anything in the reports to change the tide of higher values in the indices. This is going to test our ability to enter trades until we get some backfilling forming structure we can get our analysis teeth into. We are in for some lean times I fear in light of the huge advance of Thursday and Friday.
Here are the numbers currently in play for the December contract:
750, 748, 745, 742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.
To get the full Big Weekend Edition with both Tom's Trades and Erich's picks, join us at http://www.supportandresistance.com/subscribe.html
Good trades to you!
more info
|
Support and Resistance Trading
10/02/2006
Traders Helping Traders Big Weekend Edition - Part Two
Tom's Trades By R. Thomas Logé
The Day Fire is all but out after burning for a solid month and consuming 254 square miles of brush and timber. It is testimony to the amazing work of firefighters that only one house was lost.
The fire robbed me of 2 days of trading but we came back for the final 3 and did pretty well all things considered.
That's another benefit of the way we trade, picking predetermined price levels rather than chasing after each day's price flow. We can leave the markets for a day or 2 or even more and come right back without feeling we lost touch.
I'm going to dig right in and get after the game plan for next week.
NEW TRADES
DECEMBER TBonds
The coming week is light on reports with 2 exceptions. On Monday we start off with a heavyweight in the form of the ISM report on manufacturing activity. Analysts expect a reading around 53.5; maybe a bit higher after Chicago's regional reading on Friday. On Friday we'll cap the week with the employment report. Since it is the only report Friday it may have even greater weight than normal so be wary.
The close on Friday at 112-13 ended the week on a sour note for bulls. I think we'll open the week with more weakness and tread water from there all week. We'll be watching for opportunities at 112-16 and 112-00 to began the week.
DECEMBER Eurodollar
I'm still short from .695 from Thursday. The stop is at B/E now. I'm thinking we have a shot at seeing .620 and maybe even .580. Periodic RRR is going to dictate how this trade concludes. If I weren't involved in this short trade I'd be looking at selling a break below .660 with a stop at .675.
DECEMBER Canadian $
In Thursday's Daily Update I added 9040 and 9020 to the mix of playable numbers. We'll play either way now off all 4 numbers … 9040, 9030, 8980 and 8940. For buys at 9020 or 40 we'll look at 9080 as a target. For sells we'll look at 8940 and hope to get thru there to open up the 8860 target discussed below.
We have two primary lines in the sand to contemplate Monday morning … 8980 and 8940. We'll buy the break above 8980, sell the break below 8940 or sell the failed retest at 8980 or buy the failed retest at 8940. I'll also play at 8920 either way dependent on the appropriate whisper there. Targets are 8860 on any sell and as much as I'd like to say 9040 on the buy the real "what's most likely" is 9020. That makes the buy at 8980 a very small trade with less than a $400 profit potential.
The stops will be on the same basis we've been using for sometime now … on buy trades they go at the next lower XXX7 and on sells they are at the next higher XXX3. We'll be risking only about $80-$100 on the 8980 buy but that barely yields a 4:1 RRR. If you take the buy there you can't leave it out of your sight for even a minute.
DECEMBER Swiss Franc
We're right back where we were week before last.
I'll take a flyer at 8060 either buying the break higher or selling the failed retest there.
Target for the buy is 8160 and for no good reason, 8000 on the sell. Any trade done here needs to be rolled to B/E very quickly about 10 ticks I imagine.
The stops will be on the same basis we've been using for sometime now … on buy trades they go at the next lower XXX7 and on sells they are at the next higher XXX3.
DECEMBER Mini Russell
The market played out almost as we predicted last week. I had it pegged at 2 up and then 3 down, we actually did 3 days of up and then 2 down. We're going to stay strong but suffer a bit in trying to gain and hold new altitude. This will likely be a frustrating week for us as we keep bumping above price levels we can play. I can't add any new numbers on the high side yet so we'll probably be handicapped in buying some of the spikes we'll inevitably see.
I think it's going to be quite taxing to play the markets both ways capitalizing on both buy and sell trades. Some of you may find it more comfortable to ambush only buys on pullbacks.
Here are the numbers currently in play for the December contract with the addition of 742 and 740:
742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.
DECEMBER Mini Dow
The DOW clearly has been less riddled by volatility than has the Russell. It has been a much smother ascent to current levels. The DOW is going to be a difficult play fir us exactly for those reasons.
Here are the current numbers in play for the DOW:
11775, 11750, 11700, 11620, 11600, 11580, 11550, 11500, 11475, 11440, 11400, 11370, 11350, 11330, 11300, 11240, 11200, 11170, 11150, 11050, 11000, 10970, 10950 and 10850.
DECEMBER Gold
I think the coming weeks will play out very well for our $10 Channel theory. I see gold becoming more and more a creature of range and less and less able to make sustained moves in one direction. This tendency coupled with the Channel play should reap benefits for us throughout the week.
DECEMBER Cotton
We made the plunge below 51.60. There isn't a thing down here that gives us an ability to read a course of action. I'm going to play only at 51.60 and only by buying a break higher. The stop is 51.53. The target is 52.60 with an aggressive roll at 52.00.
The trade will more than likely terminate on the end of a long run or as a result of periodic RRR considerations as opposed to arriving at a target.
DECEMBER Cocoa
There is evidence of support at several price levels from 1460 to 1480. I'm going to play only 1470. I will buy a break higher or a failed retest there. The stop will be 1467 and I'm looking at a target of 1530 - 1540. 1480. 90, 1500, 1510 and 1520 all command respect worthy of a roll. I don't think you can manage this market that tight so again mixing periodic RRR with the S&R will be the likely way to go.
I think I'll sell Cocoa on a failure up at 1500/1510 with a stop at 1513 or 03 depending on the fill price.
DECEMBER Corn
My first line in the sand comes at 2.68. I will buy a break higher; I would prefer to sell a failed retest there as it turns and heads back south.
I'll sell a failed retest at 2.65 1/2 - 2.66. I will not buy the break higher from there. I'll also sell the break lower at 2.62.
2.52 and 2.54 are also levels I'll play. I'll look to sell breaks lower at either number or buy any failures there. These are pretty much the first buy levels I'm comfortable with outside of the buy of the break higher at 2.68
These are all scalps so the penny and a quarter rolls and stops are in play.
DECEMBER Wheat
Wheat has been on a 2 week plus pattern of alternating up and down days. The ups have non the less out paced the downs as Wheat added 65 cents to price. Monday will determine whether the pattern repeats or not. We'd expect an up day. I really think we'll be down.
I'm going to play 4.41 selling the break there. It is a scalp trade so the stop is a penny and a quarter as are the rolls.
Tom
more info
|
Support and Resistance Trading
10/02/2006
Traders Helping Traders Big Weekend Edition
more info
|
|
|
