Monday, August 10, 2009

Trades for 08/10/2009

Hello Traders,

If you traded today and made money, congrats. This was the lightest market I have seen this summer. I don't have actual volume stats to confirm that, but I know we didn't trade more than 1 million contracts until 3:45 EST. On a day like this you have to mix up your strategy. I switch to smaller time frame charts for entries and only use the bigger charts to get direction. The 1151Tick chart would barely fill half my monitor today! The chart posted above is a 310Tick. indicators are MACD, DoubleMA, ECO2, and VWAP. The shading shows standard deviations from the VWAP(volume weighted average price, you knew that though right?). You can get these indicators on Ninja Forums or over at I took one trade today for +5 and +6 for a total of +11ticks. Lets talk about it real quick.

Trade One, Long 1001.50:
I didn't get to the screen until 12 and completely missed the move down. This was because my rules say "Don't trade during NYSE lunch hour" (unless already in a trade). Most traders have the same rule, and especially on a light volume day like today, its a good idea to follow that rule.
VWAP was the crucial indicator today. When you see price getting more than +/- 2 standard deviations from the VWAP (for me) its a good idea to start looking for reversals. At 1:21 we where -2 standard deviations from VWAP, the MACD was showing bullish divergence, and Double Moving Average turned blue. I took the long at 1001.50. I traded 2 contracts because of the light volume and strong downtrend. The move lasted for a point and then got ambushed by the bears. I could have taken it off at break even, but I decided to through the pullback. The VWAP was in the cards, I was positive. In the end I turned out to be right and I took profits when we got back to the orange line. +5 +6 = +11

If you follow me on Twitter, you saw I was stalking a short into the close, but I never got a good set up. Time ran out and the bulls ran it higher. Conservative traders are done at 3:30 or 3 if they have profits, so I walked away from the table with a measly $137.50.

Some things to watch this week:
Wholesale Inventories are tomorrow. I expect it to be a nonevent and another slow day ahead of the Fed. Wednesday will have the FOMC rate decision, Federal Budget, and Crude Inventories. I expect the FOMC announcement to be a nonevent too, UNLESS they say they are buying back more treasuries. The announcement should sound like this though; "Rates will remain low, downside risks remain, blah blah blah", basically the same thing we have been hearing. Thursday we have Retail sales. This could be a blow out with gas a little higher and cash for clunkers in full swing, so be sharp. Friday will bring the CPI. I'm not an economist so I don't know what to expect, I do know that they will be watching Capacity Utilization closely because this number has broad implications for unemployment so be aware that its reported at 9:15am.

Unlike last week, which started off big and got slower, this week will start off slow and get bigger. Be sharp, and trade your plan. Good Luck


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