Good evening traders!
You all get an exclamation point today :) because tomorrow is the non farm payrolls number. One of the biggest econ reports of the month. Goldman Sachs says the number will be -50,000 jobs with a .1% rise in unemployment. would that be bad? good? who knows ! A bad number could mean more QE (quantitative easing) or a good number would mean QE is working and all will soon be well. anyway you cut it I'm willing to bet the market goes higher. Its really just a crap shoot though! I will play the hand I'm dealt and you should do the same. In the meantime I'm going to construct a few scenarios.
First is a bad report. In this case I'll prefer shorts down to 1134.50 where we have a gap fill. we may get a pause at yesterday's low and again around 1141.50. I'll try to do business at those levels
On a good report we could break over today's high in which case I would be less likely to take longs given the run up in the markets. I would try to short 1168.00 and if I fail there then cover and re-short at 1173.00 where we have very significant resistance on a composite profile dating back to April.
The last scenario involves the relationship between the Dollar and stocks. Traders please consider this: The Dollar and SPY are nearly a perfect inverse correlation the past 3 weeks. One up 2% one down 2%. A poor NFP number may stun the Dollar and send stocks higher. Or the inverse, where the Dollar strengthens on good numbers but stocks fail to rally because of the Dollar strength. The more I consider the recent correlations between these two markets the more I find this scenario to be the most likely for tomorrow.
The plan:
Pay close attention to the USD and VIX to see if the risk trade is on or off.
Wait for markets to settle after the data has been released.
Trade where you want to trade, don't force your will on the markets.
preserve capital!
Have fun and good luck tomorrow !
-Nate
Also I am on Skype now so if you want to chat send me an email, I'd love to hear from you.
Thursday, October 7, 2010
Wednesday, October 6, 2010
10/06/2010 Reflation Trade
Good evening traders,
I mentioned two days ago the reflation, inflation, quantitative easing trade will push the markets higher. I underestimated the amount of money the Fed would be buying. I learned today the Federal Reserve is now the second largest holder of US government debt. They are monetizing $11 Billion of bonds a week !
Stocks will go higher but physical commodities will certainly out perform. watch gold and oil especially. They have new gold E-mini contracts that allow you to buy 10 ounces of gold at a time. That's way to small for hedging. The speculators will flood the gold market and major dislocations will begin. A'la $150 a barrel oil .
Gonna make for some good trading this fall...
-Nate
I mentioned two days ago the reflation, inflation, quantitative easing trade will push the markets higher. I underestimated the amount of money the Fed would be buying. I learned today the Federal Reserve is now the second largest holder of US government debt. They are monetizing $11 Billion of bonds a week !
Stocks will go higher but physical commodities will certainly out perform. watch gold and oil especially. They have new gold E-mini contracts that allow you to buy 10 ounces of gold at a time. That's way to small for hedging. The speculators will flood the gold market and major dislocations will begin. A'la $150 a barrel oil .
Gonna make for some good trading this fall...
-Nate
Monday, October 4, 2010
10/04/2010 More downside to come?
Good evening traders,
In response to the title of this post... I doubt it! Well at least not much more. We still have an open gap at 1120.50 and I wouldn't be surprised to see that get filled in the short term. We need to be vigilant of outside market factors when we trade. This could be the regulatory environment, overseas conflicts, anti-business legislation, and moves by the federal reserve. We are all familiar with the the first few but its the last one, the Fed, that remains a mystery to many traders.
While the Federal reserve has no authority to operate in the primary markets, (such buying $USD futures, or $SPY options), what they do during market hours can still have a huge effect. How huge? Consider that we recently learned one "fat fingered" trader at Wadell and Reed caused the "flash crash" with a mere $4.1 Billion in E-mini contracts. Now consider that the Federal Reserve will buy in at least $800 Million worth of bonds from the heaviest part of the yield curve tomorrow (9/30/2016 – 8/15/2020). Banks want to trade in their crappy yielding paper in favor of the higher yield in stocks. A good auction might push close to $2 billion worth of capital to primary dealers. Add broad index ETF buy-ins seen at the beginning of the quarter, and I believe big money will be chasing stocks higher.
Complacency is key here. Wait and watch the market 5 minutes following the close of the auction. I have seen this market run up EVERY POMO DAY this year. While I don't have the numbers in front of me, I know another blogger actually crunched them and that statement is statistically in my favor. We hear everyone say "This time is for real" "Sellers are in control" or my favorite "We are in wave 4 of a 1,3,5 ABC pattern". Just be vigilant. Its stupid to fight the Fed, the banksters, and all those who have a vested interest in the market going higher.
We have a decent Econ Calender this week. Culminating with the Non-farm payroll report. I'm excited to trade it. Make sure you are following the blog, and on Twitter, and that I'm following you too. Email or comment below and as always, Thanks for reading!
-Nate
P.S. Here is the link for the Outright Treasury Operation Schedule
http://www.newyorkfed.org/markets/tot_operation_schedule.html
In response to the title of this post... I doubt it! Well at least not much more. We still have an open gap at 1120.50 and I wouldn't be surprised to see that get filled in the short term. We need to be vigilant of outside market factors when we trade. This could be the regulatory environment, overseas conflicts, anti-business legislation, and moves by the federal reserve. We are all familiar with the the first few but its the last one, the Fed, that remains a mystery to many traders.
While the Federal reserve has no authority to operate in the primary markets, (such buying $USD futures, or $SPY options), what they do during market hours can still have a huge effect. How huge? Consider that we recently learned one "fat fingered" trader at Wadell and Reed caused the "flash crash" with a mere $4.1 Billion in E-mini contracts. Now consider that the Federal Reserve will buy in at least $800 Million worth of bonds from the heaviest part of the yield curve tomorrow (9/30/2016 – 8/15/2020). Banks want to trade in their crappy yielding paper in favor of the higher yield in stocks. A good auction might push close to $2 billion worth of capital to primary dealers. Add broad index ETF buy-ins seen at the beginning of the quarter, and I believe big money will be chasing stocks higher.
Complacency is key here. Wait and watch the market 5 minutes following the close of the auction. I have seen this market run up EVERY POMO DAY this year. While I don't have the numbers in front of me, I know another blogger actually crunched them and that statement is statistically in my favor. We hear everyone say "This time is for real" "Sellers are in control" or my favorite "We are in wave 4 of a 1,3,5 ABC pattern". Just be vigilant. Its stupid to fight the Fed, the banksters, and all those who have a vested interest in the market going higher.
We have a decent Econ Calender this week. Culminating with the Non-farm payroll report. I'm excited to trade it. Make sure you are following the blog, and on Twitter, and that I'm following you too. Email or comment below and as always, Thanks for reading!
-Nate
P.S. Here is the link for the Outright Treasury Operation Schedule
http://www.newyorkfed.org/markets/tot_operation_schedule.html
Tuesday, September 28, 2010
9/28/2010 Over Trading
Hello Traders,
Hope you all had a profitable day! I walked away with a measly 10 ticks. However I screwed up big time. Wondering why?? Because I over traded. Half of my profit was eaten up by commissions. I realize my mistake though. I'll work in the future to minimize my trading by only taking trades at pre-defined, low risk areas. Let's go over the trades, the losing ones are circled in white.
On the first losing trade I tried to fade the initial support area at 1037.50 and support failed. I took a 6 tick loss and looked for another long around the Globex low at 1131.50. The counter trend move netted me a point and I went running before consumer confidence came out at 10:00am EST. I completely missed the long off of 1128.75. That would have been the trade of the day! During my next two trades I was fighting the Federal Reserves POMO auction. I kept trying to fade previous support levels but the money printing machines were too much to handle and kept driving prices higher.
In the afternoon session I expected price to roll over. I took a short too early and got stopped out for another 6 tick loss. After the double bottom that formed I should have known better than to short. Then, of course, price reverses and goes my direction. I was not very happy about that trade. On the next trade I lost a point because of another missed entry. Except this time I wasn't going to let the market run away without me. Once enough shorts were on board they squeezed them hard, giving me my best gain of the day, a 2 pointer. I got out before the 1140.00 IB high only to watch price continue to move in my favor. Everyone was eying 1144.50 as a potential target and momentum carried the market to 1146.00 which was the overnight high. I got short at 1145.25 for another quick point. I didn't want to overstay my welcome with 10 minutes left in the cash session.
Over trading is just plain dumb. I know better than to be making that kind of mistake. I'm very disappointed in my trading to say the least. Some levels to do business tomorrow are the Globex high from Sunday 1149.75, and the open gap at 1147.75 on the upside. If prices fall below 1136.00 I'll look for longs around today's low 1128.75 and then the open gap around 1120.
Good luck tomorrow everyone!
-Nate
Monday, September 27, 2010
9/24/2010 One Trade One Loss
Good evening traders,
Hope you all had a good trading day! I took one trade for a loss of a point. Tweeted it too. Being focused on my Quant Methods class wasn't helping so I just left the screens on and watched.
You ever just watch your DOM sometime? It does some really wierd stuff from time to time. Orders will just pop up, then quickly go away. I'll watch the contracts on the BID go from 4k-12k+ in about 3 seconds then go away again! Comments on that topic are welcome
I'll be trading more tomorrow and Wednesday because school is out until Thursday night. Tomorrow I'm watching the 1130-1132.00 price range for buyers to step in. That level puts us at the mean of the volume profile from last week. It also lines up with a few daily trend-lines that could get some swing traders on our side. Until we break out of accepted Value Area I'll be adding to my current profile for analysis. Good Luck tomorrow !
-Nathan
Hope you all had a good trading day! I took one trade for a loss of a point. Tweeted it too. Being focused on my Quant Methods class wasn't helping so I just left the screens on and watched.
You ever just watch your DOM sometime? It does some really wierd stuff from time to time. Orders will just pop up, then quickly go away. I'll watch the contracts on the BID go from 4k-12k+ in about 3 seconds then go away again! Comments on that topic are welcome
I'll be trading more tomorrow and Wednesday because school is out until Thursday night. Tomorrow I'm watching the 1130-1132.00 price range for buyers to step in. That level puts us at the mean of the volume profile from last week. It also lines up with a few daily trend-lines that could get some swing traders on our side. Until we break out of accepted Value Area I'll be adding to my current profile for analysis. Good Luck tomorrow !
-Nathan
Friday, September 24, 2010
09/24/2010 I Had A Good Day
Good Evening Traders,
I had to get at least one blog post in this week! I have been super busy studying for licensing exams, not to mention my normal course load, and my 5 year old daughter! I still take classes at University of Pittsburgh twice a week at night. That's one of the great things about trading; You have the free time to do what you want! I don't want to get too confident sounding so lets get to the trades.
The first long hit the target almost within 5 minutes. I was feeling confident and shorted initial resistance and gave a point back immediately. that's when I realized it's going to be a trend day and shorts are counter trend only. I like to lighten up the counter trend positions and look for shorter price targets. You can see I only traded one contract on my next two short positions. I also closed them out for one point. So then you are asking why did I trade 4 cars on the final trade?! Here I'll tell you; It was the weekly high and I had been waiting all morning to short it! After that big winner I was feeling pretty pleased with my performance. I took home $512.50 before commissions and junk.
Just to critique myself on a few things. First, I should have taken more trades with the trend today, and second I feel like I over-traded. If you have any other critiques please feel free to post a comment. Also take a look at my twitter posts (bottom right corner of the blog). I usually tweet my trades before I make them, however sometimes I'm too focused on the charts to play that game. Twitter makes me more cautious. It makes you think twice. I ask myself "Is this a trade I want to tweet?" and if I'm not feeling it, then I usually pass.
I'm off to see Wall Street 2 tonight. I hope you guys enjoy your weekend. Please follow me on Twitter, Facebook or where ever it is you choose to express your narcissism! And as always, thanks for reading!
-Nate
Monday, September 13, 2010
09/13/2010 One Trade One Target
Good Evening Traders,
I have been busy studying for my licensing exams so I haven't been able to post much lately. This morning I traded the September contract. Some traders were already using the December contract but I like to wait to switch because there isn't enough data to calculate my indicators properly.
1124.00 was a resistance area I identified in my research last night and given the lack of responsive buyers at the open I was positive it would be a great short. Price had moved to the top of the regression channel and the stochastic was way overbought. When 1124 was rejected I initiated the trade. I also tweeted it LIVE on my twitter account @infected1172.
I'll be back on trading tomorrow morning so make sure to follow along and maybe we can make some money together!
-Nathan
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