Saturday, October 13, 2007
Futures Rule Change Consideration
There are two distinct periods during the day: (1) morning session and (2) afternoon session. In between is the doldrums (lunch break in the east). Given that I am in the west, the doldrums show up during the 9:00 to 10:20 period. I use 10:20 due mostly to past observations of the market. I've found that volatility picks up quite a bit around this time, sometimes with head fakes, sometimes it's the beginning of a move for the afternoon session. I have also noticed that the head fakes turn into chop until 11:15ish period. So, my goal is to just use my momentum indicator during periods of trend. It's noticing the chop and then standing aside until trends kick in. I have my rules for the morning session to catch trends (see previous Futures post), I now am attempting to establish a rule for the afternoon session. What I have noticed is that the range established during the doldrums sets up support and resistance areas that are honored until the market wants to trend. Using a momentum indicator during this chop period just does not work. I spot checked doldrum periods going back through a 500 day period and found that this is indeed a distinct range that needs to be honored if using a momentum indicator. The good news is that been false breaks tend to give up 20 YM ticks before reversing. My rules have me peeling off my first target once 20 pts is attained. I may modify my afternoon targets to be T1=10 ticks and T2=20 ticks, but more research is needed before I make this change.
Friday, October 12, 2007
CYD - Establishing 1/3rd position Monday (1,500 shares)
Placing order on Monday to establish position on Chinese diesel engine manufacturer CYD. Been waiting for some time to get a signal on this one and it came yesterday; however, the funky market yesterday kept me out of it. Today, well today I just plumb forgot about it - a big mistake since it ran over 4% today alone! My momentum indicators have this as a solid long on the daily charts. It is getting ready to trigger on the weekly charts but is not quite ready. Monthly chart is not too far behind. I will enter with this 1/3rd position and hold until the weekly chart fires at which time I will establish another 1/3rd position. Then final 1/3rd will be entered on the Monthly fire. I will feel free to trade around positions as profit levels come and go. I look forward to holding this one for quite some time (trading around core positions all the while). However, I will not hesitate to cut its throat and toss it under the bus if I experience a 25% draw down on my initial position.
Futures Roundup
After days like today, I need to just walk away from the table and charts for a couple of days and do something else. If I don't, I will convince myself that I need to further tweak my system when my system has nothing to do with it whatsoever. I have a momentum indicator that I developed that works very well in trending markets and gives false signals in choppy markets - not rocket science. What I need to do is develop rules that will assist me in defining when I have trend and when I have chop. To that end, I have developed the following rules when the market opens:
1. If the globex session has a +50 tick or greater range on the YM at the 6:30 open (Cali time), it is ok to take a momentum indicator driven trade when the signals trigger.
2. If the first momentum trade is a loser AND the range since market open (from 6:30 on) has not exceeded 50 tick on the YM - sit on hands until that happens.
3. It is ok to take second trade if the Morning Session Range is greater than 50 ticks and 24 Hour Range is greater than 50 ticks on the YM.
4. If the second trade is a loser, 3rd momentum trade cannot be entered until 24 Hour Range on the YM is greater than 100 ticks AND Morning Session Range on the YM is greater than 50 ticks.
5. Failure of the 24 Hour Range to exceed 100 ticks on the YM eliminates the momentum trades for the day.
What was interesting today was that, while we had the 100 ticks on the 24 Hour YM Session and 50 ticks on the Morning YM Session, we still had chop coming out of the doldrums that did not stop until the end of the day when we finally experienced a breakout of this range during the last 5 minutes of trading. Given the above rules and using my momentum indicators, I took two long trades in the YM and ER2 - both were losers due to the chop. By applying a rule concerning breakout of the doldrum range, I would have been forbidden to trade momentum this afternoon (I usually do not trade the last 15 minutes of the day, so I would not have grabbed onto that last run. However, today I did due to my frustrated buy and hold approach). I am not certain if it is worth considering, but I will research a bit tonight. I would be considering a rule like that below:
- Do not take momentum trades following doldrum period (9-10:20) unless and until trading range established during doldrums has been broken with a bar close on the 5-min chart outside of said range.
The biggest culprit today was myself. I was not able to accept the initial post doldrum losses and then violated my rules trying to recapture ticks. A snowball effect resulted and losses were amplified thereby violating my 2% limit rule on daily losses. All of this made me feel very anxious at the end of the day due to the loss of discipline rather than capital. My initial reaction was to point blame at the indicators, but a review of those indicators shows that I would have only been in two momentum trades post doldrums. I had to shake my head in disbelief when I realized this due to the actual number of trades I took fighting myself.
So, its done and lesson is learned (hopefully). I will continue to fight it and will do everything reasonable to modify my personality with the goal of being a focused self-disciplined trader.
Summary of the day is below:
YM: -25 ticks (equal to -$125 per one contract position)
ER2: -111 ticks (equal to -$1,110 per one contract position)
I can live with the financial draw down; however, its the discipline draw down that will be tough to live with through the weekend. Now that I got that out of my system, I am off to pick up some rib eyes (yes I do have enough money left for that) and to work in the greenhouse. Feels weird writing to myself since no one else reads this, but it sure helps the mental process and getting through the discipline issues.
1. If the globex session has a +50 tick or greater range on the YM at the 6:30 open (Cali time), it is ok to take a momentum indicator driven trade when the signals trigger.
2. If the first momentum trade is a loser AND the range since market open (from 6:30 on) has not exceeded 50 tick on the YM - sit on hands until that happens.
3. It is ok to take second trade if the Morning Session Range is greater than 50 ticks and 24 Hour Range is greater than 50 ticks on the YM.
4. If the second trade is a loser, 3rd momentum trade cannot be entered until 24 Hour Range on the YM is greater than 100 ticks AND Morning Session Range on the YM is greater than 50 ticks.
5. Failure of the 24 Hour Range to exceed 100 ticks on the YM eliminates the momentum trades for the day.
What was interesting today was that, while we had the 100 ticks on the 24 Hour YM Session and 50 ticks on the Morning YM Session, we still had chop coming out of the doldrums that did not stop until the end of the day when we finally experienced a breakout of this range during the last 5 minutes of trading. Given the above rules and using my momentum indicators, I took two long trades in the YM and ER2 - both were losers due to the chop. By applying a rule concerning breakout of the doldrum range, I would have been forbidden to trade momentum this afternoon (I usually do not trade the last 15 minutes of the day, so I would not have grabbed onto that last run. However, today I did due to my frustrated buy and hold approach). I am not certain if it is worth considering, but I will research a bit tonight. I would be considering a rule like that below:
- Do not take momentum trades following doldrum period (9-10:20) unless and until trading range established during doldrums has been broken with a bar close on the 5-min chart outside of said range.
The biggest culprit today was myself. I was not able to accept the initial post doldrum losses and then violated my rules trying to recapture ticks. A snowball effect resulted and losses were amplified thereby violating my 2% limit rule on daily losses. All of this made me feel very anxious at the end of the day due to the loss of discipline rather than capital. My initial reaction was to point blame at the indicators, but a review of those indicators shows that I would have only been in two momentum trades post doldrums. I had to shake my head in disbelief when I realized this due to the actual number of trades I took fighting myself.
So, its done and lesson is learned (hopefully). I will continue to fight it and will do everything reasonable to modify my personality with the goal of being a focused self-disciplined trader.
Summary of the day is below:
YM: -25 ticks (equal to -$125 per one contract position)
ER2: -111 ticks (equal to -$1,110 per one contract position)
I can live with the financial draw down; however, its the discipline draw down that will be tough to live with through the weekend. Now that I got that out of my system, I am off to pick up some rib eyes (yes I do have enough money left for that) and to work in the greenhouse. Feels weird writing to myself since no one else reads this, but it sure helps the mental process and getting through the discipline issues.
Post Doldrum Range
Interesting to note that the range for the afternoon session has not broken out of the range established during the doldrums. I define the doldrums as that period between 9 am to 10:20 Cali time (12-1:20 Eastern). I have a solid standard with the 50-100 tick range at the start of the day; however, it is worth taking time this weekend to study historical doldrum range data to see if there may be something to waiting for breakouts of that range before entering afternoon trades. I will take a look and report back next week.
Ready to rip my eyes out......
Trading today is pure torture if you are a momentum day trader. To look at the chart you would think "what the hell? Looks good to me, up 66 - no problem". I would agree if I bought at the start of the day, put a position on and walked away never to do anything until the close. But the herky, jerky nature of the moves are excruciating. Pure water-torture hell. I have watched the futures move to the highs established during the doldrums - a 47 tick range in 1 1/2 hours....argggggg. So, how did I trade this you may ask? I got chopped on two trades and then did what I should have done at the start of the day - put a long on and just sat and watched. Terrible process, but it is what it is today. Results to come.
Futures - Morning Session
Signals popped right out of the gate this morning. I had greater than 50 ticks on the YM 24-Hour Range, but less than 50 on the Morning Session Range, so my rules allowed me to take one trade to test the waters. No way of knowing if a trend is going to develop when the market happens unless you test the waters. I received momentum signals on both ER2 and YM (2 minutes charts). The 5 minute and 15 minute charts were both supportive of long positions, so I took both. Markets were fighting to make headway while they waited for the Consumer Sentiment numbers 1/2 hour into the day. The market reaction to the short side was a bit soft when the numbers came back weaker than expected, but it held up after a few minutes. Longs were able to push it higher, but there was no overly bullish sentiment coming into the market. I was able to capture my first targets, but trailed my stop on the second targets as the choppiness just didn't allow for runners this morning. I exited the first two positions +27 ticks on the YM and +17 on the ER2. I stood aside for a bit since the Morning Session Range just could not get over 50 ticks for the YM. My momentum indicator was developing a long signal as the YM was approaching the 50 tick level, so I went ahead and violated my rule to capture the run of the indicator 2 ticks before the 50 level was achieved. The result was +20 ticks on YM and +10 ticks on the ER2.
Good outcome - bad process.
My morning results are presented below:
YM: +58 ticks (equal to +$290 per one contract position)
ER2: +27 ticks (equal to $270 per one contract position)
24 Hour Range: 114 ticks
Morning Session Range: 74 ticks
Good outcome - bad process.
My morning results are presented below:
YM: +58 ticks (equal to +$290 per one contract position)
ER2: +27 ticks (equal to $270 per one contract position)
24 Hour Range: 114 ticks
Morning Session Range: 74 ticks
Thursday, October 11, 2007
Futures Roundup
Spent most of the doldrums tweaking my momentum charts since I am still having a hard time with price movement biasing my trading. I previously eliminated candlesticks in favor of line on close, but even that is creating focus and trigger issues for me. So, I have now eliminated all price indicators. Being a momentum futures trader, I just need my indicators to signal an entry and exit. I basically have stripped it down to the bare essentials.
Once that was completed, I noticed the sell off was in order and jumped on for two YM trades and one ER2 trade. The extreme volatility went unnoticed by me due to the elimination of price on my charts. I just followed the signals. Was able to focus on the triggers and not get bound up with emotional thoughts as price bounced around. In the end, I was able to bank +53 YM ticks and +20 ER2 ticks, which helped with the morning meltdown I had. Still ended in the red for the days futures trading, but am able to go into the evening and enjoy dinner and the family.
Summary of the day is below:
YM: -80 ticks (equal to -$400 per one contract position)
ER2: -54 ticks (equal to -$540 per one contract position)
Days Range: 252
Once that was completed, I noticed the sell off was in order and jumped on for two YM trades and one ER2 trade. The extreme volatility went unnoticed by me due to the elimination of price on my charts. I just followed the signals. Was able to focus on the triggers and not get bound up with emotional thoughts as price bounced around. In the end, I was able to bank +53 YM ticks and +20 ER2 ticks, which helped with the morning meltdown I had. Still ended in the red for the days futures trading, but am able to go into the evening and enjoy dinner and the family.
Summary of the day is below:
YM: -80 ticks (equal to -$400 per one contract position)
ER2: -54 ticks (equal to -$540 per one contract position)
Days Range: 252
Equities Roundup
I was a little pissed this morning when the momentum signals were firing long on my futures charts, but I wasn't getting any traction. The multiple misfires together with the lofty areas we sat at, convinced me to take profits beginning at 11:00 Cali time. I started slow and accelerated as I saw the futures selling off at a wicked pace. I completely closed some positions and peeled off shares of others. The list is below:
AVNX: Sold 1/2 position, 20,000 shares, at $1.81 (-2.6%)
VMC: Sold 1/2 of current position, 200 shares, at $91.40 (+4.4%)
BWLD: Sold entire position at $41.06 (+7.5%)
LOGI: Sold entire position, 800 shares, at $29.29 (+1.5%)
ROCM: Sold entire position, 1000 shares, at $17.17 (+8%)
XFML: Sold 1/2 position, 2,000 shares, at $9.03 (+18%)
CNTF: Sold entire position, 4,000 shares, at $7.45 (+62%)
CTSH: Sold entire position, 400 shares, at $82.86 (+7%)
New acquisition APA held up nicely today leading the way with a 2% gain. TECH and D were green today. ALVR ripped me anew one. I feel fortunate that I peeled off shares before this meltdown started.
I have raised enough cash over the past 1-2 weeks of selling to be well positioned to jump in on bargains when this shit settles down a bit. I am sitting at 50% cash value, up from 20%. I will get aggressive when this thing decides to break to new highs. In the meantime, my scanner will be begging for mercy.
AVNX: Sold 1/2 position, 20,000 shares, at $1.81 (-2.6%)
VMC: Sold 1/2 of current position, 200 shares, at $91.40 (+4.4%)
BWLD: Sold entire position at $41.06 (+7.5%)
LOGI: Sold entire position, 800 shares, at $29.29 (+1.5%)
ROCM: Sold entire position, 1000 shares, at $17.17 (+8%)
XFML: Sold 1/2 position, 2,000 shares, at $9.03 (+18%)
CNTF: Sold entire position, 4,000 shares, at $7.45 (+62%)
CTSH: Sold entire position, 400 shares, at $82.86 (+7%)
New acquisition APA held up nicely today leading the way with a 2% gain. TECH and D were green today. ALVR ripped me anew one. I feel fortunate that I peeled off shares before this meltdown started.
I have raised enough cash over the past 1-2 weeks of selling to be well positioned to jump in on bargains when this shit settles down a bit. I am sitting at 50% cash value, up from 20%. I will get aggressive when this thing decides to break to new highs. In the meantime, my scanner will be begging for mercy.
Modified Futures Trading Rule
Blow is the modified futures trading rule:
"Days Range: An initial morning momentum trade is allowed if the 24-hour Range is at least 50 ticks. No additional trades are allowed if the initial morning trade is a loss AND the Morning Session Range (tick range for day beginning with 6:30 open) is less than 50 ticks. Morning Session Range must exceed 50 ticks before second trade of day is entered. If the second trade is a loss AND 24-hour Range is less than 100 ticks, trading shall cease until 24-hour Range exceeds 100 ticks. Failure of the market to exceed the 100 tick rule in the 24-hour session eliminates momentum trades for remainder of day."
Use of this rule will ensure that momentum trades are used for days that trend. I am allowing for a couple of tests to possibly catch trades that will begin the trends for the day, but those trades will forever now be kept on a short leash.
"Days Range: An initial morning momentum trade is allowed if the 24-hour Range is at least 50 ticks. No additional trades are allowed if the initial morning trade is a loss AND the Morning Session Range (tick range for day beginning with 6:30 open) is less than 50 ticks. Morning Session Range must exceed 50 ticks before second trade of day is entered. If the second trade is a loss AND 24-hour Range is less than 100 ticks, trading shall cease until 24-hour Range exceeds 100 ticks. Failure of the market to exceed the 100 tick rule in the 24-hour session eliminates momentum trades for remainder of day."
Use of this rule will ensure that momentum trades are used for days that trend. I am allowing for a couple of tests to possibly catch trades that will begin the trends for the day, but those trades will forever now be kept on a short leash.
Futures - Morning Session
After taking the day off from futures trading yesterday, I was back at it this morning. Problem was, my platform was freezing up right at the open, which flustered me a bit. After getting the platform up and running following 3 re-boots, I noticed that my momentum indicators were firing long - so, I took the trades in both the YM and ER2. After taking the entries, I checked the range of the YM for the day. Even though the range was about 90 ticks, this review should have been done before I entered the trades, not after. I was quickly knocked out of my trades in both the ER2 (-18 ticks) and YM (-40 ticks). Fairly sizable loses for the system and time frames that I use. But I pressed forward. I proceeded to enter into 6 more losing momentum trades in a row. Still, I looked at the days range and noticed that we were well above my rule of 50. What I didn't consider was that the range was only 36 ticks following the market open. The remaining 60 tick move was due to the globex session. We had not even seen 50 ticks since the open and here I was ripping through momentum trade after momentum trade.
I checked the days range from 6:30 on (Cali time) and saw very clearly that it traded in a 36 tick range ping ponging between the high and low extremes. It was right then that I should have stopped and sat on my hands. But no......
I then engaged in ego trades that were designed to recapture all of the lost ticks that I endured in the morning. The result could easily be guessed. I dropped another 48 ticks on the ER2 and 22 ticks on the YM. As can be seen below there was something very, very wrong with my futures trading this morning. We had a 36 tick range since the morning open (excluding globex session), but I had a disproportionate loss to the range offered. I should have noticed the issue following the first two losses and then waiting for a break of that range and 50 tick morning range before following my momentum indicators on another trade. If that trade faltered, I should have stood aside and conducted a critical observation of the days action. That approach most certainly would have minimized my morning losses. Another approach, which would have minimized my losses would have been to follow my trading rule of 2%. That rule would have prevented my ego trades because I would have stopped trading when I lost 2% of my account. Well......its back to the trading plan to do a little tweaking re: the mornings range and a little self-reflection to determine why I didn't follow my plan today.
My morning results are presented below:
YM: -133 ticks (equal to -$665 per one contract position)
ER2: -74 ticks (equal to -$740 per one contract position)
Mornings Range: 36 ticks
I checked the days range from 6:30 on (Cali time) and saw very clearly that it traded in a 36 tick range ping ponging between the high and low extremes. It was right then that I should have stopped and sat on my hands. But no......
I then engaged in ego trades that were designed to recapture all of the lost ticks that I endured in the morning. The result could easily be guessed. I dropped another 48 ticks on the ER2 and 22 ticks on the YM. As can be seen below there was something very, very wrong with my futures trading this morning. We had a 36 tick range since the morning open (excluding globex session), but I had a disproportionate loss to the range offered. I should have noticed the issue following the first two losses and then waiting for a break of that range and 50 tick morning range before following my momentum indicators on another trade. If that trade faltered, I should have stood aside and conducted a critical observation of the days action. That approach most certainly would have minimized my morning losses. Another approach, which would have minimized my losses would have been to follow my trading rule of 2%. That rule would have prevented my ego trades because I would have stopped trading when I lost 2% of my account. Well......its back to the trading plan to do a little tweaking re: the mornings range and a little self-reflection to determine why I didn't follow my plan today.
My morning results are presented below:
YM: -133 ticks (equal to -$665 per one contract position)
ER2: -74 ticks (equal to -$740 per one contract position)
Mornings Range: 36 ticks
Wednesday, October 10, 2007
Buying APA this morning - 100 Shares
Was selling it down after monster gains with a plan to re-acquire following a pull back. Seems that it isn't interested much in pulling back. The daily and weekly charts are bullish and the monthly chart just turned downright uber bullish. So, while I am not re-establishing a full position at this time, given I am entering essentially on the monthly signal, I am adding to my position here. This buy together with the purchase of D is counter to many out there that think the energy sector is too risky at these levels; however, the money is made when there is a "wall of worry". This ensures that there are those out there that have not jumped in or have sold in anticipation of a pullback.
Cutting Deadwood
I am taking advantage of this move up to scrap several under performers or to trim those that I eventually want to dispose of. This move is not profit taking per se, it is spring cleaning as we move into winter. Gotta love this bull market. Cut you losers (and under performers) and let your winners run.
LACO: selling partial position at -1.20%
MVIS: selling remaining position at -5.19%
HALO: selling remaining position at -16.83%
EP: selling remaining position at +2.91%
As you can see, I am not selling anything that is below my sell rule of -25%. My goal is to recognize those that stall quickly and cut them loose in an attempt to rid myself the misery that comes with holding losers too long, as well as avoiding the damage that ultimately comes to my bottom line.
LACO: selling partial position at -1.20%
MVIS: selling remaining position at -5.19%
HALO: selling remaining position at -16.83%
EP: selling remaining position at +2.91%
As you can see, I am not selling anything that is below my sell rule of -25%. My goal is to recognize those that stall quickly and cut them loose in an attempt to rid myself the misery that comes with holding losers too long, as well as avoiding the damage that ultimately comes to my bottom line.
Buying D this morning - 200 shares
I placed a buy order before the market for Dominion Resources Inc., which is a gas and electric company based out of Richmond, VA. The stock momentum and trend is breaking on my daily and weekly charts. It is an energy play of which I already have 3 in my portfolio, so I will be cutting one of my under performing energy stocks in order to add D.
Tuesday, October 9, 2007
Futures Roundup
Market finally gave up on trying to correct the short term overbought range and pressed higher. We crossed over into "trend" territory shortly after the Fed minutes, which we benign. Entering momentum trades right after the announcement were tricky, but one needs to take the trades as they are offered because one never knows. You cannot presume to know that the indicator is wrong this time. I have a greater than 50 tick range, so I am obligated to abide by my indicator when it triggers. I may be a bit more tighter on my exits, but I cannot ignore the entries. With that said, I jumped in 5 minutes before the announcement due to the whip action that we got that triggered my signal. Luckily, I was able to stay in for the good news reaction which gave me +30 ticks on the YM. About 7 minutes later I used discretion and price action to get me into a highly speculative ER2 play that garnered +20 ticks. So far so good. I gave up -20 YM ticks on my next momentum play and then rebounded for +56 YM ticks on one of my plays of the day. I then finished out the day around 12:03 with a +10 tick trade on the YM. I then sat back and watched the rest of the day. Matter of fact, I just didn't feel like trading any more in the day after that 12:00 trade (Cali time). market flattened out after that and meandered around the rest of the day. Suffice it to say that I scored the trend of the day and didn't miss out on anything.
Key stat of the day is the profit acquired together with the days range in the YM. Ranges over 100 are consistently profitable with my entry and exit system. Oh yeah, you can have a losing day even if the market is up 100 points. It's all dependent on triggers for entries and exits). Yesterday we chopped around with an "inside day" and gave up a few testing the waters. Today we blew the doors off by taking advantage of the trend day. Trading, esp momentum trading is just that - you chop around testing the waters giving up a few waiting for that trend day. You then jump on the trend with aggressive play to make back those losses and end up for the period.
Summary of the day is below:
YM: +86 ticks (equal to +$430 per one contract position)
ER2: +30 ticks (equal to +$300 per one contract position)
ZG: +85 ticks (equal to +$850 per one contract position)
Days Range: 150 ticks on YM
Key stat of the day is the profit acquired together with the days range in the YM. Ranges over 100 are consistently profitable with my entry and exit system. Oh yeah, you can have a losing day even if the market is up 100 points. It's all dependent on triggers for entries and exits). Yesterday we chopped around with an "inside day" and gave up a few testing the waters. Today we blew the doors off by taking advantage of the trend day. Trading, esp momentum trading is just that - you chop around testing the waters giving up a few waiting for that trend day. You then jump on the trend with aggressive play to make back those losses and end up for the period.
Summary of the day is below:
YM: +86 ticks (equal to +$430 per one contract position)
ER2: +30 ticks (equal to +$300 per one contract position)
ZG: +85 ticks (equal to +$850 per one contract position)
Days Range: 150 ticks on YM
Bought 200 TECH @ 64.89
Picked up biotech hematology company that is providing me with preliminary breakout momentum signals on my daily chart. I would typically wait for the daily indicator to pop for my swing trades, however, the weekly momentum indicator is shooting full bore. Turning to the monthly chart, we have had 2 legs of the run up since 03, and the 3rd leg was triggered last month on my momentum indicator. So, all in all it is a very good risk:reward bet to establish a 1/3 position in Tech at this time. My rule is to exit the trade within the first 1/3 holding if draw down hits 25% of the initial investment.
Futures Morning Trading
I recognized a trend continuation pattern on ZG (Gold) this morning. I entered the trade which was immediately confirmed by my momentum indicator, so my goal then became to hold until my momo indicator signaled that the move was over. There were two runs (legs) to the move which lasted one hour and forty five minutes. Total take on the trade was 85 ticks (+$850 on one contract positions). Very nice way to start the day.
My attention then turned to the indicates (e-minis) where I found momentum triggers but not a large range (low to high) for the YM. We did get +50 range for the YM thanks to the move during the overnight globex session, but we were still below 100. I took the signals since my rule is to take cautious momentum signals if we have a +50 but -100 tick range in the YM. I took two YM signals and 2 ER2 signals for the morning session. While I was successful in scoring positive ticks on all my trades, the runs were not awe inspiring.
Volatility dried up as we approached the doldrums, so I am hanging it up until the afternoon session.
My morning futures summary is below:
YM: +20 ticks (equal to +$100 per one contract position)
ER2: +12 ticks (equal to +$120 per one contract position)
ZG: +85 ticks (equal to +$850 per one contract position)
My attention then turned to the indicates (e-minis) where I found momentum triggers but not a large range (low to high) for the YM. We did get +50 range for the YM thanks to the move during the overnight globex session, but we were still below 100. I took the signals since my rule is to take cautious momentum signals if we have a +50 but -100 tick range in the YM. I took two YM signals and 2 ER2 signals for the morning session. While I was successful in scoring positive ticks on all my trades, the runs were not awe inspiring.
Volatility dried up as we approached the doldrums, so I am hanging it up until the afternoon session.
My morning futures summary is below:
YM: +20 ticks (equal to +$100 per one contract position)
ER2: +12 ticks (equal to +$120 per one contract position)
ZG: +85 ticks (equal to +$850 per one contract position)
Monday, October 8, 2007
Stock Performer of the Day - XFML +6.27%
XFMedia made the push up today on 3x average volume. That would have been an excellent sign if it finished up from its open, but it actually reversed from the open to the close. There have been two probes to test the $10.50 high level established back in June of this year. The good news is that it is safely above the 200 ema and it closed 5% above yesterdays high. As I mentioned earlier today, the company has settled down since it appointed 5 new directors, and can now get onto business following the sell of Glass Lewis - they have been one big pain in the ass to XFML since it was purchased. In addition, the company's early repurchase of 50 million shares (it IPOed in early March) gives me nothing but confidence to hold on as a speculative play. I currently have 1/2 position and will wait to break the $10.50 barrier before buying in with an additional 25% holding. I am currently up 24.35% on my initial position.
The chart below shows the break of established downtrend on solid volume and the following retracement on lower volume to test what is now support. The end result was a successful test and then rocket up. The expanding volume bars at the bottom of the graph tell the story as well. We are looking at rising price supported by expanding volume, which makes for enough energy to assist in the eventual break of the $105.0 level. The bad news that discounted the stock is out of the company and with big names in the Board, there is no reason not to have some speculative coin located here.
Futures Roundup
Stayed on the sidelines for the most part this afternoon. Long signals were triggered with that 11:20 5-minute bar on both ER2 and YM. I had stayed away from the market since my initial trade at 6:35ish. The push was fairly strong during that 11:20 bar, so I went with the signal. But as could be predicted, it all fizzled out. I exited the ER2 trade with -8 ticks and the YM with -16 ticks. Signal soon reversed as could have been expected. Why expected? Well, to begin with we did not break 100 tick range on the YM all day up to that point, and my momentum indicators were reversing soon after triggering. As I type this, both ER2 and YM are making end of day moves, but my rules keep me out of the market for the final 15 minutes. Even though I lost all three trades, I do not consider it a loss because I exited when the signals reversed and did not hold on for larger losses. We chopped around a bit, I lost a bit, but I expect to bounce back when we get one of those momentum days.
Summary for the day is below:
YM: -16 ticks (equal to -$80 per one contract position)
ER2: -18 ticks (equal to -$180 per one contract position)
Days Range: 76 points (as defined by YM)
Summary for the day is below:
YM: -16 ticks (equal to -$80 per one contract position)
ER2: -18 ticks (equal to -$180 per one contract position)
Days Range: 76 points (as defined by YM)
ALVR
ALVR is receiving quite the pullback this morning (-6.65%) on fairly heavy volume. This is not a surprise, in fact, my indicators have been telling me that ALVR was overbought for some time. All that means is that a catylist is needed to correct the overbought condition. My search only found an article published yesterday by Shlomi Cohen of Seeking Alpha.
http://seekingalpha.com/article/49087-wimax-over-hype-alvarion-not-likely-to-be-a-target-after-all
I find it somewhat contraditory for Cohen to post the following:
"Experts and industry giants still disagree profoundly as to WiMAX's future. The debate has raged on, despite the fact that Intel Corporation (INTC) is continuing to move forward at full speed, at least one giant service provider - Sprint Nextel Corp (S) - is investing billions of dollars in the roll-out of a WiMAX network, and last week Nokia Corp. (NOK) became the latest convert to the camp of stalwarts championing the case for WiMAX. "
The contract wins together with mega cap corporation involvement leads me to believe that there is a future for WiMax investments for the speculative investor. We are not talking about a mega position in ALVR, but rather some speculative money in this low cap, high technology company that has scored many contracts throughout the world. The involvement of the likes of INTC, S, and NOK just validates the speculative position further. What Mr. Cohen seems to be describing here, from a trading standpoint, is just enough negatives to give this new technology a "wall of worry" to be climbed moving forward. This is great for me because not all of the speculative run up has yet been exhausted, which for me is the game that I play. Additionally, Mr. Cohen dismisses the recent contracts as being "small contract wins." But he says no more about this point. You just are expected to believe him and then move on to his thesis as to why CSCO will not acquire ALVR. I must tell you, I have been trading ALVR for some time on the contract wins, rather than the CSCO takeover speculation. Since the last earning announcement, ALVR has scored partnerships or deals with Digicel, RACSA, Hitachi, AT&T, Russia, Israel and Mauritius. All of this for a company with less than 1 billion in capitalization, leads me to believe that these are no peanutes to the bottom line when considered cumulatively. We will need to wait until next reporting for the true value to be understood. So, to dismiss these deals within one sentence and then move on to why CSCO is not going to acquire ALVR is just plain sloppy. It should be noted that the run up from the first deal following the last earnings announcement has been 20%, but that is why we are letting it come back in a bit before reacquiring a position.
Therefore, we have an uptrend, positive prospects within the company, positive opinions regarding the technology from established mega capital corporations, and still some negative outlooks on the technology. I cannot wait to load up on my outstanding 1/2 position.
I have 1/2 position as I have sold down 1/2 of my position over the past month to capture gains during the overbought period. But I thank Mr. Cohen (if that is where this pullback comes from) for this opportunity to load back up on the pullback, but will wait a few days for the correction to settle down and for a base to form.
http://seekingalpha.com/article/49087-wimax-over-hype-alvarion-not-likely-to-be-a-target-after-all
I find it somewhat contraditory for Cohen to post the following:
"Experts and industry giants still disagree profoundly as to WiMAX's future. The debate has raged on, despite the fact that Intel Corporation (INTC) is continuing to move forward at full speed, at least one giant service provider - Sprint Nextel Corp (S) - is investing billions of dollars in the roll-out of a WiMAX network, and last week Nokia Corp. (NOK) became the latest convert to the camp of stalwarts championing the case for WiMAX. "
The contract wins together with mega cap corporation involvement leads me to believe that there is a future for WiMax investments for the speculative investor. We are not talking about a mega position in ALVR, but rather some speculative money in this low cap, high technology company that has scored many contracts throughout the world. The involvement of the likes of INTC, S, and NOK just validates the speculative position further. What Mr. Cohen seems to be describing here, from a trading standpoint, is just enough negatives to give this new technology a "wall of worry" to be climbed moving forward. This is great for me because not all of the speculative run up has yet been exhausted, which for me is the game that I play. Additionally, Mr. Cohen dismisses the recent contracts as being "small contract wins." But he says no more about this point. You just are expected to believe him and then move on to his thesis as to why CSCO will not acquire ALVR. I must tell you, I have been trading ALVR for some time on the contract wins, rather than the CSCO takeover speculation. Since the last earning announcement, ALVR has scored partnerships or deals with Digicel, RACSA, Hitachi, AT&T, Russia, Israel and Mauritius. All of this for a company with less than 1 billion in capitalization, leads me to believe that these are no peanutes to the bottom line when considered cumulatively. We will need to wait until next reporting for the true value to be understood. So, to dismiss these deals within one sentence and then move on to why CSCO is not going to acquire ALVR is just plain sloppy. It should be noted that the run up from the first deal following the last earnings announcement has been 20%, but that is why we are letting it come back in a bit before reacquiring a position.
Therefore, we have an uptrend, positive prospects within the company, positive opinions regarding the technology from established mega capital corporations, and still some negative outlooks on the technology. I cannot wait to load up on my outstanding 1/2 position.
I have 1/2 position as I have sold down 1/2 of my position over the past month to capture gains during the overbought period. But I thank Mr. Cohen (if that is where this pullback comes from) for this opportunity to load back up on the pullback, but will wait a few days for the correction to settle down and for a base to form.
Futures - Morning Trading
Really nothing to report here on this one. I have one trade posted this morning. The ER2 short triggered early on but quickly whipped back around and I exited with a -10 tick loss. My indicators failed to signal another trade all morning. This is due to the momentum indicator that I use, together with the low range in the YM this morning. My data is showing that my win:loss ratio goes way down if the days range in the YM is lower than 100 ticks. I have decided to use a 50 pt threshold for morning trading together with my new momentum indicator. Most of the morning session was below 50 point range for the YM. It currently stands at a 68 point range. This range is not good for my momentum indicator. So, I have been on the sidelines after that first move and trigger. I expect that this may be the case for the entire day. Morning futures summary is below:
ER2: -10 ticks (equal to $100 per one contract position)
ER2: -10 ticks (equal to $100 per one contract position)
CNTF up strong in pre-market
CNTF launches "Twins", which is the first cell phone that allows for users to load a WCDMA and GSM card (or two GSM cards). According to the Press Release "Twins' set of features includes a 2.0 megapixel camera, MP3 and MPEG4 player, WCDMA modem, along with both video call and dual Bluetooth capabilities". Great timing for the press release, right after a retest of the 200 ema after a breakout. Who says technical analysis doesn't work? I currently hold 1/2 position and will be adding on future pullbacks to support until I have a full position.
XFML up strong in early morning trading
XFML is up strong in early trading off the Friday news of the sell of Glass, Lewis & Co to the Ontario Teachers' Pension Plan. With the recent moves made re: new Board members and the elimination of Glass, maybe, just maybe now is the time to get back to the Business of XFML. I currently maintain a 1/2 position in XFML. I will be adding on any weakness to support.
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