Trading Lessons from the Intraday Frame (study)

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Mark Blankenship
5 years ago
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3 3 Major Companies Reporting Earnings Bank of America (BAC), Netflix (NFLX) Major Economic Reports for Tomorrow... NONE Quotes from Last Night's Planning The DAILY chart above reminds us that the 2,675 and 2,575 (roughly 2,700 and 2,600) levels are critically important and that - unfortunately for now - neither buyers nor sellers have won the battle with a breakout beyond this range rectangle in a higher volatility environment. As we've been doing, focus on the lowest timeframe possible, adapt, prepare and stay safe until we get our breakout from this range and we will. Every single day this week has been relatively the same - big gap, initial movement like a trend day in the direction of the gap, but every session failed to continue the morning trend and instead devolved into a range day (or reversal on Monday) into the close. Today simply continues that trend with a gap, reversal, and intraday trading range where we're able and encouraged to trade both sides of the market (short the highs; buy the lows). It should remind us that RISK is high and ENERGY is building up in the market for a future BREAKOUT that likely occurs early next week, especially with all the headline risk building. After the gap fade/fill, we had yet another RANGE DAY develop and thus the "range day fade trades" were the best/ideal trades to take and thus to study for your growing reference in today's lesson section TheoTrade LLC. All rights reserved.

4 "Power Trender" Strong Stock Scan We're seeing the NEW top twelve relative strength leaders (via algorithm) in trending markets and the general expectation is to buy retracements or breakouts in

4 4 "Power Trender" Strong Stock Scan We're seeing the NEW top twelve relative strength leaders (via algorithm) in trending markets and the general expectation is to buy retracements or breakouts in these strongly trending names. The logic is that what is strong tends to get stronger (stocks attracting money flow tend to continue attracting additional money flow). Right now these would be the names and thus candidates above for you to do additional research and add these to your stock-scan list for possible inclusion into a swing trading portfolio on pullbacks or outright breakouts. HOW WE USE THESE STOCKS: I write the Power-Trending Stock Section for Swing Traders looking for candidates that complex stock scans will likely miss. The scan targets strongly trending stocks and the expectation is that price will continue trending higher, though of course additional analysis is required rather than just buying these names collectively. To participate in these stocks, we typically wait for a pullback/retracement to a rising moving average or Fibonacci/Trendline level to put on a buy/retracement where the stop is trailed under the average. These would be similar to how I describe intraday 'flag' retracements on a developing Trend Day TheoTrade LLC. All rights reserved.

5 "S&P 500 Sector Performance" View This chart and sector comparisons are useful two ways: First, we get a broader sense of what's going on beneath the market subdivided into sectors.

5 5 "S&P 500 Sector Performance" View This chart and sector comparisons are useful two ways: First, we get a broader sense of what's going on beneath the market subdivided into sectors. Second, if you trade beyond the S&P 500 or futures/etfs, you can pinpoint bearish/weak stocks by starting with bearish/weak sectors. The idea is out outperform the market via short- selling a weak stock(s) in weak/bearish sectors on a down trend day (or vice versa) TheoTrade LLC. All rights reserved.

6 Tightly Compressed SP500 Stocks (Low ADX Scan) Here are the top six "Compressed ADX" (lowest ADX) values from our simple scan of the S&P 500 (in Think or Swim).

6 6 Tightly Compressed SP500 Stocks (Low ADX Scan) Here are the top six "Compressed ADX" (lowest ADX) values from our simple scan of the S&P 500 (in Think or Swim). The goal of this simple stock scan is to identify compressed or consolidating (RANGE) stocks and either: A) Play the fades (like a Range Day) into the trendlines by shorting the high and buying the low or B) Put these on a separate watchlist and then WAIT for a breakout event to trigger a buy or sell-short swing trade to trade the RANGE EXPANSION play after the current CONTRACTION. Or, you could trade more complex strategies like butterflies, iron condors, or even prepare in advance for a possible breakout with straddles or strangles (advanced options traders). We'll update this scan and ideas like it at the beginning of each week TheoTrade LLC. All rights reserved.

7 7 Intraday FANGS! With the exception of Facebook which broke its range resistance and traded up into $170 (up away from $160), the remaining "FANGs" are within compressed triangles (especially Amazon and Google which we're closely following). Again, we're not predicting but noting the similar pattern in these big stocks and the similarities with the plan and trade on the indexes. What happens to the index (a bullish short-squeeze or a bearish breakdown back toward the prior lows) should develop similarly in the FANGs and in most stocks showing a similar pattern TheoTrade LLC. All rights reserved.

8 Following the Initial Breakout in GE In addition to the FANGs, I highlighted GE for you yesterday with respect to a triangle (range contraction) pattern forming at the support near $13.00 per share.

8 8 Following the Initial Breakout in GE In addition to the FANGs, I highlighted GE for you yesterday with respect to a triangle (range contraction) pattern forming at the support near $13.00 per share. I showed the initial bullish price breakout with the idea that price could continue higher in a breakout environment and we have the first day of that upside confirmed activity with a bullish gap-up on higher volume TheoTrade LLC. All rights reserved.

9 Planning the 60-min Intraday @ES Futures Chart Like our FANGs, it's no surprise the broader market is showing a similar "into resistance" situation with breakout game plans beyond the current

9 9 Planning the 60-min Futures Chart Like our FANGs, it's no surprise the broader market is showing a similar "into resistance" situation with breakout game plans beyond the current mega-pivot level. Today's opening gap took us suddenly into 2,680 but divergences trapped traders at the highs with a reversal back within the range. Like the prior plans, we're eagerly waiting to trade a breakout from this triangle such that we'd expect a breakout short-squeeze to propel the market quickly toward 2,700 through our neutral zone; if above 2,700, we'd expect a series of bullish sessions to take us on a pathway back toward 2,800. For now, remain neutral (with perhaps a bearish tilt) until we get a break beneath 2,640 which would set in motion a likely bearish range expansion swing toward 2, TheoTrade LLC. All rights reserved.

10 Planning the Next Day (Daily S&P 500 Cash Index) Today gave us a BEARISH ENGULFING CANDLE into the range resistance high and the falling 50 day EMA, when combined with the decline in bullish

10 10 Planning the Next Day (Daily S&P 500 Cash Index) Today gave us a BEARISH ENGULFING CANDLE into the range resistance high and the falling 50 day EMA, when combined with the decline in bullish volume, all strongly suggest greater odds for a bearish swing down away from this level. That's logical, but we'll of course be on guard and ready to trade the 'alternate' thesis that triggers on a big breakout above 2,700. We REMAIN neutral and eager to trade the future RANGE EXPANSION event that triggers above 2,670/2,675 toward 2,700 and if above 2,700 then back toward 2,800. The same logic applies here with another bearish short-term dominant thesis sell-swing against 2,670, if only to trigger an alternate thesis break above 2,670 then 2,700 (bigger moves come in the opposite or stop-loss-triggered direction) TheoTrade LLC. All rights reserved.

11 11 Disclaimer: Neither TheoTrade or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors is, in such capacities, a licensed financial adviser, registered investment adviser, registered broker-dealer or FINRA SIPC NFA-member firm. TheoTrade does not provide investment or financial advice or make investment recommendations. TheoTrade is not in the business of transacting trades, nor does TheoTrade agree to direct your brokerage accounts or give trading advice tailored to your particular situation. Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past Performance is not necessarily indicative of future results TheoTrade LLC. All rights reserved.

Trading Lessons from the Intraday Frame (study)

1 Daily "Idealized Trades" Report Trading Lessons from the Intraday Frame (study) 1 2018 TheoTrade LLC. All rights reserved. 2 Trading Lessons from the Intraday Frame (1-mi) 2 2018 TheoTrade LLC. All rights