Trading Lessons from the Intraday Frame (study)

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Sharyl Pope
5 years ago
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2 2 Trading Lessons from the Intraday Frame (1-mi) Major Companies Reporting Earnings AMD, Facebook (FB), Ford (F), Twitter (TWTR), EBAY Major Economic Reports for Tomorrow... NONE TheoTrade LLC. All rights reserved.

3 3 TICK and our Intraday Trading The TICK today gave us a great insight of how to structure our trades and how to lean into the ongoing price action. With price gapping up, TICK failed to confirm the new high, locking in a divergence (we don't count the opening TICK value) and then traded lower with price - lower lows and lower highs - all day long. However, the chart on the right is frozen with a SIGN of STRENGTH via a breakout of the declining TICK trendline channel which is an early potential reversal signal. The chart on the right shows what happened next which was indeed a reversal (short-term) higher. Monitor TICK with price for these type of clues for reversals or continuity TheoTrade LLC. All rights reserved.

4 4 Quotes from Last Night's Planning The bearish breakdown pathway triggers beneath 2,660 which opens an eventual pathway back toward 2,600 or even the prior lows. Remain neutral in our 20 point yellow zone and let one side win; don't predict the outcome here. It's clear that 2,670 is our new short-term price pivot (see hourly chart for 2,660) and will frame our trades in terms of the departure from this level. Be cautious/patient and then join the winning side on the immediate swing away from here. It didn't start as a textbook trend day - we would have needed a downside gap for that - but our game plan was indeed correct: WE SHOULD REMAIN NEUTRAL in the 20 point range and then JOIN THE WINNING SIDE on a future (inevitable) breakout or range expansion move, particularly beneath 2,660 which opened a pathway back toward the 2,600 level. It's hindsight now given that price did exactly that - a breakout event that collapsed the market toward 2,600 - but it wasn't hindsight yesterday or this morning. The goal of this section is to study the price action and trades of the day for lessons into the future. While the first trade - believe it or not - was a successful long/bounce/fade, we quickly had to shift gears to a breakout/breakdown environment where price moved from range contraction (over the last few days) to range expansion or our breakout trend move. Aggressive traders "joined the winning side" with an initial breakout trade but conservative traders - as I noted above - waited for that first pullback/retracement event. At least three additional bearish short-sale trades triggered after the breakout event as price did exactly what we planned - moving down away from 2,660 toward the prior low near 2,600. This increased your confidence of successful trade outcomes (along with the TICK which confirmed price all the way down to the target) and should have prevented any and all long/buy/fade trades. If not, that's fine, but please use today's outcome as a textbook example of how we plan and implement the plan in real time as price moves toward or away from our targets TheoTrade LLC. All rights reserved.

5 "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

5 5 "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.

6 "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.

6 6 "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.

7 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).

7 7 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 watch list 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.

8 Intraday Intermarket Movement I didn't get a chance to cover it in my session (there was so much to discuss) but the push toward 3% Yield in the 10-year US Treasury Note was the likely catalyst -

8 8 Intraday Intermarket Movement I didn't get a chance to cover it in my session (there was so much to discuss) but the push toward 3% Yield in the 10-year US Treasury Note was the likely catalyst - or main contributor (along with Caterpillar and Google collapsing on earnings) for today's equity market sell-off. Here we see the US Dollar retracing while bonds initially bounced off new lows but then closed near the lows. Stocks collapsed along with Oil which retraced down from its high just beneath $ Watch these markets together for Risk-Off/Risk-On Money Flow clues as well as the spike higher in rates (showing up above as an unusual sell-off in bonds) TheoTrade LLC. All rights reserved.

9 9 Intraday FANGs The NASDAQ was the hardest hit index today, falling 1.70%. In a great example of why WE DO NOT try to predict earnings outcomes - even if we're right on the earnings number - Google surprised us all with a beat (exceed) expectations by roughly 60 cents with their earnings yet the stock collapsed into a powerful trend day down. Other technology stocks joined the sell-off as we can see above. Update your charts and any open positions relative to what happened today with respect to the ongoing sideways levels and trendlines in all FANG stocks TheoTrade LLC. All rights reserved.

10 Planning the 60-min Intraday @ES Futures Chart There you go - that's why we PLAN and not predict.

10 10 Planning the 60-min Futures Chart There you go - that's why we PLAN and not predict. We're ready for either scenario, especially when I was stressing that there is NO EDGE when price is balanced at a magnet/gravity level. The edge comes when one side of the market places a bet and then is trapped, forced to cover as the other side aggressively presses the edge. In this case a failed bullish breakout/gap this morning set the stage for bulls to be trapped and they quickly liquidated all day, collapsing the market straight toward our target where a bounce occurred (off the 200 day SMA). For Wednesday, we just keep trading the range expansion and higher volatility plays from here TheoTrade LLC. All rights reserved.

11 Planning the Next Day (Daily S&P 500 Cash Index) After forming a perfect doji/spinning top consolidation day yesterday between the 20 and 50 day EMAs, price broke out of range contraction into a

11 11 Planning the Next Day (Daily S&P 500 Cash Index) After forming a perfect doji/spinning top consolidation day yesterday between the 20 and 50 day EMAs, price broke out of range contraction into a big trend day range expansion event on high volume today. Price fell all the way toward our 200 day SMA and reversed a little higher than the 2,600 round number level. For Wednesday, note that we're in a range expansion environment and will trade the higher volatility carefully. Should price continue the bounce as seems logical, we'll play back toward 2,650 or slightly higher. Otherwise, use 2,650 as your simple pivot, playing bearishly back toward 2,600 while beneath it TheoTrade LLC. All rights reserved.

12 12 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