Wednesday, September 8, 2010

9/8 10:10

The sell threshold mentioned in yesterday's posts was the SP futures 15-minute M/A, whose envelope was exceeded to the downside overnight.  This was a second sell signal (the first being the SP futures 30-minute M/A).  The rally this morning has come back to the 15-minute M/A so this would be a good short entry point.  I am already short so will not use it.
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6 comments:

  1. pimaCanyonSeptember 8, 2010 at 7:38 AM

    Hi Steve,

    You mentioned your stop on futures is 30 min close above 1102. What's your stop on your SDS position?

    Thanks!

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  2. Steve KotelesSeptember 8, 2010 at 8:12 AM

    Same thing. The 78.6% of the decline is 1102.59. It needs to close at 1102.25 or higher.

    ReplyDelete
  3. pimaCanyonSeptember 8, 2010 at 8:36 AM

    thanks, Steve. ES has hit 1102, but no 30 min close at or above 1102 yet.

    I'm not really liking the way price is playing out compared to where we should be in the wave structure. 78 percent retrace is pretty deep, especially if we are supposed to be in a larger 3rd wave now. I suspect the wave structure will get a little clearer as the day progresses.

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  4. pimaCanyonSeptember 8, 2010 at 9:02 AM

    One more question: Why do you use a 30 min close for a stop instead of just going with price alone? EW would say that we have a 78 percent retrace when price hits that point, regardless of where the close ends up being.

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  5. Steve KotelesSeptember 8, 2010 at 9:21 AM

    Hi pima
    The most important data point of the day is the close because traders square away positions. Likewise, hourly and 30-minute closes are important to me because positions are monitored and adjusted inter-day on a clock. Also in the futures markets temporary illiquidity (the inability of existing orders to satisfy a rush of one-sided orders) can distort the intentions of larger traders. News is a prime example of this but rapid influx of orders can occur without specific news. I like closes because they reflect the market's ability to calm down, take a breath, and re-assess probabilities at a new price level. I don't wait until the clock expires if price extends well beyond the stop close price. I have a volatility stop in at all times. Depending on the M/A this is typically .2% beyond the stop close price. Otherwise a sudden runaway can do serious damage.

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  6. pimaCanyonSeptember 8, 2010 at 9:45 AM

    Thanks, Steve. Makes sense about the close. Volatility stop also.

    ReplyDelete

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